<PAGE>
As filed with the Securities and Exchange Commission on September 22, 1997
Registration No. 333 -
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
------------------------------------
COMMUNITY FIRST BANKSHARES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 6022 46-0391436
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------------------
520 Main Avenue
Fargo, North Dakota 58124-0001
(701) 298-5600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
------------------------------------
Donald R. Mengedoth, President
COMMUNITY FIRST BANKSHARES, INC.
520 Main Avenue
Fargo, North Dakota 58124-0001
(701) 298-5600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------------------
Copies to:
Patrick Delaney, Esq.
Martin R. Rosenbaum, Esq.
Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
(612) 371-3211
Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED(1) REGISTERED(1) PER SHARE OFFERING PRICE FEE (2)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7.30% Subordinated Notes Due 2004 $60,000,000 100% $60,000,000 $18,534
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement relates to the issuance of New Notes, as
defined herein, of the Registrant to current holders of unregistered 7.30%
Subordinated Notes Due 2004 of the Registrant issued in 1997 (the "Old
Notes") in connection with the proposed exchange of the New Notes for the
Old Notes of the Registrant (the "Exchange").
(2) Pursuant to Rule 457(f)(1), the fee is calculated based on the aggregate
market value of the Old Notes surrendered in the Exchange. The average of
the bid and ask sale prices of the Old Notes as reported on the
over-the-counter market on September 17, 1997 was 101.9375%, resulting in an
aggregate market value of $61,162,500.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
COMMUNITY FIRST BANKSHARES, INC.
Cross Reference Sheet Required by Item 501(b) of Regulation S-K
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION HEADING IN PROSPECTUS
<S> <C>
1. Forepart of Registration Statement and outside Front
Cover Page of Prospectus. . . . . . . . . . . . . . . . Facing Page of Registration Statement; Cover Page of
Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus. . . . . . . . . . . . . . . . . . . . . . . Inside Front Cover Page of the Prospectus; Table of
Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges and
Other Information . . . . . . . . . . . . . . . . . . . Prospectus Summary; Certain Factors
4. Terms of the Transaction . . . . . . . . . . . . . . . Prospectus Summary; The Exchange Offer; Description of
the New Notes; Certain Federal Income Tax Consequences
5. Pro Forma Financial Information . . . . . . . . . . . . Prospectus Summary; Summary Pro Forma Condensed
Combined Financial Information
6. Material Contacts with the Company Being Acquired . . . *
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be Underwriters . . . . . *
8. Interests of Named Experts and Counsel Legal Matters; Experts
9. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities. . . . . . . . . . . . . *
10. Information with Respect to S-3 Registrants . . . . . . Prospectus Summary
11. Incorporation of Certain Information by Reference
Incorporation of Certain Information by Reference
12. Information with Respect to S-2 or S-3 Registrants. . . *
13. Incorporation of Certain Information by Reference . . . *
<PAGE>
14. Information with Respect to Registrants Other Than
S-3 or S-2 Registrants. . . . . . . . . . . . . . . . . *
15. Information with Respect to S-3 Companies . . . . . . . *
16. Information with Respect to S-2 or S-3 Companies. . . . *
17. Information with Respect to Companies Other than
S-2 or S-3 Companies. . . . . . . . . . . . . . . . . . *
18. Information if Proxies, Consents or Authorizations
are to be Solicited . . . . . . . . . . . . . . . . . . *
15. Information if Proxies, Consents or Authorizations
are not to be Solicited pr or in an Exchange Offer. . . *
</TABLE>
- ---------------
*Not Applicable
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or a
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS
OFFER TO EXCHANGE
7.30% SUBORDINATED NOTES DUE 2004
FOR ANY AND ALL OF THE OUTSTANDING 7.30% SUBORDINATED NOTES
DUE 2004 ISSUED IN JUNE 1997
OF
COMMUNITY FIRST BANKSHARES, INC.
----------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON ______,1997, UNLESS EXTENDED.
----------------------------------
Community First Bankshares, Inc., a Delaware corporation (the "Company"),
hereby offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (which together constitute
the "Exchange Offer"), to exchange its 7.30% Subordinated Notes due 2004 (the
"New Notes") for an equal principal amount of its outstanding 7.30% Subordinated
Notes due 2004 issued in June 1997 (the "Old Notes"), of which $60,000,000
principal amount is outstanding. The terms of the New Notes are substantially
the same as the terms of the Old Notes, except that the New Notes have been
registered under the Securities Act of 1933, as amended (the "Securities Act").
The New Notes will evidence the same debt as the Old Notes and will be entitled
to the benefits of the Indenture governing the Old Notes (the "Indenture"). The
Old Notes and the New Notes are sometimes referred to herein collectively as the
"Notes." See "The Exchange Offer" and "Description of New Notes."
The New Notes will bear interest at the rate of 7.30% per annum and
interest will be payable semiannually on June 30 and December 31, commencing on
December 31, 1997. Holders of the Old Notes whose Old Notes are accepted for
exchange will receive, in cash, accrued interest thereon to, but not including,
the date of issuance of the New Notes, such interest to be payable with the
first interest payment on the New Notes, and will be deemed to have waived the
right to receive any payment in respect of interest on the Old Notes accrued
from and after the date of issuance of the New Notes. Like the Old Notes, the
New Notes will be unsecured general obligations of the Company and will be
subordinated to all "Senior Indebtedness" (as defined) of the Company.
The Company will not receive any proceeds from the Exchange Offer. In the
event the Company terminates the Exchange Offer and does not accept for exchange
any Old Notes, the Company will promptly return the Old Notes to the holders
thereof. See "The Exchange Offer."
PAYMENT OF PRINCIPAL OF THE NOTES MAY BE ACCELERATED ONLY IN THE CASE OF
BANKRUPTCY, INSOLVENCY OR LIQUIDATION OF THE COMPANY. THERE IS NO RIGHT OF
ACCELERATION IN THE CASE OF DEFAULT IN THE PAYMENT OF PRINCIPAL OF, OR INTEREST
ON, ANY NOTE OR IN THE PERFORMANCE OF ANY OTHER COVENANTS OF THE COMPANY.
SEE "CERTAIN FACTORS" COMMENCING ON PAGE 12 HEREIN FOR A DISCUSSION OF FACTORS
THAT, AMONG OTHERS, SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THE NOTES ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, BY ANY OTHER GOVERNMENTAL AGENCY, OR
OTHERWISE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, the Company believes
that the New Notes issued pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by any holder thereof (other than any
such holder which is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holder's business and that
such holder does not intend to participate and has no arrangement or
understanding with any person to participate in the distribution of such New
Notes. Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, such broker-dealer will
not be deemed to be admitting that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as amended or supplemented from time to
time, may be used by such broker-dealer in connection with resales of New Notes
received in exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. See "Plan of Distribution."
Prior to this Exchange Offer, there has been no public market for the Old
Notes or the New Notes. If a market for the New Notes should develop, the New
Notes could trade at a discount from their principal amount. The Company does
not currently intend to list the New Notes on any securities exchange. There
can be no assurance that an active public market for the New Notes will develop.
The date of this Prospectus is_________________, 1997.
2
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement", which term
shall include all amendments, exhibits and schedules thereto) on Form S-4 under
the Securities Act of 1933, as amended, (the "Securities Act") with respect to
the New Notes. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement and the exhibits and schedules thereto. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete; with respect to each such contract,
agreement or other document filed as an exhibit or schedule to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. The Registration Statement, including exhibits thereto, as well as
such reports, proxy statements and other information filed with the Commission
may be inspected without charge at the public reference facilities maintained by
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549 and at the following regional offices of the Commission: Northwestern
Atrium Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661; and Seven
World Trade Center, 13th Floor, New York, New York 10007. Copies of all or part
of such materials can be obtained from those offices upon payment of certain
fees prescribed by the Commission. Such reports, proxy statements and other
information concerning the Company also may be inspected at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005. The
Commission also maintains an internet web site at http://www.sec.gov containing
reports, proxy and information statements and other information regarding
registrants, including the Company, that file electronically with the
Commission.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents have been filed by the Company with the Commission
and are incorporated herein by reference: (i) the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996, as amended on Form 10-K/A
filed on May 8, 1997; (ii) the Company's Form 10-Q for the quarter ended March
31, 1997; (iii) the Company's Form 8-K report filed on July 29, 1997; (iv) the
Company's Form 10-Q for the quarter ended June 30, 1997; and (v) the Company's
Form 8-K/A report filed September 22, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the oral or written request of any such
person, a copy of all documents which are incorporated by reference in this
Prospectus, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to Mark A. Anderson, Executive Vice President,
Community First Bankshares, Inc., 520 Main Avenue, Fargo, North Dakota
58124-0001, telephone number (701) 298-5600.
3
<PAGE>
TABLE OF CONTENTS
Page
----
Available Information......................................................... 3
Incorporation of Certain Information by Reference............................. 3
Prospectus Summary............................................................ 5
Certain Factors.............................................................. 16
Recent Developments......................................................... 18
Use of Proceeds.............................................................. 21
The Exchange Offer........................................................... 21
Description of the New Notes................................................ 28
Certain Federal Income Tax Consequences...................................... 34
Plan of Distribution......................................................... 35
Legal Matters................................................................ 36
Experts...................................................................... 36
4
<PAGE>
- --------------------------------------------------------------------------------
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ
IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION INCLUDED ELSEWHERE IN THIS
PROSPECTUS AND THE FINANCIAL STATEMENTS AND DOCUMENTS INCORPORATED BY REFERENCE
HEREIN. UNLESS THE CONTEXT CLEARLY SUGGESTS OTHERWISE, REFERENCES TO THE
COMPANY INCLUDE THE COMPANY AND ITS SUBSIDIARIES.
THE COMPANY
Community First Bankshares, Inc., a Delaware corporation (the "Company"),
is a multi-bank holding company that as of August 31, 1997 operated banks and
bank branches (the "Company Banks") in 103 communities in Colorado, Iowa,
Minnesota, Nebraska, North Dakota, South Dakota, Wisconsin and Wyoming and had
total assets of approximately $4.2 billion. The Company operates community
banks primarily in small and medium-sized communities and the surrounding market
areas. The Company provides a full range of financial products and services to
individuals and businesses, including commercial and consumer banking, trust,
insurance and investment services.
The Company's primary strategy is to operate and continue to acquire banks
and bank branches in communities which generally have populations between 3,000
and 50,000 and are located in the Company's key target acquisition states of
Arizona, Colorado, Iowa, Kansas, Minnesota, Montana, Nebraska, North Dakota,
South Dakota, Wisconsin and Wyoming, and additionally in the adjacent states of
Idaho, Illinois, Missouri, New Mexico, Oklahoma and Utah (this seventeen state
area is collectively referred to as the "Acquisition Area"). Such communities
are believed to provide the Company with the opportunity for a stable,
relatively low-cost deposit base. The individual banks and bank branches sought
to be acquired by the Company generally have approximately $20 million to $150
million in assets.
On July 14, 1997, the Company acquired KeyBank National Association,
Cheyenne, Wyoming ("KeyBank Wyoming"), a subsidiary of KeyCorp, for a cash
purchase price of approximately $135 million. As of June 30, 1997, KeyBank
Wyoming had total assets of approximately $1.2 billion and banking offices in 24
communities in Wyoming. The transaction was accounted for as a business
combination. See "Recent Developments - Recent Acquisitions."
On December 18, 1996, the Company acquired Mountain Parks Financial Corp.
("Mountain Parks"), a bank holding company that operated a state chartered bank
with full service commercial banking facilities in 17 Colorado communities (this
former bank and its branches are referred to as the "Mountain Parks Banks").
The facilities in two of these communities were sold following the acquisition.
At September 30, 1996, Mountain Parks had total assets of approximately $581.8
million. The Mountain Parks Banks are located in winter ski and summer
recreational areas in the Colorado mountains and in the greater Denver/Boulder
metropolitan area. See "Recent Developments - Recent Acquisitions."
On August 22 and August 28, 1997, respectively, the Company entered into
separate merger agreements to acquire First National Summit Bankshares, Inc.,
Gunnison, Colorado ("Summit") and Republic National Bancorp, Inc., Phoenix,
Arizona ("Republic"). As of June 30, 1997, Summit had total assets of
approximately $88 million and Republic had total assets of approximately $53
million respectively. Consummation of the Summit and Republic transactions
is contingent upon, among other things, regulatory approval and is anticipated
to occur during the fourth quarter of 1997. These business combinations are
expected to be accounted for as a pooling of interests. See "Recent
Developments - Pending Acquisitions."
On September 10, 1997, the Company entered into an Office Purchase and
Assumption Agreement (the "Branch Purchase Agreement") to acquire 37 branch
banks located in Arizona, Colorado and Utah (the "Bank One Branches") from
three subsidiary banks of Banc One Corporation. At June 30, 1997, the Bank One
Branches had total deposits of $639 million and loans of $70 million. Under the
terms of the Branch Purchase Agreement, the Company will pay a purchase price
premium equal to 6% of Bank One Branches deposits, or approximately $38.3
million. Consummation of the Branch Purchase Agreement is contingent upon
regulatory approval, among other things, and is anticipated to occur during the
fourth quarter of 1997. See "Recent Developments - Pending Acquisitions."
5
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
The Company provides its banks with the advantages of affiliation with a
multi-bank holding company, such as data processing services, credit policy
formulation and review, investment management and specialized staff support,
while granting substantial autonomy to managers of the Company Banks with
respect to day-to-day operations, customer service decisions and marketing. The
Company Banks are encouraged to participate in community activities, support
local charities and community development, and otherwise to serve their
communities.
The Company's principal executive offices are located at 520 Main Avenue,
Fargo, North Dakota 58124-0001 and its telephone number is (701) 298-5600. The
Company also maintains a web site at http://www.cfbx.com.
6
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER
<TABLE>
<S> <C>
The Exchange Offer. . . . . . . . . . . The Company is offering to exchange up to $60,000,000 aggregate principal amount
of the New Notes for a like principal amount of its Old Notes. The Company will
issue the New Notes to holders on or promptly after the Expiration Date (as
defined below).
Based on an interpretation by the staff of the Commission set forth in no-action
letters issued to third parties, the Company believes that New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold and otherwise transferred by any holder thereof (other than any
such holder which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act and certain broker-dealers and their affiliates) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holder's business and that such holder does not intend to participate and
has no arrangement or understanding with any person to participate in the
distribution of such New Notes. See "Plan of Distribution."
The Exchange Offer applies to $60,000,000 aggregate principal amount of the Old
Notes. The terms of the New Notes are substantially the same as the terms of the
Old Notes except that the New Notes have been registered under the Securities Act.
The New Notes will evidence the same debt as the Old Notes and will be entitled
to the benefits of the Indenture. See "Description of New Notes."
Expiration Date . . . . . . . . . . . . The Exchange Offer will expire at 5:00 p.m., New York City time,
on________________, 1997 unless the Exchange Offer is extended, in which case the
term "Expiration Date" means the latest date and time to which the Exchange Offer
is extended.
Accrued Interest
on the New Notes
and Old Notes . . . . . . . . . . . . Each New Note will bear interest from its issuance date. Holders of Old Notes
that are accepted for exchange will receive, in cash, accrued interest thereon to,
but not including, the issuance date of the New Notes. Such interest will be paid
on December 31, 1997 with the first interest payment on the New Notes. Interest
on the Old Notes accepted for exchange will cease to accrue upon issuance of the
New Notes.
Conditions to the
Exchange Offer. . . . . . . . . . . . The Exchange Offer is subject to certain customary conditions, which may be waived
by the Company. See "The Exchange Offer - Conditions."
</TABLE>
7
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Procedures for Tendering
Old Notes . . . . . . . . . . . . . . Each holder of Old Notes wishing to accept the Exchange Offer must complete, sign and
date the accompanying Letter of Transmittal (the "Letter of Transmittal") or a
facsimile thereof, in accordance with the instructions contained herein and therein,
and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together
with the Old Notes and any other required documentation to the Exchange Agent (as
defined below) at the address set forth herein. By executing the Letter of
Transmittal, each holder will represent to the Company that, among other things, (i)
the New Notes acquired pursuant to the Exchange Offer are being acquired in the
ordinary course of business of the person receiving such New Notes, (ii) neither the
holder nor any such other person is engaging in, or intends to engage or has an
arrangement or understanding with any person to participate in the distribution of such
New Notes and (iii) neither the holder nor any such other person is an "affiliate," as
defined under Rule 405 of the Securities Act, of the Company. In the case of a
broker-dealer that receives New Notes for its own account in exchange for Old Notes
which were acquired by it as a result of market-making or other trading activities,
the Letter of Transmittal will also include an acknowledgment that the broker-dealer
will deliver a copy of this Prospectus in connection with the resale by it of New Notes
received pursuant to the Exchange Offer. See "The Exchange Offer - Purpose and Effect
of the Exchange Offer," "The Exchange Offer - Procedures for Tendering" and "Plan of
Distribution." Following the consummation of the Exchange Offer, holders of Old Notes
not tendered or tendered and not accepted will not have any further registration rights
and the Old Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for the Old Notes could be adversely affected.
Special Procedures for
Beneficial Owners . . . . . . . . . . Any beneficial owner whose Old Notes are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and who wishes to tender should contact
such registered holder promptly and instruct such registered holder to tender on such
beneficial owner's behalf. If such beneficial owner wishes to tender on such owner's
own behalf, such owner must, prior to completing and executing the Letter of
Transmittal and delivering his or her Old Notes, either make appropriate arrangements
to register ownership of the Old Notes in such owner's name or obtain a properly
completed bond power from the registered holder. The transfer of registered ownership
may take considerable time and may not be able to be completed prior to the Expiration
Date.
Guaranteed Delivery
Procedures. . . . . . . . . . . . . . Holders of Old Notes who wish to tender their Old Notes and whose Old Notes are not
immediately available or who cannot deliver their Old Notes, the Letter of Transmittal
or any other documents required by the Letter of Transmittal to the Exchange Agent
prior to the Expiration Date must tender their Old Notes according to the guaranteed
delivery procedures set forth in "The Exchange Offer - Guaranteed Delivery
Procedures."
Withdrawal Rights . . . . . . . . . . . Tenders may be withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date by furnishing a written or facsimile transmission notice of withdrawal
to the Exchange Agent containing the information set forth in "The Exchange Offer -
Withdrawal of Tenders."
</TABLE>
8
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Certain Federal Income
Tax Considerations. . . . . . . . . . For a discussion of certain Federal income tax considerations relating to the exchange
of the Old Notes for the New Notes, see "Certain Federal Income Tax Consequences."
Acceptance of Old Notes
and Delivery of New Notes. . . . . . . The Company will accept for exchange any and all Old Notes which are properly tendered
in the Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date.
The New Notes issued pursuant to the Exchange Offer will be delivered promptly
following the Expiration Date. See "The Exchange Offer-Terms of the Exchange Offer."
Exchange Agent. . . . . . . . . . . . . Norwest Bank Minnesota, National Association (the "Exchange Agent") is serving as
Exchange Agent in connection with the Exchange Offer.
THE NEW NOTES
Securities Offered. . . . . . . . . . . $60,000,000 aggregate principal amount of 7.30% Subordinated Notes Due 2004 (the "New
Notes").
Denominations . . . . . . . . . . . . . $1,000 and integral multiples thereof.
Minimum Investment. . . . . . . . . . . $100,000.
Maturity . . . . . . . . . . . . . . . June 30, 2004.
Optional or Mandatory Redemption. . . . None.
Mandatory Redemption. . . . . . . . . . None.
Sinking Fund. . . . . . . . . . . . . . None.
Interest Payment Dates. . . . . . . . . Semiannually on June 30 and December 31 of each year, commencing December 31, 1997.
The first interest payment will represent interest from the date of issuance of the New
Notes to December 31, 1997. See "Description of the New Notes -- General."
Limited rights of acceleration. . . . . Payment of principal of the New Notes may be accelerated only in the case of certain
events involving the bankruptcy, insolvency or reorganization of the Company which
constitute an Acceleration Event (as defined). There is no right of acceleration in
the case of a default in the payment of principal of or interest on the New Notes or
the performance of any other covenant of the Company in the Indenture. See
"Description of the New Notes -- Acceleration Events."
Restrictive Covenants . . . . . . . . . The indenture pursuant to which the New Notes will be issued (the "Indenture"), among
other things, restricts the ability of the Company under certain circumstances to pay
cash dividends or to make other capital distributions. See "Description of the New
Notes -- Restriction on Dividends and Other Distributions."
</TABLE>
9
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Use of proceeds . . . . . . . . . . . . The Company will not receive any proceeds from this offering. See "Use of Proceeds."
Subordination . . . . . . . . . . . . . The New Notes will be unsecured general obligations of the Company and will be
subordinated to all existing and future Senior Indebtedness" (as defined) of the
Company in the manner and to the extent described herein. Senior Indebtedness of the
Company aggregated approximately $79 million as of June 30, 1997. On a pro forma
basis, reflecting the subsequent issuance of additional long-term debt incurred in
connection with the acquisition of KeyBank Wyoming, at June 30, 1997 Senior
Indebtedness would have been approximately $109 million. There is no limitation on
the Company's ability to create or incur Senior Indebtedness or indebtedness ranking
on a parity with the New Notes. See "Description of the New Notes -- Subordination."
Rating. . . . . . . . . . . . . . . . . The New Notes have been rated BBB by Duff & Phelps Credit Rating Co. and BBB-by
Fitch Investors Service, L.P.
</TABLE>
CERTAIN FACTORS
Offerees should consider carefully the specific information set forth under
"Certain Factors" and the other information set forth in this Prospectus before
determining whether to accept the Exchange Offer.
10
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table sets forth certain consolidated financial data
concerning the Company. The summary financial data for each of the five years
ended December 31, 1996 is derived from the audited consolidated financial
statements of the Company, and related notes thereto, incorporated herein by
reference. The summary financial data as of and for the six months ended June
30, 1997 and 1996 have been derived from the Company's unaudited consolidated
financial statements. The unaudited consolidated financial statements reflect,
in the opinion of management, all adjustments of a normal recurring nature
necessary for a fair presentation of financial condition and results of
operations. The results for the six months ended June 30, 1997 are not
necessarily indicative of the results to be expected for the entire year. The
summary financial data should be read in conjunction with the consolidated
financial statements of the Company, and the related notes thereto, and
Management's Discussion and Analysis of Financial Condition and Results of
Operations incorporated by reference in the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, which report is incorporated herein by
reference.
<TABLE>
<CAPTION>
Six Months
Ended June 30, Year Ended December 31,
-------------- --------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
(unaudited)
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL OPERATING DATA:
Interest income . . . . . . . . . . . . $126,903 $ 109,201 $ 229,426 $ 192,868 $ 143,237 $ 121,146 $115,309
Interest expense. . . . . . . . . . . . 51,089 45,522 95,234 82,891 53,468 47,271 50,870
--------- --------- --------- --------- --------
Net interest income . . . . . . . . . . 75,814 63,679 134,192 109,977 89,769 73,875 64,439
Provision for loan losses . . . . . . . 5,032 2,331 6,757 2,711 1,839 2,149 2,433
-------- -------- --------- --------- --------- --------- --------
Net interest income after
provision for loan losses. . . . . . 70,782 61,348 127,435 107,266 87,930 71,726 62,006
Noninterest income. . . . . . . . . . . 19,968 12,617 27,370 22,488 18,992 18,158 14,640
Noninterest expense . . . . . . . . . . 57,716 46,657 104,288 82,593 70,241 60,854 52,992
-------- -------- --------- --------- --------- --------- --------
Income before income taxes,
extraordinary item and
cumulative effect of
accounting change. . . . . . . . . . 33,034 27,308 50,517 47,161 36,681 29,030 23,654
Provision for income taxes. . . . . . . 11,102 9,439 18,007 17,208 13,952 10,775 8,546
-------- -------- --------- --------- --------- --------- --------
Income before extraordinary
item and cumulative effect
of accounting change . . . . . . . . 21,932 17,869 32,510 29,953 22,729 18,255 15,108
Extraordinary item, net of tax (1). . . (265) -- -- -- -- -- --
Cumulative effect of accounting
change . . . . . . . . . . . . . . . -- -- -- -- -- 359 --
-------- -------- --------- --------- --------- --------- --------
Net income. . . . . . . . . . . . . . . 21,667 17,869 32,510 29,953 22,729 18,614 15,108
Dividends on preferred stock (2). . . . -- 805 1,610 1,610 1,091 -- --
-------- -------- --------- --------- --------- --------- --------
Net income applicable to common
equity . . . . . . . . . . . . . . . $ 21,667 $ 17,064 $ 30,900 $ 28,343 $ 21,638 $ 18,614 $ 15,108
-------- -------- --------- --------- --------- --------- --------
-------- -------- --------- --------- --------- --------- --------
Earnings per common and common
equivalent share:
Primary earnings per share before
extraordinary item and cumulative
effect of accounting change . . . $ 1.20 $ 1.04 $ 1.85 $ 1.82 $ 1.48 $ 1.29 $ 1.07
Extraordinary item, net of tax (1) . (0.02) -- -- -- -- -- --
Cumulative effect of accounting
change. . . . . . . . . . . . . . -- -- -- -- -- 0.03 --
Primary earnings per share . . . . . $ 1.18 $ 1.04 $ 1.85 $ 1.82 $ 1.48 $ 1.32 $ 1.07
Fully diluted earnings per share
before extraordinary item and
cumulative effect of accounting
change. . . . . . . . . . . . . . $ 1.17 $ 1.00 $ 1.79 $ 1.74 $ 1.42 $ 1.27 $ 1.07
Extraordinary item, net of tax (1) . (0.02) -- -- -- -- -- --
Cumulative effect of accounting
change. . . . . . . . . . . . . . -- -- -- -- -- 0.03
Fully diluted earnings per share . . $ 1.15 $ 1.00 $ 1.79 $ 1.74 $ 1.42 $ 1.30 $ 1.07
</TABLE>
11
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended June 30, Year Ended December 31,
-------------- --------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
(unaudited)
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Average common shares outstanding:
Primary. . . . . . . . . . . . . . . 18,343,078 16,451,408 16,699,021 15,543,129 14,580,309 14,098,585 14,080,526
Fully diluted. . . . . . . . . . . . 18,773,723 17,923,147 18,154,966 17,276,050 16,136,433 14,396,532 14,087,606
HISTORICAL OPERATING RATIOS AND OTHER
DATA:
Return on average assets (3). . . . . . 1.41% 1.30% 1.13% 1.24% 1.13% 1.10% 1.04%
Return on average common
shareholders' equity (3). . . . . . . 18.22% 18.27% 15.69% 18.19% 16.77% 16.64% 15.10%
Net interest margin (3) . . . . . . . . 5.53% 5.24% 5.32% 5.06% 4.95% 4.74% 4.85%
Net charge-offs to average loans (3). . 0.21% 0.12% 0.22% 0.17% 0.00% 0.08% 0.33%
Ratio of earnings to fixed charges (4):
Excluding interest on deposits. . . 4.86x 4.96x 4.14x 4.46x 5.23x 7.60x 8.53x
Including interest on deposits. . . 1.65x 1.58x 1.52x 1.55x 1.66x 1.61x 1.46x
HISTORICAL FINANCIAL CONDITION DATA
(END OF PERIOD):
Assets. . . . . . . . . . . . . . . . . $3,164,899 $2,818,818 $3,116,398 $2,769,976 $2,130,619 $1,883,794 $1,576,275
Loans . . . . . . . . . . . . . . . . . 2,175,593 1,851,429 2,064,108 1,767,193 1,330,146 1,037,666 813,550
Investment securities (5) . . . . . . . 711,357 723,213 729,236 717,342 613,239 653,722 579,078
Deposits. . . . . . . . . . . . . . . . 2,470,691 2,322,394 2,537,440 2,359,716 1,794,565 1,627,989 1,374,859
Long-term debt. . . . . . . . . . . . . 78,566 39,086 46,750 81,288 38,092 48,354 18,015
Preferred shareholders' equity (2). . . -- 23,000 22,988 23,000 23,000 -- --
Common shareholders' equity . . . . . . 261,385 190,999 221,583 181,004 134,701 125,071 103,911
Book value per common share . . . . . . 14.00 11.80 12.92 11.25 9.23 8.78 7.64
Tangible book value per
common share. . . . . . . . . . . . . 11.88 9.64 10.63 9.08 8.09 7.93 7.01
HISTORICAL FINANCIAL CONDITION RATIOS
(END OF PERIOD):
Nonperforming assets to total loans
and OREO. . . . . . . . . . . . . . . 0.77% 0.38% 0.70% 0.31% 0.34% 0.62% 1.13%
Allowance for loan losses to
total loans . . . . . . . . . . . . . 1.39% 1.30% 1.27% 1.29% 1.30% 1.38% 1.38%
Allowance for loan losses to
nonperforming loans . . . . . . . . . 203% 479% 201% 608% 537% 296% 224%
REGULATORY CAPITAL RATIOS
(END OF PERIOD):
Tier 1 capital. . . . . . . . . . . . . 11.26% 8.82% 8.88% 8.51% 10.64% 10.16% 10.97%
Total capital . . . . . . . . . . . . . 15.34% 11.19% 11.10% 11.18% 13.46% 13.44% 12.47%
Leverage ratio. . . . . . . . . . . . . 8.89% 6.53% 6.62% 6.10% 7.12% 6.12% 6.40%
NET INCOME AND RATIOS EXCLUDING
GOODWILL AND OTHER INTANGIBLE ASSETS
AMORTIZATION AND BALANCES ("CASH"):
Net income applicable to common
equity. . . . . . . . . . . . . . . . $23,336 $18,365 $ 33,714 $ 30,522 $ 23,194 $ 19,948 $ 15,896
Fully diluted earnings per share. . . . $ 1.24 $ 1.07 $ 1.95 $ 1.86 $ 1.50 $ 1.39 $ 1.13
Return on average assets (3). . . . . . 1.53% 1.41% 1.25% 1.34% 1.22% 1.18% 1.10%
</TABLE>
12
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Return on average common
shareholders' equity (3). . . . . . . 19.62% 19.67% 17.12% 19.58% 17.98% 17.83% 15.89%
</TABLE>
- --------------------------
(1) Represents the loss from early extinguishment of debt, less applicable
income taxes of $159,000.
(2) The Company called its 7% Cumulative Convertible Preferred Stock for
redemption in March 1997. See "Recent Developments -- Other Recent
Developments."
(3) Annualized based on results for the six months ended June 30, 1997 and
1996.
(4) For purposes of computing the ratio of earnings to fixed charges, earnings
represent income before income taxes, extraordinary items and fixed
charges. Fixed charges represent interest expense, including the interest
component of rental expense, and preferred stock dividends. Fixed charges
attributable to the preferred stock dividends are assumed to equal the
amount of pre-tax income that would be necessary to pay such dividends.
(5) Includes available-for-sale securities and held-to-maturity securities.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information
is presented to show the impact on the Company's historical financial position
and results of operations of the acquisition of KeyBank Wyoming in July 1997,
which is being accounted for under the purchase method of accounting. See
"Recent Developments." The unaudited pro forma condensed combined financial
condition data assumes that the acquisition was consummated on the last day of
each period presented, and the unaudited pro forma condensed combined operating
data assumes that the acquisition was consummated at the beginning of each
period presented. The unaudited pro forma condensed combined operating data
also assumes that the following events occurred at the beginning of each period
presented: (i) the $60 million offering of 8 7/8% Cumulative Capital Securities
completed in February 1997, (ii) the redemption on March 31, 1997 of the
Company's 7.75% Subordinated Notes due 2000 in the principal amount of $23
million, and (iii) the conversion during March 1997 of substantially all of the
Company's 7% Cumulative Convertible Preferred Stock. See "Recent Developments
- -- Other Recent Developments." The pro forma information should be read in
conjunction with the historical consolidated financial statements (including the
related notes thereto) of the Company incorporated herein by reference. The pro
forma information is not necessarily indicative of the financial condition of
the Company that would have resulted had the acquisition been consummated on the
last day of each period presented, or of the results of operations that would
have resulted had the acquisition and other assumed events been consummated at
the beginning of the periods for which data is presented, nor is it necessarily
indicative of the results of operations of future periods or future combined
financial position.
<TABLE>
<CAPTION>
Six Months Year Ended
Ended June 30, 1997 December 31, 1996
------------------- -----------------
(Dollars in thousands, except per share data)
(Unaudited)
<S> <C> <C>
PRO FORMA OPERATING DATA:
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $161,598 $306,507
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,114 137,760
-------- --------
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,484 168,747
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,008 9,015
-------- --------
Net interest income after provision for loan losses . . . . . . . . . . . . . 88,476 159,732
Noninterest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,261 38,188
Noninterest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,873 147,354
-------- --------
Income before income taxes, extraordinary item and
cumulative effect of accounting change. . . . . . . . . . . . . . . . . . . . 35,864 50,566
Provision for income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 11,417 16,780
-------- --------
Income before extraordinary item and cumulative effect of
accounting change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,447 33,786
Extraordinary item, net of tax (1). . . . . . . . . . . . . . . . . . . . . . . (265) --
Cumulative effect of accounting change. . . . . . . . . . . . . . . . . . . . . -- --
--------- --------
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,182 33,786
Earnings per common and common equivalent share:
Primary earnings per share before extraordinary item and
cumulative effect of accounting change . . . . . . . . . . . . . . . . . . $ 1.33 $1.86
Extraordinary item, net of tax (1). . . . . . . . . . . . . . . . . . . . . . (0.01) --
Cumulative effect of accounting change. . . . . . . . . . . . . . . . . . . . -- --
Primary earnings per share. . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.32 $1.86
Fully diluted earnings per share before extraordinary
item and cumulative effect of accounting change . . . . . . . . . . . . . . $ 1.30 $1.86
Extraordinary item, net of tax (1). . . . . . . . . . . . . . . . . . . . . . (0.01) --
Cumulative effect of accounting change. . . . . . . . . . . . . . . . . . . . -- --
Fully diluted earnings per share. . . . . . . . . . . . . . . . . . . . . . . $ 1.29 $1.86
Average common shares outstanding:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,343,078 18,141,716
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,773,723 18,154,966
</TABLE>
14
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year Ended
Ended June 30, 1997 December 31, 1996
------------------- -----------------
(Dollars in thousands, except per share data)
(Unaudited)
<S> <C> <C>
PRO FORMA OPERATING RATIOS AND OTHER DATA:
Return on average assets (2) . . . . . . . . . . . . . . . . . . . . . . . . . 1.16% 0.85%
Return on average common shareholders' equity (2). . . . . . . . . . . . . . . 20.33% 15.29%
Net interest margin (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13% 5.04%
Net charge-offs to average loans (2) . . . . . . . . . . . . . . . . . . . . . 0.18% 0.17%
Ratio of earnings to fixed charges (3):
Excluding interest on deposits . . . . . . . . . . . . . . . . . . . . . . . 4.91x 3.47x
Including interest on deposits . . . . . . . . . . . . . . . . . . . . . . . 1.53x 1.37x
PRO FORMA FINANCIAL CONDITION DATA (END OF PERIOD):
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,149,465 $4,182,295
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,613,973 2,561,930
Investment securities (4). . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,186 993,741
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,402,566 3,532,928
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,171 123,750
Common shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . 261,385 245,636
Book value per common share. . . . . . . . . . . . . . . . . . . . . . . . . . 14.00 13.21
Tangible book value per common share . . . . . . . . . . . . . . . . . . . . . 8.57 7.76
PRO FORMA FINANCIAL CONDITION RATIOS (END OF PERIOD):
Nonperforming assets to total loans and OREO (5) . . . . . . . . . . . . . . . 1.05% 0.84%
Allowance for loan losses to total loans . . . . . . . . . . . . . . . . . . . 1.44% 1.33%
Allowance for loan losses to nonperforming loans (5) . . . . . . . . . . . . . 156.63% 187%
REGULATORY CAPITAL RATIOS (END OF PERIOD):
Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.19% 6.71%
Total capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.52% 10.21%
Leverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.25% 4.97%
NET INCOME AND RATIOS EXCLUDING GOODWILL AND OTHER
INTANGIBLE ASSETS AMORTIZATION AND BALANCES ("CASH"):
Net income applicable to common equity . . . . . . . . . . . . . . . . . . . . $ 26,217 $ 39,703
Fully diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . $ 1.40 $ 2.19
Return on average assets (2) . . . . . . . . . . . . . . . . . . . . . . . . . 1.29% 1.03%
Return on average common shareholders' equity (2). . . . . . . . . . . . . . . 22.04% 17.97%
</TABLE>
(1) Represents loss from early extinguishment of debt, less applicable income
taxes of $159,000.
(2) Annualized based on results for the six months ended June 30, 1997.
(3) For purposes of computing the ratio of earnings to fixed charges, earnings
represent income before income taxes, extraordinary items and fixed
charges. Fixed charges represent interest expense, including the interest
component of rental expense, and preferred stock dividends. Fixed charges
attributable to the preferred stock dividends are assumed to equal the
amount of pre-tax income that would be necessary to pay such dividends.
(4) Includes available-for-sale securities and held-to-maturity securities.
(5) Adjusted to reflect nonperforming assets (consisting entirely of
nonperforming loans) of KeyBank Wyoming retained by KeyCorp at closing.
15
- --------------------------------------------------------------------------------
<PAGE>
CERTAIN FACTORS
OFFEREES SHOULD CONSIDER CAREFULLY THE FOLLOWING SPECIFIC INFORMATION, AS
WELL AS OTHER INFORMATION SET FORTH IN THIS PROSPECTUS, BEFORE DETERMINING
WHETHER TO ACCEPT THE EXCHANGE OFFER.
RISKS INVOLVED IN ACQUISITION STRATEGY
The Company's acquisitions will continue to present material risks, as the
Company has grown and intends to continue to grow primarily through acquisitions
of banks and other financial institutions. Such acquisitions involve risks of
adversely changing results of operations, unforeseen liabilities or asset
quality problems of acquired entities and other conditions beyond the control of
the Company, such as adverse personnel relations, loss of customers because of
change of identity, and deterioration in local economic conditions. In
connection with the recent acquisitions of Mountain Parks and KeyBank Wyoming,
such risks are heightened by the fact that KeyBank Wyoming and Mountain Parks
are the largest institutions acquired to date by the Company. The proposed Bank
One acquisition also represents a large acquisition for the Company, and the
Company also has recently entered into two additional merger agreements. See
"Recent Developments."
The recent acquisition of KeyBank Wyoming by the Company will likely have a
significant impact on the financial condition and results of operation of the
Company, including an impact on many performance-related ratios. For example,
the purchase is expected to result in the recognition of approximately $60
million in goodwill, which will increase intangible assets of the Company. As a
result of this increase and the increase in total assets resulting from the
acquisition, the tangible capital of the Company and its principal capital
ratios will decline. In addition, the increase in indebtedness will result in a
decline in the leverage ratio. See "Summary Pro Forma Condensed Combined
Financial Information." Following the acquisition, the Company and its
affiliates expect to be well-capitalized as defined by bank regulators.
Further, the acquisition has introduced the Company's systems and services to
new markets. The Company's financial results will depend on the Company's
ability to successfully integrate the operations of KeyBank Wyoming and the
Company's proposed acquisition targets into the Company's operations, including
decentralizing the business operations of KeyBank Wyoming and successfully
integrating the data processing functions of all of such institutions.
SOURCE OF PAYMENTS TO HOLDERS OF NEW NOTES
As a holding company, with the substantial majority of its assets
represented by its equity interest in its subsidiary banks, the Company's
ability to pay interest on the New Notes depends primarily upon the cash
dividends the Company receives from the subsidiary banks. Dividend payments
from the subsidiary banks are subject to regulatory limitations, generally based
on current and retained earnings, imposed by the various regulatory agencies
with authority over the respective subsidiary banks. Payment of dividends is
also subject to regulatory restrictions if such dividends would impair the
capital of the subsidiary banks. Payment of subsidiary bank dividends is also
subject to the bank's profitability, financial condition and capital
expenditures and other cash flow requirements. No assurance can be given that
the subsidiary banks will be able to pay dividends at past levels, or at all, in
the future. The New Notes mature on June 30, 2004, and there is no sinking fund
established or other provision for earlier retirement. See "Description of the
New Notes."
SUBORDINATION OF NEW NOTES
The payment of principal of and interest on the New Notes is unsecured and
is subordinated in right of payment to all Senior Indebtedness of the Company,
as defined in the Indenture. As a result, in the event of the dissolution,
liquidation or reorganization of the Company or the occurrence and continuance
of an event of default under any Senior Indebtedness, the holders of New Notes
would not receive payment until the holders of Senior Indebtedness were fully
satisfied or such event of default was cured or waived. Senior Indebtedness of
the Company aggregated approximately $79 million as of June 30, 1997. On a pro
forma basis, reflecting the issuance of additional long-term debt incurred
through a line of credit in connection with the acquisition of KeyBank Wyoming,
at June 30, 1997 Senior Indebtedness would have been approximately $109
16
<PAGE>
million. There is no limitation on the Company's ability to create or incur
Senior Indebtedness or indebtedness ranking on a parity with the New Notes.
Further, because the Company is a bank holding company, the right of the Company
to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the New Notes to benefit indirectly from such distribution), is
subject to the prior claims of creditors of that subsidiary, except to the
extent that the Company may itself be recognized as a creditor of that
subsidiary. Accordingly, the New Notes will be effectively subordinated to all
existing and future liabilities of the Company's subsidiaries, including its
banks, and holders of the New Notes should look only to the assets of the
Company for payment on the New Notes. See "Description of the New Notes --
Subordination."
LIMITED TRADING MARKET; LACK OF LIQUIDITY
As with the Old Notes, there can be no assurance as to the liquidity of any
markets that exist or may develop for the New Notes, the ability of holders of
the New Notes to sell their New Notes or the price at which holders would be
able to sell their New Notes. Any trading in the New Notes might be limited and
sporadic, and the New Notes could trade at prices that may be higher or lower
than the initial offering price thereof depending on many factors, including,
among other things, the Company's ability to effect the Exchange Offer,
prevailing interest rates, the Company's operating results and the market for
similar securities. Piper Jaffray Inc. and Keefe, Bruyette and Woods, Inc., the
initial purchasers in the offering of Old Notes (the "Initial Purchasers") have
advised the Company that they currently intend to make a market in the New
Notes; however, the Initial Purchasers are not obligated to do so and any market
making may be discontinued at any time without notice. The Company does not
intend to apply for listing of the New Notes offered hereby on any securities
exchange.
Historically, and particularly in recent periods, the market for
non-investment grade debt has been subject to disruptions that have caused
substantial volatility in the prices of securities similar to the New Notes.
There can be no assurance that the market for the New Notes will not be subject
to similar disruptions.
LIMITED RIGHT OF ACCELERATION OF NOTES
Payment of principal of or interest on the New Notes may be accelerated
only in the case of the bankruptcy, insolvency or reorganization of the Company.
There is no right of acceleration in the case of a default in the payment of
principal or interest on the New Notes or in the performance of any other
covenant of the Company. See "Description of the New Notes -- Acceleration
Events."
17
<PAGE>
RECENT DEVELOPMENTS
PENDING ACQUISITIONS
The Company is in the process of completing the acquisitions described
below.
FIRST NATIONAL SUMMIT BANKSHARES, INC. On August 22, 1997, the Company
executed an Agreement and Plan of Merger, including a First Amendment to the
Agreement and Plan of Merger (the "Summit Merger Agreement"), with First
National Summit Bankshares, Inc., Gunnison, Colorado ("Summit") and Summit
Acquisition Corporation. At June 30, 1997, Summit had offices in five locations
in Colorado and had total assets of approximately $88 million, total deposits of
approximately $77 million and total stockholders' equity of approximately $7
million. Pursuant to the Summit Merger Agreement, holders of Summit common
stock will receive shares of common stock of the Company in exchange for their
shares and holders of Summit preferred stock will receive $100 per share
surrendered plus accrued but unpaid dividends to the effective time of the
merger. On completion of the merger, and subject to adjustments as set forth
in the Summit Merger Agreement, the Company expects to issue approximately
380,000 shares of common stock to the former holders of Summit common stock.
The Company expects to complete the acquisition of Summit, subject to regulatory
approval, during the fourth quarter of 1997. The acquisition is expected to be
accounted for as a pooling of interests.
REPUBLIC NATIONAL BANCORP, INC. On August 28, 1997, the Company executed
an Agreement and Plan of Merger (the "Republic Merger Agreement") with Republic
National Bancorp, Inc., Phoenix, Arizona ("Republic") and Republic Acquisition
Corporation. At June 30, 1997, Republic had one office location in Arizona and
had total assets of approximately $53 million, total deposits of approximately
$48 million and total stockholders' equity of approximately $5 million. On
completion of the merger, and subject to adjustments set forth in the Republic
Merger Agreement, the Company expects to issue approximately 375,000 shares of
common stock to the consenting former holders of Republic common stock. The
Company expects to complete the acquisition of Republic, subject to regulatory
approval, during the fourth quarter of 1997. The acquisition is expected to be
accounted for as a pooling of interests.
BANK ONE. On September 10, 1997, the Company entered into an Office
Purchase and Assumption Agreement (the "Branch Purchase Agreement") with three
subsidiary banks of Banc One Corporation. The Branch Purchase Agreement
generally provides for the conveyance of 37 branch banks (the "Bank One
Branches") located in Arizona (25 locations), Colorado (8 locations) and Utah (4
locations). At June 30, 1997, the Bank One Branches had total assets of $639
million and loans of $70 million. Under the terms of the Branch Purchase
Agreement, the Company will pay a purchase price premium equal to 6% of Bank One
Branches deposits, or approximately $38.3 million. Consummation of the Branch
Purchase Agreement is contingent upon regulatory approval, among other things,
and is anticipated to occur during the fourth quarter of 1997. The Company
intends to purchase the Arizona and Utah branches through its newly-acquired
Republic subsidiary bank, and the Company intends to purchase the Colorado
branches through the Company's Colorado subsidiary bank. For accounting
purposes, the transaction is expected to be accounted for as an acquisition
of assets and assumption of liabilities.
RECENT ACQUISITIONS
In 1997 and 1996, the Company completed the acquisitions described below.
KEYBANK WYOMING. On July 14, 1997, the Company purchased KeyBank
National Association, Cheyenne, Wyoming ("KeyBank Wyoming"), from KeyCorp, its
parent corporation, for a purchase price of $135 million. KeyBank Wyoming has
been renamed "Community First National Bank." As of June 30, 1997, KeyBank
Wyoming had total assets of approximately $1.2 billion and 28 banking offices
located in 24 communities in Wyoming, including Cheyenne, Laramie, Casper,
Sheridan and Jackson. KeyBank Wyoming provides a full range of commercial and
consumer
18
<PAGE>
banking services throughout the state of Wyoming. The transaction was
accounted for as a business combination and resulted in the recognition of
goodwill by the Company of approximately $60 million.
Following the acquisition, the Company believes it is the largest banking
network in Wyoming, with approximately $1.2 billion of assets and $1.0 billion
in deposits, and banking offices serving 24 markets throughout Wyoming. If the
acquisition had been completed on June 30, 1997, the Wyoming operations would
have comprised more than 25% of the Company's assets and deposits on such date.
Because the Company did not have any operations in Wyoming prior to the
acquisition, the Company plans to maintain or increase KeyBank Wyoming's current
staff level of 350 employees in Wyoming. KeyBank Wyoming's operations have been
highly centralized in the KeyCorp organization. The Company will organize
management for the KeyBank Wyoming offices to decentralize the operations to a
large degree in order to implement the Company's policy of granting substantial
autonomy to managers of the Company's Banks, thereby enhancing the ability of
the Banks to make lending decisions and provide products, services and marketing
on a local basis to the extent required within the Company's organization.
MOUNTAIN PARKS FINANCIAL CORP. On December 18, 1996, the Company acquired
Mountain Parks Financial Corp. ("Mountain Parks"), a bank holding company that
operated a state chartered bank with full service commercial banking facilities
in 17 Colorado communities. At September 30, 1996, Mountain Parks had total
assets of approximately $581.8 million and total stockholders' equity of
approximately $57.1 million. Upon completion of the merger, the Company issued
approximately 5.2 million shares of common stock to the former holders of
Mountain Parks common stock. The market value of the Company's common stock
issued in the merger was approximately $142.2 million, based on the closing
price of the Company's common stock on the Nasdaq National Market on December
18, 1996.
The Mountain Parks Banks offer a full range of commercial and consumer
banking services and emphasize serving the needs and catering to the economic
strengths of the communities in which they are located. The Mountain Parks
Banks' primary lending focus is on commercial loans, real estate mortgage loans,
residential real estate construction loans and, to a lesser extent, consumer
loans. The operating strategy of the Mountain Parks Banks is to provide a high
level of personal and professional commercial service and to promote employee
participation in community affairs in order to build long-term relationships
with established businesses and individual customers in its market areas. The
Mountain Parks Banks are located in winter ski and summer recreational areas in
the Colorado mountains (Breckenridge, Fairplay, Frisco, Kremmling and
Silverthorne) and in the greater Denver/Boulder metropolitan area (Aurora,
Boulder, Conifer, Denver, Elizabeth, Englewood, Evergreen, Kiowa, Louisville and
Parker). Pursuant to commitments made with the Federal Reserve to address
resulting concentrations in certain Colorado banking markets, the Company sold
Mountain Parks banking offices in Granby and Grand Lake, Colorado on April 4,
1997, and sold its approximately 25% equity interest in Vail Bancorp, Inc.
As part of the acquisition of Mountain Parks, the Company also acquired (i)
an 85% interest in Equity Lending, Inc., a specialty consumer mortgage company
involved in originating non-conforming residential mortgages in Arizona,
Colorado, Minnesota and Wisconsin, and (ii) Mountain Parks Financial Services,
Inc., a consumer finance company located in Denver, Colorado that focuses on the
purchase, origination and servicing of consumer installment contracts, primarily
sub-prime auto contracts. Mountain Parks Financial Services, Inc. had total
assets of approximately $39 million as of June 30, 1997. On January 3, 1997,
the Company acquired the remaining 15% interest in Equity Lending, Inc. Equity
Lending, Inc. had total assets of approximately $62 million as of June 30, 1997.
FINANCIAL BANCORP, INC. On October 1, 1996, the Company acquired Financial
Bancorp, Inc., Trinidad, Colorado ("Financial Bancorp"), the holding company of
Trinidad National Bank, Trinidad Colorado (the "Trinidad Bank"). At September
30, 1996, Financial Bancorp had total assets of approximately $69.5 million and
total stockholders' equity of approximately $9.6 million. Upon completion of
the merger, the Company issued 538,803 shares of common stock to the former
holders of Financial Bancorp common stock. The market value of the Company's
common stock issued in the merger was approximately $12.7 million, based on the
closing price of the Company's common stock on the Nasdaq National Market on
September 30, 1996. The Trinidad Bank is a community bank located in
southeastern Colorado that serves a wide range
19
<PAGE>
of commercial, agricultural and consumer banking needs within its market. The
Trinidad Bank is primarily engaged in attracting deposits and investing those
funds in loans and investment securities.
OTHER RECENT DEVELOPMENTS
During March 1997, the Company called for redemption its 7% Cumulative
Convertible Preferred Stock ("Preferred Stock"). Holders of the Company's
919,900 depositary shares, which represented ownership of one-quarter share of
the Preferred Stock, were permitted to convert their shares, prior to
redemption, into common stock of the Company. Essentially all shares were
converted to Common Stock, resulting in the issuance of approximately 1.4
million shares of Common Stock.
During March, 1997, the Company redeemed its $23 million in aggregate
principal amount of 7.75% Subordinated Notes (the "7.75% Notes"). The 7.75%
Notes were redeemed at par plus accrued interest, resulting in an extraordinary
loss of $265,000, net of taxes, on the early extinguishment of debt.
On February 5, 1997 the Company issued $60 million of 8-7/8% Cumulative
Capital Securities (the "Capital Securities") through CFB Capital I, a business
trust subsidiary organized in January 1997. A portion of the proceeds were used
to redeem the 7.75% Notes. The remainder of the proceeds of the offering will
be used to pay a portion of the purchase price for KeyBank Wyoming. All $60
million of the Capital Securities qualify as Tier 1 Capital for regulatory
capital purposes.
20
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the issuance of the New
Notes offered hereby. In consideration for the New Notes, as contemplated in
this Prospectus, the Company will receive in exchange a like principal amount of
Old Notes, which were privately placed by the Company on June 24, 1997, the
terms of which are identical in all material respects to the New Notes. The Old
Notes surrendered in exchange for the New Notes will be retired. Accordingly,
the issuance of the New Notes will not result in any substantive change in the
indebtedness of the Issuer. Net proceeds from the sale of the Old Notes were
used to fund a portion of the purchase price for the Company's acquisition of
KeyBank Wyoming.
The New Notes will be treated as Tier 2 capital for regulatory purposes.
Under current regulations, the principal amount of the New Notes qualifying as
Tier 2 capital will decline 20% each year beginning five years from the date of
maturity of the New Notes. As Tier 2 capital, the New Notes will help to
strengthen further the capital structure of the Company.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were sold by the Company on June 24, 1997 (the "Closing
Date") to the Initial Purchasers, with further distribution permitted only to a
limited number of institutional investors. In connection therewith, the Company
entered into the Registration Rights Agreement with the Initial Purchasers (the
"Registration Rights Agreement") as of the Closing Date for the benefit of the
Initial Purchasers and their transferees, which requires, among other things,
that (i) the Company file with the Commission within 90 days of the Closing Date
a registration statement under the Securities Act with respect to an issue of
new notes of the Company identical in all material aspects to the Old Notes,
(ii) the Company use its best efforts to cause such registration statement to
become effective under the Securities Act within 150 days of the Closing Date
and, (iii) upon the effectiveness of that registration statement, the Company
offer to the holders of the Old Notes the opportunity to exchange their Old
Notes for a like principal amount of New Notes, which will be issued without a
restrictive legend and may be reoffered and resold by the holder without
restrictions or limitations under the Securities Act. A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The term "Holder" with respect to
the Exchange Offer means any person in whose name Old Notes are registered on
the books of the Company or any other person who has obtained a properly
completed bond power from a registered Holder. No securities other than the New
Notes are included in the Exchange Offer.
Based on no-action letters issued by the staff of the Commission to third
parties, the Company believes that the New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for resale, resold and otherwise
transferred by any Holder of such New Notes (other than any such Holder which is
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act and certain broker-dealers and their affiliates) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, based on the representations of each person receiving New Notes
to the effect that such New Notes are acquired in the ordinary course of such
Holder's or any other such person's business and such Holder or any other such
person does not intend to engage or participate and has no arrangement or
understanding with any person to engage or participate in the distribution of
such New Notes. Any Holder who tenders in the Exchange Offer with the intention
to participate, or for the purpose of participating, in a distribution of the
New Notes must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction. In
addition, any Holder which is a broker-dealer and which, having made certain
representations in accepting the Exchange Offer, receives New Notes for its own
account in exchange for Old Notes which were acquired by such broker-dealer as a
result of market-making activities or other trading activities may be deemed to
be an "underwriter" with respect to the New Notes and in connection with any
resale of New Notes must acknowledge that it will comply with the prospectus
delivery requirements of the Securities Act (for which purposes this Prospectus
may be used as the required prospectus).
21
<PAGE>
As a result of the filing and effectiveness of the Registration Statement
(within the period specified in the Registration Rights Agreement) of which this
Prospectus is a part, the Company will not be required to pay certain liquidated
damages. Following the consummation of the Exchange Offer, Holders of Old Notes
not tendered will not have any further registration rights, and Old Notes will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity of the market for the Old Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal (together, the "Exchange Offer"), the Holders
may tender some or all of their Old Notes pursuant to the Exchange Offer.
However, Old Notes may be tendered only in integral multiples of $1,000.
The terms of the New Notes are substantially the same as the terms of the
Old Notes except that the New Notes have been registered under the Securities
Act. The New Notes will evidence the same debt as the Old Notes and will be
entitled to the benefits of the Indenture.
As of the date of this Prospectus, $60,000,000 aggregate principal amount
of the Old Notes is outstanding and there are 14 registered Holders. This
Prospectus, together with the Letter of Transmittal, is being sent to all such
registered Holders as of ____________, 1997.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of Delaware or the Indenture in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the rules and regulations of the Commission
thereunder.
The Exchange Offer is not conditioned upon there being tendered any minimum
aggregate principal amount of Old Notes. The Company shall be deemed to have
accepted validly tendered Old Notes when, as and if the Company has given oral
or written notice thereof to the Exchange Agent. The Exchange Agent will act as
agent for the tendering Holders for the purposes of receiving the New Notes from
the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering Holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than transfer taxes in certain circumstances, in connection with the
Exchange Offer.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
______________, 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. The Expiration Date will
be at least 30 business days after the commencement of the Exchange Offer. The
Company expressly reserves the right, at any time or from time to time, to
extend the period of time during which the Exchange Offer is open, and thereby
delay acceptance for exchange of any Old Notes by giving oral notice (confirmed
in writing) or written notice to the Exchange Agent and by giving written notice
of such extension to the Holders thereof or by timely public announcement
communicated, unless otherwise required by applicable
22
<PAGE>
law or regulation, by making a release through the Dow Jones News Service, in
each case, no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration date. During any such extension, all
Old Notes previously tendered will remain subject to the Exchange Offer.
The Company expressly reserves the right, in its sole discretion, (i) to
delay accepting any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "Conditions" shall
not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of the
Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered Holders. If the Exchange Offer is
amended in a manner determined by the Company to constitute a material change,
the Company will promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the registered Holders, and the Company
will extend the Exchange Offer for a period of five to 10 business days,
depending upon the significance of the amendment and the manner of disclosure to
the registered Holders, if the Exchange Offer would otherwise expire during such
five to 10 business day period.
Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, the Company shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from their date of issuance. Holders of
Old Notes that are accepted for exchange will receive, in cash, accrued interest
thereon to, but not including, the date of issuance of the New Notes. Such
interest will be paid on December 31, 1997 with the first interest payment on
the New Notes. Interest on the New Notes accepted for exchange will cease to
accrue upon issuance of the New Notes.
The New Notes bear interest at a rate equal to 7.30% per annum. Interest
on the New Notes is payable semi-annually on each June 30 and December 31,
commencing on the first such date following their date of issuance.
PROCEDURES FOR TENDERING
Only a Holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a Holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old Note
and any other required documents, to the Exchange Agent prior to 5:00 p.m., New
York City time, on the Expiration Date. To be tendered effectively, the Old
Notes, Letter of Transmittal and other required documents must be received by
the Exchange Agent at the address set forth below under "Exchange Agent" prior
to 5:00 p.m., New York City time, on the Expiration Date.
The tender by a Holder will constitute an agreement between such Holder and
the Company in accordance with the terms and subject to the conditions set forth
herein and in the Letter of Transmittal.
THE LETTER OF TRANSMITTAL WILL INCLUDE REPRESENTATIONS TO THE COMPANY THAT,
AMONG OTHER THINGS, (I) THE NEW NOTES RECEIVED PURSUANT TO THE EXCHANGE OFFER
ARE BEING ACQUIRED IN THE ORDINARY COURSE OF BUSINESS OF THE PERSON RECEIVING
SUCH NEW NOTES (WHETHER OR NOT SUCH PERSON IS THE HOLDER), (II) NEITHER THE
HOLDER NOR ANY SUCH OTHER PERSON HAS AN ARRANGEMENT OR UNDERSTANDING WITH ANY
PERSON TO PARTICIPATE IN THE DISTRIBUTION OF SUCH NEW NOTES, (III) NEITHER THE
23
<PAGE>
HOLDER NOR ANY SUCH OTHER PERSON IS AN "AFFILIATE," AS DEFINED IN RULE 405 UNDER
THE SECURITIES ACT, OF THE COMPANY, (IV) THE HOLDER IS NOT ENGAGED IN AND DOES
NOT INTEND TO ENGAGE IN, A DISTRIBUTION OF THE NEW NOTES, AND (V) IF THE
TENDERING HOLDER IS A BROKER OR DEALER (AS DEFINED IN THE EXCHANGE ACT) (X) IT
ACQUIRED THE OLD NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING
ACTIVITIES OR OTHER TRADING ACTIVITIES AND (Y) IT HAS NOT ENTERED INTO ANY
ARRANGEMENT OR UNDERSTANDING WITH THE COMPANY OR ANY "AFFILIATE" OF THE COMPANY
(WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES ACT) TO DISTRIBUTE THE NEW
NOTES TO BE RECEIVED IN THE EXCHANGE OFFER. IN THE CASE OF A BROKER-DEALER THAT
RECEIVED NEW NOTES FOR ITS OWN ACCOUNT IN EXCHANGE FOR OLD NOTES WHICH WERE
ACQUIRED BY IT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES, THE
LETTER OF TRANSMITTAL WILL ALSO INCLUDE AN ACKNOWLEDGMENT THAT THE BROKER-DEALER
WILL DELIVER A COPY OF THIS PROSPECTUS IN CONNECTION WITH THE RESALE BY IT OF
NEW NOTES RECEIVED PURSUANT TO THE EXCHANGE OFFER. SEE "PLAN OF DISTRIBUTION."
The method of delivery of Old Notes and the Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the Holder. Instead of delivery by mail, it is recommended that Holders use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure delivery to the Exchange Agent before the Expiration Date. No
Letter of Transmittal or Old Notes should be sent to the Company. Holders may
request their respective brokers, dealers, commercial banks, trust companies or
nominees to effect the above transactions for such Holders.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering such
owner's Old Notes, either make appropriate arrangements to registered ownership
of the Old Notes in such owner's name or obtain a properly completed bond power
from the registered Holder. The transfer of registered ownership may take
considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by any Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a registered
Holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution (as defined below). In the
event that signatures on a Letter of Transmittal or notice of withdrawal, as the
case may be are required to be guaranteed, such guarantee must be by a financial
institution which is a commercial bank or trust company located or having an
office or correspondence in the United States, or any member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., which firm or financial institution must also be a
member of or participant in the Securities Transfer Agents Medallion Program,
the Stock Exchanges Medallion Program of the New York Stock Exchange Medallion
Signatures Program (any such firm or financial institution, an "Eligible
Institution.")
If the Letter of Transmittal is signed by a person other than the
registered Holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered Holder as such registered Holder's name appears on such Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and, unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
The Exchange Agent has established accounts with respect to the Old Notes
at the book-entry transfer facility, The Depository Trust Company (the
"Book-Entry Transfer Facility"), for the purpose of facilitating the Exchange
Offer. Any
24
<PAGE>
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account with respect to the Old Notes in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery of
Old Notes may be effected through book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility, an appropriate Letter of
Transmittal properly completed and duly executed with any required signature
guarantee and all other required documents must in each case be transmitted to
and received or confirmed by the Exchange Agent at its address set forth below
on or prior to the Expiration Date, or, if the guaranteed delivery procedures
described below are complied with, within the time period provided under such
procedures. Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject
any and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Old Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instruction in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Company shall determine. Although the Company intends to notify Holders of
defects or irregularities with respect to tenders of Old Notes, neither the
Company, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Old Notes will not be deemed to
have been made until such defects or irregularities have been cured or waived.
Any Old Notes received by the Exchange Agent that are not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding subsequent to
the Expiration Date or, as set forth below under "Conditions," to terminate the
Exchange Offer and, to the extent permitted by applicable law, purchase Old
Notes in the open market, in privately negotiated transactions or otherwise.
The terms of any such purchases or offers could differ from the terms of the
Exchange Offer.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or hand
delivery) setting forth the name and address of the Holder, the
certificate number(s) of such Old Notes and the principal amount of
Old Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within five New York Stock Exchange trading days
after the Expiration Date, the Letter of Transmittal (or facsimile
thereof) together with the certificate(s) representing the Old Notes
(or a confirmation of book-entry transfer of such Old Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility), and
any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all
tendered Old Notes (or a confirmation of book-entry transfer of such
Old Notes into
25
<PAGE>
the Exchange Agent's account at the Book-Entry Transfer Facility), in
proper form for transfer, and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within five New York Stock
Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes, or, in the case of Old Notes
transferred by book-entry transfer, the name and number of the account at the
Book-Entry Transfer Facility to be credited), (iii) be signed by the Holder in
the same manner as the original signature on the Letter of Transmittal by which
such Old Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee with respect
to the Old Notes register the transfer of such Old Notes into the name of the
person withdrawing the tender and (iv) specify the name in which any such Old
Notes are to be registered, if different from that of the Depositor. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company, whose determination shall be
final and binding upon all parties. Any Old Notes so withdrawn will be deemed
not to have been validly tendered for purposes of the Exchange Offer and no New
Notes will be issued with respect thereto unless the Old Notes so withdrawn are
validly retendered. Any Old Notes which have been tendered but which are not
accepted for exchange will be returned to the Holder thereof without cost to
such Holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described above under "Procedures
for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange New Notes for, any Old Notes,
and may terminate the Exchange Offer as provided herein before the acceptance of
such Old Notes, if:
(a) Any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or materially
impair the contemplated benefits of the Exchange Offer to the Company, or
any material adverse development has occurred in any existing action or
proceeding with respect to the Company or any of its subsidiaries;
(b) any change, or any development involving a prospective change, in
the business or financial affairs of the Company, or any of its
subsidiaries has occurred which, in the sole judgment of the Company, might
materially impair the ability of the Company to proceed with the Exchange
Offer or materially impair the contemplated benefits of the Exchange Offer
to the Company;
(c) any law, statute, rule or regulation is proposed, adopted or
enacted which, in the sole judgment of the Company, might materially impair
the ability of the Company to proceed with the Exchange Offer or materially
impair the contemplated benefits of the Exchange Offer to the Company; or
26
<PAGE>
(d) any governmental approval has not been obtained, which approval
the Company shall in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may (i) refuse to accept any Old Notes and return
all tendered Old Notes to the tendering Holders, (ii) extend the Exchange Offer
and retain all Old Notes tendered prior to the expiration of the Exchange Offer,
subject, however, to the rights of Holders to withdraw such Old Notes (see
"Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with respect
to the Exchange Offer and accept all properly tendered Old Notes which have not
been withdrawn. If such waiver constitutes a material change to the Exchange
Offer, the Company will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to the registered Holders, and the Company
will extend the Exchange Offer for a period of five to 10 business days,
depending upon the significance of the waiver and the manner of disclosure to
the registered Holders, if the Exchange Offer would otherwise expire during such
five to 10 business day period.
EXCHANGE AGENT
Norwest Bank Minnesota, National Association, St. Paul, Minnesota, has been
appointed as Exchange Agent for the Exchange Offer. Questions and requests for
assistance, requests for additional copies of this Prospectus or of the Letter
of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent addressed as follows:
<TABLE>
<CAPTION>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY OVERNIGHT COURIER:
Norwest Bank Minnesota, National Association Norwest Bank Minnesota, National Association
P. O. Box 738 161 North Concord Exchange
161 North Concord Exchange St. Paul, Minnesota 55075
St. Paul, Minnesota 55075-0738 Attn: Corporate Trust Services
BY FACSIMILE: BY HAND:
(612) 450-2452 Norwest Bank Minnesota, National Association
Attn: Corporate Trust Services 161 North Concord Exchange
St. Paul, Minnesota 55075
Confirm by telephone: Attn: Corporate Trust Services
(800) 468-9716
</TABLE>
SOLICITATION OF TENDERS; FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be $ 50,000. Such
expenses include fees and expenses of the Exchange Agent and Trustee, accounting
and legal fees, and printing costs.
27
<PAGE>
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts are not tendered or
accepted for exchange or are to be delivered to, or are to be issued in the name
of, any person other than the registered Holder of the Old Notes tendered, or if
tendered Old Notes are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
Holder or any other persons) will be payable by the tendering Holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering Holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
as reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized. The
expenses of the Exchange Offer will be amortized over the term of the New Notes.
OTHER
Participation in the Exchange Offer is voluntary. Holders of the Old Notes
are urged to consult their financial and tax advisors in making their own
decisions on what action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Old Notes pursuant to the terms of this Exchange Offer, the
Company will have fulfilled a covenant contained in the terms of the
Registration Rights Agreement. Holders of the Old Notes who do not tender their
certificates in the Exchange Offer will continue to hold such certificates and
will be entitled to all the rights, and limitations applicable thereto, under
the Indenture, except for any such rights under the Registration Rights
Agreement which by their terms terminate or cease to have further effect as a
result of the making of this Exchange Offer. See "Description of the New
Notes." All untendered Old Notes will continue to be subject to the
restrictions on transfer set forth in the Indenture. To the extent that Old
Notes are tendered and accepted in the Exchange Offer, the trading market for
untendered Old Notes could be adversely affected.
The Company may in the future seek to acquire untendered Old Notes in open
market or through privately negotiated transactions, subject to provisions of
its debt agreements, through subsequent offers or otherwise. The Company has no
present plan to acquire any Old Notes which are not tendered in the Exchange
Offer or to file a registration statement to permit resales of any Old Notes
which are not tendered pursuant to the Exchange Offer.
DESCRIPTION OF THE NEW NOTES
GENERAL
The New Notes will be issued by the Company under an indenture (the
"Indenture") between the Company and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"), a copy of the form of which is filed
as an exhibit to the Registration Statement of which this Prospectus is a part.
The Notes are not savings accounts or deposits of the Company Banks and are not
insured by the FDIC, any other governmental agency or otherwise. The following
summary of certain provisions of the Indenture and the New Notes does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Indenture and the New Notes, including the definitions therein
of terms not defined in this Prospectus.
28
<PAGE>
TERMS
The New Notes offered herein will be limited to $60,000,000 in aggregate
principal amount. The New Notes will be issued in registered form only,
without coupons, in denominations of $1,000 and any integral multiple thereof.
Interest on the New Notes will accrue from the date of original issuance and
will be payable semi-annually on the 30th day of June and the 31st day of
December, commencing December 31, 1997, at the rate per annum stated on the
cover page of this Prospectus. Interest will be payable to the person in whose
name the New Note is registered at the close of business on the relevant record
date which will be the 15th day of the month in which the relevant interest
payment date occurs. The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months. Interest shall
be payable to and excluding any Interest Payment Date. The New Notes will
mature on June 30, 2004. The Trustee will authenticate and deliver the New
Notes for original issue in an aggregate principal amount of $60,000,000.
Principal and interest will be payable at an office or agency to be
maintained by the Company in Minneapolis, Minnesota, except that, at the option
of the Company, interest may be paid by check mailed to, or wire transfer to the
account maintained by the person entitled thereto. The New Notes may be
presented for registration of transfer or exchange at an office or agency to be
maintained by the Company. The New Notes will be exchangeable without service
charge, but the Company may require payment to cover taxes or other government
charges. The New Notes will not be secured by the assets of the Company or any
of its Subsidiaries or Affiliates or otherwise and will not have the benefit of
a sinking fund for the retirement of principal. In addition, the rights of the
Company to participate in any distribution of assets of any Subsidiary,
including a Bank, upon its liquidation or reorganization or otherwise (and thus
the ability of the Holders of the New Notes to benefit indirectly from such
distribution) are subject to the prior claims of creditors of that Subsidiary.
Claims on the Company's Subsidiaries by creditors other than the Company may
include substantial obligations with respect to deposit liabilities, federal
funds purchased and securities sold under repurchase agreements and other debt
obligations. There are also limitations on the extent to which the Banks may
pay dividends or make other payments to the Company. See "Certain Factors --
Source of Payments to Holders of New Notes."
The Indenture does not contain provisions that would provide protection to
Holders against a sudden and dramatic decline in credit quality resulting from
takeovers, recapitalizations or similar restructurings.
OPTIONAL REDEMPTION
The New Notes may not be redeemed at the option of the Company until
maturity, at which time the New Notes are required to be redeemed by the
Company.
SINKING FUND
There will be no mandatory sinking fund for the New Notes.
SUBORDINATION
The New Notes are subordinated, in the manner and to the extent hereinafter
described, to the prior payment in full of all "Senior Indebtedness" of the
Company. Senior Indebtedness is defined as the principal of, premium, if any,
and interest on (1) all indebtedness of the Company for money borrowed
(including indebtedness of others guaranteed by the Company) other than the New
Notes, whether outstanding on the date of the Indenture or thereafter created,
assumed or incurred, (2) any amendments, renewals, extensions, modifications and
refundings of any such indebtedness, unless in either case in the instrument
creating or evidencing any such indebtedness or pursuant to which it is
outstanding it is provided that such indebtedness is not superior in right of
payment to the New Notes, and (3) Derivative Obligations (as defined below).
29
<PAGE>
For the purposes of such definition, "indebtedness for money borrowed" is
defined as (a) any obligation of the Company for the repayment of borrowed
money, whether or not evidenced by bonds, debentures, notes or other written
instruments, (b) any deferred payment obligation of the Company for the payment
of the purchase price of property or assets evidenced by a note or similar
instrument, (c) any obligation of the Company for the payment of rent or other
amounts under a lease of property or assets which obligation is required to be
classified and accounted for as a capitalized lease on the balance sheet of the
Company under general accepted accounting principals; provided, however, that
the foregoing shall not include any obligation that constitutes a trade payable
or accrued liability arising in the ordinary course of business.
"Derivative Obligations" are defined as any obligations of the Company to
make payment pursuant to the terms of any securities contracts and foreign
currency exchange contracts, derivative instruments, such as swap agreements
(including interest rate and currency and foreign exchange rate swap
agreements), cap agreements, floor agreements, collar agreements, interest rate
agreements, foreign exchange agreements, options, commodity futures contracts
and commodity options contracts other than obligations on account of
indebtedness for money borrowed ranking pari passu with or subordinate to the
New Notes.
Upon a distribution of assets in a dissolution, winding up, liquidation or
reorganization of the Company, except a distribution in connection with a merger
or consolidation or a conveyance or transfer of all or substantially all of the
properties of the Company that complies with the provisions of the Indenture or
if an event of default has occurred and is continuing with respect to any Senior
Indebtedness, or if an Acceleration Event shall have occurred and the principal
of the New Notes has been declared due and payable and such declaration has not
been rescinded or annulled, then in any such instance all Senior Indebtedness
must be paid in full before the Holders of any of the New Notes can receive any
payment of principal or interest on the New Notes. However, subordination does
not prevent the occurrence of an Acceleration Event or an "Event of Default" (as
defined below) under the Indenture.
By reason of the subordination of the New Notes, in the event of
liquidation of the Company, the Holders of the New Notes will not receive
payment until the holders of Senior Indebtedness have been satisfied. Senior
Indebtedness of the Company aggregated approximately $79 million as of June 30,
1997. On a pro forma basis, reflecting the subsequent issuance of additional
long-term debt incurred through a line of credit in connection with the recent
acquisition of KeyBank Wyoming, at June 30, 1997 Senior Indebtedness would have
been approximately $109 million. There is no limitation in the Indenture on the
Company's creation of Senior Indebtedness or indebtedness ranking in parity with
the New Notes.
RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS
The Indenture provides that the Company cannot declare or pay dividends on,
or purchase, redeem or retire its capital stock, rights, warrants or options to
acquire its capital stock, or make any distribution in respect of its capital
stock, if, after giving effect thereto, an Event of Default (as defined below)
shall have occurred or be continuing, except that the Company may declare and
pay a dividend in capital stock of the Company. Notwithstanding the foregoing,
the Company may make a previously-declared Restricted Payment if the declaration
of such Restricted Payment was permitted under these provisions when made.
LIMITATION ON CONSOLIDATION, MERGER OR EXCHANGE
The Company may not consolidate with, merge with, or transfer all or
substantially all of its assets to another entity unless (i) such other entity
is an entity organized under the laws of the United States or any state or the
District of Columbia and the entity expressly assumes the Company's obligations
under the Indenture and unless, after giving effect thereto, no event shall have
occurred and be continuing which, after notice or lapse of time, would become an
Event of Default, (ii) each insured institution controlled by the surviving
corporation shall be in compliance with applicable minimum capital requirements,
and (iii) certain other conditions are met.
30
<PAGE>
EVENT OF DEFAULT
An Event of Default includes: (a) failure to pay the principal on the New
Notes when due at Maturity, as provided in the Indenture; (b) failure to pay any
interest on the Notes for 10 days after such interest shall have become due and
payable; (c) failure to perform any other covenant or warranty of the Company
set forth in the Indenture for 30 days after receipt of written notice from the
Trustee or Holders of at least 25% in principal amount of the Outstanding Notes
specifying the default and requiring the Company to remedy such default; (d)
default in the payment at stated maturity of indebtedness of the Company or a
Subsidiary for money borrowed having an outstanding principal amount due at
stated maturity greater than $2 million and such default having continued for a
period of 30 days beyond any applicable grace period, provided, however, that
this provision does not apply to any non-recourse indebtedness of the Company or
any Subsidiary; (e) an event of default as defined in any mortgage, indenture or
instrument of the Company or any Subsidiary shall have happened and resulted in
the acceleration of indebtedness which together with the principal amount of any
other such indebtedness so accelerated, aggregates $2 million or more at any
time, and such default shall not have been cured or waived and such acceleration
shall not have been rescinded or annulled, provided, however, that this
provision does not apply to any non-recourse indebtedness of the Company or any
Subsidiary; (f) entry of a final judgment, decree or order against the Company
or any Subsidiary for the payment of money in excess of $1.0 million and such
judgment, decree or other continues unsatisfied for 60 days; and (g) certain
events of bankruptcy, insolvency, or reorganization of the Company. Except as
described under "Acceleration Events" below, there is no right to acceleration
in the case of an Event of Default.
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a "default" (meaning, for this purpose, the events specified above
without grace periods), give the Holders of the Notes notice of all defaults
known to it unless such default shall have been cured or waived; provided, that,
except in the case of a default in the payment of principal or interest on any
of the Notes, the Trustee shall be protected in withholding such notice if and
so long as it in good faith determines that the withholding of such notice is in
the interest of the Holders.
The Company must furnish within 45 days of the end of each quarter to the
Trustee an Officers' Certificate stating whether, to the best of the knowledge
of the signers, the Company is in default under any of the terms, provisions and
conditions provisions of the Indenture, and specifying all such defaults and the
nature thereof, of which they have knowledge and showing compliance with certain
other provisions.
Upon the occurrence of any Event of Default the Company shall, upon demand
of the Trustee, pay to the Trustee, for the benefit of the Holders of the New
Notes, the whole amount of Money then due and payable with respect to such New
Notes, with interest upon the overdue principal and, to the extent that payment
of such interest shall be legally enforceable, upon any overdue installments of
interest at the same rate of interest as is payable with respect to the
principal amount of the New Notes, and, in addition thereto, such Money as shall
be sufficient to cover the costs and expenses of collection. If an Event of
Default with respect to the Notes occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders of the New Notes by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in the Indenture or such
New Notes or in aid of the exercise of any power granted in the Indenture or the
New Notes, or to enforce any other proper remedy.
A Holder will not have any right to institute any proceeding with respect
to the Indenture or for any remedy thereunder, unless (a) such Holder has
previously given to the Trustee written notice of a continuing Event of Default,
(b) the Holders of at least 25% in principal amount of the Outstanding Notes
shall have made written request, and offered satisfactory indemnity, to the
Trustee to institute such proceeding as Trustee, (c) the Trustee shall have
failed to institute such proceeding within 60 days, and (d) the Trustee shall
not have received from the Holders of a majority in aggregate principal amount
of the Outstanding Notes a direction inconsistent with such requests. However,
the Holder of any New Note will have an absolute right to receive payment of the
principal of and interest on such New Note on or after the respective due dates
and to institute suit for the enforcement of any such payment.
31
<PAGE>
ACCELERATION EVENTS
The Indenture defines an "Acceleration Event" as an Event of Default
relating to bankruptcy, insolvency or reorganization of the Company. If an
Acceleration Event shall occur and be continuing, either the Trustee or the
Holders of at least 25% in principal amount of Outstanding Notes may accelerate
the maturity of all such Outstanding Notes. If an Acceleration Event has
occurred and a declaration of acceleration made before a judgment or decree for
payment of money due is obtained, Holders of a majority in principal amount of
the Outstanding Notes may rescind and annul the acceleration of the Notes and
its consequences if all Acceleration Events have been remedied and all payments
due, other than those due as a result of acceleration, have been made.
AMENDMENT, SUPPLEMENT, WAIVER
With certain limited exceptions which permit modification of the Indenture
by the Company and the Trustee only, the Indenture may be modified by the
Company with the consent of Holders of not less than a majority in principal
amount of the Outstanding Notes; provided, however, that no such changes shall
without the consent of the Holder of each New Note affected thereby (a) change
the maturity date of the principal of, or the due date of any installment of
interest on, any New Note, (b) reduce the principal of, or the rate of interest
on, any New Note, (c) change the Place of Payment, currency in which any portion
of the principal of, or interest on, any New Note is payable, (d) impair the
right to institute suit for the enforcement of any such payment, (e) reduce the
above-stated percentage in principal amount of Holders of the Outstanding Notes
necessary to modify, or waive compliance with or default under, the Indenture,
or (f) modify the foregoing requirements or reduce the percentage of Outstanding
Notes necessary to waive any past default, or certain covenants.
The Holders of a majority in aggregate principal amount of Outstanding
Notes may waive compliance by the Company with certain restrictive provisions of
the Indenture.
TRANSFER
The New Notes will be issued in registered form and will be transferable
only upon the surrender of the New Notes being transferred for registration of
transfer. The Company may require payment of a sum sufficient to cover any tax,
assessment or other governmental charge payable in connection with certain
transfers and exchanges.
PAYMENT FOR CONSENT
Neither the Company, any Affiliate of the Company nor any Subsidiary may,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any holder of a New Note for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture or the New Notes unless such consideration is offered to be
paid or agreed to be paid to all holders which so consent, waive or agree to
amend in the time frame set forth in solicitation documents relating to such
consent, waiver or agreement.
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture provides that the Company may terminate its obligations under
the Indenture by irrevocably depositing with the Trustee, in trust for such
purpose, money, Government Obligations or both which, through the payment of
interest and principal in respect thereof in accordance with their terms, will
provide on the due dates of any payment of principal and interest, or a
combination thereof, money in an amount sufficient to discharge the entire
indebtedness of such New Notes and certain other conditions are met.
32
<PAGE>
GOVERNING LAW
The Indenture and the New Notes will be governed by and construed in
accordance with the laws of the State of Minnesota.
THE TRUSTEE
Norwest Bank Minnesota, National Association serves as Trustee under the
Indenture and is also the Note Registrar and Paying Agent. The Indenture
contains certain limitations on the right of the Trustee, should it become a
creditor of the Company, to obtain payment of claims in certain cases or to
realize on certain property received in respect of any such claim as security or
otherwise. The Trustee will generally be permitted to engage in other
transactions with the Company. The Indenture also provides that the Company
will indemnify the Trustee against loss, liability or expense incurred without
negligence or bad faith on the part of the Trustee arising out of or in
connection with the trust under the Indenture. The Trustee is a bank lender to
the Company, and as of June 30, 1997, the Company had no outstanding
indebtedness to the Trustee. The Company subsequently borrowed an additional
$30 million from the Trustee in connection with the acquisition of KeyBank
Wyoming. The Trustee is also the transfer agent, registrar and dividend paying
agent for the common stock of the Company.
CERTAIN DEFINITIONS
The following definitions apply to the covenants described above:
"AFFILIATE" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control", when used with respect to any specified person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"GOVERNMENT OBLIGATIONS" means direct obligations of the United States of
America, or any Person controlled or supervised by and acting as an agency or
instrumentality of such government, in each case where the payment or payments
thereunder are unconditionally guaranteed as a full faith and credit obligation
by such government and which are not callable or redeemable at the option of the
issuer or issuers thereof, and shall also include a depository receipt issued by
a bank or trust company as custodian with respect to any such Government
Obligation or a specific payment of interest on or principal of or other amount
with respect to any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, PROVIDED that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of or other amount with respect to the Government
Obligation evidenced by such depository receipt.
"MONEY", with respect to any payment, deposit or other transfer pursuant to
or contemplated by the terms hereof, means United States dollars or other
equivalent unit of legal tender for payment of public or private debts in the
United States of America.
"OUTSTANDING", when used with respect to any Notes, means, as of the date
of determination, all New Notes authenticated and delivered under the Indenture,
except:
(1) any New Note canceled by the Trustee or the Note Registrar or delivered
to the Trustee or the Note Registrar for cancellation;
33
<PAGE>
(2) any New Note or portion thereof for whose payment at the Maturity
thereof Money in the necessary amount has been deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set
aside and segregated in trust by the Company (if the Company acts as
its own Paying Agent) for the Holders of the New Notes;
(3) any New Note with respect to which the Company has effected defeasance
pursuant to Clauses (1)(b) and (3) of Section 401 of the Indenture; and
(4) any New Note which has been paid pursuant to Section 306 of the
Indenture or in exchange for or in lieu of which other New Notes have
been authenticated and delivered pursuant to the Indenture, unless
there shall have been presented to the Trustee proof satisfactory to it
that such New Note is held by a bona fide purchaser in whose hands such
New Note is a valid obligation of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, New Notes owned
by the Company or any other obligor upon the New Notes or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making any such determination or relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only New Notes which the
Trustee knows to be so owned shall be so disregarded. New Notes so owned which
shall have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee (a) the pledgee's right
so to act with respect to such New Notes and (b) that the pledgee is not the
Company or any other obligor upon the New Notes or any Affiliate of the Company
or such other obligor.
"NOTE REGISTRAR" means the Trustee.
"PLACE OF PAYMENT" means the Office or Agency of the Company in
Minneapolis, Minnesota where New Notes may be presented or surrendered for
payment, where New Notes may be surrendered for registration, transfer or
exchange and where notices and demands to or upon the Company in respect of the
New Notes and the Indenture may be served.
"PAYING AGENT" means any Person authorized by the Company to pay the
principal of or interest on any New Note on behalf of the Company.
"RESTRICTED PAYMENT" means, (i) any dividend, either in cash or property,
on any shares of capital stock declared or paid by the Company (except
dividends or other distributions payable solely in shares of capital stock of
the Company) (ii) the purchase, redemption or retirement of (a) any shares of
capital stock of the Company or (b) any warrants, rights or options to purchase
or acquire any shares of capital stock of the Company, or (iii) any other
payment or distribution, either directly or indirectly through any Subsidiary,
in respect of the capital stock of the Company if, after giving effect thereto,
an Event of Default shall have occurred or be continuing.
"SUBSIDIARY" means any Corporation of which at the time of determination
the Company or one or more Subsidiaries owns or controls directly or indirectly
more than 50% of the shares of Voting Stock.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain United States federal income tax
consequences of the exchange of Old Notes for New Notes. The discussion set
forth below is based upon the Internal Revenue Code of 1986, as amended,
regulations and announcements promulgated thereunder and published rulings and
court decisions, all as in effect on the date hereof and
34
<PAGE>
without giving effect to changes to the federal tax laws, if any, enacted after
the date hereof. Legislative, judicial or administrative changes or
interpretations may be forthcoming that could alter or modify the statements or
conclusions set forth below. This summary does not discuss all the federal
income tax consequences that may be relevant to a particular holder or to
certain holders subject to special treatment under the federal income tax laws.
The exchange of Old Notes for New Notes should not be treated as a sale or
exchange of Old Notes for federal income tax purposes. Consequently,
noteholders who exchange Old Notes for New Notes will not recognize gain or loss
upon receipt of the New Notes. For purposes of computing original issue
discount on the New Notes, the original issue discount, if any, of the Old Notes
will carry over to the New Notes as if the New Notes were issued on the same
issue date and for the same issue price as the Old Notes. A noteholder's tax
basis in and market discount, if any, on the New Notes will be the same as such
noteholder's tax basis in and market discount, if any, on the Old Notes
exchanged therefor. Noteholders will be considered to have held the New Notes
from the time of their original acquisition of the Old Notes.
There will be no federal income tax consequences of the Exchange Offer to
nonexchanging noteholders.
THE FOREGOING SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS
INCLUDED HEREIN FOR GENERAL INFORMATION PURPOSES ONLY. HOLDERS OF OLD NOTES ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE SPECIFIC FEDERAL INCOME
TAX CONSEQUENCES OF ACCEPTING THE EXCHANGE OFFER, AS WELL AS THE EFFECT OF
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
PLAN OF DISTRIBUTION
In case of a broker-dealer which acquired Old Notes for its own account as
a result of market making activities or other trading activities, such
broker-dealer may be deemed an "underwriter" for purposes of the Securities Act
and, if it is able to make the representations set forth in the third paragraph
under "The Exchange Offer -- Procedures for Tendering," may obtain New Notes in
the Exchange Offer and may resell such New Notes without registration under the
Securities Act, provided that such broker-dealer delivers to the purchaser of
such New Notes a copy of a prospectus relating thereto, which may be this
Prospectus as supplemented or amended from time to time.
New Notes received by broker-dealers for their own account pursuant to the
Exchange Offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the New Notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such New Notes. The Letter of Transmittal requires such
broker-dealer to acknowledge that the broker-dealer will deliver such
prospectus, but states that by so acknowledging and by delivering a prospectus,
such broker-dealer will not be deemed to be admitting that it is an
"underwriter" within the meaning of the Securities Act.
The Company has agreed that, for a period of one year after the Expiration
Date of the Exchange Offer, it will make this Prospectus, as amended or
supplemented from time to time, available to any broker-dealer for use in
connection with any such resale. The Company has agreed to pay all expenses
incident to the Exchange Offer other than commissions or concessions of any
brokers or dealers and expenses of counsel for the holders of the New Notes and
will indemnify the Holders of the New Notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers or any other persons. Any broker-dealer that resells or
participates in a distribution of New Notes may be deemed to be an "underwriter"
as defined in Section 2(11) of the Securities Act and subject to restrictions
thereunder as such.
35
<PAGE>
LEGAL MATTERS
Certain legal matters regarding the validity of the New Notes will be
passed upon for the Company by Lindquist & Vennum P.L.L.P., Minneapolis,
Minnesota. Patrick Delaney, a holder of common stock and of options to purchase
common stock and a director of the Company, is a partner in Lindquist & Vennum
P.L.L.P.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference herein have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference, which (i) as to the years 1995 and 1994,
are based in part on the reports of Arthur Andersen LLP, formerly independent
auditors for Mountain Parks, and (ii) as to the year 1994, are based in part
on the reports of Hacker, Nelson & Co., P.C. and Fortner, Bayens, Levkulich
and Co., P.C., formerly independent auditors for Minowa Bancshares, Inc. and
First Community Bankshares, Inc., respectively. As of the date of their
reports and during the periods covered by the financial statements on which
they reported, each of the foregoing accounting firms were independent
certified public accountants with respect to the Company, Mountain Parks,
Minowa Bancshares, Inc. and First Community Bankshares, Inc., as the case may
be, within the meaning of the Securities Act and the applicable published
rules and regulations thereunder. The Company has agreed to indemnify
Hacker, Nelson & Co., P.C., its officers, directors and employees from any
and all damages, fines, legal costs and expenses that may be incurred by the
parties being indemnified in successfully defending their audit to any
person, corporation or governmental entity relying upon the audit, provided
that such indemnification will not apply to any claim, legal expense, or
costs incurred if Hacker, Nelson & Co., P.C. has been found guilty of
professional malpractice with respect to such audit. The consolidated
financial statements referred to above are incorporated herein by reference
in reliance upon such reports given upon the authority of such firms as
experts in accounting and auditing.
The financial statements of KeyBank Wyoming as of and for the year ended
December 31, 1996 appearing in Community First Bankshares, Inc.'s Current Report
on Form 8-K/A dated September 22, 1997 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report included therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance on such report given upon the authority of such
firm as experts in accounting and auditing.
36
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's By Laws require indemnification of directors and officers of
the Company in accordance with, and to the fullest extent permitted by, Delaware
law as it may be amended from time to time. Section 145 of the Delaware General
Corporation Law generally provides that any person who was or is a director or
officer may be indemnified against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with the defense or settlement of any threatened, pending or
completed legal proceedings in which he is involved by reason of the fact that
he is or was a director or officer if he acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if he had
no reasonable cause to believe that his conduct was unlawful. However, if the
legal proceeding is by or in the right of the corporation, the director or
officer may not be indemnified in respect of any claim, issue or matter as to
which he shall have been adjudged to be liable to the corporation unless the
court in which such action was brought deems it proper.
CFB currently has in effect policies of insurance which provide insurance
protection to its directors and officers against some liabilities which may be
incurred by them on account of their services to CFB. CFB has also entered into
indemnification agreements with each of its directors and officers, which
agreements provide for indemnification to the fullest extent permitted by
Delaware law, except that with respect to an action commenced by an indemnitee
against CFB or by the indemnitee as a derivative action by or in the right of
CFB, such indemnitees shall be indemnified at the discretion of the Board of
Directors. Subject to certain limitations, the agreements also provide for
indemnification against any and all expenses (including attorneys fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by the indemnitee in connection with any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (including, without limitation, any derivative action by or in
the right of CFB) to which the indemnitee is, was, or at any time becomes a
party or is threatened to be made a party by reason of the fact that the
indemnitee is or was at any time a director, officer, employee, or agent of CFB
or is or was serving or at any time serves at the request of CFB as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
1.1 Purchase Agreement dated June 19, 1997 between the Registrant and Piper
Jaffray Inc. and Keefe, Bruyette & Woods, Inc.
2.1 Stock Purchase Agreement dated as of February 18, 1997, among the
Registrant, KeyCorp and Key Bank of the Rocky Mountains, Inc. (incorporated
by reference to Exhibit 2.8 to the Registrant's Amendment No. 1 to its
Annual Report on Form 10-K for the fiscal year ended December 31, 1996,
filed with the Securities and Exchange Commission (the "Commission") as of
May 8, 1997.)
2.2 Agreement and Plan of Reorganization dated as of June 25, 1996, between
Registrant and Mountain Parks Financial Corp. (incorporated by reference to
Exhibit 2.1 to the Registrant's Registration Statement on Form S-4 (File
No. 333-14439) as declared effective by the Commission on November 6,
1996).
2.3 Agreement and Plan of Merger dated as of March 8, 1996, between Registrant,
Trinidad Acquisition Corporation and Financial Bancorp., Inc. (incorporated
by reference to Exhibit 2.1 to the Registrant's Registration Statement on
Form S-4 (File No. 333-6239) as declared effective by the Commission on
August 9, 1996).
2.4 Agreement and Plan of Merger dated as of August 22, 1997, including First
Amendment to Agreement and Plan of Merger dated as of the same date, among
the Registrant, Summit Acquisition Corporation and First National Summit
Bankshares, Inc.
II-1
<PAGE>
2.5 Agreement and Plan of Merger dated as of August 28, 1997 among the
Registrant, Republic Acquisition Corporation and Republic National
Bancorp, Inc.
2.6 Office Purchase and Assumption Agreement by and between Bank One,
Arizona, National Association, Bank One, Colorado, National Association,
Bank One, Utah, National Association and the Registrant dated as of
the 10th day of September, 1997.
3.1 Restated Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1996 (the "1996 Form 10-K")).
3.2 Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the
Registrant's Registration Statement on Form S-1 (File No. 33-41246) as
declared effective by the Commission on August 13, 1991 (the "1991 S-1")).
4.1 Indenture dated June 24, 1997 relating to the Registrant's 7.30%
Subordinated Notes Due 2004 (the "New Notes") between the Registrant and
Norwest Bank Minnesota, National Association, as trustee (a specimen of
the New Notes is contained as Exhibit A thereto).
4.2 Registration Rights Agreement dated as of June 24, 1997, by and among the
Registrant, Piper Jaffray Inc. and Keefe, Bruyette & Woods, Inc.
4.3 Certificate of Designations, Preferences and Rights of 7% Cumulative
Convertible Preferred Stock of the Registrant (incorporated by reference
to Exhibit 4.1 to the Registrant's Registration Statement on Form S-3
(File No. 33-77398) as declared effective by the Commission on May 4,
1994 (the "1994 Form S-3")).
4.4 Deposit Agreement dated as of May 4, 1994 by and among the Registrant,
Norwest Bank Minnesota, National Association, as Depositary, and the
Holders from time to time of the Depositary Receipts (incorporated by
reference to Exhibit 4.2 to the 1994 Form S-3).
4.5 Certificate of Designations, Preferences and Rights of Series A Junior
Participating Preferred Stock (incorporated by reference to Exhibit A to
Exhibit 1 to the Registrant's Registration Statement on Form 8-A filed
with the Commission on January 9, 1995 (the "Form 8-A")).
4.6 Form of Rights Agreement dated as of January 5, 1995 by and between the
Registrant and Norwest Bank Minnesota, N.A. (incorporated by reference to
Exhibit 1 to the Form 8-A).
5.1 Opinion and Consent of Lindquist & Vennum P.L.L.P., counsel to the
Registrant.
12.1 Statement of Ratio of Earnings to Fixed Charges of the Registrant.
23.1 Consent of Lindquist & Vennum P.L.L.P. (See Exhibit 5.1 above).
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Hacker, Nelson & Co., P.C.
23.4 Consent of Fortner, Bayens, Levkulich and Co., P.C.
23.5 Consent of Arthur Andersen LLP.
II-2
<PAGE>
24.1 A Power of Attorney is set forth on the signature pages of this
Registration Statement.
99.1 Report of Arthur Andersen LLP regarding financial statements of Mountain
Parks Financial Corp. (incorporated by reference to Exhibit 99.1 to the
Registrant's Registration Statement on Form S-3 (File No. 333-19921),
including Amendment No. 1 to the Registration Statement filed with the
Commission on January 30, 1997, as declared effective by the Commission on
January 31, 1997).
99.2 Form of Letter of Transmittal.
99.3 Form of Notice of Guaranteed Delivery.
(b) Financial Statement Schedules
Not applicable.
ITEM 22. UNDERTAKINGS.
The Registrant hereby undertakes:
1. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
2. (a) To file, during any period in which offers or sales are being
made, a post-effective amendment to the Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
II-3
<PAGE>
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
3. That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
4. To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this Form,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
5. To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.
6. To to deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X are not set
forth in the prospectus, to deliver, or cause to be delivered to each person to
whom the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such interim
financial information.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Fargo, State of North
Dakota, on September 19, 1997.
COMMUNITY FIRST BANKSHARES, INC.
By: /s/ DONALD R. MENGEDOTH
----------------------------------------
Donald R. Mengedoth
President, Chief Executive Officer
and Chairman of the Board
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Donald R. Mengedoth and Mark A. Anderson, and
each of them, his or her true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him or her and in his or her name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting upon said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or either of them, or their or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the 19th day of September, 1997,
by the following persons in the capacities indicated.
SIGNATURE TITLE
/s/ DONALD R. MENGEDOTH President, Chief Executive Officer and
- ---------------------------- Chairman of the Board of Directors and
Donald R. Mengedoth Director (principal executive officer)
/s/ MARK A. ANDERSON Executive Vice President, Chief Financial
- ---------------------------- Officer, Secretary and Treasurer (principal
Mark A. Anderson financial and accounting officer)
/s/ PATRICIA A. ADAM Director
- ----------------------------
Patricia A. Adam
/s/ JAMES T. ANDERSON Director
- ----------------------------
James T. Anderson
II-5
<PAGE>
/s/ PATRICK E. BENEDICT Director
- ----------------------------
Patrick E. Benedict
/s/ PATRICK DELANEY Director
- ----------------------------
Patrick Delaney
/s/ JOHN H. FLITTIE Director
- ----------------------------
John H. Flittie
/s/ DENNIS M. MATHISEN Director
- ----------------------------
Dennis M. Mathisen
/s/ DEAN E. SMITH Director
- ----------------------------
Dean E. Smith
/s/ THOMAS C. WOLD Director
- ----------------------------
Thomas C. Wold
/s/ HARVEY L. WOLLMAN Director
- ----------------------------
Harvey L. Wollman
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
1.1 Purchase Agreement dated June 19, 1997 between the Registrant and Piper Jaffray Inc. and
Keefe, Bruyette & Woods, Inc.
2.4 Agreement and Plan of Merger dated as of August 22, 1997, including First Amendment to
Agreement and Plan of Merger dated as of the same date, among the Registrant, Summit
Acquisition Corporation and First National Summit Bankshares, Inc.
2.5 Agreement and Plan of Merger dated as of August 28, 1997 among the Registrant, Republic
Acquisition Corporation and Republic National Bancorp, Inc.
2.6 Office Purchase and Assumption Agreement by and between Bank One, Arizona, National Association,
Bank One, Colorado, National Association, Bank One, Utah, National Association and the Registrant
dated as of the 10th day of September, 1997.
4.1 Indenture dated June 24, 1997 relating to the Registrant's 7.30% Subordinated Notes Due 2004
(the "New Notes") between the Registrant and Norwest Bank Minnesota, National
Association, as trustee (including a specimen of the New Notes is contained as Exhibit A therein)
4.2 Registration Rights Agreement dated as of June 24, 1997, by and among the Registrant, Piper
Jaffray Inc. And Keefe, Bruyette & Woods, Inc.
5.1 Opinion and Consent of Lindquist & Vennum P.L.L.P.
12.1 Statement of Ratio of Earnings to Fixed Charges of the Registrant
23.2 Consent of Ernst & Young LLP
23.3 Consent of Hacker, Nelson & Co., P.C.
23.4 Consent of Fortner, Bayens, Levkulich and Co., P.C.
23.5 Consent of Arthur Andersen LLP
99.2 Form of Letter of Transmittal
99.3 Form of Guaranteed Notice of Delivery
</TABLE>
<PAGE>
Exhibit 1.1
$60,000,000
COMMUNITY FIRST BANKSHARES, INC.
7.30% SUBORDINATED NOTES DUE 2004
PURCHASE AGREEMENT
June 19, 1997
PIPER JAFFRAY INC.
KEEFE, BRUYETTE & WOODS, INC.
c/o Piper Jaffray Inc.
Piper Jaffray Tower
222 South Ninth Street
Minneapolis, Minnesota 55402
Ladies and Gentlemen:
Community First Bankshares Inc., a Delaware corporation (the "Company")
proposes to sell to Piper Jaffray Inc. and Keefe, Bruyette & Woods, Inc. (the
"Initial Purchasers") its 7.30% Subordinated Notes due 2004 in an aggregate
principal amount of $60,000,000 (the "Securities"). The Securities will be
issued under an indenture, dated as of June 24, 1997 (the "Indenture"), between
the Company and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee"). The net proceeds to the Company from the sale of the Securities
will be used to provide a portion of the financing to fund the acquisition of
KeyBank National Association (Wyoming), ("Key Bank"), pursuant to that certain
Stock Purchase Agreement, dated February 18, 1997 (the "Stock Purchase
Agreement") among Keycorp, Key Bank of the Rocky Mountains, Inc., and the
Company.
The sale of the Securities to the Initial Purchasers will be made without
registration of the Securities under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions from the registration
requirements of the Securities Act. The Company hereby confirms its agreement
with respect to the sale of the Securities to the Initial Purchasers.
<PAGE>
1. OFFERING MEMORANDA.
In connection with the sale of the Securities, the Company has prepared a
preliminary offering memorandum, dated June 11, 1997 (including any and all
exhibits thereto and any information incorporated by reference therein, and
collectively with the "Supplement dated June 17, 1997 to Preliminary Offering
Memorandum Dated June 11, 1997", the "Preliminary Offering Memorandum"), and an
offering memorandum, dated June 19, 1997 (including any and all exhibits thereto
and any information incorporated by reference therein, the "Offering
Memorandum"). Each of the Preliminary Offering Memorandum and the Offering
Memorandum sets forth certain information concerning the Company and the
Securities. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendment
or supplement thereto, in connection with the offer and sale of the Securities
by the Initial Purchasers. Unless stated to the contrary, any references herein
to the terms "amend", "amendment" or "supplement" with respect to the Offering
Memorandum shall be deemed to refer to and include any information filed under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), subsequent
to the Closing Date which is incorporated by reference therein.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company represents and warrants to, and agrees with, the
Initial Purchasers as follows:
(i) As of their respective dates, the Preliminary Offering
Memorandum and the Offering Memorandum (the "Memoranda") did not, and at
the Closing Date the Offering Memorandum will not, contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; except
that the foregoing shall not apply to statements in or omissions from the
Preliminary Offering Memorandum or the Offering Memorandum in reliance
upon, and in conformity with, written information furnished to the Company
by you specifically for use in the preparation thereof.
(ii) Neither the Company nor any of its Affiliates (as that term
is used within the meaning of Rule 501(b) of Regulation D under the
Securities Act ("Regulation D")), nor any person acting on its or their
behalf has, directly or indirectly, made offers or sales of any security,
or solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or will be integrated
with the sale of the Securities in a manner that would require the
registration of the Securities under the Securities Act.
(iii) Neither the Company, nor any of its Subsidiaries, nor any
person acting on its or their behalf has (i) engaged, in connection with
the offering of the Securities, in any form of general solicitation or
general advertising (as those terms are used within the meaning of
Regulation D) or (ii) solicited offers for, or offered or sold, such
Securities by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act.
<PAGE>
(iv) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(v) The consolidated financial statements of the Company,
together with the notes thereto, included in the Memoranda (and any
amendments or supplements thereto) comply in all material respects with the
requirements of the Securities Act and Exchange Act and fairly present the
financial condition of the Company and its consolidated subsidiaries as of
the dates indicated and the results of operations and changes in cash flows
for the periods therein specified in conformity with generally accepted
accounting principles consistently applied throughout the periods involved
(except as otherwise stated in the Memoranda); and the supporting schedules
present fairly the information required to be stated therein; and the other
financial and statistical information and data of the Company and its
consolidated subsidiaries included in the Preliminary Offering Memorandum
or Offering Memorandum, historical and pro forma, are accurately presented
and prepared on a basis consistent with such financial statements and the
books and records of the Company. The independent public accountants whose
reports are included in the Memoranda, are independent public accountants
as required by the Securities Act and Exchange Act and the rules and
regulations ("Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder.
(vi) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Delaware
and is duly registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended (the "BHC Act"), supervised by the Board of
Governors of the Federal Reserve System (the "FRB"). The only subsidiaries
of the Company, other than CFB Capital I (the "Trust"), (each a
"Subsidiary" and collectively the "Subsidiaries") and the percentage of
issued and outstanding shares of stock of each such Subsidiary owned of
record and beneficially by the Company are set forth in Exhibit A attached
hereto. Each Subsidiary has been duly organized and is validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization as the case may be. Each of the Company and its Subsidiaries
has full corporate power and authority to own its properties and conduct
its business as currently being carried on and as described in the
Memoranda, and is duly qualified to do business as a foreign corporation in
good standing under the corporation and financial services laws of each
jurisdiction in which the conduct of its business or ownership or lease of
its properties requires such qualification and where the failure to be so
qualified would, individually or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), earnings, business,
prospects, assets, results of operations or properties of the Company and
its subsidiaries taken as a whole. Other than the foregoing Subsidiaries
and the Trust, the Company owns no capital stock or other equity, ownership
or proprietary interest in any company, partnership, association, trust or
other entity. The accounts of each of the Company's subsidiaries which are
banks are insured by the Bank Insurance Fund of the Federal Deposit
Insurance Corporation (the "FDIC") up to the maximum applicable amount in
accordance with the rules and regulations of the FDIC, and no proceedings
for the termination or revocation of such membership or insurance are
pending, or, to the knowledge of the Company, threatened.
(vii) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Act with full trust
power and authority to own property
<PAGE>
and to conduct its business as described in the Memoranda and is authorized
to do business in each jurisdiction in which such qualification is
required, except where the failure to so qualify would not have a material
adverse effect on the Company's condition (financial or otherwise),
earnings, business, prospects, assets, results of operations or properties
taken as a whole; the Trust has conducted and will conduct no business
other than the transactions contemplated by an Amended and Restated Trust
Agreement, among Wilmington Trust Company, the administrative trustees
named therein and the Company and described in the Memoranda; the Trust is
not a party to or otherwise bound by any agreement other than those
described in the Memoranda; the Trust is and will be classified for United
States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation; and the Trust is and will be treated
as a consolidated subsidiary of the Company pursuant to generally accepted
accounting principles.
(viii) Except as contemplated in the Memoranda, subsequent to the
respective dates as of which information is given in the Memoranda, neither
the Trust, nor the Company nor any of its Subsidiaries has incurred any
material liabilities or obligations, direct or contingent, or entered into
any material transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock (other than
dividends paid in the ordinary course with respect to shares of the
Company's Common Stock or any of its Subsidiaries' Common Stock); and there
has not been any change in the capital stock (other than a change in the
number of outstanding shares of Common Stock due to the issuance of shares
upon the exercise of outstanding options or warrants), or any material
change in the short-term or long-term debt, or any issuance of options,
warrants, convertible securities or other rights to purchase the capital
stock, of the Company or any of its Subsidiaries, or any material adverse
change, or any development involving a prospective material adverse change,
in the general affairs, condition (financial or otherwise), business, key
personnel, property, prospects, net worth or results of operations of the
Trust, the Company and its Subsidiaries, taken as a whole (a "Material
Adverse Change").
(ix) Except as set forth in the Memoranda, there is not pending
or, to the knowledge of the Company, threatened or contemplated, any
action, suit or proceeding to which the Trust, the Company or any of its
Subsidiaries is a party before or by any court or governmental agency,
authority or body, or any arbitrator, which might result in any Material
Adverse Change.
(x) Each of this Agreement, the Indenture and the Registration
Rights Agreement between the Company and the Initial Purchasers (the
"Registration Rights Agreement") has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding
obligation of the Company, enforceable in accordance with its terms, except
as rights to indemnity hereunder and under the Registration Rights
Agreement may be limited by federal or state securities laws and except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally
and subject to general principles of equity. The execution, delivery and
performance of this Agreement, the Indenture and the Registration Rights
Agreement and the consummation of the transactions herein and therein
contemplated will not result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any statute, any
agreement or instrument to which the Company is a party or by which it is
bound or to which any of its property is subject, the Company's charter or
by-laws, or any order, rule, regulation or decree of any court or
governmental agency or body having
<PAGE>
jurisdiction over the Company or any of its properties; no consent,
approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement, the Indenture and the Registration Rights
Agreement or for the consummation of the transactions contemplated hereby
or thereby, including the issuance or sale of the Securities by the
Company; it is not necessary in connection with the offer, sale and
delivery of the Securities or in connection with the initial resale of such
Securities in the manner contemplated by this Agreement and the Offering
Memorandum to register the Securities under the Securities Act; and the
Company has full power and authority to enter into this Agreement, the
Indenture and the Registration Rights Agreement and to authorize, issue and
sell the Securities as contemplated by this Agreement.
(xi) All of the issued and outstanding shares of capital stock of
the Company, including the outstanding shares of Common Stock, are duly
authorized and validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, were not
issued in violation of or subject to any preemptive rights or other rights
to subscribe for or purchase securities, and the holders thereof are not
subject to personal liability by reason of being such holders; and the
capital stock of the Company, including the Common Stock, conforms to the
description thereof in the Memoranda. Except as otherwise stated in the
Memoranda, there are no preemptive rights or other rights to subscribe for
or to purchase, or any restriction upon the voting or transfer of, any
shares of Common Stock pursuant to the Company's charter, by-laws or any
agreement or other instrument to which the Company is a party or by which
the Company is bound. The offering or sale of the Securities as
contemplated by this Agreement does not give rise to any rights for or
relating to the registration of any shares of Common Stock or other
securities of the Company. All of the issued and outstanding shares of
capital stock of each of the Company's Subsidiaries have been duly and
validly authorized and issued and are fully paid and nonassessable, and,
except as otherwise described in the Memoranda and except for any
directors' qualifying shares, the Company owns of record and beneficially,
free and clear of any security interests, claims, liens, proxies, equities
or other encumbrances, all of the issued and outstanding shares of such
stock. Except as described in the Memoranda, there are no options,
warrants, agreements, contracts or other rights in existence to purchase or
acquire from the Company or any subsidiary of the Company any shares of the
capital stock of the Company or any subsidiary of the Company. The Company
has an authorized and outstanding capitalization as set forth in the
Memoranda.
(xii) The Securities to be issued and sold hereunder have been
duly and validly authorized by the Company and the Securities, when they
are authenticated by the Trustee and issued, sold and delivered in
accordance with this Agreement and the Indenture against payment therefor
as provided by this Agreement, will have been duly and validly executed,
authenticated, issued and delivered and will constitute valid and binding
obligations of the Company, enforceable against the Company, in accordance
with their terms and entitled to the benefits provided by the Indenture,
except to the extent that enforcement thereof may be limited by (A)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and (B)
general principles of equity.
(xiii) Except to the extent that the failure to comply, lack of
possession or invalidity would not result in a Material Adverse Change, (i)
the Trust and the Company and each of its Subsidiaries holds, and is
operating in compliance with, all franchises, grants, authorizations,
<PAGE>
licenses, permits, easements, consents, certificates and orders of any
governmental or self-regulatory body required for the conduct of its
business and (ii) all such franchises, grants, authorizations, licenses,
permits, easements, consents, certifications and orders are valid and in
full force and effect; and the Trust, the Company and each of its
Subsidiaries is in compliance in all material respects with all applicable
federal, state, local and foreign laws, regulations, orders and decrees.
(xiv) The Company and its Subsidiaries have good and marketable
title to all property described in the Memoranda as being owned by them, in
each case free and clear of all liens, claims, security interests or other
encumbrances except such as are described in the Memoranda; the property
held under lease by the Company and its Subsidiaries is held by them under
valid, subsisting and enforceable leases with only such exceptions with
respect to any particular lease as do not interfere in any material respect
with the conduct of the business of the Company or its Subsidiaries; the
Company and each of its Subsidiaries owns or possesses all patents, patent
applications, trademarks, service marks, tradenames, trademark
registrations, service mark registrations, copyrights, licenses,
inventions, trade secrets and rights necessary for the conduct of the
business of the Company and its Subsidiaries as currently carried on and as
described in the Memoranda; except as stated in the Memoranda, no name
which the Company or any of its Subsidiaries uses and no other aspect of
the business of the Company or any of its Subsidiaries will involve or give
rise to any infringement of, or license or similar fees for, any patents,
patent applications, trademarks, service marks, tradenames, trademark
registrations, service mark registrations, copyrights, licenses,
inventions, trade secrets or other similar rights of others material to the
business or prospects of the Company and neither the Company nor any of its
Subsidiaries has received any notice alleging any such infringement or fee.
(xv) Neither the Company nor any of its Subsidiaries is in
violation of its respective charter or by-laws; the Trust is not in
violation of the Trust Agreement or its Certificate of Trust; none of the
Company, any of its Subsidiaries or the Trust is in breach of or otherwise
in default in the performance of any material obligation, agreement or
condition contained in any bond, debenture, note, indenture, loan agreement
or any other material contract, lease or other instrument to which it is
subject or by which any of them may be bound, or to which any of the
material property or assets of the Company, any of its Subsidiaries or the
Trust is subject.
(xvi) The Trust, the Company and its Subsidiaries have filed all
federal, state, local and foreign income and franchise tax returns required
to be filed and are not in default in the payment of any taxes which were
payable pursuant to said returns or any assessments with respect thereto,
other than any which the Trust, the Company or any of its Subsidiaries is
contesting in good faith.
(xvii) The Company has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and
sale of the Securities other than the Memoranda or other materials
permitted by the Securities Act to be distributed by the Company.
(xviii) Each of the Trust, the Company and its Subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally
<PAGE>
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xix) Other than as contemplated by this Agreement, the Company
has not incurred any liability for any finder's or broker's fee or agent's
commission in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
(xx) Neither the Company nor any of its affiliates is presently
doing business with the government of Cuba or with any person or affiliate
located in Cuba.
(xxi) Proceeds from the sale of the Securities will constitute
"tier II" capital under applicable regulations, currently in effect, as
promulgated by the FRB.
(xxii) To the best knowledge of the Company, following the Closing
Date (as defined in paragraph 3(a) below), all conditions precedent to the
obligations of the Company, Keycorp and Key Bank of the Rocky Mountains,
Inc. to effect the transactions contemplated in the Stock Purchase
Agreement will have been performed, complied with, or otherwise satisfied
or waived, and no other action will be required in order to consummate the
transactions contemplated by the Stock Purchase Agreement, other than
completion of the Company's bank financing described in the Offering
Memorandum and delivery of customary closing certificates and opinions. If
waived, any condition so waived has been identified to the Underwriters.
(xxiii) The Company and its Subsidiaries, and to the best knowledge
of the Company, Keycorp has complied in all material respects with all
covenants and agreements set forth in the Stock Purchase Agreement. To the
best knowledge of the Company, each of the representations and warranties
in the Stock Purchase Agreement of Keycorp is true and correct in all
material respects.
(a) Any certificate signed by any officer of the Company and
delivered to you or to counsel for the Initial Purchasers shall be deemed a
representation and warranty by the Company to each Initial Purchaser as to the
matters covered thereby.
<PAGE>
1. PURCHASE, SALE AND DELIVERY OF SECURITIES.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell the Securities to the Initial
Purchasers, and each Initial Purchaser agrees, severally and not jointly, to
purchase from the Company the principal amount of the Securities set forth
opposite the name of such Initial Purchaser in Schedule I hereto. The purchase
price for each Security shall be 99.0% of the principal amount thereof. In
making this Agreement, each Initial Purchaser is contracting severally and not
jointly; except as provided in Section 8 hereof, the agreement of each Initial
Purchaser is to purchase only the respective amount of Securities specified in
Schedule I.
The Securities will be delivered by the Company to Piper Jaffray Inc.
for the accounts of each Initial Purchaser against payment of the purchase price
therefor by immediately available funds payable to the order of the Company, at
the offices of Piper Jaffray Inc., Piper Jaffray Tower, 222 South Ninth Street,
Minneapolis, Minnesota, or such other location as may be mutually acceptable, at
9:00 a.m. Central time on the third full business day following the date hereof,
or at such other time and date as you and the Company determine, such time and
date of delivery being herein referred to as the "Closing Date." If the Initial
Purchasers so elect, delivery of the Securities may be made by credit through
full fast transfer to the accounts at The Depository Trust Company designated by
the Initial Purchasers. The Securities, in definitive form and in such
denominations and registered in such names as you may request upon at least two
business days' prior notice to the Company and the Trustee, will be made
available for checking and packaging not later than 10:30 a.m., Central time, on
the business day next preceding the Closing Date at the offices of Piper Jaffray
Inc., Piper Jaffray Tower, 222 South Ninth Street, Minneapolis, Minnesota, or
such other location as may be mutually acceptable.
(a) It is understood that each Initial Purchaser, may (but shall
not be obligated to) make payment to the Company on behalf of the other Initial
Purchaser for the Securities to be purchased by such Initial Purchaser. Any
such payment by you shall not relieve such other Initial Purchaser of any of its
obligations hereunder. Nothing herein contained shall constitute any of the
Initial Purchasers an unincorporated association or partner with the Company.
(a) The Initial Purchasers have advised the Company that the
Initial Purchasers propose to offer the Securities for resale upon the terms and
conditions set forth in this Agreement and in the Offering Memorandum. Each of
the Initial Purchasers hereby represents and warrants to, and agrees with, the
Company that it (i) has and will not solicit offers for, or offer or sell, such
Securities by means of any form of general solicitation or general advertising
(as those terms are used in Regulation D) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act, (ii) will
solicit offers for such Securities pursuant to Rule 144A promulgated by the
Commission under the Securities Act, as such rule may be amended from time to
time ("Rule 144A"), or resales not involving a public offering, as applicable,
only from, and will offer, sell or deliver such Securities, as part of its
disposition thereof, only to, respectively (A) persons in the United States whom
they reasonably believe to be qualified institutional buyers ("Qualified
Institutional Buyers") as defined in Rule 144A and (B) to institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D); provided, however, that each such "accredited investor" must
complete and deliver to such Initial Purchaser an investment letter
substantially in the form of Exhibit B hereto prior to acceptance of any order,
(iii) is a Qualified Institutional Buyer, with such knowledge and experience in
financial and business matters as are necessary in order to evaluate the merits
and risks of
<PAGE>
an investment in the Securities, and (iv) will, during its initial disposition
of the Securities, unless prohibited by applicable law, furnish to each person
to whom it offers any Securities a copy of the Preliminary Offering Memorandum
and will, during its initial disposition of the Securities furnish to each
person to whom it sells any Securities a copy of the Offering Memorandum.
1. COVENANTS.
(a) The Company covenants and agrees with the Initial Purchasers
as follows:
(i) The Company will advise you, promptly after it shall
receive notice or obtain knowledge thereof, of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction,
or of the initiation or threatening of any proceeding for any such purpose.
(i) At any time prior to the completion of the disposition
of the Securities by the Initial Purchasers, the Company will advise you
promptly and, if requested by you, confirm such advice in writing, of the
happening of any event that makes any statement of a material fact made in
the Offering Memorandum (as amended or supplemented from time to time)
untrue or which requires the making of any additions to or changes in the
Offering Memorandum (as amended or supplemented from time to time) in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading. If, during the period specified in the
first sentence of this paragraph, any event shall occur as a result of
which it is necessary, in the reasonable judgment of the Initial
Purchasers, to amend or supplement the Offering Memorandum in order to make
the Offering Memorandum not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, the Company will
forthwith amend or supplement the Offering Memorandum (in form and
substance reasonably satisfactory to the Initial Purchaser) so that, as so
amended or supplemented, the Offering Memorandum will not include an untrue
statement of material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
existing at the time it is delivered to the purchaser, not misleading, and
the Company will furnish to the Initial Purchasers copies of such amendment
or supplement in an amount reasonably requested by the Initial Purchasers.
(i) At any time prior to completion of the disposition of
the Securities by the Initial Purchasers, the Company and each of its
Subsidiaries will, as required, file promptly all documents required to be
filed with the Commission pursuant to Section 13, 14 or 15(d) of the
Exchange Act.
(i) The Company will not solicit any offer to buy or offer
or sell the Securities by means of any form of general solicitation or
general advertising.
(i) Neither the Company nor any affiliate (as defined in
Rule 501(b) of Regulation D) will offer, sell or solicit offers to buy or
otherwise negotiate in respect of any security
<PAGE>
(as defined in the Securities Act) which will be integrated with the sale
of the Securities in a manner that would require the registration of the
Securities under the Securities Act.
(i) During the period from the Closing Date to two years
after the Closing Date, neither the Company, nor its Subsidiaries will, and
will not permit any "affiliate" (as defined in Rule 144 under the
Securities Act) of any of them to, resell any of the Securities that have
been reacquired by them, except for Securities purchased by the Company, or
any of its respective affiliates and resold in a transaction registered
under the Securities Act.
(i) The Company will, so long as the Securities are
outstanding and any Securities are "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act, either (i) timely file
reports and other information with the Commission under Section 13 or 15(d)
of the Exchange Act, or (ii) in the event it is not subject to Section 13
or 15(d) of the Exchange Act, make available to holders of the Securities
and prospective purchasers of the Securities designated by such holders,
upon request of such prospective purchasers, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act to permit
compliance with Rule 144A in connection with resales of the Securities.
(i) Each of the Securities will bear the legend contained
in "Notice to Investors" in the Offering Memorandum, except after such
Securities are resold or exchanged pursuant to a registration statement
effective under the Securities Act.
(i) The Company shall apply the net proceeds of its sale of
the Securities as set forth in the Offering Memorandum.
(i) The Company shall not invest, or otherwise use the
proceeds received from the sale of the Securities in such a manner as would
require the Company or any of the Subsidiaries to register as an investment
company under the 1940 Act or the rules and regulations thereunder.
(i) The Company will use its reasonable best efforts to do
and perform all things required to be done and performed under this
Agreement by it prior to or after the Closing Date and to satisfy all
conditions precedent on its part to the delivery of the Securities.
(i) During the period beginning on the date of this
Agreement and continuing to and including the Closing Date, except as
described in the Offering Memorandum, there will be no transactions entered
into by the Company which are material with respect to the Company and the
Subsidiaries taken as a whole, and during such period there will be no
dividend or distribution of any kind declared, paid or made by the Company
on any class of capital stock or other equity interests except pursuant to
any employee stock option plan, stock ownership plan or dividend
reinvestment plan of the Company described in the Offering Memorandum and
in effect on the date hereof, and issuable upon the conversion of
securities or the exercise of warrants outstanding on the date hereof and
described in the Offering Memorandum.
<PAGE>
(i) The Company will use its best efforts to qualify the
Securities for sale, or secure any necessary exemptions, under the
securities laws of such jurisdictions as you reasonably designate and to
continue such qualifications in effect so long as required for the
distribution of the Securities, except that the Company shall not be
required in connection therewith to qualify as a foreign corporation or to
execute a general consent to service of process in any state.
(i) The Company will furnish to the Initial Purchasers the
Offering Memorandum, and all amendments and supplements to such document,
in each case as soon as available and in such quantities as you may from
time to time reasonably request.
(i) During a period of five years commencing with the date
hereof, the Company will furnish to the Initial Purchasers, copies of all
periodic and special reports furnished to the stockholders of the Company
and all information, documents and reports filed with the Commission, the
National Association of Securities Dealers, Inc., NASDAQ or any securities
exchange.
(i) The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is terminated,
will pay or cause to be paid (A) all expenses (including transfer taxes
allocated to the respective transferees) incurred in connection with the
delivery to the Initial Purchasers of the Securities, (B) all expenses and
fees (including, without limitation, fees and expenses of the Company's
accountants and counsel and the fees and expenses of the Initial
Purchasers' counsel) in connection with the preparation, printing,
distribution, delivery, and shipping of each Memoranda (including financial
statements and exhibits) and any amendment thereof or supplement thereto,
and the printing, delivery, and shipping of this Agreement, the Indenture,
the Registration Rights Agreement and other documents, including Blue Sky
Memoranda, printed, distributed and delivered in connection with the
offering and sale of the Securities, (C) all filing fees and fees and
disbursements of the Initial Purchasers' counsel incurred in connection
with the qualification of the Securities for offering and sale by the
Initial Purchasers or by dealers under the securities or blue sky laws of
the states and other jurisdictions which you shall designate, (D) the fees
and expenses of any transfer agent or registrar, (E) the fees relating to
the rating of the Securities by one or more rating agencies, (F) the fees
and expenses of the Trustee and any of its agents and the fees and
disbursements of counsel for the Trustee in connection with the Indenture
and the Securities and (G) the performance by the Company of its other
obligations under this Agreement, including (without limitation) the cost
of printing and engraving the certificates representing the Securities and
all expenses and taxes incident to the sale and delivery of the Securities
to you and (H) all other costs and expenses incident to the performance of
its obligations hereunder that are not otherwise specifically provided for
herein. If the sale of the Securities provided for herein is not
consummated by reason of action by the Company pursuant to Section 9(a)
hereof which prevents this Agreement from becoming effective, or by reason
of any failure, refusal or inability on the part of the Company to perform
any agreement on its part to be performed, or because any other condition
of the Initial Purchasers' obligations hereunder required to be fulfilled
by the Company is not fulfilled, the Company will reimburse the Initial
Purchasers for all out-of-pocket disbursements (including fees and
disbursements of counsel) incurred by the Initial Purchasers in connection
with their investigation, preparing to market and marketing the Securities
or in contemplation of
<PAGE>
performing their obligations hereunder. The Company shall not in any event
be liable to any of the Initial Purchasers for loss of anticipated profits
from the transactions covered by this Agreement.
(i) The Company will not amend or supplement the Memoranda,
other than by filing documents under the Exchange Act which are
incorporated by reference therein, without the prior written consent of the
Initial Purchasers; provided, however, that, prior to the completion of the
disposition of the Securities by the Initial Purchasers (as determined by
the Initial Purchasers), the Company will not file any document under the
Exchange Act which is incorporated by reference in the Offering Memorandum
unless, prior to such proposed filing, the Company has furnished the
Initial Purchasers with a copy of such document for their review and the
Initial Purchasers have not reasonably objected to the filing of such
document. The Company will promptly advise the Initial Purchasers when any
document filed under the Exchange Act which is incorporated by reference in
the Offering Memorandum shall have been filed with the Commission.
(i) The Company will cooperate with the Initial Purchasers
and use its best efforts to permit the Securities to be eligible for
clearance and settlement through The Depository Trust Company.
(i) In connection with any disposition of Securities
pursuant to a transaction made in compliance with applicable State
securities laws and (i) satisfying the requirements of Rule 144(k) under
the Securities Act, (ii) satisfying the requirements of Rule 904 of
Regulation S, (iii) made pursuant to an effective registration statement
under the Securities Act or (iv) disposed of in any other transaction that
does not require registration under the Securities Act (and the Company has
received an opinion of counsel or other documentation satisfactory to it to
such effect), the Company will reissue certificates evidencing such
Securities without the legend set forth under the heading "Notice to
Investors" in the Offering Memorandum (provided, in the case of a
transaction specified in clause (iv) above, that the legal opinion referred
to therein so permits).
1. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations of
the Initial Purchasers hereunder are subject to the accuracy, as of the date
hereof and at the Closing Date (as if made at such Closing Date), of and
compliance with all representations, warranties and agreements of the Company
contained herein, to the performance by the Company of its respective
obligations hereunder and to the following additional conditions:
No Initial Purchaser shall have advised the Company that the Memoranda
or any amendment thereof or supplement thereto contains an untrue statement of
fact which, in your opinion, is material, or omits to state a fact which, in
your opinion, is material and is required to be stated therein or necessary to
make the statements therein not misleading.
(a) Except as contemplated in the Offering Memorandum,
subsequent to the respective dates as of which information is given in the
Offering Memorandum, neither the Company nor any of its Subsidiaries shall have
incurred any material liabilities or obligations, direct or contingent, or
entered into any material transactions, or declared or paid any dividends or
made any distribution of any kind with
<PAGE>
respect to its capital stock; and there shall not have been any change in the
capital stock (other than a change in the number of outstanding shares of Common
Stock due to the issuance of shares upon the exercise of outstanding options or
warrants), or any material change in the short-term or long-term debt of the
Company, or any issuance of options, warrants, convertible securities or other
rights to purchase the capital stock of the Company or any of its Subsidiaries,
or any Material Adverse Change, that, in your judgment, makes it impractical or
inadvisable to offer or deliver the Securities on the terms and in the manner
contemplated in the Offering Memorandum.
On the Closing Date, there shall have been furnished to the
Initial Purchasers, the opinion of Lindquist & Vennum P.L.L.P., counsel for the
Company, dated the Closing Date and addressed to you, to the effect that:
(i) Each of the Company and its Subsidiaries has been duly
organized and is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and is duly registered as a bank holding
company under the BHC Act. The deposit accounts of each of the Company's
Subsidiaries that is a bank are insured by the FDIC, and, to the knowledge
of such counsel, no proceedings for the termination or revocation of such
membership or insurance are pending or threatened. Each of the Company and
its Subsidiaries has full corporate power and authority to own its
properties and conduct its business as currently being carried on and as
described in the Offering Memorandum, and is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in
which its ownership or lease of real property or the conduct of its
business makes such qualification necessary and in which the failure to so
qualify would result in a Material Adverse Change. To the best of such
counsel's knowledge, neither the Company nor any of its Subsidiaries is in
violation of its respective charter or bylaws
(i) The statements in the Offering Memorandum under the
captions "Recent Developments", "Description of Notes", "Exchange Offer;
Registration Rights", and Notice to Investors" insofar as such statements
constitute matters of law applicable to the Company or summaries of
documents, fairly present the information required to be included therein
in all material respects. All of the issued and outstanding shares of the
capital stock of the Company have been duly authorized and validly issued
and are fully paid and nonassessable, and the holders thereof are not
subject to personal liability by reason of being such holders. Except as
otherwise stated in the Offering Memorandum, there are no preemptive rights
or options, warrants, agreements, contracts or other rights in existence to
purchase or acquire from the Company any shares of the capital stock of the
Company pursuant to the Company's charter, bylaws or any agreement or other
instrument known to such counsel to which the Company is a party or by
which the Company is bound. To the best of such counsel's knowledge,
neither the offering or sale of the Securities as contemplated by this
Agreement gives rise to any rights for or relating to the registration of
any shares of Common Stock or other securities of the Company.
(i) All of the issued and outstanding shares of capital
stock of each of the Company's Subsidiaries have been duly and validly
authorized and issued and are fully paid and nonassessable, and, to the
best of such counsel's knowledge, except as otherwise described in the
<PAGE>
Offering Memorandum and except for directors' qualifying shares, the
Company owns of record and beneficially, free and clear of any security
interests, claims, liens, proxies, equities or other encumbrances in the
case of the Subsidiaries set forth on Exhibit A attached hereto, that
percentage of shares of the issued and outstanding shares of such
Subsidiaries' stock as is set forth on such Exhibit A. To the best of such
counsel's knowledge, except as described in the Offering Memorandum, there
are no options, warrants, agreements, contracts or other rights in
existence to purchase or acquire from the Company or any of its
Subsidiaries any shares of the capital stock of any Subsidiary of the
Company.
(i) The Securities are in the form contemplated by the
Indenture, have been duly authorized, executed and delivered by the Company
and, when authenticated by the Trustee in the manner provided for in the
Indenture and delivered against payment therefor, will constitute valid and
binding obligations of the Company, entitled to the benefits of the
Indenture, and enforceable against the Company in accordance with their
terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights
of creditors generally and subject to general principles of equity.
(i) The Securities are subordinate and junior in right of
payment to all "Senior Indebtedness" (as defined in the Indenture) of the
Company.
(i) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the 1940 Act.
(i) To the best of such counsel's knowledge, no stop order
suspending the qualification of the Securities for offering or sale in any
jurisdiction has been instituted or threatened by the Commission.
(i) To such counsel's knowledge, there are no legal or
governmental proceedings or rulings, pending or threatened, to which the
Company is a party or to which any of its respective property is subject
which, if determined adversely, would reasonably be expected to result in a
Material Adverse Change or adversely affect the performance by the Company
of its obligations pursuant to this Agreement.
(i) The reports of the Company incorporated by reference in
the Offering Memorandum, or any further amendment or supplement thereto,
made by the Company (other than the financial statements, other financial
data and related schedules therein, as to which such counsel need express
no opinion), when they were filed with the Commission, complied as to form
in all material respects with the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder.
(i) The Company has full corporate power and authority to
enter into this Agreement, the Indenture, and the Registration Rights
Agreement and to issue the Securities and to effect the transactions
contemplated by this Agreement, the Indenture and the Registration Rights
Agreement and each of this Agreement, the Indenture and the Registration
Rights Agreement is duly
<PAGE>
authorized, executed and delivered by the Company and constitutes a valid,
legal and binding obligation of the Company enforceable in accordance with
its terms (except as rights to indemnity hereunder and under the
Registration Rights Agreement may be limited by federal or state securities
laws and except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity). The
execution, delivery and performance of this Agreement, the Indenture, the
Registration Rights Agreement and the issuance, offer and sale of
Securities and the consummation of the transactions herein or therein
contemplated will not result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any statute, rule or
regulation, any agreement or instrument known to such counsel to which the
Company is a party or by which it is bound or to which any of its property
is subject, the Company's charter or bylaws, or any other order or decree
known to such counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its respective properties, except
for any breach, violation or default which would not result in a Material
Adverse Change; and no consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required for the
execution, delivery and performance of this Agreement, the Indenture, the
Registration Rights Agreement or for the consummation of the transactions
contemplated hereby or thereby, including the issuance or sale of the
Securities, except (a) under the Securities Act, state securities or blue
sky laws, (b) the regulations of the NASD with respect to the Registration
Rights Agreement, and (c) the qualification of the Indenture under the
Trust Indenture Act of 1939, as amended, and the regulations thereunder.
(i) Assuming (A) the accuracy of, and compliance with, the
representations, warranties and covenants of the Company in this Agreement,
(B) the accuracy of, and compliance with, the representations, warranties
and covenants of the Initial Purchasers in Section 3 of this Agreement, (C)
the accuracy of the representations and warranties of each of the
purchasers to whom the Initial Purchasers initially resell the Securities
as specified in Section 3 of this Agreement, (D) the compliance by the
Initial Purchasers with the offering and transfer procedures and
restrictions described in the Offering Memorandum and (E) receipt by the
purchasers to whom the Initial Purchaser initially resells the Securities
of a copy of the Offering Memorandum prior to such sale, and (F) the
execution by each institutional accredited investor purchasing securities
from the Initial Purchasers of the investment letter described in Section
3(c), it is not necessary in connection with the offer, sale and delivery
of the Securities or in connection with the initial resale of such
Securities in the manner contemplated by this Agreement and the Offering
Memorandum to register the Securities under the Securities Act, it being
understood that no opinion is expressed as to any subsequent resale of any
Securities.
(i) The Offering Memorandum and any amendment thereof or
supplement thereto, comply as to form in all material respects with the
applicable requirements of the Securities Act and the Rules and
Regulations; and on the basis of conferences with officers of the Company,
examination of documents referred to in the Offering Memorandum and such
other procedures as such counsel deemed appropriate, nothing has come to
the attention of such counsel that causes such counsel to believe that the
Offering Memorandum (as of the date thereof and as of the Closing Date) as
amended or supplemented, includes any untrue statement of material fact or
omits to state a material fact necessary to make the statements therein, in
light of the circumstances
<PAGE>
under which they were made, not misleading; it being understood that such
counsel need express no opinion as to the financial statements or other
financial data included in the Offering Memorandum.
(i) The Company has full corporate power and authority to
enter into the Stock Purchase Agreement and to perform all of its
obligations under the Stock Purchase Agreement, and the Stock Purchase
Agreement has been duly authorized, executed and delivered by the Company
and constitutes a valid, legal and binding obligation of the Company
enforceable against the Company in accordance with its terms (except as
such enforceability may be limited by supervisory powers of bank regulatory
agencies and by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally and subject to general
principles of equity); the execution, delivery and performance of the Stock
Purchase Agreement and the consummation of the transactions therein
contemplated will not result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any statute, rule or
regulation, any agreement or instrument known to such counsel to which the
Company is a party or by which either is bound or to which any of their
property is subject, the Company's charter or bylaws, or any order or
decree known to such counsel of any court or governmental agency or body
having jurisdiction over the Company or any of its respective properties,
the result of which individually or in the aggregate would prevent the
Company from performing its obligations under the Stock Purchase Agreement;
and no consent, approval, authorization or order of, or filing with, any
court or governmental agency or body is required for the execution,
delivery and performance of the Stock Purchase Agreement or for the
consummation of the transactions contemplated thereby, except such
regulatory approvals contemplated by the Stock Purchase Agreement, each of
which has been obtained.
(xiv) To the best of such counsel's knowledge, there is no
pending or threatened action or proceeding to which the Company is a party
or to which any property of the Company or any Subsidiary is subject, which
action or proceeding arises out of or relates to the Stock Purchase
Agreement.
(xv) Such other matters as you may reasonably request.
In rendering such opinion such counsel may rely (i) as to matters of law
other than Delaware, Minnesota and federal law, upon the opinion or opinions of
local counsel provided that the extent of such reliance is specified in such
opinion and that such counsel shall state that such opinion or opinions of local
counsel are satisfactory to them and that they believe they and you are
justified in relying thereon and (ii) as to matters of fact, to the extent such
counsel deems reasonable upon certificates of officers of the Company and its
subsidiaries provided that the extent of such reliance is specified in such
opinion.
(a) On the Closing Date, there shall have been furnished to you,
such opinion or opinions from Faegre & Benson LLP, counsel for the Initial
Purchasers, dated the Closing Date and addressed to you, with respect to the
formation of the Company, the validity of the Securities, the Memoranda and
other related matters as you reasonably may request, and such counsel shall have
received such papers and information as they request to enable them to pass upon
such matters.
(a) On the Closing Date you shall have received a letter from
Ernst & Young LLP, dated the Closing Date and addressed to the Initial
Purchasers, confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the applicable
requirements
<PAGE>
relating to the qualifications of accountants under Rule 2-01 of Regulation S-X
of the Commission, and stating, as of the date of such letter (or, with respect
to matters involving changes or developments since the respective dates as of
which specified financial information is given, or incorporated by reference, in
the Offering Memorandum, as of a date not more than five days prior to the date
of such letter), the conclusions and findings of said firm with respect to the
financial information and other matters covered by its letter delivered to the
Initial Purchasers concurrently with the execution of this Agreement, and the
effect of the letter so to be delivered on the Closing Date shall be to confirm
the conclusions and findings set forth in such prior letter.
(a) The Securities, the Indenture and the Registration Rights
Agreement shall have been executed and delivered by the Company.
(a) Prior to the Closing Date there shall not have been any
decrease in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Securities Act) or any notice given of any intended or
potential decrease in any such rating or of a possible change in any such rating
that does not indicate the direction of the possible change.
(a) On the Closing Date, there shall have been furnished to the
Initial Purchasers, a certificate, dated such Closing Date and addressed to you,
signed by the chief executive officer and by the chief financial officer of the
Company, to the effect that:
(i) The representations and warranties of the Company in
this Agreement are true and correct, in all material respects, as if made
at and as of such Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to such Closing Date;
(i) No stop order or other order suspending the
qualification of the Securities for offering or sale has been issued, and
no proceeding for that purpose has been instituted or, to the best of their
knowledge, is contemplated by the Commission or any state or regulatory
body; and
(i) The signers of said certificate have carefully examined
the Memoranda, and any amendments thereof or supplements thereto, and (A)
such documents contain all statements and information required to be
included therein and do not include any untrue statement of material fact
or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
(B) since the date of the Offering Memorandum, there has occurred no event
required to be set forth in an amended or supplemented offering memorandum
which has not been so set forth, (C) subsequent to the date as of which
information is given in the Offering Memorandum, neither the Trust, the
Company nor any of its Subsidiaries has incurred any material liabilities
or obligations, direct or contingent, or entered into any material
transactions, not in the ordinary course of business, or declared or paid
any dividends or made any distribution of any kind with respect to its
capital stock, and except as disclosed in the Offering Memorandum, there
has not been any change in the capital stock (other than a change in the
number of outstanding shares of Common Stock due to the issuance of shares
upon the exercise of outstanding options or
<PAGE>
warrants), or any material change in the short-term or long-term debt, or
any issuance of options, warrants, convertible securities or other rights
to purchase the capital stock, of the Company, or any of its subsidiaries,
or any Material Adverse Change, and (D) except as stated in the Offering
Memorandum, there is not pending, or, to the knowledge of the Company,
threatened or contemplated, any action, suit or proceeding to which the
Trust, the Company or any of its Subsidiaries is a party before or by any
court or governmental agency, authority or body, or any arbitrator, which
might result in any Material Adverse Change.
(a) The Company shall have furnished to you and counsel for the
Initial Purchasers such additional documents, certificates and evidence as you
or they may have reasonably requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and counsel for the Initial Purchasers. The Company will
furnish you with such conformed copies of such opinions, certificates, letters
and other documents as you shall reasonably request.
1. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Initial Purchaser against any losses, claims, damages or liabilities, joint or
several, to which such Initial Purchaser may become subject, under the
Securities Act or otherwise (including in settlement of any litigation if such
settlement is effected with the written consent of the Company), insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any of the Memoranda, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Initial Purchaser
for any legal or other expenses reasonably incurred by it in connection with
investigating or defending against such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability or action arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in any of the Memoranda, or any amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by you specifically for use in the preparation thereof.
In addition to their other obligations under this Section 6(a), the
Company agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
this Section 6(a), it will reimburse each Initial Purchaser on a monthly basis
for all reasonable legal fees or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse the
Initial Purchasers for such expenses and the possibility that such payments
might later be held to have been improper by a court of competent jurisdiction.
To the extent that any such interim reimbursement payment is so held to have
been improper, the Initial Purchaser that received such payment shall promptly
return it to the party or
<PAGE>
parties that made such payment, together with interest, compounded daily,
determined on the basis of the prime rate (or other commercial lending rate for
borrowers of the highest credit standing) announced from time to time by Norwest
Bank Minnesota, N.A. (the "Prime Rate"). Any such interim reimbursement
payments which are not made to an Initial Purchaser within 30 days of a request
for reimbursement shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement shall be in addition to any liabilities which
the Company may otherwise have.
(a) Each Initial Purchaser will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the Company
may become subject, under the Securities Act or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Initial Purchaser), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Memoranda, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any of
the Memoranda, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by you an Initial
Purchaser, specifically for use in the preparation thereof, and will reimburse
the Company for any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending against any such loss, claim,
damage, liability or action.
(a) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
that it may have to any indemnified party. In case any such action shall be
brought against any indemnified party, and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of the indemnifying party's
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that if, in the sole judgment of the Initial Purchasers, it is advisable for the
Initial Purchasers to be represented as a group by separate counsel, the Initial
Purchaser shall have the right to employ a single counsel to represent the
Initial Purchasers who may be subject to liability arising from any claim in
respect of which indemnity may be sought by the Initial Purchasers under
subsection (a) of this Section 6, in which event the reasonable fees and
expenses of such separate counsel shall be borne by the indemnifying party or
parties and reimbursed to the Initial Purchasers as incurred (in accordance with
the provisions of the second paragraph in subsection (a) above). An
indemnifying party shall not be obligated under any settlement agreement
relating to any action under this Section 6 to which it has not agreed in
writing.
<PAGE>
(a) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above, (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Initial Purchasers on the other from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Initial
Purchasers on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Initial Purchasers on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total discounts and
commissions received by the Initial Purchasers, in each case as set forth in the
table on the cover page of the Offering Memorandum. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Initial
Purchasers and the parties' relevant intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
Company and the Initial Purchasers agree that it would not be just and equitable
if contributions pursuant to this subsection (d) were to be determined by pro
rata allocation (even if the Initial Purchasers were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the first sentence of this
subsection (d). The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
against any action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities purchased by it and resold to subsequent
purchasers as described in the Offering Memorandum exceeds the amount of any
damages that such Initial Purchaser has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations in this subsection (d) to contribute are several in
proportion to their respective purchase obligations hereunder and not joint.
(a) The obligations of the Company under this Section 6 shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Initial Purchaser within the meaning of the Securities Act; and the
obligations of the Initial Purchasers under this Section 6 shall be in addition
to any liability that the respective Initial Purchasers may otherwise have and
shall extend, upon the same terms and conditions, to each director of the
Company (including any person who, with his consent, is named in the Offering
Memorandum as about to become a director of the Company), to the chief executive
officer and chief financial officer of the Company and to each person, if any,
who controls the Company within the meaning of the Securities Act.
<PAGE>
1. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the several
Initial Purchasers and the Company contained in Section 6 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Initial Purchaser or any controlling person thereof, or the
Company or any of its officers, directors, or controlling persons, and shall
survive delivery of, and payment for, the Securities to and by the Initial
Purchasers hereunder.
1. SUBSTITUTION OF INITIAL PURCHASERS.
(a) If any Initial Purchaser shall fail to take up and
pay for the amount of Securities agreed by such Initial Purchaser to be
purchased hereunder, upon tender of such Securities in accordance with the
terms hereof, and the aggregate principal amount of Securities not purchased
does not aggregate more than 10% of the aggregate principal amount of
Securities, the remaining Initial Purchaser shall be obligated to take up and
pay for the Securities that the withdrawing or defaulting Initial Purchaser
agreed but failed to purchase.
(a) If any Initial Purchaser shall fail to take up and pay
for the principal amount of Securities agreed by such Initial Purchaser to be
purchased hereunder, upon tender of such Securities in accordance with the terms
hereof, and the principal amount of Securities not purchased aggregates more
than 10% of the aggregate principal amount of Securities, and arrangements
satisfactory to you for the purchase of such Securities by other persons are not
made within 36 hours thereafter, this Agreement shall terminate. In the event
of any such termination the Company shall not be under any liability to either
Initial Purchaser (except to the extent provided in Section 4(a)(xvi) and
Section 6 hereof) nor shall either Initial Purchaser (other than the Initial
Purchaser who shall have failed, otherwise than for some reason permitted under
this Agreement, to purchase the amount of Securities agreed by such Initial
Purchaser to be purchased hereunder) be under any liability to the Company
(except to the extent provided in Section 6 hereof).
If Securities to which a default relates are to be purchased by the
non-defaulting Initial Purchaser or by any other party or parties, the
non-defaulting Initial Purchaser or the Company shall have the right to postpone
the Closing Date for not more than seven business days in order that the
necessary changes in the Offering Memorandum and any other documents, as well as
any other arrangements, may be effected. As used herein, the term "Initial
Purchaser" includes any person substituted for an Initial Purchaser under this
Section 8.
1. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at 10:00 a.m.,
Central time, on the first full business day following the date hereof. By
giving notice as hereinafter specified before the time this Agreement becomes
effective the Initial Purchaser, or the Company may prevent this Agreement from
becoming effective without liability of any party to any other party, except
that the provisions of Section 4(a)(xvi) and Section 6 hereof shall at all times
be effective.
(a) You shall have the right to terminate this Agreement by
giving notice as hereinafter specified at any time at or prior to the Closing
Date if (i) the Company shall have failed, refused or been unable, at or prior
to such Closing Date, to perform any agreement on its part to be
<PAGE>
performed hereunder, (ii) any other condition of the Initial Purchasers'
obligations hereunder is not fulfilled, (iii) trading on the New York Stock
Exchange or the American Stock Exchange shall have been wholly suspended, (iv)
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required, on the New York Stock
Exchange, the American Stock Exchange or Nasdaq Stock Market, by such Exchange
or by order of the Commission or any other governmental authority having
jurisdiction, (v) a banking moratorium shall have been declared by Federal, New
York, Minnesota, North Dakota or South Dakota authorities, or (vi) there has
occurred any material adverse change in the financial markets in the United
States or an outbreak of major hostilities (or an escalation thereof) in which
the United States is involved, a declaration of war by Congress, any other
substantial national or international calamity or any other event or occurrence
of a similar character shall have occurred since the execution of this Agreement
that, in your judgment, makes it impractical or inadvisable to proceed with the
completion of the sale of and payment for the Securities. Any such termination
shall be without liability of any party to any other party except that the
provisions of Section 4(a)(xvi) and Section 6 hereof shall at all times be
effective.
(a) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section, the
Company, shall be notified promptly by you by telephone or telegram, confirmed
by letter. If the Company elects to prevent this Agreement from becoming
effective, you shall be notified by the Company by telephone or telegram,
confirmed by letter.
1. INFORMATION FURNISHED BY INITIAL PURCHASERS. The statements set
forth in the last paragraph of the cover page and under the caption "Plan of
Distribution" in any Memoranda constitute the written information furnished by
or on behalf of the Initial Purchasers referred to in Section 2 and Section 6
hereof.
1. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Initial Purchasers,
shall be mailed, telegraphed or delivered to the Initial Purchasers c/o Piper
Jaffray Inc., Piper Jaffray Tower, 222 South Ninth Street, Minneapolis,
Minnesota 55402, except that notices given to an Initial Purchaser pursuant to
Section 6 hereof shall be sent to such Initial Purchaser at the address stated
in the Initial Purchasers' Questionnaire furnished by such Initial Purchaser in
connection with this offering; if to the Company, shall be mailed, telegraphed
or delivered to it at 520 Main Avenue, Fargo, North Dakota 58124-0001,
Attention: Donald R. Mengedoth, or in each case to such other address as the
person to be notified may have requested in writing. All notices given by
telegram shall be promptly confirmed by letter. Any party to this Agreement may
change such address for notices by sending to the parties to this Agreement
written notice of a new address for such purpose.
1. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns and the controlling persons, officers and
directors referred to in Section 6. Nothing in this Agreement is intended or
shall be construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any provision
herein contained. The term "successors and assigns" as herein used shall not
include any purchaser, as such purchaser, of any of the Securities from any of
the Initial Purchasers.
<PAGE>
1. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
[Signature Page Follows]
<PAGE>
Please sign and return to the Company the enclosed duplicates of this
letter whereupon this letter will become a binding agreement between the Company
and the Initial Purchasers in accordance with its terms.
Very truly yours,
COMMUNITY FIRST BANKSHARES, INC.
By /s/ Donald R. Mengedoth
--------------------------------------
Donald R. Mengedoth
President and Chief Executive Officer
Confirmed as of the date first
above mentioned, on behalf of
themselves and the other several
Initial Purchasers named in Schedule I
hereto.
PIPER JAFFRAY INC.
By /s/ Joyce Nelson Schuette
--------------------------------------
Managing Director
KEEFE, BRUYETTE & WOODS, INC.
By /s/ Peter J. Wirth
--------------------------------------
Senior Vice President
M1:0257354.05
<PAGE>
SCHEDULE I
Initial Purchasers Principal Amount of Purchased Notes
Piper Jaffray Inc. $36,000,000
Keefe, Bruyette & Woods, Inc. $24,000,000
-----------
Total. . . . . . . . . . . . . . . . . . . . . . . . .$60,000,000
-----------
-----------
<PAGE>
Exhibit 2.4
AGREEMENT AND PLAN OF MERGER
dated as of August 22, 1997
among
COMMUNITY FIRST BANKSHARES, INC.,
SUMMIT ACQUISITION CORPORATION
and
FIRST NATIONAL SUMMIT BANKSHARES, INC.
<PAGE>
INDEX TO AGREEMENT AND PLAN OF MERGER
Page
AGREEMENT AND PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Effective Time of the Merger. . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Calculation of Summit Value . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES . . . . . . . . . . . . 3
2.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Conversion of Preferred Stock. . . . . . . . . . . . . . . . . . 3
(b) Conversion of Common Stock . . . . . . . . . . . . . . . . . . . 3
(c) Exchange Rate. . . . . . . . . . . . . . . . . . . . . . . . . . 4
(d) Adjustments to Exchange Rate Based on CFB Trading Value. . . . . 4
(e) Adjustment based on Summit Value . . . . . . . . . . . . . . . . 5
(f) Shareholders' Right of Dissent . . . . . . . . . . . . . . . . . 5
2.2 Exchange of Certificates. . . . . . . . . . . . . . . . . . . . . . . 5
(a) Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Exchange Procedures. . . . . . . . . . . . . . . . . . . . . . . 5
(c) Distributions with Respect to Unexchanged Shares; Voting . . . . 6
(d) Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . 6
(f) Termination of Exchange Fund . . . . . . . . . . . . . . . . . . 7
(g) Lost or Destroyed Shares . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Representations and Warranties of Summit. . . . . . . . . . . . . . . 7
(a) Bank Subsidiary Organization . . . . . . . . . . . . . . . . . . 7
(b) Summit Organization. . . . . . . . . . . . . . . . . . . . . . . 8
(c) Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) Limitation of Bank's Powers. . . . . . . . . . . . . . . . . . . 8
i
<PAGE>
(e) Corporate Records. . . . . . . . . . . . . . . . . . . . . . . . 8
(f) Insured Status of . . . . . . . . . . . . . . . . . . . . . . . 8
(g) No Default; Creation of Liens. . . . . . . . . . . . . . . . . . 9
(h) Financial Statements . . . . . . . . . . . . . . . . . . . . . . 9
(i) Fidelity Insurance . . . . . . . . . . . . . . . . . . . . . . .10
(j) Employment Contracts . . . . . . . . . . . . . . . . . . . . . .10
(k) Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . .10
(l) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . .10
(m) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
(n) Title to Property. . . . . . . . . . . . . . . . . . . . . . . .11
(o) Insurance Policies . . . . . . . . . . . . . . . . . . . . . . .11
(p) Bank Property. . . . . . . . . . . . . . . . . . . . . . . . . .11
(q) Conduct of Business. . . . . . . . . . . . . . . . . . . . . . .12
(r) Documentation. . . . . . . . . . . . . . . . . . . . . . . . . .12
(s) Leases and Contracts . . . . . . . . . . . . . . . . . . . . . .12
(t) Shareholder Lists. . . . . . . . . . . . . . . . . . . . . . . .12
(u) Bank Principals. . . . . . . . . . . . . . . . . . . . . . . . .13
(v) Information Supplied . . . . . . . . . . . . . . . . . . . . . .13
(w) Agreements with Bank Regulators. . . . . . . . . . . . . . . . .13
3.2 Representations and Warranties of CFB . . . . . . . . . . . . . . . .13
(a) CFB Organization . . . . . . . . . . . . . . . . . . . . . . . .14
(b) Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
(c) Enforceability . . . . . . . . . . . . . . . . . . . . . . . . .14
(d) No Default; Creation of Liens. . . . . . . . . . . . . . . . . .14
(e) Information Supplied . . . . . . . . . . . . . . . . . . . . . .15
(f) No Plan to Transfer Assets . . . . . . . . . . . . . . . . . . .15
(g) Future Filing Requirements . . . . . . . . . . . . . . . . . . .15
ARTICLE 4
COVENANTS OF SUMMIT AND CFB. . . . . . . . . . . . . . . . . . . . . . . .15
4.1 Covenants of Summit . . . . . . . . . . . . . . . . . . . . . . . . .15
(a) Ordinary Course. . . . . . . . . . . . . . . . . . . . . . . . .15
(b) Shareholder Meeting. . . . . . . . . . . . . . . . . . . . . . .16
(c) Registration Statement . . . . . . . . . . . . . . . . . . . . .16
(d) Confidential Information . . . . . . . . . . . . . . . . . . . .16
(e) Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . .16
(f) No Solicitations . . . . . . . . . . . . . . . . . . . . . . . .17
(g) No Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . .17
(h) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . .18
(i) Pooling Restrictions . . . . . . . . . . . . . . . . . . . . . .18
(j) Financial Statements . . . . . . . . . . . . . . . . . . . . . .18
(k) Additional Covenants of Summit . . . . . . . . . . . . . . . . .18
4.2 Covenants of CFB. . . . . . . . . . . . . . . . . . . . . . . . . . .21
ii
<PAGE>
(a) Ordinary Course. . . . . . . . . . . . . . . . . . . . . . . . .21
(b) Application. . . . . . . . . . . . . . . . . . . . . . . . . . .21
(c) Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . .21
(d) Registration Statement . . . . . . . . . . . . . . . . . . . . .21
(e) Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
(f) Shares to be Issued. . . . . . . . . . . . . . . . . . . . . . .22
(g) Blue Sky . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
(h) Confidential Information . . . . . . . . . . . . . . . . . . . .22
(i) Registration Statement . . . . . . . . . . . . . . . . . . . . .23
4.3 Covenants of Summit and CFB . . . . . . . . . . . . . . . . . . . . .23
(a) Governing Documents. . . . . . . . . . . . . . . . . . . . . . .23
(b) Other Actions. . . . . . . . . . . . . . . . . . . . . . . . . .23
(c) Advice of Changes; Government Filings. . . . . . . . . . . . . .23
(d) Title of Property. . . . . . . . . . . . . . . . . . . . . . . .24
(e) Environmental Assessment . . . . . . . . . . . . . . . . . . . .24
ARTICLE 5
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . .24
5.1 Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . . . .24
5.2 Letters of Summit Officers. . . . . . . . . . . . . . . . . . . . . .25
5.3 Access to Information . . . . . . . . . . . . . . . . . . . . . . . .25
5.4 Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.5 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . .26
5.6 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.7 Additional Agreements; Best Efforts . . . . . . . . . . . . . . . . .26
ARTICLE 6
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . .27
6.1 Conditions to Each Party's Obligation to Effect the Merger. . . . . .27
(a) Stockholder Approval . . . . . . . . . . . . . . . . . . . . . .27
(b) NASDAQ Listing . . . . . . . . . . . . . . . . . . . . . . . . .27
(c) Other Approvals. . . . . . . . . . . . . . . . . . . . . . . . .27
(d) Registration Statement . . . . . . . . . . . . . . . . . . . . .27
(e) No Injunctions or Restraints; Illegality . . . . . . . . . . . .27
(f) No Unduly Burdensome Condition . . . . . . . . . . . . . . . . .27
6.2 Conditions to Obligations of CFB. . . . . . . . . . . . . . . . . . .28
(a) Representations and Warranties . . . . . . . . . . . . . . . . .28
(b) Performance of Obligations of Summit . . . . . . . . . . . . . .28
(d) Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . .28
6.3 Conditions to Obligations of Summit . . . . . . . . . . . . . . . . .28
(a) Representations and Warranties . . . . . . . . . . . . . . . . .28
(b) Performance of Obligations of CFB. . . . . . . . . . . . . . . .29
iii
<PAGE>
(c) Consents Under Agreements. . . . . . . . . . . . . . . . . . . .29
(d) Tax Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . .29
(e) Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE 7
TERMINATION AND AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . .29
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . .30
7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
7.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . .30
ARTICLE 8
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
8.3 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . .31
8.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
8.5 Entire Agreement: Third Party Beneficiaries; Rights of Ownership. . .32
8.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
8.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
8.8 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
8.9 Enforcement of Agreement. . . . . . . . . . . . . . . . . . . . . . .32
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 22, 1997 (the "Agreement"),
by and among Community First Bankshares, Inc., a Delaware corporation ("CFB"),
Summit Acquisition Corporation, a Colorado corporation ("Acquisition
Subsidiary") and First National Summit Bankshares, Inc., a Colorado corporation
("Summit").
WHEREAS, the Boards of Directors of CFB, Acquisition Subsidiary and
Summit have approved, and deem it advisable and in the best interests of
their respective companies and their stockholders to consummate the business
combination transaction provided for herein in which Acquisition Subsidiary
will be merged with and into Summit and Summit thereby become a wholly-owned
subsidiary of CFB (the "Merger");
WHEREAS, CFB and Summit desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also
to prescribe various conditions to the Merger; and
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
Agreement, articles of merger (the "Articles of Merger") in substantially the
form as attached hereto as EXHIBIT A shall be duly prepared, executed and
acknowledged by CFB and Summit and thereafter delivered for filing to the
Secretary of State of the State of Colorado, as provided in the Colorado
Business Corporation Act (the "Colorado Act"), on the Closing Date (as
defined in Section 1.2). The Merger shall become effective upon the filing
of the Articles of Merger with the Secretary of State of Colorado or at such
other time as CFB and Summit may agree in writing to provide in the Articles
of Merger (the "Effective Time"). Notwithstanding the immediately preceding
sentence, however, the parties intend that the effective date and time of the
Closing, as defined in Section 1.2 below, for both Summit and tax reporting
purposes, shall be as of the close of business on the Closing Date.
1.2 CLOSING. Subject to the terms and conditions hereof, the closing of
the Merger (the "Closing") will take place after the satisfaction or waiver
(subject to applicable law) of the latest to occur of the conditions set
forth in Article 6 hereof (the "Closing Date"), at the offices of
<PAGE>
Lindquist & Vennum, in Minneapolis, Minnesota, unless another time, date or
place is agreed to in writing by the parties hereto. Each of the parties
agrees to use its best efforts to cause the Merger to be consummated within
thirty (30) business days after the satisfaction or waiver of the conditions
set forth in Article 6 of this Agreement.
1.3 EFFECTS OF THE MERGER.
(a) At the Effective Time: (i) the separate existence of the
Acquisition Subsidiary shall cease and the Acquisition Subsidiary shall be
merged with and into Summit; (ii) the Articles of Incorporation of the
Acquisition Subsidiary, as in effect immediately prior to the Effective Time
shall be the Articles of Incorporation of the Surviving Corporation until
duly amended in accordance with applicable law; (iii) the By-laws of the
Acquisition Subsidiary, as in effect immediately prior to the Effective Time
shall be the By-laws of the Surviving Corporation until amended in accordance
with applicable law; (iv) CFB, as the holder of all of the outstanding common
stock of the Acquisition Subsidiary, shall continue as sole shareholder of
the Surviving Corporation; (v) the holders of certificates representing
shares of Summit Preferred Stock (as defined in Section 2.1(a) below) shall
cease to have any rights as shareholders of Summit, except such rights, if
any, as they may have pursuant to Article 113 of the Colorado Act, and their
sole right shall be the right to receive in cancellation thereof, the sum of
One Hundred and no/100 Dollars ($100.00) per share, plus accrued but unpaid
dividends thereon to the Effective Time; and (vi) the holders of certificates
representing shares of Summit Common Stock (as defined in Section 2.1(b)
below) shall cease to have any rights as shareholders of Summit, except such
rights, if any, as they may have pursuant to Article 113 of the Colorado Act,
and their sole right shall be the right to receive (A) the number of whole
shares of CFB Common Stock (as defined in Section 2.1(b) below) into which
their shares of Summit Common Stock have been converted in the Merger as
provided herein (together with any dividend payments with respect thereto, to
the extent provided in Section 2.2(c) below), and (B) the cash value of any
fraction of a share of CFB Common Stock into which their shares of Summit
Common Stock have been converted as provided herein.
(b) As used in this Agreement, the term "Constituent Corporations"
shall mean Summit and the Acquisition Subsidiary. The term "Surviving
Corporation" shall mean Summit, after giving effect to the Merger.
1.4 CALCULATION OF SUMMIT VALUE. Subject to the provisions of Section
4.1(k), as of the last day of the month immediately preceding the Effective
Time (the "Determination Date"), Summit shall prepare a consolidated balance
sheet of Summit in accordance with generally accepted accounting principles
("GAAP"), but excluding the effects of any adjustments otherwise required by
FASB 115 and excluding any footnotes that might be required to be included
with such financial statements (the "Determination Date Balance Sheet"),
together with a consolidated statement of income (the "Interim Income") for
the period from March 31, 1997 to the Determination Date (the "Interim Income
Statement"), such consolidated statement of income shall be prepared in
accordance with GAAP, but excluding the effects of any adjustments otherwise
required by FASB 115 and excluding any footnotes that might be required to be
2
<PAGE>
included with such statements (the "Determination Date Balance Sheet and
Interim Income Statement are herein referred to as the "Determination Date
Financial Statements"). The Determination Date Financial Statements shall be
delivered to CFB as soon as they are prepared so that CFB and its accountants
may review and confirm their accuracy. For purposes of this Agreement, the
"Summit Value" shall be equal to the total consolidated assets of Summit
minus the sum of (i) the total consolidated liabilities of Summit, and (ii)
the value of the Summit Preferred Stock, including accrued dividends thereon
to the Closing Date, all as reflected on the Determination Date Balance
Sheet, prepared in accordance with this Section 1.4. Total consolidated
liabilities of Summit shall include, without limitation, provision for taxes
and the expenses of the preparation of the final tax return for Summit.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 EFFECT ON CAPITAL STOCK.
(a) CONVERSION OF PREFERRED STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder of
shares of preferred stock, $100.00 par value, of Summit ("Summit Preferred
Stock"), each issued and outstanding share of Summit Preferred Stock, other
than shares of Summit Preferred Stock held by persons who have taken all
steps required to perfect their right to be paid the fair value of such
shares under Article 113 of the Colorado Act, shall be converted into the
right to receive in cancellation and exchange therefor the sum of One Hundred
and no/100 ($100.00), plus accrued but unpaid dividends thereon to the
Effective Time. All such shares of Summit Preferred Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist. Each Summit shareholder's certificate or certificates previously
representing shares of Summit Preferred Stock (each a "Summit Preferred
Certificate") shall be aggregated (if a single stockholder holds more than
one Summit Preferred Certificate) and exchanged for the foregoing
consideration upon the surrender of such Summit Preferred Certificates in
accordance with Section 2.2, without any interest thereon.
(b) CONVERSION OF COMMON STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of any holder of shares of
common stock, $.09 par value, of Summit ("Summit Common Stock"), subject to
Section 2.2(e), each issued and outstanding share of Summit Common Stock,
other than shares of Summit Common Stock held by persons who have taken all
steps required to perfect their right to be paid the fair value of such
shares under Article 113 of the Colorado Act, shall be converted into shares
of validly issued, fully paid and nonassessable shares of common stock of
CFB, $.01 par value ("CFB Common Stock"). All such shares of Summit Common
Stock shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist. Each Summit shareholder's certificate or
certificates previously representing shares of Summit Common Stock (each a
"Summit Common Certificate") shall be aggregated (if a single stockholder
holds more than one Summit Common
3
<PAGE>
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 Summit Common Certificates in accordance
with Section 2.2, without any interest thereon. In the event that,
subsequent to the date of this Agreement but prior to the Effective Time, the
outstanding shares of CFB Common Stock shall have been increased, decreased,
changed into or exchanged for a different number or kind of shares or
securities through a reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or other similar change in
CFB's capitalization, then an appropriate and proportionate adjustment shall
be made to the "Exchange Rate," as hereinafter defined, so that the number of
shares of CFB Common Stock into which a share of Summit Common Stock shall be
converted will equal the number of shares of CFB Common Stock that the
holders of shares of Summit Common Stock would have received pursuant to such
reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar change had the record date
therefor been immediately following the Closing Date.
(c) EXCHANGE RATE. Subject to the adjustments provided in Section
2.1(b), 2.1(d) and 2.1(e) hereof, all of the issued and outstanding shares of
Summit Common Stock and any outstanding options, warrants or other rights to
Summit Common Stock shall be exchanged for Four Hundred Thousand (400,000)
shares of CFB Common Stock (the aforementioned exchange rate is hereinafter
referred to as the "Exchange Rate"). On or before the Effective Time, all
stock options and other rights with respect to Summit Common Stock shall be
(i) accelerated and exercised by the holder thereof, in accordance with the
terms of the stock option plan or agreement, or (ii) released and terminated
by written acknowledgment and agreement by the holder thereof, obtained by
Summit less than ten (10) business days prior to the Closing Date.
(d) ADJUSTMENTS TO EXCHANGE RATE BASED ON CFB TRADING VALUE.
Notwithstanding anything to the contrary in this Article 2, the Exchange Rate
shall be subject to modification as set forth below:
(i) If the CFB Trading Value is less than or equal to $39.50 per
share, then the Exchange Rate shall be as set forth in Section 2.1(c),
above;
(ii) If the CFB Trading Value is greater than $39.50 per share,
then the Exchange Rate shall be reduced so that the product of the CFB
Trading Value multiplied by the Exchange Rate shall be $15,800,000.
For purposes of this Agreement, the "CFB 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). Calculations will be rounded to three decimal places.
4
<PAGE>
Any fractional share of CFB Common Stock will be paid in cash in accordance
with Section 2.2(e). Illustrations of the above Exchange Rate calculations
are attached as EXHIBIT 2.1(d) hereto and incorporated herein by reference.
(e) ADJUSTMENT BASED ON SUMMIT VALUE. In the event that the Summit
Value, calculated in accordance with Section 1.4, above, shall be less than
$7,000,000, then the Exchange Rate determined in accordance with Section
2.1(c)-(d) shall be subject to reduction. The amount of reduction shall be
determined by (i) multiplying the difference between the Summit Value and
$7,000,000 by 2.0857 (which is the ratio of the minimum transaction value
divided by the minimum equity requirement) and then (ii) dividing the
foregoing product by $36.50 (which is the minimum CFB Trading Value).
(f) SHAREHOLDERS' RIGHT OF DISSENT. Any holder of shares of Summit
Stock who does not vote in favor of the Merger at the meeting of shareholders
of Summit and has given notice in writing to the presiding officer prior to
the Merger vote that he or she intends to demand payment for his or her
shares of Summit Stock if the Merger is effectuated, shall be entitled to
receive the value of the Summit Stock so held by him or her in accordance
with Article 113 of the Colorado Act and his or her shares of Summit Stock
shall be deemed subject to the provisions of Article 113 of the Colorado Act.
2.2 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
Summit Stock, (i) cash to be paid pursuant to Section 2.1(a) in exchange for
the outstanding shares of Summit Preferred Stock and (ii) certificates dated
the Closing Date representing the shares of CFB Common Stock and the cash to
be paid in lieu of fractional shares to be issued and paid pursuant to
Section 2.1(b) in exchange for the outstanding shares of Summit Common Stock.
(Such cash and certificates for shares of CFB Common Stock together with any
dividends or distributions with respect thereto, are hereinafter referred to
as the "Exchange Fund.")
(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 Summit Certificate or Summit Certificates (i) a letter of
transmittal which shall specify that delivery shall be effective, and risk of
loss and title to the Summit Certificate(s) shall pass, only upon delivery of
the Summit Certificate(s) to the Exchange Agent and which shall be in such
form and have such other provisions as CFB and Summit may reasonably specify
not later than five business days before the Closing Date and (ii)
instructions for use in effecting the surrender of the Summit Common and
Preferred Certificate(s) in exchange for cash, in the case of Summit
Preferred Certificates, or for a certificate representing shares of CFB
Common Stock and the cash to be paid in lieu of any fractional share, in the
case of Summit Common Certificates. Upon surrender of a shareholder's Summit
Preferred Certificate or Summit Preferred Certificates for cancellation to
the Exchange Agent together with such letter of transmittal, duly executed,
the holder of such
5
<PAGE>
Summit Preferred Certificate(s) shall be entitled to receive in exchange
therefor a check representing the amount of the cash to be paid for such
Summit Preferred Stock and unpaid dividends and distributions, if any, which
such holder has the right to receive in respect of the Summit Preferred
Certificate(s) surrendered, as provided in Section 2.2(c) below, and the
Summit Certificate(s) so surrendered shall forthwith be canceled. Upon
surrender of a shareholder's Summit Common Certificate or Summit Common
Certificates for cancellation to the Exchange Agent together with such letter
of transmittal, duly executed, the holder of such Summit Common
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, and unpaid dividends and distributions, if any,
which such holder has the right to receive in respect of the Summit Common
Certificate(s) surrendered, as provided in Section 2.2(c) below, and the
Summit Common Certificate(s) so surrendered shall forthwith be canceled. No
interest will be paid on the cash in lieu of fractional shares and unpaid
dividends and distributions, if any, payable to holders of Summit Common
Certificates. In the event of a transfer of ownership of Summit Common Stock
which is not registered in the transfer records of Summit, a CFB Certificate
representing the proper number of shares of CFB Common Stock, and/or a check
for the cash to be paid, may be issued to such a transferee if the Summit
Common Certificate representing such Summit 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
Summit 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 Summit Common Certificates shall not be entitled to vote after the
Closing Date at any meeting of CFB shareholders until they have exchanged their
Summit Common Certificates.
(d) TRANSFERS. After the Effective Time, there shall be no transfers
on the stock transfer books of Summit of the shares of Summit Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Summit Certificates are presented to the Surviving Corporation, they shall
be canceled and exchanged for the shares of CFB Common Stock and/or cash, in an
amount as determined in accordance with the provisions of Sections 2.1(a),
2.1(b) and this Section 2.2, deliverable in respect thereof pursuant to this
Agreement. Summit Certificates surrendered for exchange by any person
constituting an "affiliate" of Summit 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 5.5.
(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
6
<PAGE>
the Trading Value of a share of CFB Common Stock. For purposes of
calculating fractional shares, a holder of Summit Common Stock with more than
one Summit Certificate shall receive cash only for the fractional share
remaining after aggregating all of its, his or her Summit Common Stock to be
exchanged.
(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 Summit for twelve months after the
Closing Date shall be paid to CFB. The Exchange Agent shall give notice to
shareholders of Summit for whom Exchange Funds are held thirty (30) days prior
to the date upon which the Exchange Funds shall be paid to CFB. Any
shareholders of Summit who have not theretofore complied with this Article 2
shall thereafter look only to CFB for payment of their shares, and cash in an
amount as determined in accordance with the provisions of Section 2.1(a),
Section 2.1(b) and this Section 2.2, 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 Summit 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 Summit Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Summit 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 Summit Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Summit Certificate the
shares of CFB Common Stock, and/or cash in an amount as determined in accordance
with the provisions of Sections 2.1(a), 2.1(b) and this Section 2.2, deliverable
in respect thereof pursuant to this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF SUMMIT. In order to induce CFB to
enter into this Agreement, Summit represents and warrants to CFB, in all
material respects, as of the date of this Agreement (except as otherwise
expressly provided), as follows, except as disclosed on the attached EXHIBIT B
(the "Summit Disclosure Schedule") and the schedules thereunder which are
numbered to correspond to the representations set forth below:
(a) BANK SUBSIDIARY ORGANIZATION. First National Summit Bank (the
"Bank") is a national banking association duly organized and validly existing
and in good standing under the laws of the United States with an authorized
capital of $250,000, consisting of 2,500 shares of one class of common stock,
par value $100.00 per share. All of the shares of stock of the Bank which are
presently issued and outstanding, have been validly issued, fully paid and,
subject to 12 U.S.C. Section 55 (1982), non-assessable, and except for those
options described in Section 3.1(a) of the Summit Disclosure Schedule, there are
no stock options or other commitments outstanding
7
<PAGE>
pursuant to which the Bank is obligated to issue additional shares of such
stock or purchase or redeem any outstanding shares of such stock.
(b) SUMMIT ORGANIZATION. Summit is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado,
with authorized capital stock consisting of 100,000 shares of preferred stock,
$100.00 par value per share, of which 10,750 shares are issued and outstanding,
and 2,000,000 shares of common stock, $.09 par value per share, of which 953,708
shares are issued and outstanding. Summit has all requisite power, authority,
charters, licenses and franchises necessary or required by law to carry on the
business activity in which it is presently engaged, except where the failure to
have any such power, authority, charters, licenses or franchises would not
reasonably be expected to have a material adverse effect on Summit. Summit is
registered as a company under Section 1841 of Title 12, United States Code, as
amended (the "Bank Holding Company Act"). Summit has no direct or indirect
subsidiaries except the Bank and is not a partner to any partnership. Except as
set forth in Section 3.1(b) of the Summit Disclosure Schedule, Summit owns all
of the shares of Bank stock, free and clear of any liens or encumbrances.
(c) ENFORCEABILITY. Subject to the required approval of the Merger
by the shareholders of Summit, Summit has the corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement by Summit and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Summit. Subject to approval by the Summit
shareholders and of government agencies and other governing bodies having
regulatory authority over Summit or the Bank as may be required by statute or
regulation, this Agreement constitutes a valid and binding obligation of Summit,
enforceable against it in accordance with its terms.
(d) LIMITATION OF BANK'S POWERS. Except as set forth in Section
3.1(d) of the Summit Disclosure Schedule, there are no proceedings or actions
pending by any federal or state regulatory body having authority over the Bank
to limit or impair any of the Bank's powers, rights and privileges, to terminate
deposit insurance or to dissolve the Bank.
(e) CORPORATE RECORDS. Summit's Articles of Incorporation and
Bylaws, and the Bank's Articles of Association and Bylaws are each unchanged
from the form in which they were delivered to CFB on or before the date of this
Agreement. The minute books of Summit and the Bank contain reasonably complete
and accurate records of all meetings and corporate actions of each of their
respective shareholders and Boards of Directors.
(f) INSURED STATUS OF BANK. The Bank is an insured bank under the
provisions of Chapter 16 of Title 12, United States Code Annotated, known as
the "Federal Deposit Insurance Act," and no act or default on the part of any
of the Bank exists that could reasonably be expected to have a material
adverse effect on its status as an insured bank thereunder. All of the
Bank's deposits are insured by the Bank Insurance Fund or the Savings
Association Insurance Fund of the FDIC as set forth in Section 3.1(f) of the
Summit Disclosure Schedule. The Bank
8
<PAGE>
possesses and is in full compliance with all licenses, franchises, permits
and other governmental authorizations that are legally required to hold its
properties or conduct its business, except where the failure to possess any
such licenses, franchises, permits or other governmental authorizations would
not reasonably be expected to have a material adverse effect on Summit.
(g) NO DEFAULT; CREATION OF LIENS. Neither the execution and
delivery of this Agreement, nor the consummation of the Merger will (i) conflict
with, result in the breach of, constitute a default under or accelerate the
performance provided by the terms of (A) any judgment, order or decree of any
court or other governmental agency to which Summit or the Bank may be subject,
(B) any of the "Material Contracts," as hereinafter defined, or (C) the Articles
of Incorporation/Association or Bylaws of Summit or the Bank, or (ii) constitute
an event that, with the lapse of time or action by a third party, would result
in a default under any of the foregoing or result in the creation of any lien,
charge or encumbrance upon the Summit Common Stock or any of the Bank's capital
stock.
(h) FINANCIAL STATEMENTS. The following financial statements of the
Bank and Summit (the "Financial Statements") have been delivered to CFB and are
incorporated by reference herein:
(i) The Consolidated Reports of Condition and Income of the Bank
as of December 31 for each of the years 1994, 1995 and 1996 and the period
ending March 31, 1997; and
(ii) The audited consolidated financial statements of
Summit, prepared in the ordinary course of business for each of the
years ended December 31, 1994, 1995 and 1996.
Each of the aforementioned Financial Statements is, and the Determination Date
Balance Sheet will be (when delivered pursuant to Section 1.4), true and correct
in all material respects, and together they fairly present, in accordance with
generally accepted accounting principles (applied on a consistent basis except
as disclosed in the footnotes thereto and except that the unaudited Financial
Statements are subject to any adjustments which might be required as a result of
an examination of independent accountants) the financial position and results of
operation of each of the respective Bank and Summit as of the dates and for the
periods therein set forth. To the knowledge of Summit, such Financial
Statements did not, as of the date of the preparation thereof, exclude any
material assets or omit to state any material liability, absolute or contingent,
the inclusion or omission of which renders such financial statements, in light
of the circumstances in which they were made, misleading in any material
respect. Since May 31, 1997, there has been no material adverse change in the
financial condition, results of operation or business of the Bank and Summit,
taken as a whole (other than changes in banking laws or regulations, changes in
generally accepted accounting principles or interpretations thereof that affect
the banking industry generally, or changes in general economic conditions that
affect the banking industry on a nationwide basis, including changes in the
general level of interest rates).
9
<PAGE>
(i) FIDELITY INSURANCE. The Bank is insured under a Banker's Blanket
Bond which is in full force and effect and the Bank has not received notice of
cancellation or non-renewal thereof, and except as set forth in Schedule 3.1(i)
of the Summit Disclosure Schedule, filed any claim thereunder during the past
five years. There are no unresolved claims.
(j) EMPLOYMENT CONTRACTS. Except as set forth in Section 3.1(j) of
the Summit Disclosure Schedule, neither Summit nor the Bank is a party to or
bound by any written or oral (i) employment or consulting contract that is not
terminable without penalty by Summit or the Bank on 30 days' or less notice or
(ii) any collective bargaining agreement covering employees.
(k) EMPLOYEE BENEFITS. Section 3.1(k) of the Summit Disclosure
Schedule lists every employee benefit plan within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
which the Bank or Summit maintain or to which the Bank or Summit contribute
on behalf of current or former employees of the Bank or Summit. All of the
plans and programs listed in Section 3.1(l) of the Summit Disclosure Schedule
(hereinafter referred to as the "Plans") are in compliance in all material
respects with all applicable requirements of ERISA and all other applicable
federal and state laws. None of the Plans is a defined benefit pension plan.
None of the Plans has engaged in a "prohibited transaction," within the
meaning of Section 4975 of the Code or Section 406 of ERISA, none of the
Plans which is subject to Title IV of ERISA or any trust created thereunder
has been terminated, nor have there been any "reportable events" as that term
is defined in Section 4043 of ERISA with respect to any Plan and none of the
Plans has incurred an accumulated funding deficiency within the meaning of
Section 412(a) of the Code.
(l) LITIGATION. Except as described in Section 3.1(l) of the Summit
Disclosure Schedule, no claims have been asserted by written notice to Summit
and no relief has been sought against Summit, the Bank or any of the Plans in
any pending litigation or governmental proceedings or otherwise. Neither Summit
nor the Bank is a party to any unsatisfied order, judgment or decree which is
adverse to Summit or the Bank, and neither Summit nor the Bank (i) is the
subject of any cease and desist order, or other formal or informal enforcement
action by any regulatory authority; or (ii) has made any commitment to or
entered into any agreement with any regulatory authority that restricts or
adversely affects its operations or financial condition. To the knowledge of
Summit, there do not exist facts that would reasonably be expected to give rise
to a material claim against Summit or the Bank after the Closing Date.
(m) TAXES. Each of Summit and the Bank have filed all federal and
state income tax returns and all other returns with respect to any taxes,
either federal, state or local, which it is required to have filed; said
returns have been correctly and accurately prepared; all taxes reflected
thereon have been paid or adequately accrued for; no notice of any
deficiency, assessments or additions to tax have been received by Summit or
the Bank; neither Summit nor the Bank has waived any statute of limitations
with respect to any taxes reflected on said returns; and deferred taxes have
been properly reflected on the financial statements. Except as set forth in
Section 3.1(m) of the Summit Disclosure Schedule, there are no other taxes of
any kind or
10
<PAGE>
character for which either Summit or the Bank is or may be liable which are
now past due, delinquent and/or unpaid.
(n) TITLE TO PROPERTY. The Bank has good and marketable title to all
material assets and properties, whether real or personal, that it purports to
own, including without limitation all real and personal assets and properties
reflected in its Consolidated Reports of Condition and Income as of December 31,
1996, or acquired subsequent thereto (except to the extent that such assets and
properties have been disposed of for fair value in the ordinary course of
business since December 31, 1996) subject to no liens, mortgages, security
interests, encumbrances or charges of any kind, except (i) as noted in said
Consolidated Reports or the Schedules thereto; (ii) statutory liens for taxes
not yet delinquent; (iii) security interests granted to secure deposits of funds
by federal, state or other governmental agencies; (iv) minor defects and
irregularities in title and encumbrances that do not materially impair the use
thereof for the purposes for which they are held by the Bank as of the date
hereof; and (v) such liens, mortgages, security interests, encumbrances and
charges that are not in the aggregate material to the assets and properties of
such Bank.
(o) INSURANCE POLICIES. Summit has delivered to CFB true, accurate
and complete copies of all insurance policies of Summit and the Bank as of the
date of this Agreement. Each such policy is in full force and effect, with all
premiums due thereon on or prior to the date of this Agreement having been paid
as and when due.
(p) BANK PROPERTY. All buildings, structures, fixtures, and
appurtenances comprising the premises of the Bank are in good condition
subject to ordinary wear and tear. Except for the facts set forth in the
Assessment (as hereinafter defined), Summit and the Bank are, and have been
at all times, in substantial compliance with all applicable Environmental
Laws (as defined below), and have not engaged in any activity resulting in a
material violation of any applicable Environmental Law. To the best
knowledge of Summit, there is no legal, administrative, or other proceeding,
claim, investigation (with respect to which Summit is aware), inquiry, order,
hearing or action of any nature seeking to impose, or that would reasonably
be expected to result in the imposition, on Summit or the Bank, of any
liability arising from any violation of or obligation under any local, state
or federal environmental statute, regulation or ordinance including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("Environmental Laws"), pending or, to the
knowledge of Summit, threatened against Summit or the Bank; to the knowledge
of Summit and except for the facts set forth in the Assessment, there is no
reasonable basis for any such proceeding, claim, investigation, inquiry,
order, hearing or action; and neither Summit nor the Bank is subject to any
agreement, order, judgment, or decree by or with court, governmental
authority or third party imposing any such environmental liability. No
claims have been made by any governmental authority or third party against
Summit since it was incorporated, or the Bank during the past ten (10) years
relating to damage, contribution, cost recovery, compensation, loss or
inquiry resulting from any violation of or obligation under any Environmental
Laws.
11
<PAGE>
(q) CONDUCT OF BUSINESS. Except for the facts set forth in the
Assessment, the Bank and Summit are in compliance in all material respects with
all laws, regulations and orders (including zoning ordinances) applicable to
them and to the conduct of their business, including without limitation, all
statutes, rules and regulations pertaining to the conduct of the Bank's banking
activities (including the exercise of fiduciary and trust powers), except where
the failure to comply would not reasonably be expected to have a material
adverse effect on Summit.
(r) DOCUMENTATION. The documentation relating to loans made by the
Bank 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. 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). There are no loans,
leases, other extensions of credit or commitments to extend credit of the Bank
that have been or should in accordance with generally acceptable accounting
principles, have been classified by the Bank as nonaccrual, as restructured, as
90 days past due, as still accruing and doubtful of collection or any comparable
classification. Summit has provided to CFB such written information concerning
the loan portfolios of the Bank as CFB has requested, which information is true,
correct and complete in all material respects.
(s) LEASES AND CONTRACTS. Except as set forth in Section 3.1(s) of
the Summit Disclosure Schedule neither the Bank nor Summit is a party to or
bound by any written or oral (i) lease or license with respect to any
property, real or personal, with a value in excess of $20,000, whether as a
lessor, lessee, licensor or licensee; (ii) contract or commitment for capital
expenditures in excess of $20,000 for any one project or $50,000 in the
aggregate; (iii) contract or commitment for total expenses in excess of
$20,000 made in the ordinary course of business for the purchase of
materials, supplies, or for the performance of services for a period of more
than 180 days from the date of this Agreement; or (iv) contract or option for
the purchase or sale of any real or personal property other than in the
ordinary course of business (all such agreements, contracts, and commitments
collectively are herein referred to as the "Material Contracts"). The Bank
and Summit have performed in all material respects all obligations required
to be performed by them to date, and are not in material default under, and
no event has occurred which, with the lapse of time or action by a third
party, could result in a material default under any of the Material Contracts
to which the Bank or Summit is a party or by which the Bank or Summit is
bound. Each of the Material Contracts is a valid and legally binding
obligation of the Bank and the other party or parties thereto, subject to (i)
all applicable bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, and (ii) the
application of equitable principles if equitable remedies are sought.
(t) SHAREHOLDER LISTS. Summit has furnished to CFB a current
shareholder list as of the date set forth therein that (i) sets forth the record
name and number of shares held by each holder of preferred stock and common
stock of Summit and (ii) identifies each shareholder who is an officer or
director of the Bank or Summit.
12
<PAGE>
(u) BANK PRINCIPALS. Except as set forth in Section 3.1(u) of the
Summit Disclosure Schedule, no director or executive officer of Summit or the
Bank, nor any holder of ten percent or more of the outstanding capital stock
of Summit, nor any affiliate of such person as that term is defined under 12
USC 371(c) ("Bank Principal") (i) is or has during the period subsequent to
December 31, 1995, been a party (other than as a depositor) to any
transaction with the Bank, whether as a borrower or otherwise, which (a) was
made other than in the ordinary course of business; (b) was made on other
than substantially the same terms, including interest rate and collateral, as
those prevailing at the time for comparable transactions for other persons;
or (c) involves more than the normal risk of collectibility or presents other
unfavorable features; or (ii) is a party to any loan or loan commitment,
whether written or oral, from the Bank involving an amount in excess of
$10,000. Except as set forth in Section 3.1(u) of the Summit Disclosure
Schedule, no Bank Principal holds any position with any depository
organization other than the Bank or Summit. For the purposes of this
provision, the term "depository organization" means a commercial bank
(including a private bank), a savings bank, a trust company, a savings and
loan association, a homestead association, a cooperative bank, an industrial
bank, a credit union, or a depository organization holding company.
(v) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Summit or the Bank for inclusion or incorporation by reference in
(i) the "Registration Statement" (as hereinafter defined) will, at the time the
Registration Statement becomes effective under the Securities Act of 1993, as
amended (the "Securities Act"), contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading and (ii) the "Prospectus-Proxy Statement" (as hereinafter
defined) and any amendment or supplement thereto will, at the date of mailing to
the Summit stockholders and at the times of the meeting of stockholders of
Summit to be held in connection with the Merger, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. Summit
will use its best efforts to cause those portions of the Registration Statement
supplied by Summit to comply in all material respects with applicable law.
(w) AGREEMENTS WITH BANK REGULATORS. Except as set forth in Section
3.1(w) of the Summit Disclosure Schedule, neither Summit nor the Bank: (i) is a
party to any written agreement or memorandum of understanding with; (ii) is
subject to any order or directive by; (iii) is subject to any extraordinary
supervisory letter from; or (iv) has adopted any board resolutions at the
request of, federal or state governmental entities charged with the supervision
or regulation of Bank or Summit or engaged in the insurance of bank deposits
("Bank Regulators"), nor has Summit been advised by any Bank Regulators that it
is contemplating issuing or requesting any such order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar undertaking.
3.2 REPRESENTATIONS AND WARRANTIES OF CFB. CFB represents and warrants
to Summit, in all material respects, as of the date of this Agreement (except
as otherwise expressly provided)
13
<PAGE>
as follows, except as disclosed on the attached EXHIBIT C (the "CFB
Disclosure Schedule") and the schedules thereunder which are numbered to
correspond to the representations set forth below:
(a) CFB ORGANIZATION. CFB is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with
authorized capital stock consisting of 30,000,000 shares of common stock, par
value of $.01 per share, of which 18,658,951 shares were issued and outstanding
as of March 31, 1997 and 2,000,000 shares of preferred stock, of which no shares
of preferred stock were issued and outstanding as of March 31, 1997. CFB has
all requisite power, authority, charters, licenses and franchises necessary or
required by law to carry on the business activity in which it is presently
engaged. CFB is registered as a corporation under Section 1841 of Title 12,
United States Code, as amended (the "Bank Holding Company Act").
(b) REPORTS. CFB and the CFB Subsidiaries have filed all reports,
registrations and statements, together with any required amendments thereto,
that they were required to file with (i) the Securities and Exchange Commission
("SEC"), including, but not limited to, Forms 10-K, Forms 10-Q and proxy
statements, (ii) the Federal Reserve Board, (iii) the FDIC, (iv) the Comptroller
and (v) any applicable state securities or banking authorities. All such
reports and statements filed with any such regulatory body or authority are
collectively referred to herein as the "CFB Reports." As of their respective
dates, the CFB Reports complied in all material respects with all the rules and
regulations promulgated by the SEC, the Federal Reserve Board, the FDIC, the
Comptroller and any applicable state securities or banking authorities, as the
case may be, and did 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 therein, in light of the circumstances under which they were made,
not misleading. CFB has timely filed with the SEC all reports, statements and
forms required to be filed pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(c) ENFORCEABILITY. The execution, delivery and performance of this
Agreement by CFB and the consummation of the transactions contemplated hereby
have been duly authorized by the Board of Directors of CFB. Subject to approval
by the government agencies and other governing bodies having regulatory
authority over CFB as may be required by statute or regulation, this Agreement
constitutes a valid and binding obligation of CFB, enforceable against it in
accordance with its terms. This Agreement does not require the approval of CFB
shareholders. CFB has no knowledge of any facts or circumstances which would
lead a reasonably prudent person to conclude that regulatory approval of this
transaction might be denied.
(d) NO DEFAULT; CREATION OF LIENS. Neither the execution and
delivery of this Agreement nor the consummation of the transaction
contemplated hereby will conflict with, result in the breach of, constitute a
default under or accelerate the performance provided by the terms of any
judgment, order or decree of any court or other governmental agency to which
CFB may be subject, or any contract, agreement or instrument to which CFB is
a party or by which
14
<PAGE>
CFB is bound or committed, or the Articles of Incorporation or Bylaws of CFB,
or constitute an event that, with the lapse of time or action by a third
party, could result in a default under any of the foregoing or result in the
creation of any lien, charge or encumbrance upon the CFB Common Stock.
(e) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by CFB for inclusion or incorporation by reference in (i) the
Registration Statement will, at the time the Registration Statement becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which such statements were made, not misleading and (ii) the Prospectus-Proxy
Statement and any amendment or supplement thereto will, at the date of mailing
to Summit stockholders and at the times of the meeting of stockholders of Summit
to be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. The
Registration Statement will comply as to form in all material respects with
applicable law.
(f) NO PLAN TO TRANSFER ASSETS. CFB has no plan or intention to sell
or otherwise dispose of any of the assets of Summit to be acquired in the
Merger, except for dispositions in the ordinary course of business or transfers
to controlled subsidiaries as described in Section 368(a)(2)(C) of the Code.
(g) FUTURE FILING REQUIREMENTS. CFB will make any and all filings
which are required to satisfy the requirements of Rule 145(d)(1) and Rule 144(c)
(or any amendments, supplements, or successors to such rules) on or before the
dates on which such filings are required to be made to comply with applicable
requirements of law, and will include in its reports, both quarterly and annual,
the statement that CFB has filed all reports required to be filed by Section 13
or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12
months.
ARTICLE 4
COVENANTS OF SUMMIT AND CFB
4.1 COVENANTS OF SUMMIT. During the period from the date of this
Agreement and continuing until the Effective Time, Summit agrees as follows:
(a) ORDINARY COURSE. Except as otherwise required under this
Agreement or by CFB, Summit and the Bank shall carry on their respective
businesses in the usual, regular and ordinary course in substantially the
same manner as heretofore conducted and use all reasonable efforts to
preserve intact their present business organizations, maintain their rights
and franchises and preserve their relationships with customers, suppliers and
others having business dealings with them to the end that their goodwill and
ongoing businesses shall not be impaired in any material respect. Summit
shall not, nor shall it permit the Bank to (i) enter into any new material
15
<PAGE>
line of business, (ii) increase or decrease the current number of the
directors of Summit and the Bank, (iii) change its or the Bank's lending,
investment, liability management or other material banking policies in any
respect that is material to such party; or (iv) incur or commit to any
capital expenditures (or any obligations or liabilities in connection
therewith) other than capital expenditures (and obligations or liabilities in
connection therewith) incurred or committed to in the ordinary course of
business consistent with past practices.
(b) SHAREHOLDER MEETING. Summit will cause to be duly called, and
will cause to be held as soon as it is practicable to do so, but in no event
later than forty-five (45) days following the effective date of the
Registration Statement, a meeting of its shareholders and will direct that
this Agreement be submitted to a vote at such meeting. Summit will (i) cause
proper notice of such meeting to be given to its shareholders in compliance
with the Colorado Act and other applicable laws and regulations; (ii)
recommend by the affirmative vote of a majority of the Board of Directors a
vote in favor of approval of this Agreement; and (iii) use its best efforts
to solicit from its shareholders proxies in favor thereof.
(c) REGISTRATION STATEMENT. Summit will promptly furnish or cause
to be furnished to CFB all of the information concerning Summit and the Bank
required for inclusion in, and will cooperate with CFB in the preparation of,
the Registration Statement and Prospectus-Proxy Statement (including audited
financial statements, prepared in accordance with generally accepted
accounting principles, in form suitable for inclusion in the Registration
Statement and Prospectus-Proxy Statement), or any statement or application
made by CFB to any governmental body in connection with the Merger. Summit
agrees promptly to advise CFB if at any time prior to the Effective Date of
the Merger, any information provided by or on behalf of Summit becomes
incorrect or incomplete in any material respect and to provide the
information needed to correct such inaccuracy or omission.
(d) CONFIDENTIAL INFORMATION. Summit will hold in confidence all
documents and nonpublic information concerning CFB and its subsidiaries
furnished to Summit and its representatives in connection with the Merger and
will not release or disclose such information to any other person, except as
required by law and except to Summit's outside professional advisers in
connection with this Agreement, with the same undertaking from such
professional advisers. If the Merger contemplated by this Agreement shall
not be consummated, such confidence shall be maintained and such information
shall not be used in competition with CFB (except to the extent that such
information can be shown to be previously known to Summit, in the public
domain, or later acquired by Summit from other legitimate sources) and, upon
request, all such documents, any copies thereof and extracts therefrom shall
immediately thereafter be returned to CFB.
(e) BENEFIT PLANS. Summit and the Bank will, to the extent legally
permissible, take all action necessary or required (i) to terminate or amend,
if requested by CFB and at CFB's cost, 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
16
<PAGE>
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.
Except as set forth in Section 3.1(k) of the Summit Disclosure
Schedule, and except as otherwise required pursuant to this Section 4.1(e),
Summit agrees as to itself and the Bank that it will not, without the prior
written consent of CFB, (i) enter into, adopt, amend (except as may be
required by law) or terminate any Plan, as the case may be, or any other
employee benefit plan or any agreement, arrangement, plan or policy between
Summit or any of the Bank and one or more of its directors or officers;
provided, however, that Summit or the Bank may amend any of the Plans to
reduce or eliminate a requirement of mandatory periodic contributions
provided that if any of the Plans do not have assets with an aggregate value
that exceeds the present value of its liability for accrued benefits, all as
determined on a termination basis, then Summit shall accrue on its
Determination Date Financial Statements the amount by which any of the Plans
are underfunded; (ii) except for normal increases in the ordinary course of
business consistent with past practice that in the aggregate do not result in
aggregate annual base compensation expense to Summit in excess of 105% of
that in effect as of December 31, 1996, increase in any manner the
compensation of any director, officer, or employee, or pay any benefit not
required by any plan and arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or performance
units or shares) or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing; or (iii) enter into or renew any
contract, agreement, commitment or arrangement providing for the payment to
any director, officer or employee of Summit or the Bank of compensation or
benefits contingent, or the terms of which are materially altered, upon the
occurrence of the Merger.
(f) NO SOLICITATIONS. Summit shall not permit the Bank to, nor
shall it authorize or permit any of its officers, directors or employees or
any investment banker, financial advisor, attorney, accountant or other
representative or agent retained by it or the Bank to solicit, 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 takeover proposal
(as defined below), or agree or endorse any takeover proposal, or participate
in any discussions or negotiations, or provide third parties with any
nonpublic information, relating to any such inquiry or proposal. Summit
shall promptly advise CFB orally and in writing of any such inquiries or
proposals, including all of the material terms thereof. As used in this
Agreement, "takeover proposal" shall mean any tender or exchange offer,
proposal for a merger, consolidation or other business combination involving
Summit or any proposal or offer to acquire in any manner a substantial equity
interest in, or a substantial portion of the assets of Summit other than the
transactions contemplated or permitted by this Agreement.
(g) NO ACQUISITIONS. Other than (i) acquisitions described in
Section 4.1(g) of the Summit Disclosure Schedule, or (ii) acquisitions which
may be mutually agreed to by the parties, Summit shall not, nor shall permit
the Bank 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
17
<PAGE>
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 Bank 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 Summit assets in each case in the ordinary
course of business.
(h) INSURANCE. Summit and the Bank shall maintain the insurance
coverage (or coverage of a like kind and amount) referenced in Section 3.1(o)
through the Effective Time.
(i) POOLING RESTRICTIONS. From and after the date of this
Agreement, neither Summit nor the Bank shall take any action which, with
respect to Summit, would disqualify the Merger as a "pooling of interests"
for accounting purposes.
(j) FINANCIAL STATEMENTS. Summit shall have prepared, filed and
submitted to CFB all quarterly and management prepared financial statements
for any periods ending at least 30 days before the Closing Date.
(k) ADDITIONAL COVENANTS OF SUMMIT. From the date of this
Agreement to the Closing Date or the earlier termination of this Agreement,
Summit, EXCEPT WITH THE PRIOR WRITTEN CONSENT OF CFB (except as otherwise
specifically provided in clauses (xiv) and (xv) of this Section 4.1(k)), or
as specifically required under the Agreement, shall not, nor shall it allow
the Bank to:
(i) Except as set forth in Section 4.1(g) of the Summit
Disclosure Schedule, issue, sell or commit to issue or sell any
shares of capital stock of Summit or the Bank, securities
convertible into or exchangeable for capital stock of Summit or the
Bank, warrants, options or other rights to acquire such stock, or
enter into any agreement with respect to the foregoing other than
issuance by the Bank of capital stock to Summit;
(ii) Redeem, purchase or otherwise acquire (except for trust
account shares) directly or indirectly, any shares of capital stock
of Summit or the Bank or any securities convertible or exercisable
for any shares of capital stock of Summit or the Bank;
(iii) Split, combine or reclassify any of capital stock of
Summit or the Bank or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of, or in substitution
for shares of capital stock of Summit or the Bank;
(iv) Borrow, assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other
individual, corporation or other entity, any material amount;
18
<PAGE>
(v) Other than in the ordinary course of business, discharge
or satisfy any material lien or encumbrance on the properties or
assets of the Bank or pay any material liability;
(vi) Mortgage, pledge or subject to any lien or other
encumbrance any of its assets, except (A) in the ordinary course of
business, (B) liens and encumbrances for current property taxes not
yet due and payable, and (C) liens and encumbrances which do not
materially affect the value or interfere with the current use or
ability to convey the property subject thereto or affected thereby;
(vii) Sell, assign or transfer any tangible or intangible
assets with a book value greater than $10,000, except in the
ordinary course of business;
(viii) Enter into any individual employment, agency or other
contract or arrangement for the performance of personal services for
an amount in excess of $10,000 (except for service agreements in the
ordinary course of business);
(ix) Amend the Bank' or Summit's Articles of Association,
Articles of Incorporation, Bylaws or other governing documents;
(x) Cancel any material debt or claim or waive any right of
material value, except in the ordinary course of business;
(xi) Repurchase or enter into any agreement to repurchase all
or any portion of any loan previously participated to any other
financial institution other than loans repurchased in compliance
with all applicable laws and regulations;
(xii) Originate any loan which is thereafter participated to
another financial institution providing for payment upon default on
any basis other than pro rata;
(xiii) 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;
(xiv) (A) make, or agree to make, any fully secured loan or
increase any existing fully secured loan for an amount in excess of
$150,000, 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 $25,000 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
19
<PAGE>
policies; (D) make, or agree to make, any additional advance in an
amount in excess of $25,000 with respect to any loan classified
"substandard" or less by any bank regulatory agency or pursuant to
the Bank's risk rating system; or (E) make any change with respect
to the terms of any existing loan, except in the ordinary course of
business (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). Section 4.1(xiv), 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;
(xv) Make or agree to make any loan to any Bank Principal or
any person, corporation or entity in violation of any state or
federal law or regulation;
(xvi) Incur any obligation or liability with respect to
capital expenditures which exceeds $10,000 for any single matter or
$50,000 in the aggregate, except for capital expenditures described
in Section 3.1(s) of the Summit Disclosure Schedule;
(xvii) Fail to timely pay and discharge all federal and state
taxes and other accounts payable for which it is liable, provided,
that the Bank may deposit an amount equal to any such taxes, in lieu
of the payment thereof, into a reserve account, determined
consistently with prior practices, from which such taxes will be
paid when and to the extent they are found to be properly due and
payable;
(xviii) Pay or commit to pay any additional salary or other
compensation to any of the Bank's officers, directors or employees;
(xix) Except as otherwise required pursuant to Section 4.1(e),
enter into, adopt, amend (except as may be required by law),
terminate or make or grant any increase above current funding levels
in any of the Plans (other than normal premium increases on current
health care insurance) or arrangement;
(xx) Purchase or sell any bonds or other investment securities
without prior written consent of CFB or make or agree to make any
investment in violation of any federal law or regulation except that
the Bank may purchase U.S. Treasury or Agencies securities with
maturity dates of twenty-four (24) months or less;
(xxi) Fail to charge and pay interest rates on loans and
deposits, respectively, not materially consistent with practices in
the Bank's marketplace;
(xxii) Fail to use its reasonable best efforts to comply with
any law, rule, regulation or order applicable to the Bank and/or
Summit if such failure would have a material adverse effect upon
Summit;
20
<PAGE>
(xxiii) Fail to make all appropriate and required transfers to
the Bank's loan loss reserves based upon existing policies of the
Bank or at the request of any regulatory agency or, in any event,
fail to maintain a loan loss reserve of at least equal to
$2,000,000;
(xxiv) Change any accounting methods, practices or procedures
with respect to the accumulation and presentation of financial
information, except as directed by applicable law or regulation or
to conform with accounting standards;
(xxv) Declare or pay any dividends or distributions with
respect to its stock after the Determination Date; or
(xxvi) Fail to use its reasonable best efforts to obtain the
consent or approval of each person (other than the government
authorities referred to in Section 6.1(c)) whose consent or approval
is required in order to permit a succession by the Surviving
Corporation pursuant to the Merger to any obligation, right or
interest of Summit or the Bank under any loan or credit agreement,
note, mortgage, indenture, lease, license or other agreement or
instrument.
4.2 COVENANTS OF CFB. During the period from the date of this Agreement
and continuing until the Effective Time, CFB agrees as follows:
(a) ORDINARY COURSE. Except as set forth in Section 4.2(a) of
the CFB Disclosure Schedule, CFB shall carry on its business in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted.
(b) APPLICATION. Subject to the required cooperation of Summit and
its affiliates, CFB shall use its reasonable best efforts to prepare and
submit within thirty (30) days of the date hereof an application to the
Federal Reserve Bank of Minneapolis for prior approval pursuant to Section
3(a)(5) of the Bank Holding Company Act of 1956, as amended, of the proposed
transaction, and to prosecute all required federal and state applications.
(c) COOPERATION. CFB will furnish to Summit all the information
concerning CFB required for inclusion in, and will cooperate in the
preparation of, the Prospectus-Proxy Statement to be sent to the shareholders
of Summit. CFB agrees promptly to advise Summit if at any time prior to the
Effective Date of the Merger, any information provided by CFB in the
Prospectus-Proxy Statement becomes incorrect or incomplete in any material
respect and to provide the information needed to correct such inaccuracy or
omission.
(d) REGISTRATION STATEMENT. As promptly as practicable after the
execution of this Agreement, CFB will file with the SEC a registration
statement on Form S-4 under the Securities Act (the "Registration Statement")
and any other applicable documents, which will include a prospectus and joint
proxy statement (the "Prospectus-Proxy Statement"), and will use its best
efforts to cause the Registration Statement to become effective under the
Securities Act and
21
<PAGE>
applicable state securities laws as soon as practicable. CFB shall advise
Summit promptly when the Registration Statement has become effective and of
any supplements or amendments thereto, and CFB shall furnish Summit with
copies of all such documents. At the time the Registration Statement becomes
effective, the Registration Statement and the Prospectus-Proxy Statement will
comply in all material respects with the provisions of the Securities Act and
the published rules and regulations thereunder, and will not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements contained therein,
in light of the circumstances under which they are made, not misleading. At
the time of mailing thereof to the Summit shareholders, at the time of the
Summit shareholders' meeting referred to in Section 4.1(b) hereof and at the
Effective Time of the Merger, the Prospectus-Proxy Statement included as part
of the Registration Statement or any amendment thereof or supplement thereto,
will not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements contained therein, in light of
the circumstances under which they are made, not misleading or omit to state
a material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the Summit
shareholders' meeting; PROVIDED, HOWEVER, that none of the provisions of this
subparagraph shall apply to statements in or omissions from the Registration
Statement or the Prospectus-Proxy Statement made in reliance upon and in
conformity with information furnished by Summit or the Bank for use in the
Registration Statement or the Prospectus-Proxy Statement. CFB shall bear
the costs of all SEC filing fees with respect to the Registration Statement,
the costs of printing the Prospectus-Proxy Statement, and the costs of
qualifying the shares of CFB Common Stock under state blue sky laws as
necessary.
(e) LISTING. CFB will file all documents required to be filed to
obtain approval for listing the CFB Common Stock to be issued pursuant to the
Merger on the NASDAQ National Market System and use its best efforts to
effect said listing.
(f) SHARES TO BE ISSUED. The shares of CFB Common Stock to be
issued by CFB to the shareholders of Summit pursuant to this Agreement will,
upon such issuance and delivery to said shareholders pursuant to the
Agreement, be duly authorized, validly issued, fully paid and nonassessable.
The shares of CFB Common Stock to be delivered to the shareholders of Summit
pursuant to this Agreement are and will be free of any preemptive rights of
the stockholders of CFB.
(g) BLUE SKY. CFB will file all documents required to obtain prior
to the Effective Time of the Merger all necessary Blue Sky permits and
approvals, if any, required to carry out the transactions contemplated by
this Agreement, will pay all expenses incident thereto and will use its best
efforts to obtain such permits and approvals.
(h) CONFIDENTIAL INFORMATION. CFB will hold in confidence all
documents and information concerning Summit and the Bank furnished to it and
its representatives in connection with the transactions contemplated by this
Agreement and will not release or disclose such information to any other
person, except as required by law and except to its outside professional
22
<PAGE>
advisers in connection with this Agreement, with the same undertaking from
such professional advisers. If the transactions contemplated by this
Agreement shall not be consummated, such confidence shall be maintained and
such information shall not be used in competition with Summit (except to the
extent that such information can be shown to be previously known to CFB, in
the public domain, or later acquired by CFB from other legitimate sources)
and, upon request, all such documents, copies thereof or extracts therefrom
shall immediately thereafter be returned to Summit.
(i) REGISTRATION STATEMENT. CFB will furnish or cause to be
furnished all of the information concerning CFB and the CFB Subsidiaries
required for inclusion in, and will cooperate with Summit in the preparation
of the Registration Statement, or any statement or application made by Summit
to any governmental body in connection with the transactions contemplated by
this Agreement. CFB agrees to advise Summit if at any time prior to the
Effective Time, any information provided by or on behalf of CFB becomes
incorrect or incomplete in any material respect and to provide the
information needed to correct such inaccuracy or omission.
4.3 COVENANTS OF SUMMIT AND CFB. During the period from the date of
this Agreement and continuing until the Effective Time, Summit and CFB agree
as to themselves and their subsidiaries that, except as expressly
contemplated or permitted by this Agreement, or to the extent that the
parties shall otherwise consent in writing:
(a) GOVERNING DOCUMENTS. No party shall amend its Certificate or
Articles of Incorporation or Bylaws.
(b) OTHER ACTIONS. Unless such action is required by law or sound
banking practice, no party knowingly and intentionally shall, or shall permit
any of its Subsidiaries to, take any action that (i) is intended to result in
any of its representations and warranties set forth in this Agreement being
or becoming untrue in any material respect, or in any of the conditions to
the Merger set forth in Article VI not being satisfied or in a violation of
any provision of this Agreement, or (ii) would adversely affect the ability
of any of them to obtain any of the Requisite Regulatory Approvals (as
defined in Section 6.1(c)) without imposition of a condition or restriction
of the type referred to in Section 6.1(f) hereof except, in every case, as
may be required by applicable law or this Agreement.
(c) ADVICE OF CHANGES; GOVERNMENT FILINGS. Each party shall
promptly advise the other orally and in writing of any change or event
constituting a material breach of any of the representations, warranties or
covenants of such party contained herein. CFB shall file all reports
required to be filed by it with the SEC between the date of this Agreement
and the Effective Time and shall deliver to Summit copies of all such reports
promptly after the same are filed. CFB, Summit and each subsidiary of CFB or
Summit that is a bank shall file all Call Reports with the appropriate Bank
Regulators and all other reports, applications and other documents required
to be filed with the appropriate Bank Regulators between the date hereof and
the Closing Date and shall make available to the other party copies of all
such reports promptly after the same are filed.
23
<PAGE>
(d) TITLE OF PROPERTY. Summit agrees to deliver to CFB (at
Summit's expense) within thirty (30) days of the date hereof, a title
insurance commitment for all real property owned by Summit or the Bank in the
State of Colorado (including property held as OREO) (the "Title Commitment").
CFB shall have thirty (30) days after receipt by CFB's counsel of said Title
Commitment within which to notify Summit, in writing, of CFB's objection to
any exceptions (other than any exception of the type described in Section
3.1(n)(i) through (iv)) to the title shown in said Title Commitment. In the
event of any such objection, then Summit shall have thirty (30) days from the
date of such objection within which to attempt to eliminate such objected to
exceptions to title from the Title Commitment. In the event such objected to
exceptions are not eliminated or satisfied to the reasonable satisfaction of
CFB, CFB may terminate this Agreement pursuant to Section 7.1 hereof and such
termination shall be the sole and exclusive remedy for the failure to
eliminate or satisfy such exceptions.
(e) ENVIRONMENTAL ASSESSMENT. Summit shall engage at its expense
an independent, qualified environmental engineering firm, acceptable to CFB
for the purpose of conducting a Phase I Hazardous Waste Assessment (the
"Assessment") of all real properties owned or controlled by the Bank. The
Assessment shall satisfy ASTM's E-1527 Standard Practice and shall include a
record review of publicly available federal, state and local sources of
environmental records. The Assessment shall be completed within thirty (30)
days after the date hereof. CFB shall have a period of thirty (30) days from
the date of receipt of such Assessment to review such Assessment and give
written notice to Summit stating either that (i) such Assessment is approved
by CFB or (ii) such Assessment is not approved by CFB and the reasons
therefor.
If CFB gives a notice pursuant to (ii) above which sets forth specific
objections to the Assessment, then CFB may, at its option, terminate this
Agreement as of the date which is sixty (60) days after the date of such
notice unless during such sixty (60) day period Summit corrects or satisfies
such objections, or indemnifies CFB against loss, liability or expense, to
the reasonable satisfaction of CFB.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 REGULATORY MATTERS.
(a) CFB shall use its reasonable best efforts to have the
Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing, and, following the record date for
the stockholder meeting of Summit, thereafter mail the Prospectus-Proxy
Statement to the stockholders of Summit.
(b) The parties hereto shall cooperate with each other and use
their reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all necessary applications, notices, petitions,
filings and other documents, and to obtain as promptly as
24
<PAGE>
practicable all necessary permits, consents, and authorizations of all
governmental entities necessary to consummate the Merger ("Requisite
Regulatory Approvals"). Summit and CFB shall have the right to review in
advance, and to the extent practicable each will consult the other on,
subject to applicable laws relating to the exchange of information, all the
information relating to Summit or CFB, as the case may be, and any of their
respective subsidiaries, which appear in any filing made with, or written
materials submitted to any governmental entity in connection with the Merger.
In exercising the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable.
(c) Summit and CFB shall promptly furnish each other with copies of
written communications received by Summit or CFB, as the case may be, or any
of their respective Subsidiaries, Affiliates or Associates (as such items are
defined in Rule 12b-2 under the Exchange Act as in effect on the date hereof)
from, or delivered by any of the foregoing to, any governmental entity in
respect of the Merger.
5.2 LETTERS OF SUMMIT OFFICERS. Summit shall cause to be delivered to
CFB a letter of Summit's chief financial officer in substantially the form
shown on EXHIBIT 5.2A dated (i) the date on which the Registration Statement
shall become effective and (ii) the business day prior to the Closing Date,
and addressed to CFB.
CFB shall cause to be delivered to Summit a letter of CFB's chief
financial officer in substantially the form shown on EXHIBIT 5.2B dated (i)
the date on which the Registration Statement shall become effective and (ii)
the business day prior to the Closing Date, and addressed to Summit.
5.3 ACCESS TO INFORMATION. Upon reasonable notice and subject to
applicable laws relating to the exchange of information, Summit and CFB shall
each (and cause each of its subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of CFB, access
during normal business hours during the period prior to the Effective Time,
to all its properties, books, contracts, commitments and records for the
purpose of updating any review of such items performed prior to the date of
this Agreement and, during such period, Summit and CFB shall (and shall cause
each of its subsidiaries to) make available to the other: (a) a copy of each
report, schedule, registration statement and other document filed or received
by it during such period pursuant to the requirements of federal or state
securities laws or federal or state banking laws (other than reports or
documents which either party is not permitted to disclose under applicable
law); and (b) all other information concerning its business, properties and
personnel as either party may reasonably request. It is the intention of the
parties that CFB shall conduct an examination of Summit and the Bank (i)
promptly following execution of the Agreement and, again (ii) prior to the
Closing Date in order to confirm compliance with the representations,
warranties and covenants set forth in this Agreement. Any required
adjustments to the Financial Statements shall be made by Summit within ten
(10) business days following identification by CFB. In the event of a
dispute between Summit and CFB over whether adjustments are in conformity
with generally accepted accounting principles, the parties agree to share the
cost of referring the matter to Grant Thornton L.L.P. and to abide by its
final
25
<PAGE>
determination. No investigation by either party shall affect the
representations and warranties set forth herein.
5.4 AFFILIATES. Each of Summit and CFB shall use its reasonable best
efforts to cause each director, executive officer and other person who is an
"affiliate" (for purposes of Rule 145 under the Securities Act) of Summit or
CFB to deliver to the other party hereto, as soon as practicable after the
date hereof, and at least 32 days prior to the Closing Date, a written
agreement substantially in the form of EXHIBIT 5.4.
5.5 EMPLOYEE BENEFIT PLANS. Each person who is an employee of the Bank
as of the Effective Time ("Bank Employees") shall be participants in the
employee welfare plans, and shall be eligible for participation in the
pension plans of CFB, as in effect from time to time, subject to any
eligibility requirements (with full credit for years of past service to any
of the Bank, or to any predecessor-in-interest of the Bank to the extent such
service is presently given credit under the Plans of the Bank described in
Section 3.1(k) hereof, for the purpose of satisfying any eligibility and
vesting periods) applicable to such plans (but not subject to any
pre-existing condition exclusions) and shall enter each welfare plan
immediately after the Effective Time and shall enter each pension plan not
later than the first day of the calendar year which begins at least 32 days
after the Effective Time. For the purpose of determining each Bank
Employee's benefit for the year in which the Merger occurs under the CFB
vacation program, vacation taken by a Bank Employee in the year in which the
Merger occurs will be deducted from the total CFB benefit. Each Bank
Employee shall be eligible for participation, as a new employee with the
credit for past service described above, in the CFB Plans under the terms
thereof.
5.6 EXPENSES. Except as otherwise stated herein, whether or not the
Merger is consummated, all costs and expenses incurred in connection with
this Agreement, and the transactions contemplated hereby shall be paid by the
party incurring such expense, except as may be permitted by Section 7.2. All
of the expenses (including but not limited to professional fees) incurred or
to be incurred by Summit in connection with the Merger shall be accrued as
expenses on the Determination Date Balance Sheet.
5.7 ADDITIONAL AGREEMENTS; BEST EFFORTS. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use its
reasonable best efforts to take all action and to do all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement, including,
without limitation, cooperating fully with the other party hereto, providing
the other party hereto with any appropriate information and making all
necessary filings in connection with the Requisite Regulatory Approvals.
Without limiting the foregoing, Summit agrees to (i) cooperate with CFB and
use its best efforts in support of a request by CFB to the appropriate
regulatory agencies to provide interim management assistance to the Bank
pending consummation of the Agreement, and (ii) cooperate with CFB in
converting the Bank to CFB's data processing system. In the event the Bank's
data processing system is converted prior to consummation, CFB shall
26
<PAGE>
not charge the Bank at a rate in excess of the rate the Bank currently pays
for comparable services.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to
the satisfaction prior to the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been approved
and adopted by the affirmative vote of the holders of two-thirds of the
outstanding shares of Summit Common Stock.
(b) NASDAQ LISTING. The shares of CFB Common Stock issuable to the
Summit stockholders pursuant to this Agreement shall have been approved for
listing on the NASDAQ National Market System, upon notice of issuance.
(c) OTHER APPROVALS. Other than the filing provided for by Section
1.1, all consents, orders or approvals of, or declarations or filings with,
and all expirations of waiting periods imposed by, any governmental entity
(collectively, the "Consents") which are prescribed by law as necessary for
the consummation of the Merger and the other transactions contemplated hereby
(other than immaterial Consents) shall have been filed, occurred or been
obtained and all such Requisite Regulatory Approvals shall be in full force
and effect.
(d) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order, injunction
or decree issued by any court or agency of competent jurisdiction or other
legal restraint or prohibition (an "Injunction") preventing the consummation
of the Merger or any of the transactions contemplated hereby shall be in
effect, nor shall any proceeding by any governmental entity seeking any such
Injunction be pending. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, or enforced by any governmental
entity which prohibits, restricts or makes illegal consummation of the Merger.
(f) NO UNDULY BURDENSOME CONDITION. There shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced
or deemed applicable to the Merger or any of the transactions contemplated
hereby, by any federal or state governmental entity which, in connection with
the grant of a Requisite Regulatory Approval, imposes any condition or
restriction upon CFB, Summit, or any of their Subsidiaries which would so
materially adversely
27
<PAGE>
impact the economic or business benefits of the transactions contemplated by
this Agreement as to render inadvisable, in the reasonable business judgment
of the Board of Directors of either CFB or Summit, the consummation of the
Merger.
6.2 CONDITIONS TO OBLIGATIONS OF CFB. The obligation of CFB to effect
the Merger are also subject to the satisfaction or waiver by CFB prior to the
Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Summit set forth in this Agreement shall be true and correct in
all material respects as of the date of the 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 the Closing Date, except where the failure
to be true and accurate in all material respects would not have or would not
be reasonably expected to have a material adverse effect on Summit, and CFB
shall have received a certificate signed on behalf of Summit by the Chairman
of the Board of Summit to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF SUMMIT. Summit shall have
performed in all materials respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and CFB shall
have received a certificate signed on behalf of Summit by the Chairman of the
Board of Summit to such effect.
(c) 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
Summit's accountants, in form and substance reasonably satisfying to Ernst &
Young, confirming certain facts on behalf of Summit.
(d) LEGAL OPINION. CFB shall have received the opinion of McKenna
& Cuneo, L.L.P., counsel to Summit, dated the Closing Date, in substantially
the form shown on EXHIBIT 6.2, and such opinion shall not have been withdrawn
prior to the Effective Time.
6.3 CONDITIONS TO OBLIGATIONS OF SUMMIT. The obligation of Summit to
effect the Merger is also subject to the satisfaction or waiver by Summit
prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of CFB set forth in this Agreement shall be true and correct in
all material 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 the Closing Date, except as otherwise
contemplated by this Agreement, and Summit shall have received a certificate
signed on behalf of CFB by the Chairman and Chief Executive Officer and by
the Chief Financial Officer of CFB to such effect.
28
<PAGE>
(b) PERFORMANCE OF OBLIGATIONS OF CFB. CFB and the Acquisition
Subsidiary shall have performed in all material respects all obligations
required to be performed by either of them under this Agreement at or prior
to the Closing Date, and Summit shall have received a certificate signed on
behalf of CFB and the Acquisition Subsidiary by the Chairman and Chief
Executive Officer and by the Chief Financial Officer of CFB to such effect.
(c) CONSENTS UNDER AGREEMENTS. CFB shall have obtained the consent
or approval of each person (other than the Governmental Entities referred to
in Section 6.1(c)) whose consent or approval shall be required in connection
with the transactions contemplated hereby under any loan or credit agreement,
note, mortgage, indenture, lease, license or other agreement or instrument to
which CFB or any of its subsidiaries is a party or is otherwise bound, except
those for which failure to obtain such consents and approvals would not, in
the reasonable opinion of Summit, individually or in the aggregate, have a
material adverse effect on CFB or upon the consummation of the transactions
contemplated hereby.
(d) TAX OPINION. CFB and Summit shall have received the opinion of
Lindquist & Vennum P.L.L.P., dated the Closing Date, to the effect that (i)
the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, (ii) CFB and
Summit will each be a party to that reorganization within the meaning of
Section 368(b) of the Code, (iii) shareholders of Summit who exchange their
shares of Summit Common Stock for shares of CFB Common Stock will not
recognize gain or loss, for purposes of federal income tax, except to the
extent of the cash received in lieu of fractional shares, and (iv) Summit
will not recognize gain or loss, for purposes of federal income tax, as a
result of consummation of the Merger.
(e) LEGAL OPINION. Summit shall have received the opinion of
Lindquist and Vennum, P.L.L.P., counsel to CFB, dated the Closing Date, in
substantially the form shown on Exhibit 6.3, and such opinion shall not have
been withdrawn prior to the Effective Time.
ARTICLE 7
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated in writing at any
time prior to the Effective Time, whether before or after approval of the
Merger by the stockholders of Summit or CFB, only in the following
circumstances:
(a) by mutual consent of CFB and Summit in a written instrument, if
the Board of Directors of each so determines by a vote of a majority of the
members of its entire Board;
(b) by either CFB or Summit if (i) any Requisite Regulatory
Approval shall have been denied; or (ii) any governmental entity of competent
jurisdiction shall have issued a final nonappealable order enjoining or
otherwise prohibiting the consummation of the transactions contemplated by
this Agreement;
29
<PAGE>
(c) by either CFB or Summit if the Merger shall not have been
consummated on or before December 31, 1997, unless the failure of
consummation shall be due to the failure of the party seeking to terminate to
perform or observe in all material respects the covenants and agreements
hereunder to be performed or observed by such party;
(d) by either CFB or Summit if there shall have been a material
breach of any of the covenants or agreements set forth in this Agreement on
the part of the other party, which breach shall not have been cured before
closing or within twenty (20) business days following receipt by the
breaching party of written notice of such breach from the other party,
whichever occurs first; or
(e) by CFB pursuant to the terms of Section 4.3(d) or 4.3(e), as
applicable.
7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either CFB or Summit as provided in Section 7.1, this Agreement
shall forthwith become void and have no effect except that the obligations
under Sections 4.1(d), 4.2(h), 5.6, and 7.2 shall survive termination of this
Agreement; provided, however, that no party shall be relieved or released
from any liabilities or damages arising out of the willful breach by such
party of any provision of this Agreement.
7.3 AMENDMENT. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the stockholders of Summit and CFB, provided, however, that after
any such approval, no amendment shall be made which by law requires further
approval by such stockholders, without such further approval. This Agreement
may not be amended except by an instrument in writing signed on behalf of
each of the parties hereto.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto; (ii) waive any inaccuracies in the representations and warranties
contained herein or in any of the Schedules; and (iii) waive compliance 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.
30
<PAGE>
ARTICLE 8
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No representation
or warranty contained in this Agreement shall survive the Merger or the
termination of this Agreement, except that Section 3.2, 4.2(c) - (f),
4.2(h) - (i), 5.6, 8.6 and 8.10 shall survive the Merger, and Sections 4.1(d),
4.2(h), 5.6 and 7.2 shall survive the termination of the Agreement.
8.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given when received by 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 or Acquisition
Subsidiary, to: Community First Bankshares, Inc.
Attn: Donald R. Mengedoth, President
520 Main Avenue
Fargo, ND 58124
with copies to: Steven J. Johnson, Esq.
Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South 8th Street
Minneapolis, MN 55402-2205
and
(b) if to Summit, to: First National Summit Bankshares, Inc.
Attn: James C. Noone, D.V.M.
201 Main Street
Gunnison, CO 86723
with copies to: Patrick B. Augustine, Esq.
McKenna & Cuneo, L.L.P.
370 17th Street #4850
Denver, CO 80202
8.3 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to 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."
31
<PAGE>
8.4 COUNTERPARTS. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when 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.
8.5 ENTIRE AGREEMENT: THIRD PARTY BENEFICIARIES; RIGHTS OF OWNERSHIP.
This Agreement (including the documents and the instruments referred to
herein) 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. This Agreement is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder, except
that Sections 3.2 and 4.2(i) are intended for the benefit of the Summit
shareholders; and Section 5.5 is intended for the benefit of employees of the
Bank. CFB shall be liable to such third-party beneficiaries for damages
caused by the breach of such Sections. 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.
8.6 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Colorado.
8.7 PUBLICITY. Except as otherwise required by law or the rules of the
NASDAQ or the National Association of Securities Dealers, so long as this
Agreement is in effect, neither CFB nor Summit shall, nor shall either of
them permit any of its subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld.
8.8 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.
8.9 ENFORCEMENT OF AGREEMENT. Each of the parties hereto agrees that
it will not object if the other party seeks to obtain an injunction to
prevent breaches of this Agreement or to enforce specifically the terms and
provision hereof in any court in the United States or any state have
jurisdiction. The enforcing party shall be entitled to recover its attorneys
fees incurred in the successful enforcement of the terms and provisions of
this Agreement.
8.10 INDEMNIFICATION. CFB will indemnify the officers and directors of
Summit and Bank for all actions they take in the performance of their duties
as required by this Agreement to the same extent CFB indemnifies its officers
and directors for all actions they take in the performance of their duties as
required by this Agreement.
32
<PAGE>
IN WITNESS WHEREOF, CFB, Acquisition Subsidiary and Summit have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first above written.
COMMUNITY FIRST BANKSHARES, INC.
By: /s/ Donald R. Mengedoth
---------------------------------
Name: Donald R. Mengedoth
Attest: Title: Chairman and President
/s/ Mark A. Anderson
- -------------------------------
Name: Mark A. Anderson
Title: Executive Vice President SUMMIT ACQUISITION CORPORATION
By: /s/ Donald R. Mengedoth
-----------------------------
Name: Donald R. Mengedoth
Title: President
Attest:
/s/ Mark A. Anderson
- ----------------------------
Name: Mark A. Anderson
Title: Secretary/Treasurer FIRST NATIONAL SUMMIT BANKSHARES INC.
By: /s/ James C. Noone, D.V.M.
-------------------------------
Attest: Name: James C. Noone, D.V.M.
Title: Chairman
/s/ Alanson Hegemen
- -----------------------
Name: Alanson Hegeman
Title: Secretary
33
<PAGE>
TABLE OF EXHIBITS
EXHIBIT A -- Articles of Merger
EXHIBIT B -- Summit Disclosure Schedule
EXHIBIT C -- CFB Disclosure Schedule
EXHIBIT 2.1(c) -- Illustrations of Exchange Rate Calculations
EXHIBIT 5.4 -- Affiliate Agreement
EXHIBIT 6.2 -- McKenna & Cuneo LLP Opinion
EXHIBIT 6.3 -- Lindquist & Vennum P.L.L.P. Opinion
<PAGE>
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER is dated as of the
22 day of August, 1997 and made and entered into by and among COMMUNITY FIRST
BANKSHARES, INC., a Delaware corporation ("CFB"), SUMMIT ACQUISITION
CORPORATION, a Colorado corporation ("Acquisition Subsidiary") and FIRST
NATIONAL SUMMIT BANKSHARES, INC., a Colorado corporation ("Summit").
WHEREAS, the parties hereto are parties to an Agreement and Plan of
Merger dated August 22, 1997 (the "Merger Agreement"); and
WHEREAS, the parties desire to make certain changes to the Merger
Agreement, as hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound hereby, the parties hereto agree as follows:
1. AMENDMENT OF SECTION 1.3(a) OF THE MERGER AGREEMENT. Section 1.3(a)
of the Merger Agreement is amended and restated in its entirety as follows:
(a) At the Effective Time: (i) the separate existence of Summit
shall cease and Summit shall be merged with and into Acquisition
Subsidiary; (ii) the Articles of Incorporation of the Acquisition
Subsidiary, as in effect immediately prior to the Effective Time shall
be the Articles of Incorporation of the Surviving Corporation until
duly amended in accordance with applicable law; (iii) the By-laws of
the Acquisition Subsidiary, as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until
amended in accordance with applicable law; (iv) CFB, as the holder of
all of the outstanding common stock of the Acquisition Subsidiary,
shall continue as sole shareholder of the Surviving Corporation;
(v) the holders of certificates representing shares of Summit
Preferred Stock (as defined in Section 2.1(a) below) shall cease to
have any rights as shareholders of Summit, except such rights, if any,
as they may have pursuant to Article 113 of the Colorado Act, and
their sole right shall be the right to receive in cancellation
thereof, the sum of One Hundred and no/100 Dollars ($100.00) per
share, plus accrued but unpaid dividends thereon to the Effective
Time; and (vi) the holders of certificates
35
<PAGE>
thereon to the Effective Time; and (vi) the holders of certificates
representing shares of Summit Common Stock (as defined in Section
2.1(b) below) shall cease to have any rights as shareholders of Summit,
except such rights, if any, as they may have pursuant to Article 113 of
the Colorado Act, and their sole right shall be the right to receive (A)
the number of whole shares of CFB Common Stock (as defined in Section
2.1(b) below) into which their shares of Summit Common Stock have been
converted in the Merger as provided herein (together with any dividend
payments with respect thereto, to the extent provided in Section 2.2(c)
below), and (B) the cash value of any fraction of a share of CFB Common
Stock into which their shares of Summit Common Stock have been converted
as provided herein.
2. AMENDMENT TO SECTION 1.4 OF THE MERGER AGREEMENT. Section 1.4 of
the Merger Agreement is amended and restated in its entirety as follows:
1.4 CALCULATION OF SUMMIT VALUE. Subject to the provisions of
Section 4.1(k), as of the last day of the month immediately preceding
the Effective Time (the "Determination Date"), Summit shall prepare a
consolidated balance sheet of Summit in accordance with generally
accepted accounting principles ("GAAP"), but excluding the effects of
any adjustments otherwise required by FASB 115 and excluding any
footnotes that might be required to be included with such financial
statements (the "Determination Date Balance Sheet"), together with a
consolidated statement of income (the "Interim Income") for the period
from March 31, 1997 to the Determination Date (the "Interim Income
Statement"), such consolidated statement of income shall be prepared
in accordance with GAAP, but excluding the effects of any adjustments
otherwise required by FASB 115 and excluding any footnotes that might
be required to be included with such statements (the "Determination
Date Balance Sheet and Interim Income Statement are herein referred to
as the "Determination Date Financial Statements"). The Determination
Date Financial Statements shall be delivered to CFB as soon as they
are prepared (and in no event less than five (5) business days before
the Closing) so that CFB and its accountants may review
36
<PAGE>
and confirm their accuracy. For purposes of this Agreement, the
"Summit Value" shall be equal to the total consolidated assets of
Summit minus the total consolidated liabilities of Summit, all as
reflected on the Determination Date Balance Sheet, prepared in
accordance with this Section 1.4. Total consolidated assets of Summit
shall be determined net of loan loss reserves. Total consolidated
liabilities of Summit shall include without limitation (i) provision
for taxes and the expense of the preparation of the final tax return
for Summit; (ii) value of the remaining 1997 annual fees due National
Commerce Bank Services, Inc. under the terms of the Consulting and
License Agreement dated September 8, 1995 by and between the Bank and
National Commerce Bank Services, Inc.; (iii) any remaining liabilities
under covenants not to compete entered into between the Bank and current
or former employees; (iv) liabilities to participants upon termination
of the ESI and DDI plans; and (v) any remaining liabilities under the
Service Agreement between the Bank and Dougherty & Associates dated
January 7, 1997.
3. AMENDMENT OF SECTION 4.1(e) OF THE MERGER AGREEMENT. Section 4.1(e)
of the Merger Agreement is amended and restated in its entirety as follows:
(e) BENEFIT PLANS. Summit and the Bank will, to the extent
legally permissible, take all action necessary or required (i) to
terminate or amend, if requested by CFB and at CFB's cost, 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. Notwithstanding the foregoing, Summit and the Bank
will terminate the Executive Supplemental Income and Director Deferred
Income plans, at the expense of Summit and the Bank,
37
<PAGE>
and fully provide for any and all resulting liabilities as of the
Determination Date Financial Statement.
Except as set forth in Section 3.1(k) of the Summit Disclosure
Schedule, and except as otherwise required pursuant to this
Section 4.1(e), Summit agrees as to itself and the Bank that it will
not, without the prior written consent of CFB, (i) enter into, adopt,
amend (except as may be required by law) or terminate any Plan, as the
case may be, or any other employee benefit plan or any agreement,
arrangement, plan or policy between Summit or any of the Bank and one
or more of its directors or officers; provided, however, that Summit
or the Bank may amend any of the Plans to reduce or eliminate a
requirement of mandatory periodic contributions provided that if any
of the Plans do not have assets with an aggregate value that exceeds
the present value of its liability for accrued benefits, all as
determined on a termination basis, then Summit shall accrue on its
Determination Date Financial Statements the amount by which any of the
Plans are underfunded; (ii) except for normal increases in the
ordinary course of business consistent with past practice that in the
aggregate do not result in aggregate annual base compensation expense
to Summit in excess of 105% of that in effect as of December 31, 1996,
increase in any manner the compensation of any director, officer, or
employee, or pay any benefit not required by any plan and arrangement
as in effect as of the date hereof (including, without limitation, the
granting of stock options, stock appreciation rights, restricted
stock, restricted stock units or performance units or shares) or enter
into any contract, agreement, commitment or arrangement to do any of
the foregoing; or (iii) enter into or renew any contract, agreement,
commitment or arrangement providing for the payment to any director,
officer or employee of Summit or the Bank of compensation or benefits
contingent, or the terms of which are materially altered, upon the
occurrence of the Merger.
4. ESCROW AND INDEMNITY AGREEMENT. Concurrently with the execution and
delivery of this Amendment, CFB and Summit shall execute and deliver an
Agreement (the "Escrow Agreement") requiring indemnification of CFB by
shareholders of Summit against certain
38
<PAGE>
losses or expenses as described therein, and providing for an escrow as of
the Effective Time in the aggregate value of Three Hundred Fifty Thousand
Dollars ($350,000), to be administered as provided therein. The obligations
of CFB under the Merger Agreement are expressly contingent upon the
execution, delivery and performance of the Escrow Agreement by Summit.
5. RELEASE. Concurrently with the execution and delivery of this
Amendment, CFB and Dr. Bob L. Sellers ("Sellers") shall execute and deliver a
Release providing for the release by Sellers of any and all claims he may
have against Summit and the Bank, as provided therein. The obligations of
CFB under the Merger Agreement are expressly contingent upon the execution,
delivery and performance of the Release by Sellers.
Except as hereinabove set forth, there are no other changes to the Merger
Agreement, and the same is expressly ratified and confirmed.
IN WITNESS WHEREOF, CFB, Acquisition Subsidiary and Summit have
caused this Agreement to be signed by their respective officers thereunto
duly authorized as of the date first above written.
COMMUNITY FIRST BANKSHARES, INC.
By: /s/ Gary A. Knutson
---------------------------------
Name: Gary A. Knutson
Title: Senior Vice President
SUMMIT ACQUISITION CORPORATION
By: /s/ Gary A. Knutson
---------------------------------
Name: Gary A. Knutson
Title: Senior Vice President
FIRST NATIONAL SUMMIT BANKSHARES INC.
By: /s/ James C. Noone
---------------------------------
Name: James C. Noone, D.V.M.
Title: Chairman
39
<PAGE>
Exhibit 2.5
AGREEMENT AND PLAN OF MERGER
dated as of August 28, 1997
among
COMMUNITY FIRST BANKSHARES, INC.,
REPUBLIC ACQUISITION CORPORATION
and
REPUBLIC NATIONAL BANCORP, INC.
<PAGE>
INDEX TO AGREEMENT AND PLAN OF MERGER
Page
AGREEMENT AND PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Effective Time of the Merger. . . . . . . . . . . . . . . . . . . 1
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Calculation of Republic Value . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . 3
2.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . 3
(a) Conversion of Common Stock . . . . . . . . . . . . . . . . . 3
(b) Exchange Rate; Options . . . . . . . . . . . . . . . . . . . 3
(c) Shareholders' Right of Dissent . . . . . . . . . . . . . . . 4
2.2 Exchange of Certificates. . . . . . . . . . . . . . . . . . . . . 4
(a) Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Exchange Procedures. . . . . . . . . . . . . . . . . . . . . 4
(c) Distributions with Respect to Unexchanged Shares; Voting . . 5
(d) Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . 5
(e) Fractional Shares. . . . . . . . . . . . . . . . . . . . . . 5
(f) Termination of Exchange Fund . . . . . . . . . . . . . . . . 5
(g) Lost or Destroyed Shares . . . . . . . . . . . . . . . . . . 6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . 6
3.1 Representations and Warranties of Republic. . . . . . . . . . . . 6
(a) Organization.. . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Capital Structure. . . . . . . . . . . . . . . . . . . . . . 6
(c) Authority. . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Shareholder Approval.. . . . . . . . . . . . . . . . . . . . 7
(e) No Violations. . . . . . . . . . . . . . . . . . . . . . . . 7
(f) Consents.. . . . . . . . . . . . . . . . . . . . . . . . . . 8
(g) Financial Statements and Reports.. . . . . . . . . . . . . . 8
(h) Absence of Certain Changes or Events.. . . . . . . . . . . . 9
(i) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(j) Absence of Claims. . . . . . . . . . . . . . . . . . . . . . 10
(k) Absence of Regulatory Actions. . . . . . . . . . . . . . . . 10
i
<PAGE>
(1) Agreements.. . . . . . . . . . . . . . . . . . . . . . . . . 10
(m) Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . 11
(n) Employee Benefit Plans.. . . . . . . . . . . . . . . . . . . 11
(o) Title to Assets. . . . . . . . . . . . . . . . . . . . . . . 13
(p) Fees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(q) Compliance with Laws.. . . . . . . . . . . . . . . . . . . . 13
(r) Environmental Matters. . . . . . . . . . . . . . . . . . . . 14
(s) Loans and Investments. . . . . . . . . . . . . . . . . . . . 15
(t) Allowance for Loan Losses. . . . . . . . . . . . . . . . . . 15
(u) Material Interests of Certain Persons. . . . . . . . . . . . 16
(v) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 16
(w) Investment Securities. . . . . . . . . . . . . . . . . . . . 17
(x) Registration Obligations.. . . . . . . . . . . . . . . . . . 17
(y) Books. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(z) Corporate Documents. . . . . . . . . . . . . . . . . . . . . 17
(aa) Absence of Knowledge.. . . . . . . . . . . . . . . . . . . . 17
(bb) Accounting and Tax Treatment.. . . . . . . . . . . . . . . . 17
(cc) SEC and Regulatory Filings.. . . . . . . . . . . . . . . . . 17
(dd) Derivative Contracts.. . . . . . . . . . . . . . . . . . . . 18
(ee) Deposits.. . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Representations and Warranties of CFB . . . . . . . . . . . . . . 18
(a) CFB Organization . . . . . . . . . . . . . . . . . . . . . . 18
(b) Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Enforceability . . . . . . . . . . . . . . . . . . . . . . . 19
(d) No Default; Creation of Liens. . . . . . . . . . . . . . . . 19
(e) Absence of Certain Changes or Events . . . . . . . . . . . . 19
(f) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(g) Absence of Claims. . . . . . . . . . . . . . . . . . . . . . 19
(h) Absence of Regulatory Actions. . . . . . . . . . . . . . . . 20
(i) Compliance with Laws . . . . . . . . . . . . . . . . . . . . 20
(j) Absence of Knowledge . . . . . . . . . . . . . . . . . . . . 20
(k) Accounting and Tax Treatment . . . . . . . . . . . . . . . . 20
(l) Information Supplied . . . . . . . . . . . . . . . . . . . . 20
(m) No Plan to Transfer Assets . . . . . . . . . . . . . . . . . 21
ARTICLE 4 COVENANTS OF REPUBLIC AND CFB . . . . . . . . . . . . . . . . . 21
4.1 Covenants of Republic . . . . . . . . . . . . . . . . . . . . . . 21
(a) Ordinary Course. . . . . . . . . . . . . . . . . . . . . . . 21
(b) Republic Preferred Stock.. . . . . . . . . . . . . . . . . . 21
(c) Shareholder Meeting. . . . . . . . . . . . . . . . . . . . . 21
(d) Registration Statement . . . . . . . . . . . . . . . . . . . 22
(e) Confidential Information . . . . . . . . . . . . . . . . . . 22
(f) Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . 22
ii
<PAGE>
(g) No Solicitations . . . . . . . . . . . . . . . . . . . . . . 23
(h) No Acquisitions. . . . . . . . . . . . . . . . . . . . . . . 24
(i) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 24
(j) Pooling Restrictions . . . . . . . . . . . . . . . . . . . . 24
(k) Financial Statements . . . . . . . . . . . . . . . . . . . . 24
(l) Additional Covenants of Republic . . . . . . . . . . . . . . 24
4.2 Covenants of CFB. . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Ordinary Course. . . . . . . . . . . . . . . . . . . . . . . 27
(b) Application. . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . 28
(d) Registration Statement . . . . . . . . . . . . . . . . . . . 28
(e) Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(f) Shares to be Issued. . . . . . . . . . . . . . . . . . . . . 28
(g) Blue Sky . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(h) Confidential Information . . . . . . . . . . . . . . . . . . 29
(i) Registration Statement . . . . . . . . . . . . . . . . . . . 29
(j) Indemnification. . . . . . . . . . . . . . . . . . . . . . . 29
4.3 Covenants of Republic and CFB . . . . . . . . . . . . . . . . . . 30
(a) Governing Documents. . . . . . . . . . . . . . . . . . . . . 30
(b) Other Actions. . . . . . . . . . . . . . . . . . . . . . . . 30
(c) Advice of Changes; Government Filings. . . . . . . . . . . . 30
(d) Title to Property. . . . . . . . . . . . . . . . . . . . . . 30
(e) Environmental Assessment . . . . . . . . . . . . . . . . . . 31
ARTICLE 5 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . 31
5.1 Loan Loss Reserve . . . . . . . . . . . . . . . . . . . . . . . . 31
5.2 Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . . 31
5.3 Letters of Republic Officers. . . . . . . . . . . . . . . . . . . 32
5.4 Access to Information . . . . . . . . . . . . . . . . . . . . . . 32
5.5 Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.6 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . 32
5.7 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.8 Additional Agreements; Reasonable Efforts . . . . . . . . . . . . 33
ARTICLE 6 CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . 33
6.1 Conditions to Each Party's Obligation to Effect the Merger. . . . 33
(a) Stockholder Approval . . . . . . . . . . . . . . . . . . . . 33
(b) NASDAQ Listing . . . . . . . . . . . . . . . . . . . . . . . 33
(c) Other Approvals. . . . . . . . . . . . . . . . . . . . . . . 34
(d) Registration Statement . . . . . . . . . . . . . . . . . . . 34
(e) No Injunctions or Restraints; Illegality . . . . . . . . . . 34
(f) No Unduly Burdensome Condition . . . . . . . . . . . . . . . 34
iii
<PAGE>
6.2 Conditions to Obligations of CFB. . . . . . . . . . . . . . . . . 34
(a) Representations and Warranties . . . . . . . . . . . . . . . 34
(b) Performance of Obligations of Republic . . . . . . . . . . . 35
(c) Minimum Republic Value . . . . . . . . . . . . . . . . . . . 35
(e) Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . 35
(f) Employment Agreements. . . . . . . . . . . . . . . . . . . . 35
(g) Change of Control Agreements . . . . . . . . . . . . . . . . 35
6.3 Conditions to Obligations of Republic . . . . . . . . . . . . . . 35
(a) Representations and Warranties . . . . . . . . . . . . . . . 35
(b) Performance of Obligations of CFB. . . . . . . . . . . . . . 36
(c) Consents Under Agreements. . . . . . . . . . . . . . . . . . 36
(d) Tax Opinion. . . . . . . . . . . . . . . . . . . . . . . . . 36
(e) Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 7 TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . 36
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . 37
7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 8 GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . 38
8.1 Non-Survival of Representations and Warranties. . . . . . . . . . 38
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.3 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.5 Entire Agreement: Third Party Beneficiaries; Rights of Ownership. 39
8.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.8 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.9 Enforcement of Agreement. . . . . . . . . . . . . . . . . . . . . 39
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 28, 1997 (the
"Agreement"), by and among Community First Bankshares, Inc., a Delaware
corporation ("CFB"), Republic Acquisition Corporation, an Arizona corporation
("Acquisition Subsidiary") and Republic National Bancorp, Inc., an Arizona
corporation ("Republic").
WHEREAS, the Boards of Directors of CFB, Acquisition Subsidiary and
Republic have approved, and deem it advisable and in the best interests of
their respective companies and their stockholders to consummate the business
combination transaction provided for herein in which Acquisition Subsidiary
will be merged with and into Republic and Republic thereby become a
wholly-owned subsidiary of CFB (the "Merger");
WHEREAS, CFB and Republic desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also
to prescribe various conditions to the Merger; and
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
Agreement, articles of merger (the "Articles of Merger") in substantially the
form as attached hereto as EXHIBIT A shall be duly prepared, executed and
acknowledged by CFB and Republic and thereafter delivered for filing to the
Corporation Commission of the State of Arizona, as provided in the Arizona
Business Corporation Act (the "Arizona Act"), on the Closing Date (as defined
in Section 1.2). The Merger shall become effective at the effective time and
date of the Articles of Merger (the "Effective Time"). Notwithstanding the
immediately preceding sentence, however, the parties intend that the
effective date and time of the Closing, as defined in Section 1.2 below, for
both financial and tax reporting purposes, shall be as of the close of
business on the Closing Date.
1.2 CLOSING. Subject to the terms and conditions hereof, the closing of
the Merger (the "Closing") will take place after the satisfaction or waiver
(subject to applicable law) of the latest to occur of the conditions set forth
in Article 6 hereof (the "Closing Date"), at the offices of
<PAGE>
Lindquist & Vennum, in Minneapolis, Minnesota, unless another time, date or
place is agreed to in writing by the parties hereto.
1.3 EFFECTS OF THE MERGER.
(a) At the Effective Time: (i) the separate existence of the
Acquisition Subsidiary shall cease and the Acquisition Subsidiary shall be
merged with and into Republic; (ii) the Articles of Incorporation of the
Acquisition Subsidiary, as in effect immediately prior to the Effective Time
shall be the Articles of Incorporation of the Surviving Corporation until
duly amended in accordance with applicable law; (iii) the By-laws of the
Acquisition Subsidiary, as in effect immediately prior to the Effective Time
shall be the By-laws of the Surviving Corporation until amended in accordance
with applicable law; (iv) CFB, as the holder of all of the outstanding common
stock of the Acquisition Subsidiary, shall continue as sole shareholder of
the Surviving Corporation; and (v) the holders of certificates representing
shares of Republic Common Stock (as defined in Section 2.1(b) below) shall
cease to have any rights as shareholders of Republic, except such rights, if
any, as they may have pursuant to Chapter 13 of the Arizona Act, and their
sole right shall be the right to receive (A) the number of whole shares of
CFB Common Stock (as defined in Section 2.1(b) below) into which their shares
of Republic Common Stock have been converted in the Merger as provided
herein (together with any dividend payments with respect thereto, to the
extent provided in Section 2.2(c) below), and (B) the cash value of any
fraction of a share of CFB Common Stock into which their shares of Republic
Common Stock have been converted as provided herein.
(b) As used in this Agreement, the term "Constituent Corporations"
shall mean Republic and the Acquisition Subsidiary. The term "Surviving
Corporation" shall mean Republic, after giving effect to the Merger.
1.4 CALCULATION OF REPUBLIC VALUE. As of the last day of the month
immediately preceding the Effective Time (the "Determination Date"), Republic
shall prepare a consolidated balance sheet of Republic in accordance with
generally accepted accounting principles ("GAAP"), but excluding the effects
of any adjustments otherwise required by FASB 115 and excluding any footnotes
that might be required to be included with such financial statements (the
"Determination Date Balance Sheet"), together with a consolidated statement
of income (the "Interim Income") for the period from March 31, 1997 to the
Determination Date (the "Interim Income Statement"), such consolidated
statement of income being prepared in accordance with GAAP, but excluding the
effects of any adjustments otherwise required by FASB 115 and excluding any
footnotes that might be required to be included with such statements (the
"Determination Date Balance Sheet and Interim Income Statement are herein
referred to as the "Determination Date Financial Statements"). The
Determination Date Financial Statements shall be delivered to CFB as soon as
they are prepared so that CFB and its accountants may review and confirm
their accuracy. For purposes of this Agreement, the "Republic Value" shall
be equal to the total consolidated assets of Republic minus the total
consolidated liabilities of Republic, all as reflected on the Determination
Date Balance Sheet, prepared in accordance with this Section 1.4.
2
<PAGE>
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 EFFECT ON CAPITAL STOCK.
(a) CONVERSION OF COMMON STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of any holder of shares of
common stock, no par value per share, of Republic ("Republic Common Stock"),
but subject to Section 2.2(e) hereof, each issued and outstanding share of
Republic Common Stock, other than shares of Republic Common Stock held by
persons who have taken all steps required to perfect their right to be paid
the fair value of such shares under Chapter 13 of the Arizona Act, shall be
converted into shares of validly issued, fully paid and nonassessable shares
of common stock of CFB, $.01 par value ("CFB Common Stock"). All such shares
of Republic Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist. Each
Republic shareholder's certificate or certificates previously representing
shares of Republic Common Stock (each a "Republic Certificate") shall be
aggregated (if a single stockholder holds more than one Republic 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 Republic Certificates in accordance with Section
2.2, 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 Effective Time 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. In the event that,
subsequent to the date of this Agreement but prior to the Effective Time, the
outstanding shares of CFB Common Stock shall have been increased, decreased,
changed into or exchanged for a different number or kind of shares or
securities through a reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or other similar change in
CFB's capitalization, then an appropriate and proportionate adjustment shall
be made to the "Exchange Rate," as hereinafter defined, so that the number of
shares of CFB Common Stock into which a share of Republic Common Stock shall
be converted will equal the number of shares of CFB Common Stock that the
holders of shares of Republic Common Stock would have received pursuant to
such reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split or other similar change had the record date
therefor been immediately following the Closing Date.
(b) EXCHANGE RATE; OPTIONS. Subject to the adjustments provided in
Section 2.1(a) above, all of the issued and outstanding shares of Republic
Common Stock and any outstanding options, warrants or other rights to
Republic Common Stock shall be exchanged for Three Hundred Sixty-Eight
Thousand Five Hundred (368,500) shares of CFB Common Stock (the
aforementioned exchange rate is hereinafter referred to the "Exchange Rate").
On or before the Effective Time, all stock options and other rights with
respect to Republic Common Stock shall be (i) accelerated and exercised by
the holder thereof, in accordance with the terms of the stock
3
<PAGE>
option plan or agreement, or (ii) released and terminated by written
acknowledgment and agreement by the holder thereof, obtained by Republic not
less than ten (10) business days prior to the Closing Date.
(c) SHAREHOLDERS' RIGHT OF DISSENT. Any holder of shares of
Republic Common Stock who does not vote in favor of the Merger at the meeting
of shareholders of Republic and has given notice in writing to the presiding
officer prior to the Merger vote that he or she intends to demand payment for
his or her shares of Republic Common Stock if the Merger is effectuated,
shall be entitled to receive the value of the Republic Common Stock so held
by him or her in accordance with Chapter 13 of the Arizona Act.
2.2 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
Republic 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 to be issued and paid pursuant to Section 2.1(a) in exchange for the
outstanding shares of Republic Common Stock. (Such cash and certificates for
shares of CFB Common Stock together with any dividends or distributions with
respect thereto, are hereinafter referred to as the "Exchange Fund.")
(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 Republic Certificate or Republic Certificates (i) a letter of
transmittal which shall specify that delivery shall be effective, and risk of
loss and title to the Republic Certificate(s) shall pass, only upon delivery
of the Republic Certificate(s) to the Exchange Agent and which shall be in
such form and have such other provisions as CFB and Republic may reasonably
specify not later than five business days before the Closing Date and (ii)
instructions for use in effecting the surrender of the Republic
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 Republic Certificate or Certificates for
cancellation to the Exchange Agent together with such letter of transmittal,
duly executed, the holder of such Republic 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, and unpaid
dividends and distributions, if any, which such holder has the right to
receive in respect of the Republic Certificate(s) surrendered, as provided in
Section 2.2(c) below, and the Republic Certificate(s) so surrendered shall
forthwith be canceled. No interest will be paid on the cash in lieu of
fractional shares and unpaid dividends and distributions, if any, payable to
holders of Republic Certificates. In the event of a transfer of ownership of
Republic Stock which is not registered in the transfer records of Republic, a
CFB Certificate representing the proper number of shares of CFB Common Stock,
and/or a check for the cash to be paid, may be issued to such a transferee if
the Republic Certificate representing such Republic Common Stock is
4
<PAGE>
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 Republic 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 Republic Certificates shall not be entitled to vote
after the Closing Date at any meeting of CFB shareholders until they have
exchanged their Republic Certificates.
(d) TRANSFERS. After the Effective Time, there shall be no
transfers on the stock transfer books of Republic of the shares of Republic
Common Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Republic Certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for the shares of
CFB Common Stock and cash, in amounts as determined in accordance with the
provisions of Sections 2.1(a), and this Section 2.2, deliverable in respect
thereof pursuant to this Agreement. Republic Certificates surrendered for
exchange by any person constituting an "affiliate" of Republic 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 5.5.
(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 Republic Common Stock with more than one
Republic Certificate shall receive cash only for the fractional share
remaining after aggregating all of its, his or her Republic Common Stock to
be exchanged.
For purposes of this Agreement, 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). Calculations will be rounded to three decimal places.
(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 Republic for twelve months
after the Closing Date shall be paid to CFB. Any shareholders of Republic
who have not theretofore complied with this Article 2 shall thereafter look
only to CFB for payment of their shares, and cash in an amount as determined
in
5
<PAGE>
accordance with the provisions of Section 2.1(a) and this Section 2.2,
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 Republic 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 Republic
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Republic 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 Republic
Certificate, the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Republic Certificate the shares of CFB Common Stock, and/or cash
in an amount as determined in accordance with the provisions of Sections
2.1(a), and this Section 2.2, deliverable in respect thereof pursuant to this
Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF REPUBLIC. In order to induce CFB
to enter into this Agreement, Republic represents and warrants to CFB, in all
material respects, as of the date of this Agreement (except as otherwise
expressly provided), as follows, except as disclosed on the attached EXHIBIT
B (the "Republic Disclosure Schedule") and the schedules thereunder which are
numbered to correspond to the representations set forth below:
(a) ORGANIZATION. Republic is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Arizona and is a
bank holding company duly registered under the Bank Holding Company Act of
1956, as amended (the "BHCA"). Republic National Bank of Arizona, National
Association ("Bank"), is a national banking association duly organized,
validly existing and in good standing under the laws of the United States.
Republic and the Bank each have the corporate power and authority to carry on
its business as it is now conducted and to own, lease and operate its
properties, and is duly qualified to do business and is in good standing in
each jurisdiction in which the nature of the business conducted or the
properties or assets owned or leased by it makes such qualification
necessary, except where the absence thereof, would not, individually or in
the aggregate, have a Material Adverse Effect as herein as defined in 3.1(h),
below. The Bank's deposits are insured by the Bank Insurance Fund ("BIF") of
the FDIC to the maximum extent permitted by law. Other than the Bank,
Republic has no direct or indirect subsidiaries.
(b) CAPITAL STRUCTURE.
(i) The authorized capital stock of the Republic consists of
5,000,000 shares of Republic Common Stock, no par value per share (the
"Republic Common Stock") and 306 shares of Republic Preferred Stock, par
value $1.00 per share (the "Republic
6
<PAGE>
Preferred Stock" and, with the Republic Common Stock, the "Republic
Stock"). As of August 22, 1997: (A) 3,668,792 shares of Republic Common
Stock were issued and outstanding, (B) 312,134 shares of Republic Common
Stock were subject to outstanding stock option awards, and (C) 306
shares of Republic Preferred Stock were issued and outstanding. All
outstanding shares of Republic Stock are validly, issued, fully paid and
nonassessable and not subject to any preemptive rights. Section 3.1(b)
of the Republic Disclosure Schedule sets forth a complete and accurate
list of all options to purchase Republic Stock outstanding, including
the dates of grant, exercise prices, dates of vesting, dates of
termination and shares subject to option for each grant.
(ii) Except as provided in Section 4.1(b) as of the date of this
Agreement, except for this Agreement and as set forth in Section 3.1(b)
of the Republic Disclosure Schedule, Republic is not a party to or bound
by any outstanding subscriptions, options, warrants, calls, rights,
convertible securities, commitments or agreements of any character
obligating Republic to issue, deliver or sell, or cause to be issued,
delivered or sold, any additional shares of capital stock of Republic or
obligating Republic to grant, extend or enter into any such option,
warrant, call, right, convertible securities, commitments or agreements.
As of the date hereof, there are no outstanding contractual obligations
of Republic or the Bank to repurchase, redeem or otherwise acquire any
shares of capital stock of Republic or the Bank, respectively.
(c) AUTHORITY. Each of Republic and the Bank has all requisite corporate
power and authority to enter into this Agreement and, subject to approval of
this Agreement by the requisite vote of the shareholders of Republic and
approval of Regulatory Agencies (as defined in Section 3.1(g)(ii)), to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement, and, subject to the approval of this Agreement by the requisite
vote of the shareholders of the Republic and approval of Regulatory Agencies,
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Republic and the
Bank. This Agreement has been duly executed and delivered by Republic and the
Bank, assuming due execution and delivery by CFB and Acquisition Subsidiary,
constitutes a valid and binding obligation of Republic and the Bank, enforceable
in accordance with its terms subject to applicable conservatorship,
receivership, bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, whether applied in a court of law or a court of equity.
(d) SHAREHOLDER APPROVAL. The affirmative vote of two-thirds of the
outstanding shares of Republic Common Stock is required for approval of this
Agreement and to consummate the transactions contemplated hereby. The Board of
Directors of Republic has received the opinion of Hovde Financial, Inc. to the
effect that the Exchange Rate is fair, from a financial point of view, to
Republic shareholders.
(e) NO VIOLATIONS. Subject to approval of this Agreement by Republic's
shareholders and the Regulatory Agencies, the execution, delivery and
performance of this Agreement by
7
<PAGE>
Republic and the Bank does not, and the consummation of the transactions
contemplated hereby by Republic and the Bank will not, constitute (i) a
breach or violation of, or a default under, any law, rule or regulation or
any judgment, decree, order, governmental permit or license, or agreement,
indenture or instrument of Republic or the Bank or to which Republic or the
Bank (or any of their respective properties) is subject, which breach,
violation or default would, individually or in the aggregate, have a Material
Adverse Effect on Republic or the Bank either individually or considered as a
whole, (ii) a breach or violation of, or a default under, the articles of
incorporation/association or bylaws of Republic or the Bank or (iii) a breach
or violation of, or a default under (or an event which with due notice or
lapse of time or both would constitute a default under), or result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other encumbrance
upon any of the properties or assets of Republic or the Bank under, any of
the terms, conditions or provisions of any note, bond, indenture, deed of
trust, loan agreement or other agreement, instrument or obligation to which
Republic or the Bank is a party, or to which any of their respective
properties or assets may be bound or affected, except for, in the case of
(iii) any of the foregoing that, individually or in the aggregate, would not
have a Material Adverse Effect on Republic considered as a whole.
(f) CONSENTS. Except as referred to herein or in connection, or in
compliance, with the provisions of the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the BHCA, the rules and regulations of the Board of Governors
of the Federal Reserve System (the "FRB"), the Office of the Comptroller of the
Currency (the "OCC") and the Federal Deposit Insurance Corporation (the "FDIC"),
as applicable, and the environmental, corporation, securities or "blue sky" laws
or regulations of the various states, no filing or registration with, or
authorization, consent or approval of, any public body or authority is necessary
for the consummation by Republic of the Merger or the other transactions
contemplated by this Agreement.
(g) FINANCIAL STATEMENTS AND REPORTS.
(i) As of their respective dates, neither Republic's Financial
Statements (as defined below), nor any subsequent Republic Financial
Statements (including the Determination Date Financial Statements)
prepared subsequent to March 31, 1997 (collectively the "Financial
Statements"), contained or will contain any untrue statement of a
material fact or omitted or will omit to state a material fact required
to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not
misleading; provided, that no representation is made herein with respect
to any exhibits to the Financial Statements that are not specifically
incorporated by reference therein. Each of the balance sheets of
Republic contained or specifically incorporated by reference in the
Financial Statements (including in each case any related notes and
schedules) fairly presented the financial position of the entity or
entities to which it relates as of its date and each of the statements
of income and of changes in shareholders equity and of cash flows of
Republic, contained or specifically incorporated by reference in the
Financial Statements (including in each case any related
8
<PAGE>
notes and schedules) fairly presented the results of operations,
shareholders' equity and cash flows, as the case may be, of the entity
or entities to which it relates for the periods set forth therein
(subject, in the case of unaudited interim statements. to normal
year-end audit adjustments), in each case in all material respects in
accordance with generally accepted accounting principles ("GAAP")
consistently applied during the period involved, except as may be noted
therein.
(ii) Republic has filed all material reports, registrations and
statements together with any amendments required to be made with respect
thereto, that it was required to file since March 31, 1997 with the
Securities and Exchange Commission ("SEC"), the FDIC, the Federal
Reserve Board ("FRB") or the Office of the Comptroller of the Currency
("OCC") (collectively, the "Regulatory Agencies") and has paid all fees
and assessments due and payable in connection therewith, except for
those reports, registrations and statements and those fees and
assessments that would not have a Material Adverse Effect on Republic.
(h) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in Section
3.1(h) of the Republic Disclosure Schedule, (i) from March 31, 1997 to the date
hereof, Republic and the Bank have not incurred any liability, other than in the
ordinary course of its business consistent with past practice, and (ii) since
March 31, 1997, there has not been any condition. event, change or occurrence
that, individually or in the aggregate, has had, or is reasonably likely to
have, a Material Adverse Effect on Republic taken as a whole. "Material Adverse
Effect," with respect to a party to this Agreement, means a material adverse
effect upon (A) the business, properties, assets, financial condition or results
of operations of such party, and (B) the ability of such party to consummate the
transactions contemplated by this Agreement; it being understood that a Material
Adverse Effect shall not include: (i) a change with respect to, or effect on, a
party resulting from a change in law, rule, regulation, generally accepted
accounting principles or regulatory accounting principles; (ii) subject to the
minimum Republic Value condition of Section 6.2(c) hereof, a change with
respect to, or effect on, a party resulting from expenses (such as legal,
accounting and investment bankers' fees) incurred in connection with this
Agreement or the transactions contemplated hereby; or (iii) a material change
with respect to, or effect on, a party resulting from any other matter affecting
depository institutions generally.
(i) TAXES. All federal, state, and local tax returns required to be filed
by or on behalf of Republic and the Bank have been timely filed or requests for
extensions have been timely filed (and any such extension shall have been
granted and not have expired). All taxes, shown on such returns, all taxes
required to be shown on returns for which extensions have been granted, and any
penalties, interest or other governmental charges related thereto have been paid
in full or adequate provision has been made for any such taxes on Republic's
balance sheet as of March 31, 1997 (in all material respects in accordance with
GAAP). Neither Republic nor the Bank has ever been audited by the Internal
Revenue Service or the applicable taxing authority of the State of Arizona. As
of the date of this Agreement, there is no audit examination, deficiency, claim,
or refund litigation with respect to any taxes of Republic or the Bank that
could reasonably be expected to result in a Material Adverse Effect on Republic
or the Bank, and no claim or
9
<PAGE>
assessment that could reasonably be expected to result in a Material Adverse
Effect on Republic or the Bank has been made by any authority in a
jurisdiction where Republic or the Bank does not file tax returns and
Republic or the Bank is subject to taxation. All taxes, interest, additions,
and penalties due with respect to completed and settled examinations or
concluded litigation relating to Republic or the Bank have been paid in full
or adequate provision has been made for any such taxes on Republic's balance
sheet as of March 31, 1997 (in all material respects in accordance with
GAAP). Except as set forth in Section 3.1(i) of the Republic Disclosure
Schedule, neither Republic nor the Bank has executed an extension or waiver
of any statute of limitations on the assessment or collection of any material
tax due that is currently in effect. Except as set forth in Section 3.1(i)
of the Republic Disclosure Schedule, Republic and the Bank have withheld and
paid all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
shareholder or other third party, and Republic and the Bank have timely
complied with all applicable information reporting requirements under Part
III, Subchapter A of Chapter 61 of the Code and similar applicable state and
local information reporting requirements, except in each case for such
failure to withhold, pay or comply that would not, individually or in the
aggregate result in a Material Adverse Effect on Republic taken as whole.
Neither Republic nor the Bank is responsible for the taxes of any person
other than Republic or the Bank under Treasury Regulation 1.1502-6 or any
similar provision of federal, state or foreign law.
(j) ABSENCE OF CLAIMS. Except as set forth in Section 3.1(j) of the
Republic Disclosure Schedule, neither Republic, the Bank or any of its
respective directors and officers, in their respective capacities as directors
and officers, is a party to any pending litigation, legal, administrative,
arbitration or other proceeding, before any court or governmental agency
("Claim"), and to the knowledge of the executive officers of Republic and the
Bank, there is no threatened Claim against Republic or the Bank, in either case
which is reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on Republic when taken as a whole.
(k) ABSENCE OF REGULATORY ACTIONS. Except as set forth in Section 3.1(k)
of the Republic Disclosure Schedule, neither Republic nor the Bank is a party to
any cease and desist order, written agreement or memorandum of understanding
with, or a party to any commitment letter or similar written undertaking to, or
is subject to any order or directive by, or is a recipient of any extraordinary
supervisory letter from, federal or state governmental authorities charged with
the supervision or regulation of depository institutions or depository
institution holding companies or engaged in the insurance of bank deposits
("Regulatory Authority") nor has either been advised by any Regulatory Authority
that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter or similar written undertaking.
(1) AGREEMENTS. Except for this Agreement and as contemplated thereby and
except as disclosed in Section 3.1(l) of the Republic Disclosure Schedule,
neither Republic nor the Bank is a party to a written or, to Republic's or to
the Bank's knowledge, oral (A) agreement not
10
<PAGE>
terminable on thirty (30) days' or less notice, and providing for payments in
excess of $25,000, (B) agreement with any executive officer or other key
employee of Republic or the Bank the benefits of which are contingent, or the
terms of which are materially altered, upon the occurrence of a transaction
involving Republic of the nature contemplated by this Agreement, (C)
agreement with respect to any executive officer or key employee of Republic
or the Bank providing for other than at-will employment, (D) agreement or
plan, including any stock option plan, stock appreciation rights plan,
restricted stock plan, stock purchase plan, or any other non-qualified
compensation 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 any of the
transactions contemplated by this Agreement, or (E) agreement containing
covenants that limit the ability of Republic or the Bank to compete in any
line of business or with any person, or that involve any restriction on the
geographic area in which or method by which, Republic or the Bank (including
any successor thereof) may carry on its business (other than as may be
required by law or any regulatory agency). The Bank and Republic have
performed in all material respects all obligations required to be performed
by them to date, and are not in material default under, and no event has
occurred which, with the lapse of time or action by a third party, could
result in a material default under any of the aforedescribed agreements to
which the Bank or Republic is a party or by which the Bank or Republic is
bound. Each of the aforedescribed agreements is a valid and legally binding
obligation of the Bank and the other party or parties thereto, subject to (i)
all applicable bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, and (ii) the
application of equitable principles.
(m) LABOR MATTERS. Neither Republic nor the Bank is a party to, or is
bound by, any collective bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization with respect to its
employees. Neither Republic nor the Bank is the subject of any proceeding
asserting that it has committed an unfair labor practice or seeking to compel it
to bargain with any labor organization as to wages and conditions of employment,
nor is the management of Republic or the Bank aware of any strike, other labor
dispute or organizational effort involving Republic or the Bank that is pending
or threatened that individually or in the aggregate would result in a Material
Adverse Effect on Republic or the Bank.
(n) EMPLOYEE BENEFIT PLANS.
(i) Section 3.1(n) of the Republic Disclosure Schedule contains a
complete list of all employee, retiree or director pension, retirement,
stock option, stock purchase, restricted stock, stock ownership, savings,
stock appreciation right, profit sharing, deferred compensation,
supplemental income, supplemental retirement, consulting, bonus, group
insurance, key executive officer insurance, severance and any other benefit
plans, employment contracts (providing termination, change in control, or
severance payments), agreements, arrangements, or policies including, but
not limited to, employee benefit plans, as defined in Section 3(3) of the
Employee Retirement Income Security Act
11
<PAGE>
of 1974, as amended ("ERISA"), incentive and welfare policies,
contracts, plans and arrangements and all trust agreements related
thereto, maintained at the date hereof or at any time within three (3)
years prior to the date hereof with respect to any present or former
directors, officers, or other employees of Republic and the Bank
(hereinafter referred to collectively as the "Employee Plans"), except
for any agreements contemplated by this Agreement. All of the Employee
Plans comply in all material respects with all applicable requirements
of ERISA, the Code and other applicable laws and have been operated in
material compliance with their terms. Neither Republic nor the Bank has
engaged in a "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Code) with respect to any Employee Plan
which is likely to result in any material penalties or taxes to Republic
or the Bank under Section 502(i) of ERISA or Section 4975 of the Code.
Neither Republic nor any entity which is considered one employer with
Republic under Section 4001 of ERISA or Section 414 of the Code (an
"ERISA Affiliate") has ever maintained, or contributed to any plan
subject to either Title IV of ERISA or Section 412 of the Code. Each
Employee Plan of Republic and the Bank which is an employee "pension
benefit plan" (as defined in Section 3(2) of ERISA) and which is
intended to be qualified under Section 401(a) of the Code (a "Qualified
Plan") has received a favorable determination letter from the Internal
Revenue Service (the "IRS") that the pension benefit plan complies with
all applicable legislative and regulatory requirements for tax
qualification that were in effect at the time that the determination
letter was issued and Republic is not aware of any circumstances likely
to result in revocation of any such favorable determination letter. No
Employee Plan is an "employee stock ownership plan" (as defined in
Section 4975(e)(7) of the Code).
(ii) There is no pending or, to Republic's or the Bank's knowledge,
threatened litigation, administrative action or proceeding relating to
any Employee Plan. There has been no announcement or commitment by
Republic to create an additional Employee Plan or to amend an Employee
Plan except for amendments required by applicable law which do not
materially increase the cost of such Employee Plan and neither Republic
nor the Bank have any obligations for post-retirement or post-employment
benefits under any Employee Plan (exclusive of any coverage mandated by
the Consolidated Omnibus Reconciliation Act of 1986 ("COBRA"), as
amended.
(iii) With respect to each Employee Plan to the extent applicable,
Republic has supplied to Buyer a true and complete copy of (A) the
annual report on the applicable form of the Form 5500 series filed with
the IRS with all the attachments filed for 1994, 1995 and 1996 plan
years, (B) such Employee Plan, including amendments thereto (or a copy
of the substantive provisions of each Employee Plan for which no plan
document exists), (C) each trust agreement and insurance contract
relating to such Employee Plan, including amendments thereto, (D) the
most recent summary plan description for such Employee Plan, including
amendments thereto, if the Employee Plan is subject to Title I of ERISA,
(E) any material written communication to employees relating to Employee
Plans and (F) the most recent determination letter issued by the IRS if
such Employee Plan is a Pension Plan and Qualified Plan.
12
<PAGE>
(o) TITLE TO ASSETS. Except as set forth in Section 3.1(o) of the
Republic Disclosure Schedule, Bank has title to all material assets and
properties, whether real or personal, that it purports to own, including without
limitation all real and personal assets and properties reflected in its
Consolidated Reports of Condition and Income as of March 31, 1997 or acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of for fair value in the ordinary course of business since March
31, 1997) subject to no liens, mortgages, security interests, encumbrances or
charges of any kind, except (i) as noted in said Consolidated Reports or the
Schedules thereto; (ii) statutory liens for taxes not yet delinquent;
(iii) security interests granted to secure deposits of funds by federal, state
or other governmental agencies; (iv) minor defects and irregularities in title
and encumbrances that do not materially impair the use thereof for the purposes
for which they are held by the Bank as of the date hereof; and (v) such liens,
mortgages, security interests, encumbrances and charges that are not in the
aggregate material to the assets and properties of such Bank. Liens shall mean
any claim, encumbrance, or charge on property for payment of a debt, obligation
or duty.
(p) FEES. Except as set forth in Section 3.1(p) of the Republic
Disclosure Schedule and other than financial advisory services performed for
Republic by Hovde Financial, Inc., the terms of which are set forth in
Section 3.1(p) of the Republic Disclosure Schedule, neither Republic nor the
Bank, nor to Republic's or the Bank's knowledge any of its respective officers,
directors, employees or agents, has employed any broker or finder or incurred
any liability for any financial advisory fees, brokerage fees, commissions, or
finder's fees, and no broker or finder has acted directly or indirectly for
Republic or the Bank, in connection with this Agreement or the transactions
contemplated hereby. CFB shall not be liable for any financial services fees
incurred by Republic or the Bank, all of which shall be paid or fully accrued as
of the Determination Date Financial Statements. Neither Republic nor the Bank
shall be liable for any financial services advisory fees incurred by CFB.
(q) COMPLIANCE WITH LAWS. Republic and the Bank hold all licenses,
certificates, permits, franchises and rights from all appropriate federal, state
or other public authorities necessary for the conduct of its and their business
as it is presently conducted except where the absence thereof would not,
individually or in the aggregate, have a Material Adverse Effect on (a) Republic
and the Bank in their individual corporate capacities, (b) Republic, taken as a
whole, or (c) delay the Merger. Each of Republic and the Bank has conducted its
business so as to comply in all respects with all applicable federal, state and
local statutes, ordinances, regulations or rules, except for possible violations
which would not, individually or in the aggregate, have a Material Adverse
Effect on Republic taken as a whole; and neither Republic nor the Bank is
presently charged with, or, to Republic's or the Bank's knowledge, under
governmental investigation with respect to, any actual or alleged material
violations of any statute, ordinance, regulation or rule, and neither Republic
nor the Bank is the subject of any pending or, to Republic's or the Bank's
knowledge, threatened material proceeding by any regulatory authority having
jurisdiction over its business, properties or operations.
13
<PAGE>
(r) ENVIRONMENTAL MATTERS.
(i) For purposes of this Agreement, the following terms shall have
the following respective meanings:
(a) "Environmental Law(s)" means any law, regulation, rule,
ordinance or similar requirement which governs or protects the
environment enacted by the United States, any state, or any county,
city or agency or subdivision of the United States or any state.
(b) "Hazardous Material(s)" means any material or substance:
(1) which is a "hazardous substance," "pollutant," or "contaminant,"
pursuant to the Comprehensive Environmental Response Compensation and
Liability Act ("CERCLA") (42 U.S.C. 9601 et seq.) as amended and
regulations promulgated thereunder; (2) containing gasoline, oil,
diesel fuel or other petroleum products; (3) which is "hazardous
waste" pursuant to the Federal Resource Conservation and Recovery Act
("RCRA") (42 U.S.C. Section 6901 et seq.) as amended and regulations
promulgated thereunder; (4) containing polychlorinated biphenyls
(PCBs); (5) containing asbestos; (6) which is radioactive; (7) the
presence of which requires investigation or remediation under any
Environmental Law (defined above); or (8) which is defined or
identified as a "hazardous waste," "hazardous substance," "pollutant,"
"contaminant," or "biologically Hazardous Material" under any
Environmental Law.
(c) "Properties" means (1) the real estate owned or leased by
Republic or the Bank and used as a banking related facility; (2) other
real estate owned ("OREO") by Republic or the Bank as defined by any
other federal or state financial institution regulatory agency with
regulatory authority for Republic or the Bank; (3) real estate that is
in the process of pending foreclosure or forfeiture proceedings
conducted by Republic or the Bank; (4) real estate that is held in
trust for others by Republic or the Bank; and (5) real estate owned or
leased by a partnership or joint venture in which Republic or the Bank
has an ownership interest.
(ii) Except as disclosed in Schedule 3.1(r) of the Republic Disclosure
Schedule, there are no present conditions on the Properties, involving or
resulting from a past or present storage, spill, discharge, leak, emission,
injection, escape, dumping, release or migration of any Hazardous Materials
or from any generation, transportation, treatment, storage, disposal, use
or handling of any Hazardous Materials, that may reasonably be expected to
result in a Material Adverse Effect on Republic, taken as a whole.
(iii) Republic and the Bank are in substantial compliance with all
applicable Environmental Laws. Neither Republic nor the Bank has received
notice of, nor are there outstanding or pending, any public or private
claims, lawsuits, citations, penalties, unsatisfied abatement obligations
or notices or orders of non-compliance relating to the
14
<PAGE>
environmental condition of the Properties or Republic or Bank's
compliance with Environmental Laws, which have or may have a Material
Adverse Effect on Republic, taken as a whole.
(iv) No Properties are currently undergoing or are scheduled to
undergo remediation or clean-up of Hazardous Materials or other
environmental conditions, the actual or estimated cost of which may have a
Material Adverse Effect on Republic, taken as a whole.
(v) Republic and the Bank have all governmental permits, licenses,
certificates of inspection and other authorizations governing or protecting
the environment necessary to conduct its present business, and are and at
all times have been in material compliance therewith.
(s) LOANS AND INVESTMENTS.
(i) (A) Except as set forth in Section 3.1(s) of the Republic
Disclosure Schedule, and (B) except for matters outside the reasonable
knowledge of senior officers of Republic and the Bank, as of the date
hereof, which would not have a Material Adverse Effect on Republic or
the Bank, each outstanding loan of the Bank as of the date hereof is
evidenced by appropriate and sufficient documentation and constitutes
the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms except to the extent that the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles
affecting the rights of creditors generally. Except as set forth in
Section 3.1(s) of the Republic Disclosure Schedule, no obligor named
therein is seeking to avoid the enforceability of the terms of any
loan under any such laws or equitable principles and no loan is
subject to any defense, offset or counterclaim. The documentation
relating to loans made by the Bank 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.
(ii) In originating, underwriting, servicing, and discharging
loans, mortgages, land contracts, and other contractual obligations,
either for their own account or for the account of others, the Bank
has complied with all applicable terms and conditions of such
obligations and with all applicable laws, regulations, rules,
contractual requirements, and procedures. 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).
(t) ALLOWANCE FOR LOAN LOSSES. Republic's consolidated allowance for
losses on loans included in the Financial Statements as of March 31, 1997 was
$457,156.05, representing 1.07%
15
<PAGE>
of its total consolidated loans held in portfolio. In Republic's reasonable
judgment, the amount of such allowance for losses on loans was adequate to
absorb reasonably expectable losses in the loan portfolio of the Bank. To
the knowledge of Republic, there are no facts which would cause it to
increase the level of such allowance for losses on loans. Except as disclosed
in Section 3.1(t) of the Republic Disclosure Schedule, the loan portfolio of
the Bank as of March 31, 1997 in excess of such reserves is, to the best
knowledge and belief of the executive officers of the Bank after due inquiry
as to potential losses, and based on past loan loss experience, fully
collectible in accordance with the terms of the documentation relating to the
loans in such portfolio. There are no loans, leases, other extensions of
credit or commitments to extend credit of the Bank that have been or should
in accordance with generally acceptable accounting principles, have been
classified by the Bank as nonaccrual, as restructured, as 90 days past due,
as still accruing and doubtful of collection or any comparable
classification. Republic and the Bank have disclosed to Buyer in writing
prior to the date hereof the amounts of all loans, leases, advances, credit
enhancements, other extensions of credit, commitments and interest-bearing
assets of the Bank that have been classified as of March 31, 1996 as "Other
Loans Specially Mentioned," "Special Mention," "Substandard," "Doubtful,"
"Loss," "Classified, "Criticized," "Delinquent Loans," "Credit Risk Assets,"
"Concerned Loans" (in the latter two cases, to the extent available) or words
of similar import. Republic has provided to CFB such written information
concerning the loan portfolios of the Bank as CFB has requested, which
information is true, correct and complete in all material respects. From and
after the date hereof, Republic and the Bank promptly will provide Buyer with
a copy of each quarterly classified asset report and a delinquency trend
report it provides to its Board of Directors. The REO included in any
non-performing assets of Republic is carried net of reserves at the lower of
cost or fair value.
(u) MATERIAL INTERESTS OF CERTAIN PERSONS. Except as set forth in
Section 3.1(u) of the Republic Disclosure Schedule, no director or executive
officer of Republic or the Bank, nor any holder of ten percent or more of the
outstanding capital stock of Republic, nor any affiliate of such person as that
term is defined under 12 USC 371(c) ("Bank Principal") (i) is or has during the
period subsequent to December 31, 1995, been a party (other than as a depositor)
to any transaction with the Bank, whether as a borrower or otherwise, which
(a) was made other than in the ordinary course of business; (b) was made on
other than substantially the same terms, including interest rate and collateral,
as those prevailing at the time for comparable transactions for other persons;
or (c) involves more than the normal risk of collectibility or presents other
unfavorable features; or (ii) is a party to any loan or loan commitment, whether
written or oral, from the Bank involving an amount in excess of $10,000. Except
as set forth in Section 3.1(u) of the Republic Disclosure Schedule, no Bank
Principal holds any position with any depository organization other than the
Bank or Republic. For the purposes of this provision, the term "depository
organization" means a commercial bank (including a private bank), a savings
bank, a trust company, a savings and loan association, a homestead association,
a cooperative bank, an industrial bank, a credit union, or a depository
organization holding company.
(v) INSURANCE. Republic and the Bank are presently insured, and since
March 31, 1997 each has been insured, for reasonable amounts with financially
sound and reputable insurance companies, against such risks as companies engaged
in a similar business located in the State of
16
<PAGE>
Arizona would, in accordance with good business practice, customarily be
insured. Republic has delivered to CFB true, accurate and complete copies of
all insurance policies of Republic and the Bank as of the date of this
Agreement. Each such policy is in full force and effect, with all premiums
due thereon on or prior to the date of this Agreement having been paid as and
when due. The Bank has not filed any claim under its bankers blanket bond
during the past five years. There are no unresolved claims.
(w) INVESTMENT SECURITIES. Except for investments in the Federal Reserve
Bank of San Francisco, none of the investments reflected in the balance sheet of
Republic as of March 31, 1997, and none of such investments with face value of
in excess of $100,000 made by it since March 31, 1997 is subject to any
restriction (contractual or statutory), other than applicable securities laws,
that would materially impair the ability of the entity holding such investment
freely to dispose of such investment at any time, except to the extent any such
investments are pledged in the ordinary course of business (including in
connection with hedging arrangements or programs or reverse repurchase
arrangements) consistent with prudent banking practice to secure obligations of
Republic and the Bank, as applicable.
(x) REGISTRATION OBLIGATIONS. Republic is not under any obligation,
contingent or otherwise, to register any of its securities under the Securities
Act or any state securities laws.
(y) BOOKS. The books and records of Republic and the Bank are complete
and accurate in all material respects and have been, and are being, maintained
in accordance with applicable legal and accounting requirements.
(z) CORPORATE DOCUMENTS. Republic and the Bank have delivered to Buyer
true and complete copies of their respective certificate of incorporation,
charter and bylaws, as amended to date, which are currently in full force and
effect.
(aa) ABSENCE OF KNOWLEDGE. As of the date hereof, Republic is not aware of
any, reason why it would be unable to obtain all the necessary approvals
required in order to consummate the transactions contemplated by this Agreement.
(bb) ACCOUNTING AND TAX TREATMENT. To the knowledge of Republic, Republic
has not engaged in any act that would preclude or adversely affect the Merger
from qualifying as a tax-free reorganization under Section 368 of the Code or
from using the pooling of interests method of accounting for this transaction.
(cc) SEC AND REGULATORY FILINGS. None of the information regarding
Republic or the Bank which is prepared by or reviewed by Republic or the Bank
for inclusion or included in (i) the proxy or information statement to be mailed
to shareholders of Republic (the "Proxy Statement"), (ii) the registration
statement on Form S-4 to be filed with the SEC by CFB for the purpose of
registering the shares of CFB Common Stock to be exchanged for shares of
Republic Common Stock pursuant to the provisions of this Agreement, if
applicable (the "Registration Statement") or (iii) any other documents to be
filed with the SEC or any Regulatory Agencies in
17
<PAGE>
connection with the transactions contemplated hereby will, at the respective
times such documents are filed with the SEC or any Regulatory Agencies and,
in the case of the Registration Statement, if applicable, when it becomes
effective and, with respect to the Proxy Statement, when mailed, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not misleading or, in
the case of the Proxy Statement or any amendment thereof or supplement
thereto, at the time of the meeting of Republic stockholders referred to in
Section 4.1(b), be false or misleading with respect to any material fact, or
omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for such
meeting.
(dd) DERIVATIVE CONTRACTS. Neither Republic nor the Bank is a party to or
has agreed to enter into an exchange-traded or over-the-counter swap, forward,
future, option, cap, floor or collar financial contract or agreement, or any
other contract or agreement not included in Financial Statements of Republic
which is a financial derivative contract (including various combinations
thereof) ("Derivative Contracts"), except for those Derivatives Contracts set
forth in Section 3.1(dd) of the Republic Disclosure Schedule.
(ee) DEPOSITS. None of the deposits of the Bank is subject to any
encumbrances, legal restraint or other legal process. and no portion of any such
deposits of the Bank represents a deposit of any affiliate of the Bank, except
as set forth in Section 3.1(ee) of the Republic Disclosure Schedule.
3.2 REPRESENTATIONS AND WARRANTIES OF CFB. CFB represents and warrants to
Republic, in all material respects, as of the date of this Agreement (except as
otherwise expressly provided) as follows, except as disclosed on the attached
EXHIBIT C (the "CFB Disclosure Schedule") and the schedules thereunder which are
numbered to correspond to the representations set forth below:
(a) CFB ORGANIZATION. CFB is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with
authorized capital stock consisting of 30,000,000 shares of common stock, par
value of $.01 per share, of which 18,658,951 shares were issued and outstanding
as of March 31, 1997 and 2,000,000 shares of preferred stock, none of which were
issued and outstanding as of March 31, 1997. CFB has all requisite power,
authority, charters, licenses and franchises necessary or required by law to
carry on the business activity in which it is presently engaged. CFB is
registered as a corporation under the BHCA.
(b) REPORTS. CFB and the CFB Subsidiaries have filed all reports,
registrations and statements, together with any required amendments thereto,
that they were required to file with (i) the SEC, including, but not limited to,
Forms 10-K, Forms 10-Q and proxy statements, (ii) the FRB, (iii) the FDIC,
(iv) the OCC and (v) any applicable state securities or banking authorities.
All such reports and statements filed with any such regulatory body or authority
are collectively referred to herein as the "CFB Reports." As of their
respective dates, the CFB Reports complied in all material respects with all the
rules and regulations promulgated by the SEC, the FRB, the FDIC, the OCC and any
applicable state securities or banking authorities, as the case may be,
18
<PAGE>
and did 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 therein, in light of the circumstances under which they were made,
not misleading. CFB has timely filed with the SEC all reports, statements and
forms required to be filed pursuant to the Exchange Act.
(c) ENFORCEABILITY. The execution, delivery and performance of this
Agreement by CFB and the consummation of the transactions contemplated hereby
have been duly authorized by the Board of Directors of CFB. Subject to approval
by the government agencies and other governing bodies having regulatory
authority over CFB as may be required by statute or regulation, this Agreement
constitutes a valid and binding obligation of CFB, enforceable against it in
accordance with its terms. This Agreement does not require the approval of CFB
shareholders.
(d) NO DEFAULT; CREATION OF LIENS. Neither the execution and
delivery of this Agreement nor the consummation of the transaction contemplated
hereby will conflict with, result in the breach of, constitute a default under
or accelerate the performance provided by the terms of any judgment, order or
decree of any court or other governmental agency to which CFB may be subject, or
any contract, agreement or instrument to which CFB is a party or by which CFB is
bound or committed, or the Articles of Incorporation or Bylaws of CFB, or
constitute an event that, with the lapse of time or action by a third party,
could result in a default under any of the foregoing or result in the creation
of any lien, charge or encumbrance upon the CFB Common Stock.
(e) ABSENCE OF CERTAIN CHANGES OR EVENTS. From March 31, 1997 to the
date hereof, CFB has not incurred any liability, other than in the ordinary
course of its business consistent with past practice, and since March 31, 1997,
there has not been any condition, event, change or occurrence that, individually
or in the aggregate, has had, or is reasonably likely to have, a Material
Adverse Effect on CFB taken as a whole.
(f) TAXES. All federal, state, and local tax returns required to be
filed by or on behalf of CFB have been timely filed or requests for extensions
have been timely filed (and any such extension shall have been granted and not
have expired). All taxes, shown on such returns, all taxes required to be shown
on returns for which extensions have been granted, and any penalties, interest
or other governmental charges related thereto have been paid in full or adequate
provision has been made for any such taxes on CFB's balance sheet as of March
31, 1997 (in all material respects in accordance with GAAP).
(g) ABSENCE OF CLAIMS. Neither CFB nor any of its directors and
officers, in their capacities as directors and officers, is a party to any
pending litigation, legal, administrative, arbitration or other proceeding,
before any court or governmental agency ("Claim"), and to the knowledge of the
executive officers of CFB, there is no threatened Claim against CFB which is
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on CFB when taken as a whole.
19
<PAGE>
(h) ABSENCE OF REGULATORY ACTIONS. CFB is not a party to any cease
and desist order, written agreement or memorandum of understanding with, or a
party to any commitment letter or similar written undertaking to, or is subject
to any order or directive by, or is a recipient of any extraordinary supervisory
letter from any Regulatory Authority, nor has it been advised by any Regulatory
Authority that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter or similar written undertaking.
(i) COMPLIANCE WITH LAWS. CFB and its subsidiaries hold all
licenses, certificates, permits, franchises and rights from all appropriate
federal, state or other public authorities necessary for the conduct of its and
their business as it is presently conducted except where the absence thereof
would not, individually or in the aggregate, have a Material Adverse Effect on
CFB, taken as a whole, or delay the Merger. CFB has conducted its business so
as to comply in all respects with all applicable federal, state and local
statutes, ordinances, regulations or rules, except for possible violations which
would not, individually or in the aggregate, have a Material Adverse Effect on
CFB taken as a whole; and CFB is not presently charged with, or, to CFB's
knowledge, under governmental investigation with respect to, any actual or
alleged material violations of any statute, ordinance, regulation or rule, and
CFB is not the subject of any pending or, to CFB's knowledge, threatened
material proceeding by any Regulatory Authority having jurisdiction over its
business, properties or operations.
(j) ABSENCE OF KNOWLEDGE. As of the date hereof, CFB is not aware of
any reason why it would be unable to obtain all the necessary approvals required
in order to consummate the transactions contemplated by this Agreement.
(k) ACCOUNTING AND TAX TREATMENT. To the knowledge of CFB, CFB has
not engaged in any act that would preclude or adversely affect the Merger from
qualifying as a tax-free reorganization under Section 368 of the Code or from
using the pooling of interests method of accounting for this transaction.
(l) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by CFB for inclusion or incorporation by reference in (i) the
Registration Statement will, at the time the Registration Statement becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which such statements were made, not misleading and (ii) the Proxy Statement and
any amendment or supplement thereto will, at the date of mailing to Republic
stockholders and at the times of the meeting of stockholders of Republic to be
held in connection with the Merger, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading. The
Registration Statement will comply as to form in all material respects with
applicable law.
20
<PAGE>
(m) NO PLAN TO TRANSFER ASSETS. CFB has no plan or intention to sell
or otherwise dispose of any of the assets of Republic to be acquired in the
Merger, except for dispositions in the ordinary course of business or transfers
to controlled subsidiaries as described in Section 368(a)(2)(C) of the Code.
ARTICLE 4
COVENANTS OF REPUBLIC AND CFB
4.1 COVENANTS OF REPUBLIC. During the period from the date of this
Agreement and continuing until the Effective Time, Republic agrees as follows:
(a) ORDINARY COURSE. Except as otherwise required under this
Agreement or by CFB, Republic and the Bank shall carry on their respective
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and use all reasonable efforts to preserve intact
their present business organizations, maintain their rights and franchises and
preserve their relationships with customers, suppliers and others having
business dealings with them to the end that their goodwill and ongoing
businesses shall not be impaired in any material respect. Republic shall not,
nor shall it permit the Bank to (i) enter into any new material line of
business, (ii) increase or decrease the current number of the directors of
Republic and the Bank, (iii) change its or the Bank's lending, investment,
liability management or other material banking policies in any respect that is
material to such party; or (iv) incur or commit to any capital expenditures (or
any obligations or liabilities in connection therewith) other than capital
expenditures (and obligations or liabilities in connection therewith) provided
for in the budget attached hereto as Section 4.1(a) of the Republic Disclosure
Schedule.
(b) REPUBLIC PREFERRED STOCK. On or before the Effective Time,
Republic shall (i) redeem all outstanding shares of Republic Preferred stock, in
cancellation thereof, or (ii) exchange all outstanding shares of Republic
Preferred Stock for Republic Common Stock, which shall be subject to conversion
as set forth in Section 2.1, above. In order to accomplish the foregoing
redemption or exchange, Republic shall be entitled to issue additional shares of
Republic Preferred stock as shall be necessary to secure a majority class
approval to the Merger and all transactions contemplated hereby.
(c) SHAREHOLDER MEETING. Republic will cause to be duly called, and
will cause to be held not later than forty-five (45) days following the
effective date of the Registration Statement, a meeting of its shareholders and
will direct that this Agreement be submitted to a vote at such meeting.
Republic will (i) cause proper notice of such meeting to be given to its
shareholders in compliance with the Arizona Act and other applicable laws and
regulations; (ii) recommend by the affirmative vote of a majority of the Board
of Directors a vote in favor of approval of this Agreement; and (iii) use its
best efforts to solicit from its shareholders proxies in favor thereof.
21
<PAGE>
(d) REGISTRATION STATEMENT. Republic will promptly furnish or cause
to be furnished to CFB all of the information concerning Republic and the Bank
required for inclusion in, and will cooperate with CFB in the preparation of,
the Registration Statement and Proxy Statement (including audited financial
statements, prepared in accordance with generally accepted accounting
principles, in form suitable for inclusion in the Registration Statement and
Proxy Statement), or any statement or application made by CFB to any
governmental body in connection with the Merger. Republic agrees promptly to
advise CFB if at any time prior to the Effective Date of the Merger, any
information provided by or on behalf of Republic becomes incorrect or incomplete
in any material respect and to provide the information needed to correct such
inaccuracy or omission. At the time the Registration Statement becomes
effective, the Registration Statement and the Proxy Statement will comply in all
material respects with the provisions of the Securities Act and the published
rules and regulations thereunder, and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they are made, not misleading. At the time of mailing
thereof to Republic shareholders, at the time of Republic shareholders' meeting
referred to in Section 4.1(c) hereof and at the Effective Time of the Merger,
the Proxy Statement included as part of the Registration Statement or any
amendment thereof or supplement thereto, will not contain any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they are
made, not misleading or omit to state a material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for Republic shareholders' meeting; PROVIDED, HOWEVER, that none of the
provisions of this subparagraph shall apply to statements in or omissions from
the Registration Statement or the Proxy Statement made in reliance upon and in
conformity with information furnished by CFB for use in the Registration
Statement or the Proxy Statement.
(e) CONFIDENTIAL INFORMATION. Republic will hold in confidence all
documents and nonpublic information concerning CFB and its subsidiaries
furnished to Republic and its representatives in connection with the Merger and
will not release or disclose such information to any other person, except as
required by law and except to Republic's outside professional advisers in
connection with this Agreement, with the same undertaking from such professional
advisers. If the Merger contemplated by this Agreement shall not be
consummated, such confidence shall be maintained and such information shall not
be used in competition with CFB (except to the extent that such information can
be shown to be previously known to Republic, in the public domain, or later
acquired by Republic from other legitimate sources) and, upon request, all such
documents, any copies thereof and extracts therefrom shall immediately
thereafter be returned to CFB.
(f) BENEFIT PLANS. Republic and the Bank will, to the extent legally
permissible, take all action necessary or required (i) to terminate or amend, if
requested by CFB and at CFB's cost, 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
22
<PAGE>
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.
Except as set forth in Section 3.1(k) of Republic Disclosure Schedule,
and except as otherwise required pursuant to this Section 4.1(e), Republic
agrees as to itself and the Bank that it will not, without the prior written
consent of CFB, (i) enter into, adopt, amend (except as may be required by law)
or terminate any Plan, as the case may be, or any other employee benefit plan or
any agreement, arrangement, plan or policy between Republic or any of the Bank
and one or more of its directors or officers; provided, however, that Republic
or the Bank may amend any of the Plans to reduce or eliminate a requirement of
mandatory periodic contributions provided that if any of the Plans do not have
assets with an aggregate value that exceeds the present value of its liability
for accrued benefits, all as determined on a termination basis, then Republic
shall accrue on its Determination Date Financial Statements the amount by which
any of the Plans are underfunded; (ii) except for the incentive compensation for
all Bank employees for calendar year 1997 and bonus program for the President of
the Bank for calendar years 1997 (all as set forth in Section 3.1(k) of the
Republic Disclosure Schedule), which amounts have already been accrued and
expensed as of the date hereof, except for normal increases in the ordinary
course of business consistent with past practice that in the aggregate do not
result in aggregate annual base compensation expense to Republic in excess of
105% of that in effect as of December 31, 1996, increase in any manner the
compensation of any director, officer, or employee, or pay any benefit not
required by any plan and arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or performance
units or shares) or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing; or (iii) enter into or renew any
contract, agreement, commitment or arrangement providing for the payment to any
director, officer or employee of Republic or the Bank of compensation or
benefits contingent, or the terms of which are materially altered, upon the
occurrence of the Merger. Notwithstanding the foregoing, CFB acknowledges and
accepts the contemplated transfer of motor vehicle sedan to the President of the
Bank.
(g) NO SOLICITATIONS. Republic shall not permit the Bank to, nor
shall it authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative or agent retained by it or the Bank to solicit, 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 takeover proposal (as
defined below), or agree or endorse any takeover proposal, or participate in any
discussions or negotiations, or provide third parties with any nonpublic
information, relating to any such inquiry or proposal. Republic shall promptly
advise CFB orally and in writing of any such inquiries or proposals, including
all of the material terms thereof. As used in this Agreement, "takeover
proposal" shall mean any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving Republic or any proposal
or offer to acquire in any manner a substantial equity interest in, or a
substantial portion of the assets of Republic other than the transactions
contemplated or permitted by this Agreement.
23
<PAGE>
(h) NO ACQUISITIONS. Other than (i) acquisitions described in
Section 4.1(h) of Republic Disclosure Schedule, or (ii) acquisitions which may
be mutually agreed to by the parties, Republic shall not, nor shall permit the
Bank 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 Bank 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 Republic
assets in each case in the ordinary course of business.
(i) INSURANCE. Republic and the Bank shall maintain the insurance
coverage (or coverage of a like kind and amount) referenced in Section 3.1(v)
through the Effective Time.
(j) POOLING RESTRICTIONS. From and after the date of this Agreement,
neither Republic nor the Bank shall take any action which, with respect to
Republic, would disqualify the Merger as a "pooling of interests" for accounting
purposes.
(k) FINANCIAL STATEMENTS. Republic shall prepare, file and submit to
CFB all quarterly and management prepared financial statements for any periods
ending at least 30 days before the Closing Date.
(l) ADDITIONAL COVENANTS OF REPUBLIC. From the date of this
Agreement to the Closing Date or the earlier termination of this Agreement,
Republic, EXCEPT WITH THE PRIOR WRITTEN CONSENT OF CFB (except as otherwise
specifically provided in clauses (xiv) and (x) of this Section 4.1(k)), or as
specifically required under the Agreement, shall not, nor shall it allow the
Bank to:
(i) Except as may be required by Section 4.1(b) or Section
6.2(c) hereof, issue, sell or commit to issue or sell any shares of
capital stock of Republic or the Bank, securities convertible into or
exchangeable for capital stock of Republic or the Bank, warrants,
options or other rights to acquire such stock, or enter into any
agreement with respect to the foregoing other than issuance by the
Bank of capital stock to Republic;
(ii) Redeem, purchase or otherwise acquire (except for trust
account shares) directly or indirectly, any shares of capital stock of
Republic or the Bank or any securities convertible or exercisable for
any shares of capital stock of Republic or the Bank;
(iii) Split, combine or reclassify any of capital stock of
Republic or the Bank or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of, or in substitution for
shares of capital stock of Republic or the Bank;
24
<PAGE>
(iv) Borrow, assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other
individual, corporation or other entity, any material amount;
(v) Other than in the ordinary course of business, discharge or
satisfy any material lien or encumbrance on the properties or assets
of the Bank or pay any material liability;
(vi) Mortgage, pledge or subject to any lien or other encumbrance
any of its assets, except (A) in the ordinary course of business, (B)
liens and encumbrances for current property taxes not yet due and
payable, and (C) liens and encumbrances which do not materially affect
the value or interfere with the current use or ability to convey the
property subject thereto or affected thereby;
(vii) Sell, assign or transfer any tangible or intangible assets
with a book value greater than $10,000, except in the ordinary course
of business (which includes the sale of the guaranteed portions of
government guaranteed loans);
(viii) Enter into any individual employment, agency or other
contract or arrangement for the performance of personal services for
an amount in excess of $10,000 (except for service agreements in the
ordinary course of business);
(ix) Amend the Bank' or Republic's Articles of Association,
Articles of Incorporation, Bylaws or other governing documents;
(x) Cancel any material debt or claim or waive any right of
material value, except in the ordinary course of business;
(xi) Repurchase or enter into any agreement to repurchase all or
any portion of any loan previously participated to any other financial
institution other than loans repurchased in compliance with all
applicable laws and regulations;
(xii) Originate any loan which is thereafter participated to
another financial institution providing for payment upon default on
any basis other than pro rata;
(xiii) 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;
(xiv) (A) make, or agree to make, any fully secured loan or
increase any existing fully secured loan for an amount in excess of
$250,000, 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
25
<PAGE>
Agreement; (B) make, or agree to make, any unsecured loan or
increase any unsecured loan by $50,000 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; or (D) make any change with respect to the terms
of any existing loan, except in the ordinary course of business
(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); PROVIDED, HOWEVER, for
any loan requiring CFB's approval, CFB will agree to be commercially
reasonable in approving or disapproving such loan and will provide its
decision within five (5) business days of submittal and, in the event
of a disapproval, CFB shall furnish its reason for such response (if
CFB fails to approve or disapprove any loan within said five business
day period, the loan shall be deemed approved); and, PROVIDED FURTHER,
HOWEVER, if the Effective Date has not occurred within ninety (90)
days of the date of this Agreement, the loan approval amount would
double; i.e., five hundred thousand ($500,000) in the event more than
ten percent (10%) of loans submitted to CFB for approval have been
denied during said 90-day period;
(xv) Make or agree to make any loan to any Bank Principal or any
person, corporation or entity in violation of any state or federal law
or regulation;
(xvi) Incur any obligation or liability with respect to capital
expenditures which exceeds $10,000 for any single matter or $50,000 in
the aggregate, except for capital expenditures described in Section
4.1(l)(xvi) of Republic Disclosure Schedule;
(xvii) Fail to timely pay and discharge all federal and state
taxes and other accounts payable for which it is liable, provided,
that the Bank may deposit an amount equal to any such taxes, in lieu
of the payment thereof, into a reserve account, determined
consistently with prior practices, from which such taxes will be paid
when and to the extent they are found to be properly due and payable;
(xviii) Except as provided in the Employee Plans set forth in
Section 3.1(n) of the Republic Disclosure Schedule, pay or commit to
pay any additional salary or other compensation to any of the Bank's
officers, directors or employees;
(xix) Except as otherwise required pursuant to Section 4.1(e),
enter into, adopt, amend (except as may be required by law), terminate
or make or grant any increase above current funding levels in any of
the Plans (other than normal premium increases on current health care
insurance) or arrangement;
26
<PAGE>
(xx) Purchase or sell any bonds or other investment securities
without prior written consent of CFB or make or agree to make any
investment in violation of any federal law or regulation except that
the Bank may purchase U.S. Treasury or Agencies securities with
maturity dates of twenty-four (24) months or less;
(xxi) Fail to charge and pay interest rates on loans and
deposits, respectively, not materially consistent with practices in
the Bank's marketplace;
(xxii) Fail to use its reasonable efforts to comply with any law,
rule, regulation or order applicable to the Bank and/or Republic if
such failure would have a Material Adverse Effect upon Republic;
(xxiii) Fail to make all appropriate and required transfers to
the Bank's loan loss reserves based upon existing policies of the Bank
or at the request of any regulatory agency;
(xxiv) Change any accounting methods, practices or procedures
with respect to the accumulation and presentation of financial
information, except as directed by applicable law or regulation or to
conform with accounting standards;
(xxv) Declare or pay any dividends or distributions with respect
to its Common Stock (i) in excess of $400,000 in the aggregate or (ii)
after the Determination Date; or
(xxvi) Fail to use its reasonable efforts to obtain the consent
or approval of each person (other than the government authorities
referred to in Section 6.1(c)) whose consent or approval is required
in order to permit a succession by the Surviving Corporation pursuant
to the Merger to any obligation, right or interest of Republic or the
Bank under any loan or credit agreement, note, mortgage, indenture,
lease, license or other agreement or instrument.
4.2 COVENANTS OF CFB. During the period from the date of this Agreement
and continuing until the Effective Time, CFB agrees as follows:
(a) ORDINARY COURSE. Except as set forth in Section 4.2(a) of the
CFB Disclosure Schedule, CFB shall carry on its business in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted.
(b) APPLICATION. Subject to the required cooperation of Republic and
its affiliates, CFB shall use its reasonable efforts to prepare and submit
within thirty (30) days of the date hereof an application to the Federal Reserve
Bank of Minneapolis for prior approval pursuant to Section 3(a)(5) of the Bank
Holding Company Act of 1956, as amended, of the proposed transaction, and to
prosecute all required federal and state applications. CFB shall provide
27
<PAGE>
Republic, through its counsel, copies of all applications as filed and any
non-confidential correspondence exchanged with appropriate federal and state
regulatory agencies.
(c) COOPERATION. CFB will furnish to Republic all the information
concerning CFB required for inclusion in, and will cooperate in the preparation
of, the Proxy Statement to be sent to the shareholders of Republic. CFB agrees
promptly to advise Republic if at any time prior to the Effective Date of the
Merger, 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.
(d) REGISTRATION STATEMENT. As promptly as practicable after the
execution of this Agreement, CFB will file with the SEC a registration statement
on Form S-4 under the Securities Act (the "Registration Statement") and any
other applicable documents, which will include a prospectus and joint proxy
statement (the "Proxy Statement"), and will use its best efforts to cause the
Registration Statement to become effective under the Securities Act and
applicable state securities laws as soon as practicable. CFB shall advise
Republic promptly when the Registration Statement has become effective and of
any supplements or amendments thereto, and CFB shall furnish Republic with
copies of all such documents. At the time the Registration Statement becomes
effective, the Registration Statement and the Proxy Statement will comply in all
material respects with the provisions of the Securities Act and the published
rules and regulations thereunder, and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they are made, not misleading. At the time of mailing
thereof to Republic shareholders, at the time of Republic shareholders' meeting
referred to in Section 4.1(b) hereof and at the Effective Time of the Merger,
the Proxy Statement included as part of the Registration Statement or any
amendment thereof or supplement thereto, will not contain any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they are
made, not misleading or omit to state a material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for Republic shareholders' meeting; PROVIDED, HOWEVER, that none of the
provisions of this subparagraph shall apply to statements in or omissions from
the Registration Statement or the Proxy Statement made in reliance upon and in
conformity with information furnished by Republic or the Bank for use in the
Registration Statement or the Proxy Statement. CFB shall bear the costs of all
SEC filing fees with respect to the Registration Statement, the costs of
printing the Proxy Statement, and the costs of qualifying the shares of CFB
Common Stock under state blue sky laws as necessary.
(e) LISTING. CFB will file all documents required to be filed to
obtain approval for listing the CFB Common Stock to be issued pursuant to the
Merger on the NASDAQ National Market System and use its best efforts to effect
said listing.
(f) SHARES TO BE ISSUED. The shares of CFB Common Stock to be issued
by CFB to the shareholders of Republic pursuant to this Agreement will, upon
such issuance and delivery to said shareholders pursuant to the Agreement, be
duly authorized, validly issued, fully paid and
28
<PAGE>
nonassessable. The shares of CFB Common Stock to be delivered to the
shareholders of Republic pursuant to this Agreement are and will be free
of any preemptive rights of the stockholders of CFB.
(g) BLUE SKY. CFB will file all documents required to obtain prior
to the Effective Time of the Merger all necessary Blue Sky permits and
approvals, if any, required to carry out the transactions contemplated by this
Agreement, will pay all expenses incident thereto and will use its best efforts
to obtain such permits and approvals.
(h) CONFIDENTIAL INFORMATION. CFB will hold in confidence all
documents and information concerning Republic and the Bank furnished to it and
its representatives in connection with the transactions contemplated by this
Agreement and will not release or disclose such information to any other person,
except as required by law and except to its outside professional advisers in
connection with this Agreement, with the same undertaking from such professional
advisers. If the transactions contemplated by this Agreement shall not be
consummated, such confidence shall be maintained and such information shall not
be used in competition with Republic (except to the extent that such information
can be shown to be previously known to CFB, in the public domain, or later
acquired by CFB from other legitimate sources) and, upon request, all such
documents, copies thereof or extracts therefrom shall immediately thereafter be
returned to Republic.
(i) REGISTRATION STATEMENT. CFB will furnish or cause to be
furnished all of the information concerning CFB and the CFB Subsidiaries
required for inclusion in, and will cooperate with Republic in the preparation
of the Registration Statement, or any statement or application made by Republic
to any governmental body in connection with the transactions contemplated by
this Agreement. CFB agrees to advise Republic if at any time prior to the
Effective Time, any information provided by or on behalf of CFB becomes
incorrect or incomplete in any material respect and to provide the information
needed to correct such inaccuracy or omission.
(j) INDEMNIFICATION. From and after the Effective Time through the
sixth anniversary of the Effective Time, CFB shall indemnify and hold harmless
each present and former director, officer and employee of Republic and the Bank
and each officer or employee of Republic and the Bank that is serving or has
served as a director or trustee of another entity expressly at Republic's or the
Bank's request or direction (each, an "Indemnified Party"), against any costs or
expenses (including reasonable attorneys' fees), judgment, fines, losses,
claims, damages or liabilities (collectively, the "Costs") incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, and whether or not the
Indemnified Party is a party thereto, arising out of matters existing or
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement), whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extend then permitted under applicable
law and regulation. Subject to any prohibition or restriction under applicable
law or regulation, CFB further agrees to advance any such costs to each
Indemnified Party as they are from time to time incurred (subject to receipt
of an
29
<PAGE>
undertaking to repay such advances if it is ultimately judicially determined
that such Indemnified Party is not entitled to indemnification).
4.3 COVENANTS OF REPUBLIC AND CFB. During the period from the date of
this Agreement and continuing until the Effective Time, Republic and CFB agree
as to themselves and their subsidiaries that, except as expressly contemplated
or permitted by this Agreement, or to the extent that the parties shall
otherwise consent in writing:
(a) GOVERNING DOCUMENTS. No party shall amend its Certificate or
Articles of Incorporation or Bylaws.
(b) OTHER ACTIONS. Unless such action is required by law or sound
banking practice, no party knowingly and intentionally shall, or shall permit
any of its Subsidiaries to, take any action that (i) is intended to result in
any of its representations and warranties set forth in this Agreement being or
becoming untrue in any material respect, or in any of the conditions to the
Merger set forth in Article VI not being satisfied or in a violation of any
provision of this Agreement, or (ii) would adversely affect the ability of any
of them to obtain any of the Requisite Regulatory Approvals (as defined in
Section 6.1(c)) without imposition of a condition or restriction of the type
referred to in Section 6.1(f) hereof except, in every case, as may be required
by applicable law or this Agreement.
(c) ADVICE OF CHANGES; GOVERNMENT FILINGS. Each party shall promptly
advise the other orally and in writing of any change or event constituting a
material breach of any of the representations, warranties or covenants of such
party contained herein. CFB shall file all reports required to be filed by it
with the SEC between the date of this Agreement and the Effective Time and shall
deliver to Republic copies of all such reports promptly after the same are
filed. CFB, Republic and each subsidiary of CFB or Republic that is a bank
shall file all reports with the appropriate Regulatory Agencies and all other
reports, applications and other documents required to be filed with the
appropriate Regulatory Agencies between the date hereof and the Closing Date and
shall make available to the other party copies of all such reports promptly
after the same are filed.
(d) TITLE TO PROPERTY. Republic agrees to deliver to CFB (at
Republic's expense) within thirty (30) days of the date hereof, a title
insurance commitment for all real property owned by Republic or the Bank in the
State of Arizona (including property held as OREO) (the "Title Commitment") CFB
shall have thirty (30) days after receipt by CFB's counsel of said Title
Commitment within which to notify Republic, in writing, of CFB's objection to
any exceptions (other than any exception of the type described in
Section 3.1(o)) to the title shown in said Title Commitment. In the event of
any such objection, then Republic shall have thirty (30) days from the date of
such objection within which to attempt to eliminate such objected to exceptions
to title from the Title Commitment. In the event such objected to exceptions
are not eliminated or satisfied to the reasonable satisfaction of CFB, CFB may
terminate this Agreement pursuant to Section 7.1 hereof and such termination
shall be the sole and exclusive remedy for the failure to eliminate or satisfy
such exceptions.
30
<PAGE>
(e) ENVIRONMENTAL ASSESSMENT. Republic shall engage at its expense
an independent, qualified environmental engineering firm, acceptable to CFB for
the purpose of conducting a Phase I Hazardous Waste Assessment (the
"Assessment") of all real properties owned or controlled by the Bank. The
Assessment shall satisfy ASTM's E-1527 Standard Practice and shall include a
record review of publicly available federal, state and local sources of
environmental records. The Assessment shall be completed within thirty (30)
days after the date hereof. CFB shall have a period of thirty (30) days from
the date of receipt of such Assessment to review such Assessment and give
written notice to Republic stating either that (i) such Assessment is approved
by CFB or (ii) such Assessment is not approved by CFB and the reasons therefor.
If CFB gives a notice pursuant to (ii) above which sets forth specific
objections to the Assessment, then CFB may, at its option, terminate this
Agreement as of the date which is sixty (60) days after the date of such notice
unless during such sixty (60) day period Republic corrects or satisfies such
objections, or indemnifies CFB against loss, liability or expense, to the
reasonable satisfaction of CFB.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 LOAN LOSS RESERVE. On or before the Determination Date, Republic
shall cause the Bank to supplement its reserve for losses on loans by a transfer
in the amount of $400,000.
5.2 REGULATORY MATTERS.
(a) CFB shall use its reasonable efforts to have the Registration
Statement declared effective under the Securities Act as promptly as practicable
after such filing, and, following the record date for the stockholder meeting of
Republic, thereafter mail the Proxy Statement to the stockholders of Republic.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all necessary applications, notices, petitions, filings
and other documents, and to obtain as promptly as practicable all necessary
permits, consents, and authorizations of all governmental entities necessary to
consummate the Merger ("Requisite Regulatory Approvals"). Republic and CFB shall
have the right to review in advance, and to the extent practicable each will
consult the other on, subject to applicable laws relating to the exchange of
information, all the information relating to Republic or CFB, as the case may
be, and any of their respective subsidiaries, which appear in any filing made
with, or written materials submitted to any governmental entity in connection
with the Merger. In exercising the foregoing right, each of the parties hereto
shall act reasonably and as promptly as practicable.
31
<PAGE>
(c) Republic and CFB shall promptly furnish each other with copies of
written communications received by Republic or CFB, as the case may be, or any
of their respective Subsidiaries, Affiliates or Associates (as such items are
defined in Rule 12b-2 under the Exchange Act as in effect on the date hereof)
from, or delivered by any of the foregoing to, any governmental entity in
respect of the Merger.
5.3 LETTERS OF REPUBLIC OFFICERS. Republic shall cause to be delivered to
CFB a letter of Republic's chief financial officer in substantially the form
shown on EXHIBIT 5.3A dated (i) the date on which the Registration Statement
shall become effective and (ii) the business day prior to the Closing Date, and
addressed to CFB.
CFB shall cause to be delivered to Republic a letter of CFB's chief
financial officer in substantially the form shown on EXHIBIT 5.3B dated (i) the
date on which the Registration Statement shall become effective and (ii) the
business day prior to the Closing Date, and addressed to Republic.
5.4 ACCESS TO INFORMATION. Upon reasonable notice and subject to
applicable laws relating to the exchange of information, Republic and CFB shall
each (and cause each of its subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of CFB, access during normal
business hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records for the purpose of
updating any review of such items performed prior to the date of this Agreement
and, during such period, Republic and CFB shall (and shall cause each of its
subsidiaries to) make available to the other: (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal or state securities
laws or federal or state banking laws (other than reports or documents which
either party is not permitted to disclose under applicable law); and (b) all
other information concerning its business, properties and personnel as either
party may reasonably request. It is the intention of the parties that CFB shall
conduct an examination of Republic and the Bank prior to the Closing Date in
order to confirm compliance with the representations, warranties and covenants
set forth in this Agreement. No investigation by either party shall affect the
representations and warranties set forth herein or waive any right or remedy
hereunder.
5.5 AFFILIATES. Each of Republic and CFB shall use its reasonable efforts
to cause each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act) of Republic or CFB to
deliver to the other party hereto, as soon as practicable after the date hereof,
and at least 32 days prior to the Closing Date, a written agreement
substantially in the form of EXHIBIT 5.5.
5.6 EMPLOYEE BENEFIT PLANS. Each person who is an employee of the Bank as
of the Effective Time ("Bank Employees") shall be participants in the employee
welfare plans, and shall be eligible for participation in the pension plans of
CFB, as in effect from time to time, subject to any eligibility requirements
(with full credit for years of past service to any of the Bank, or to any
predecessor-in-interest of the Bank to the extent such service is presently
given
32
<PAGE>
credit under the Plans of the Bank described in Section 3.1(n) hereof, for
the purpose of satisfying any eligibility and vesting periods) applicable to
such plans (but not subject to any pre-existing condition exclusions) and shall
enter each welfare plan immediately after the Effective Time and shall enter
each pension plan not later than the first day of the calendar year which begins
at least 32 days after the Effective Time. For the purpose of determining each
Bank Employee's benefit for the year in which the Merger occurs under the CFB
vacation program, vacation taken by a Bank Employee in the year in which the
Merger occurs will be deducted from the total CFB benefit. Each Bank Employee
shall be eligible for participation, as a new employee with the credit for past
service described above, in the CFB Plans under the terms thereof.
5.7 EXPENSES. Except as otherwise stated herein, whether or not the
Merger is consummated, all costs and expenses incurred in connection with this
Agreement, and the transactions contemplated hereby shall be paid by the party
incurring such expense. All of the expenses (including but not limited to
professional fees) incurred or to be incurred by Republic in connection with the
Merger shall be accrued as expenses on the Determination Date Balance Sheet.
5.8 ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use its
reasonable efforts to take all action and to do all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including, without limitation,
cooperating fully with the other party hereto, providing the other party hereto
with any appropriate information and making all necessary filings in connection
with the Requisite Regulatory Approvals.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been approved
and adopted by the affirmative vote of the holders of two-thirds of the
outstanding shares of Republic Common Stock entitled to vote thereon.
(b) NASDAQ LISTING. The shares of CFB Common Stock issuable to
Republic stockholders pursuant to this Agreement shall have been approved for
listing on the NASDAQ National Market System, upon notice of issuance.
33
<PAGE>
(c) OTHER APPROVALS. Other than the filing provided for by Section
1.1, all consents, orders or approvals of, or declarations or filings with, and
all expirations of waiting periods imposed by, any governmental entity
(collectively, the "Consents") which are prescribed by law as necessary for the
consummation of the Merger and the other transactions contemplated hereby (other
than immaterial Consents) shall have been filed, occurred or been obtained and
all such Requisite Regulatory Approvals shall be in full force and effect.
(d) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order, injunction
or decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger or any of the transactions contemplated hereby shall be in effect, nor
shall any proceeding by any governmental entity seeking any such Injunction be
pending. No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, or enforced by any governmental entity which prohibits,
restricts or makes illegal consummation of the Merger.
(f) NO UNDULY BURDENSOME CONDITION. There shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger or any of the transactions contemplated hereby,
by any federal or state governmental entity which, in connection with the grant
of a Requisite Regulatory Approval, imposes any condition or restriction upon
CFB, Republic, or any of their Subsidiaries which would so materially adversely
impact the economic or business benefits of the transactions contemplated by
this Agreement as to render inadvisable, in the reasonable business judgment of
the Board of Directors of either CFB or Republic, the consummation of the
Merger.
6.2 CONDITIONS TO OBLIGATIONS OF CFB. The obligation of CFB to effect the
Merger are also subject to the satisfaction or waiver by CFB prior to the
Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Republic set forth in this Agreement shall be true and correct in
all material respects as of the date of the 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 the Closing Date, except where the failure to be
true and accurate in all material respects would not have or would not be
reasonably expected to have a material adverse effect on Republic, and CFB shall
have received a certificate signed on behalf of Republic by the Chief Executive
Officer and Chief Financial Officer of Republic to such effect.
34
<PAGE>
(b) PERFORMANCE OF OBLIGATIONS OF REPUBLIC. Republic shall have
performed in all materials respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and CFB shall have
received a certificate signed on behalf of Republic by the Chief Executive
Officer and Chief Financial Officer of Republic to such effect.
(c) MINIMUM REPUBLIC VALUE. The Republic Value as of the
Determination Date shall not be less than Four Million Two Hundred Fifty-Three
Thousand and no/100 Dollars ($4,253,000.00). The confirmation of the minimum
Republic Value shall be made pursuant to the procedures set forth in
Section 1.4. Republic shall use its best efforts to assure such minimum
Republic Value, including, but not limited to, obtaining shareholder capital
contributions or issuing additional shares of Republic Common Stock as necessary
to increase Republic Value.
(d) 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 Republic's
accountants, in form and substance reasonably satisfying to Ernst & Young,
confirming certain facts on behalf of Republic.
(e) LEGAL OPINION. CFB shall have received the opinion of Streich
Lang P.A., counsel to Republic, dated the Closing Date, in substantially the
form attached as EXHIBIT 6.2(e), and such opinion shall not have been withdrawn
prior to the Effective Time.
(f) EMPLOYMENT AGREEMENTS. CFB and each of (i) Thomas Euen, (ii)
Peter Homenick, (iii) Patrick Havey, (iv) Donna Rau, (v) Mike Wanegar, (vi)
Vanessa Buonagurio, (vii) Beverly Rankin and (viii) Gene Chandler (collectively,
the "Republic Employees") shall have executed and delivered Employee Agreements
in substantially the forms attached as EXHIBIT 6.2(f).
(g) CHANGE OF CONTROL AGREEMENTS. The Republic Employees shall have
canceled and terminated their respective Change of Control Agreements, as of the
Effective Time.
6.3 CONDITIONS TO OBLIGATIONS OF REPUBLIC. The obligation of Republic to
effect the Merger is also subject to the satisfaction or waiver by Republic
prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of CFB set forth in this Agreement shall be true and correct in all
material 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 the Closing Date, except as otherwise
contemplated by this Agreement, and Republic shall have received a certificate
signed on behalf
35
<PAGE>
of CFB by the Chairman and Chief Executive Officer and by the
Chief Financial Officer of CFB to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF CFB. CFB and the Acquisition
Subsidiary shall have performed in all material respects all obligations
required to be performed by either of them under this Agreement at or prior to
the Closing Date, and Republic shall have received a certificate signed on
behalf of CFB and the Acquisition Subsidiary by the Chairman and Chief Executive
Officer and by the Chief Financial Officer of CFB to such effect.
(c) CONSENTS UNDER AGREEMENTS. CFB shall have obtained the consent
or approval of each person (other than the Governmental Entities referred to in
Section 6.1(c)) whose consent or approval shall be required in connection with
the transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument to which
CFB or any of its subsidiaries is a party or is otherwise bound, except those
for which failure to obtain such consents and approvals would not, in the
reasonable opinion of Republic, individually or in the aggregate, have a
material adverse effect on CFB or upon the consummation of the transactions
contemplated hereby.
(d) TAX OPINION. CFB and Republic shall have received the opinion of
Streich Lang P.A., counsel to Republic, dated the Closing Date, to the effect
that (i) the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, (ii) CFB and
Republic will each be a party to that reorganization within the meaning of
Section 368(b) of the Code, (iii) shareholders of Republic who exchange their
shares of Republic Common Stock for shares of CFB Common Stock will not
recognize gain or loss, for purposes of federal income tax, except to the extent
of the cash received in lieu of fractional shares, and (iv) Republic will not
recognize gain or loss, for purposes of federal income tax, as a result of
consummation of the Merger.
(e) LEGAL OPINION. Republic shall have received the opinion of
Lindquist and Vennum, P.L.L.P., counsel to CFB, dated the Closing Date, in
substantially the form shown on EXHIBIT 6.3, and such opinion shall not have
been withdrawn prior to the Effective Time.
ARTICLE 7
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated in writing at any time
prior to the Effective Time, whether before or after approval of the Merger by
the stockholders of Republic or CFB, only in the following circumstances:
(a) by mutual consent of CFB and Republic in a written instrument, if
the Board of Directors of each so determines by a vote of a majority of the
members of its entire Board;
(b) by either CFB or Republic if (i) any Requisite Regulatory
Approval shall have been denied; or (ii) any governmental entity of competent
jurisdiction shall have issued a final nonappealable order enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement;
36
<PAGE>
(c) by either CFB or Republic if the Merger shall not have been
consummated on or before January 30, 1998; provided, however, that all parties
shall use their respective reasonable efforts to consummate the transaction as
soon as practicable, it being the desire of Republic that the transaction be
completed by December 31, 1997. This right of termination shall be unavailable
to a part if the failure of consummation shall be due to the failure of the
party seeking to terminate to perform or observe in all material respects the
covenants and agreements hereunder to be performed or observed by such party;
(d) by either CFB or Republic if there shall have been a material
breach of any of the covenants or agreements set forth in this Agreement on the
part of the other party, which breach shall not have been cured before closing
or within twenty (20) business days following receipt by the breaching party of
written notice of such breach from the other party, whichever occurs first; or
(e) by CFB pursuant to the terms of Section 4.3(d) or 4.3(e), as
applicable.
7.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either CFB or Republic as provided in Section 7.1, this Agreement shall
forthwith become void and have no effect except that the obligations under
Sections 4.1(d), 4.2(h), 5.7, and 7.2 shall survive termination of this
Agreement; provided, however, that no party shall be relieved or released from
any liabilities or damages arising out of the willful breach by such party of
any provision of this Agreement. As used herein, with respect to Republic, a
failure of any of the representations and warranties set forth in Section 3.1
shall not constitute a "willful breach" of the Agreement, unless within the
actual knowledge of Thomas J. Euen as of the date hereof.
7.3 AMENDMENT. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the stockholders of Republic and CFB, provided, however, that after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders, without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto;
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any of the Schedules; and (iii) waive compliance 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.
37
<PAGE>
ARTICLE 8
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No representation or
warranty contained in this Agreement shall survive the Merger or the termination
of this Agreement.
8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given when received by 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 or Acquisition
Subsidiary, to: Community First Bankshares, Inc.
Attn: Donald R. Mengedoth, President
520 Main Avenue
Fargo, ND 58124
with copies to: Steven J. Johnson, Esq.
Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South 8th Street
Minneapolis, MN 55402-2205
and
(b) if to Republic, to: Republic National Bancorp, Inc.
Attn: Thomas J. Euen, President
Harry T. Goss, Chairman
2020 North Central Avenue
Phoenix, AZ 85004
with copies to: R. Neil Irwin, Esq.
Streich Lang P.A.
Renaissance One
2 North Central Avenue
Phoenix, AZ 85004-2391
8.3 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to 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."
8.4 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when 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.
38
<PAGE>
8.5 ENTIRE AGREEMENT: THIRD PARTY BENEFICIARIES; RIGHTS OF OWNERSHIP. This
Agreement (including the documents and the instruments referred to herein)
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. This Agreement is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder, except that
Sections 3.2 and 4.2(i) are intended for the benefit of Republic shareholders;
and Section 5.6 is intended for the benefit of employees of the Bank. CFB shall
be liable to such third-party beneficiaries for damages caused by the breach of
such Sections. 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.
8.6 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Arizona.
8.7 PUBLICITY. Except as otherwise required by law or the rules of the
NASDAQ or the National Association of Securities Dealers, so long as this
Agreement is in effect, neither CFB nor Republic shall, nor shall either of them
permit any of its subsidiaries to, issue or cause the publication of any press
release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld.
8.8 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.
8.9 ENFORCEMENT OF AGREEMENT. Each of the parties hereto agrees that it
will not object if the other party seeks to obtain an injunction to prevent
breaches of this Agreement or to enforce specifically the terms and provision
hereof in any court in the United States or any state have jurisdiction. The
enforcing party shall be entitled to recover its attorneys fees incurred in the
successful enforcement of the terms and provisions of this Agreement.
39
<PAGE>
IN WITNESS WHEREOF, CFB, Acquisition Subsidiary and Republic have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first above written.
COMMUNITY FIRST BANKSHARES, INC.
Attest: By: /s/ Donald R. Mengedoth
--------------------------------
Name: Donald R. Mengedoth
Title: Chairman and President
/s/ Mark A. Anderson
- -------------------------------
Name: Mark A. Anderson
Title: Executive Vice President
REPUBLIC ACQUISITION CORPORATION
Attest: By: /s/ Donald R. Mengedoth
--------------------------------
Name: Donald R. Mengedoth
Title: President
/s/ Mark A. Anderson
- -------------------------------
Name: Mark A. Anderson
Title: Secretary/Treasurer REPUBLIC NATIONAL BANCORP, INC.
By: /s/ Thomas J. Euen
---------------------------------
Attest: Name: /s/ Thomas J. Euen
Title: President
/s/ Gene W. Chandler
- -------------------------------
Name: Gene W. Chandler
Title: Secretary
39
<PAGE>
TABLE OF EXHIBITS
EXHIBIT A -- Articles of Merger
EXHIBIT B -- Republic Disclosure Schedule
EXHIBIT C -- CFB Disclosure Schedule
EXHIBIT 5.3 -- Letters of Chief Financial Officers
EXHIBIT 5.5 -- Affiliate Agreement
EXHIBIT 6.2(c) -- Streich Lang Opinion
EXHIBIT 6.2(f) -- Employment Agreements
EXHIBIT 6.3 -- Lindquist & Vennum Opinion
<PAGE>
Exhibit 2.6
OFFICE PURCHASE AND ASSUMPTION AGREEMENT
BY AND BETWEEN
BANK ONE, ARIZONA, NATIONAL ASSOCIATION
241 NORTH CENTRAL AVENUE
PHOENIX, ARIZONA 85004
BANK ONE, COLORADO, NATIONAL ASSOCIATION
1125 17TH STREET
DENVER, COLORADO 80202
BANK ONE, UTAH, NATIONAL ASSOCIATION
501 WEST BROADWAY
SALT LAKE CITY, UTAH 84101
AND
COMMUNITY FIRST BANKSHARES, INC.
520 MAIN AVE.
FARGO, NORTH DAKOTA 58124-0001
DATED AS OF THE 10TH DAY OF SEPTEMBER, 1997
<PAGE>
TABLE OF CONTENTS
1. PURCHASE AND ASSUMPTION. . . . . . . . . . . . . . . . . . . . . . . . . .1
1.01 Purchase and Sale of Assets. . . . . . . . . . . . . . . . . . . . .1
1.02 Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . .2
1.03 Acceptance and Assumption. . . . . . . . . . . . . . . . . . . . . .4
1.04 Payment of Funds . . . . . . . . . . . . . . . . . . . . . . . . . .7
2. CONDUCT OF THE PARTIES PRIOR TO CLOSING. . . . . . . . . . . . . . . . . 10
2.01 Covenants of BANK ONE. . . . . . . . . . . . . . . . . . . . . . . 10
2.02 Covenants of BUYER . . . . . . . . . . . . . . . . . . . . . . . . 15
2.03 Covenants of All Parties . . . . . . . . . . . . . . . . . . . . . 17
3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . 17
3.01 Representations and Warranties of BANK ONE . . . . . . . . . . . . 17
3.02 Representations and Warranties of BUYER. . . . . . . . . . . . . . 23
4. ACTIONS RESPECTING EMPLOYEES AND PENSIONS
AND EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . 24
4.01 Employment of Employees. . . . . . . . . . . . . . . . . . . . . . 24
4.02 Terms and Conditions of Employment . . . . . . . . . . . . . . . . 25
4.03 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . 28
4.04 Actions to be Taken by BANK ONE. . . . . . . . . . . . . . . . . . 28
5. CONDITIONS PRECEDENT TO CLOSING. . . . . . . . . . . . . . . . . . . . . 29
5.01 Conditions to BANK ONE's Obligations . . . . . . . . . . . . . . . 29
5.02 Conditions to BUYER's Obligations. . . . . . . . . . . . . . . . . 31
5.03 Non-Satisfactions of Conditions Precedent. . . . . . . . . . . . . 33
5.04 Waivers of Conditions Precedent. . . . . . . . . . . . . . . . . . 33
6. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.01 Closing and Closing Date . . . . . . . . . . . . . . . . . . . . . 34
6.02 BANK ONE's Actions at Closing. . . . . . . . . . . . . . . . . . . 34
6.03 BUYER's Actions at Closing . . . . . . . . . . . . . . . . . . . . 36
6.04 Methods of Payment . . . . . . . . . . . . . . . . . . . . . . . . 38
6.05 Availability of Closing Documents. . . . . . . . . . . . . . . . . 39
6.06 Effectiveness of Closing . . . . . . . . . . . . . . . . . . . . . 39
7. CERTAIN TRANSITIONAL MATTERS . . . . . . . . . . . . . . . . . . . . . . 39
7.01 Transitional Action by BUYER . . . . . . . . . . . . . . . . . . . 39
7.02 Transitional Action by BANK ONE. . . . . . . . . . . . . . . . . . 42
7.03 Overdrafts and Transitional Action . . . . . . . . . . . . . . . . 47
<PAGE>
7.04 ATMs & Debit Cards . . . . . . . . . . . . . . . . . . . . . . . . 48
7.05 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 49
7.06 Effect of Transitional Action53
8. GENERAL COVENANTS AND INDEMNIFICATION. . . . . . . . . . . . . . . . . . 53
8.01 Confidentiality Obligations of BUYER . . . . . . . . . . . . . . . 53
8.02 Confidentiality Obligations of BANK ONE. . . . . . . . . . . . . . 54
8.03 Indemnification by BANK ONE. . . . . . . . . . . . . . . . . . . . 55
8.04 Indemnification by BUYER . . . . . . . . . . . . . . . . . . . . . 56
8.05 Solicitation of Customers by BUYER Prior to Closing. . . . . . . . 57
8.06 Solicitation of Customers by BANK ONE After the Closing. . . . . . 57
8.07 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 58
8.08 Operation of the Offices . . . . . . . . . . . . . . . . . . . . . 58
8.09 Information After Closing. . . . . . . . . . . . . . . . . . . . . 59
8.10 Survival of Covenants. . . . . . . . . . . . . . . . . . . . . . . 60
8.11 Individual Retirement Accounts . . . . . . . . . . . . . . . . . . 60
8.12 Covenant Not to Compete. . . . . . . . . . . . . . . . . . . . . . 60
9. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.01 Termination by Mutual Agreement. . . . . . . . . . . . . . . . . . 61
9.02 Termination by BANK ONE. . . . . . . . . . . . . . . . . . . . . . 61
9.03 Termination by BUYER . . . . . . . . . . . . . . . . . . . . . . . 62
9.04 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . 63
10. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . 63
10.01 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.02 Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.03 Termination of Representations and Warranties . . . . . . . . . . 64
10.04 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.06 Parties in Interest: Assignment; Amendment. . . . . . . . . . . . 67
10.07 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.08 Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.09 Flexible Structure. . . . . . . . . . . . . . . . . . . . . . . . 69
10.10 Press Releases. . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.11 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 70
10.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.13 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.15 Good Faith Deposit. . . . . . . . . . . . . . . . . . . . . . . . 70
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
<PAGE>
SCHEDULES:
Schedule A - Description of Owned Real Estate
Schedule B - Description of Leased Real Estate and Third Party Lease
Schedule C - Furniture, Fixtures and Equipment
Schedule D - Assumed Contracts
Schedule E - List of Leases, Safekeeping Items and Agreements
Schedule F - Form of Assignment and Assumption of Lease and Estoppel
Certificate
Schedule G - Deposit Accounts
Schedule H - Office Loans
Schedule I - Form of Certification of BUYER
Schedule J - Form of Opinion of Counsel for BUYER
Schedule K - Form of Certification of BANK ONE
Schedule L - Form of Opinion of Counsel for BANK ONE
Schedule M - Form of Assignment of Office Loans, Notes,
Agreements and Pledge
Schedule N - Form of Instrument of Assumption
Schedule O - Form of Assignment, Transfer and Appointment of Successor
Custodian for IRAs
Schedule P - Form of Preliminary Closing Statement
Schedule Q - Form of Final Closing Statement
Schedule R - Listing of Employees of Offices
Schedule S - Put Provisions for Office Loans
<PAGE>
OFFICE PURCHASE AND ASSUMPTION AGREEMENT
This Office Purchase and Assumption Agreement (the "Agreement" herein), made and
entered into this 10th day of September, 1997, by and between Community First
Bankshares, Inc., a corporation organized and existing under and by virtue of
the laws of the State of Delaware and a registered bank holding company under
the Bank Holding Company Act of 1968, as amended, with its principal office
located at 520 Main Ave., Fargo, North Dakota ( the "BUYER" herein), on its own
behalf and on behalf of its subsidiary insured depository institutions, and Bank
One, Arizona, National Association, a national banking association with its
principal office at 241 North Central Avenue, Phoenix, Arizona 85004, Bank One,
Colorado, National Association, a national banking association with its
principal office at 1125 17th Street, Denver, Colorado 80202, and Bank One,
Utah, National Association, a national banking association with its principal
office at 50 West Broadway, Salt Lake City, Utah 84101 (each respectively "BANK
ONE" herein).
WHEREAS, BUYER desires to purchase and assume from BANK ONE, and BANK ONE
desires to sell and assign to BUYER, certain assets and liabilities associated
with offices of BANK ONE as hereinafter described;
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
BUYER and BANK ONE hereby agree as follows:
1. PURCHASE AND ASSUMPTION.
1.01 PURCHASE AND SALE OF ASSETS. At the Closing, as defined in Section
6.01 hereof (the "Closing"), BUYER shall purchase and acquire, and
BANK ONE shall sell and assign, the real estate and other assets
described in Section 1.02 hereof (collectively, the "Assets") all of
which are used in and/or relate to business conducted by BANK ONE at
its branch offices known as and located at the sites described in
SCHEDULES A AND B
<PAGE>
attached hereto and incorporated herein by reference, pursuant to the
terms and conditions set forth herein and subject to exceptions, if
any, set forth herein. The foregoing offices are hereinafter
sometimes collectively referred to as the "Offices" and each,
individually, sometimes as an "Office." The transactions contemplated
by this Agreement and the purchase of assets and assumption of
liabilities provided for herein is sometimes referred to herein as the
"Acquisition." Except as otherwise expressly provided herein, the sale
of the Assets is without warranty or guarantee, express or implied, on
an "as-is, where-is" basis, and without recourse. Except as otherwise
expressly provided herein, the Assets are sold without any
representation or warranty whatsoever by BANK.
1.02 TRANSFER OF ASSETS. Subject to the terms and conditions of this
Agreement, BANK ONE shall assign, transfer, convey and deliver to
BUYER, on and as of the Closing on the Closing Date, as defined in
Section 6.01 hereof, the Assets, which shall include the following:
(a) OWNED REAL ESTATE. All of BANK ONE's right, title and interest
in and to the real estate described in attached SCHEDULE A on
which an Office is situated, together with all of BANK ONE's
rights in and to all improvements thereon; and all easements
rights, privileges and appurtenances associated therewith (the
"Owned Real Estate");
(b) LEASED REAL ESTATE. A good and valid leasehold estate in the
real estate described in attached SCHEDULE B and created by
certain lease agreement(s) (individually and collectively the
"Third Party Lease") relating to the referenced Offices (the
"Leased Real Estate"), specifically identified in SCHEDULE B
attached hereto and incorporated herein by reference;
(c) FURNITURE AND EQUIPMENT. All of BANK ONE's right, title and
interest in and to the furniture, fixtures and equipment located
at the Offices as of the Closing Date
<PAGE>
(the "Fixed Assets"), a preliminary listing of which is contained
in SCHEDULE C attached hereto and incorporated herein by
reference, specifically excluding, among other items, teller
calculators and other teller and platform equipment and systems,
CRTs, controller and printer and signs and stands, printed
supplies and documents bearing any BANK ONE or affiliate name
and/or logo, and network communications equipment and related
devices. A final listing of specific items included in the Fixed
Assets will be provided to BUYER prior to the Closing;
(d) SAFE DEPOSIT BUSINESS. All right, title and interest of BANK ONE
in and to the safe deposit business (subject to the allocation of
safe deposit rental payments as provided in Section 1.03(c)(ii)
hereof) conducted at the Offices as of the close of business on
the Closing Date;
(e) CASH ON HAND. All cash on hand at the Offices as of the close of
business on the Closing Date including vault cash, petty cash,
ATM cash and tellers' cash;
(f) PREPAID EXPENSES. All prepaid expenses recorded or otherwise
reflected on the books of BANK ONE as at August 31, 1997, or
incurred in the ordinary course of business thereafter, as being
attributable to the Offices as of the close of business on the
day immediately preceding the Closing Date, but only to the
extent attributable to the Assets sold, assigned or transferred
to BUYER by BANK ONE pursuant to this Agreement and only to the
extent arising by reason of BUYER's use or ownership of such
Assets after the close of business on the Closing Date. Any and
all prepaid expenses incurred by BANK ONE with respect to the
Offices subsequent to August 31, 1997, shall be subject to the
prior written consent of BUYER;
(g) OFFICE LOANS. All right, title and interest in and to all those
loans which, as of the close of business on the Closing Date, are
(i) secured in whole or in part by Deposit Accounts (as
hereinafter defined) attributable to an Office (the "Deposit
<PAGE>
Account Loans"), (ii) commercial or other loans attributable to
an Office (if any, the "Other Loans") or (iii) automatically
created as the result of an overdraft of a Deposit Account
pursuant to a pre-approved overdraft protection program offered
by BANK ONE (except for those overdraft protection loans which
are charged to credit card accounts not transferred to the BUYER
hereunder, the "Overdraft Loans"). The Deposit Account Loans,
Other Loans, and Overdraft Loans sold and assigned to BUYER
hereunder will be identified as of the Closing Date and listed in
SCHEDULE H attached hereto and incorporated herein by reference
(hereinafter referred to individually and collectively as the
"Office Loans"). Transfer of the Office Loans will be subject to
the terms and conditions set forth in SCHEDULE S attached hereto
and incorporated herein by reference. Except as otherwise
expressly provided herein, the transfer of the Office Loans will
be made without recourse, without any representation, warranty,
or guarantee of any kind, express or implied, and without any
reserve for loan losses;
(h) RECORDS OF THE OFFICES. All original records and documents
related to the Assets transferred or liabilities assumed by BUYER
which are maintained by BANK ONE and available for delivery to
BUYER in whatever form presently maintained by BANK ONE
including, but not limited to, those relating to the Deposit
Accounts and the Office Loans; and
(i) CONTRACTS OR AGREEMENTS. All of BANK ONE's right, title and
interest in and to the maintenance and service agreements related
to the Offices, as listed on SCHEDULE D annexed hereto and made a
part hereof (the "Assumed Contracts"), provided the same are
assignable without cost to BANK ONE.
1.03 ACCEPTANCE AND ASSUMPTION. Subject to the terms and conditions of
this Agreement, on and as of the Closing on the Closing Date, BUYER
shall:
<PAGE>
(a) ASSETS. Receive and accept all of the Assets assigned,
transferred, conveyed and delivered to BUYER by BANK ONE pursuant
to this Agreement, including those identified in Section 1.02
above.
(b) DEPOSIT LIABILITIES. Assume and thereafter discharge, pay in
full and perform all of BANK ONE's obligations and duties
relating to the "Deposit Liabilities" (as hereinafter defined).
The term "Deposit Liabilities" is defined herein as all of BANK
ONE's obligations, duties and liabilities of every type and
character relating to all deposit accounts, other than (i) KEOGH
accounts and (ii) deposit accounts securing any loan of BANK ONE
which is not an Office Loan, for which BUYER assumes no
liability, which, as reflected on the books of BANK ONE as of the
close of business on the Closing Date, are attributable to the
Offices. The deposit accounts referred to in the immediately
preceding sentence (hereinafter the "Deposit Accounts") include,
without limitation, passbook, statement savings, checking, Money
Market, and NOW accounts, Individual Retirement Accounts for
which BANK ONE has not received, on or before the Closing Date,
the written advice from the account holder of such account
holder's objection or failure to accept BUYER as successor
custodian ("IRA's") and certificates of deposit. The
"obligations, duties and liabilities" referred to in the
immediately preceding sentence include, without limitation, the
obligation to pay and otherwise process all Deposit Accounts in
accordance with applicable law and their respective contractual
terms and the duty to supply all applicable reporting forms for
periods following the Closing Date including, without limitation,
IRS Form 1099 reports relating to the Deposit Accounts to be
filed and provided after the Closing Date. With regard to each
IRA included within the Deposit Accounts, BUYER shall also assume
the appropriate plan pertaining thereto and the trustee or
custodial arrangement in connection therewith.
(c) LIABILITIES UNDER LEASES/SAFE DEPOSIT BUSINESS. Assume and
thereafter fully and timely perform and discharge, in accordance
with their respective terms, all of
<PAGE>
the liabilities and obligations of BANK ONE arising after the
Closing Date with respect to:
(i) all leases listed on SCHEDULES B AND E to this Agreement
(including safe deposit leases if any) and sold, assigned
or transferred to BUYER by BANK ONE pursuant to this
Agreement;
(ii) the safe deposit business of the Offices including, but
not limited to, the maintenance of all necessary
facilities for the use of safe deposit boxes by the
renters thereof during the periods for which such persons
have paid rent therefor in advance to BANK ONE, subject to
the agreed allocation of such rents, which allocation
shall be satisfied in full by BANK ONE paying to BUYER, in
the manner specified in Section 6.04 hereof, the amount of
rental payment received by BANK ONE for each such safe
deposit box attributable to and prorated to reflect the
period from and after the Closing Date, subject to the
provisions of the applicable leases or other agreements
relating to such boxes; and
(iii) all safekeeping items and agreements listed on SCHEDULE E
to this Agreement and delivered to BUYER by BANK ONE
pursuant to this Agreement, including, but not limited to,
all applicable safekeeping agreements, memoranda, or
receipts so delivered to BUYER by BANK ONE hereunder.
(d) OTHER LIABILITIES. Fully and timely perform and discharge, as
the same may be or become due, the Assumed Contracts, the Third
Party Lease for the Leased Real Estate and all additional
liabilities, obligations and deferred expenses of BANK ONE as of
the date of this Agreement, which are reflected on the books of
BANK ONE as being attributable to an Office as of the close of
business on the Closing Date but only to the extent attributable
to the Assets sold, assigned or
<PAGE>
transferred to BUYER by BANK ONE pursuant to this Agreement and
only to the extent arising by reason of BUYER's use or ownership
of such Assets after the close of business on the Closing Date.
No additional material liabilities and obligations of BANK ONE
incurred subsequent to the date of this Agreement shall be
assumed by BUYER unless the prior written consent of BUYER has
been obtained prior to the incursion of the material liability or
obligation by BANK ONE.
(e) OTHER OBLIGATIONS. Fully and timely perform its obligations
relative to employees of the Offices, if any, as set forth
hereinafter.
1.04 PAYMENT OF FUNDS. Subject to the terms and conditions hereof, at the
Closing:
(a) CONSIDERATION. In consideration of BUYER's assumption of the
Deposit Liabilities and its other agreements herein, BANK ONE
shall make available and transfer to BUYER, in the manner
specified in Section 6.04 hereof, funds equal to the aggregate
balance of all Deposit Accounts (including interest posted or
accrued to such accounts as of the close of business on the day
immediately preceding the Closing Date) plus the deferred
expenses identified in Section 1.03(d) hereof prorated as of the
close of business on the day preceding the Closing Date less an
amount equal to the sum of:
(i) the amount of cash on hand at the Offices transferred to
BUYER as of the close of business on the Closing Date;
(ii) the net aggregate book value of the Offices, valued as of
the last day of the month ending immediately prior to the
month in which the Closing Date occurs;
<PAGE>
(iii) the net aggregate book value of the furniture, fixtures
and equipment being transferred to BUYER, valued as of the
last day of the month ending immediately prior to the
month in which the Closing Date occurs;
(iv) six percent (6%) of the aggregate "Core Deposits" (as
hereinafter defined) of the Offices as of the close of
business on the Closing Date. The term "Core Deposits"
shall mean the aggregate balance of all Deposit
Liabilities of the Offices (which aggregate balance shall
include interest posted to such accounts as of the close
of business on the Closing Date). The amount calculated as
set forth herein as of the close of business on the
Closing Date is hereinafter called the "Acquisition
Consideration";
(v) the amount of prepaid expenses described in Section
1.02(f) of this Agreement, prorated as of the close of
business on the day immediately preceding the Closing
Date;
(vi) the book value of the Office Loans together with accrued
and unpaid interest thereon computed as of the close of
business on the Closing Date; and
(vii) the sum of $10,000.00 for each ATM or CBCT located at the
Offices.
In the event that the sum of items (i) through (vii) above should
be in excess of the aggregate amount to be transferred by BANK
ONE pursuant to the first paragraph of this Section 1.04(a), the
full amount of such excess shall constitute an amount due from
BUYER to BANK ONE, and shall be paid to BANK ONE at the Closing
in the manner specified in Section 6.04 hereof. The parties
shall execute a Preliminary Settlement Statement at the Closing
and a Final Settlement Statement post-closing in accordance with
section 6.04 herein, in substantially
<PAGE>
the same form as set forth in SCHEDULES P AND Q attached hereto
and incorporated herein.
(b) REIMBURSEMENT AND PRORATION OF CERTAIN EXPENSES. All other
expenses (i) due and payable at times after the Closing Date for
periods prior to the close of business on the Closing Date or
(ii) paid prior to the close of business on the Closing Date for
periods following the Closing Date, including the prepaid
expenses described in Section 1.02(f) hereof and deferred
expenses described in Section 1.03(d) hereof, including without
limitation, real estate taxes and assessments which are a lien
but not yet due and payable, utility payments, payments due on
leases assigned, payments due on assigned service and maintenance
contracts and similar expenses relating to the Offices shall be
prorated between BANK ONE and BUYER as of the close of business
on the day immediately preceding the Closing Date, PROVIDED,
HOWEVER, that all real estate taxes and assessments, and to the
extent payable by Seller and/or Buyer, shall be prorated at the
Closing on the basis of the most recently certified real estate
taxes and assessments, and all utility payments and lease
payments shall be prorated on the basis of the best information
available at Closing. With respect to premiums paid to the FDIC
deposit insurance for the Deposit Liabilities it shall be assumed
that all the Deposit Liabilities are insured under the Bank
Insurance Fund; the proration of FDIC insurance premiums will be
based on the amount of the Deposit Liabilities as of the close of
business on the Closing Date and the number of days during any
period for which BANK ONE has prepaid premiums to the FDIC but
during which BUYER has held or will hold the Deposit Liabilities.
For prorations, if any, which cannot be reasonably calculated as
of the Closing, a post-closing adjustment shall be made in the
manner specified in Section 6.04 hereof.
(c) EXPENSES RELATING TO REAL PROPERTY. The transfer (or conveyance)
fees relating to the Owned Real Estate and the costs, fees and
expenses of all title
<PAGE>
commitments, title guaranties and title examinations relating to
the procurement of the Title Commitments related to the Owned
Real Estate and the Leased Real Estate referred to in Sections
2.01(b) and 5.02(g) herein, shall be allocated to, and shall be
borne, solely and exclusively by BANK ONE. The costs, fees and
expenses relating to the premiums for all title insurance
policies (net of the costs of all title commitments, guaranties
and examinations), recording costs and other similar costs, fees
and expenses, if any, relating to the sale and transfer of the
Owned Real Estate or the transfer of BANK ONE's interest in the
Leased Real Estate, shall be allocated to, and shall be borne,
solely and exclusively, by BUYER. BANK ONE shall reimburse BUYER
at the Closing for all the costs, fees and expenses allocated to
BANK ONE pursuant to this Section 1.04(c) but paid by BUYER, and
BUYER shall reimburse BANK ONE at the Closing for all of the
costs, fees and expenses allocated to BUYER pursuant to this
Section 1.04(c) but paid by BANK ONE in the manner specified in
Section 6.04 herein. If this transaction does not close by
virtue of a breach of this Agreement, the breaching party shall
be responsible for and shall, as appropriate, reimburse the other
party for its expenses as set forth herein. If this transaction
does not close for any other reason, each party shall reimburse
the other party upon termination of this Agreement for such
party's share of expenses so that each party shall pay the same
share of expenses as it would have paid at Closing.
2. CONDUCT OF THE PARTIES PRIOR TO CLOSING.
2.01 COVENANTS OF BANK ONE. BANK ONE hereby covenants to BUYER that, from
the date hereof until the Closing, it will do or cause the following
to occur:
(a) OPERATION OF THE OFFICES. BANK ONE shall continue to operate the
Offices in a manner substantially equivalent to that manner and
system of operation employed immediately prior to the date of
this Agreement; provided, however, that it is contemplated by the
parties that, prior to Closing, BANK ONE will be
<PAGE>
terminating certain programs which are currently in effect which
allow depositors to access Deposit Accounts through electronic
means.
Notwithstanding the foregoing and except as may be required to
obtain the required authorizations referred to in Section 2.03 of
this Agreement, between the date of this Agreement and the
Closing Date, and except as may be otherwise required by a
regulatory authority, BANK ONE shall not, without the prior
consent of BUYER, which consent shall not be unreasonably
withheld:
(i) cause any Office to engage or participate in any material
transaction or incur or sustain any obligation which, in
the aggregate, is material to its business, condition or
operations except in the ordinary course of business;
(ii) cause any Office to transfer to BANK ONE's other
operations any material amount of Assets, except for
(a) supplies, if any, which have unique function in the
business of BANK ONE and its affiliates and ordinarily
would not be useful to BUYER, (b) cash and other normal
intrabank transfers which may be transferred in the
ordinary course of business in accordance with normal
banking practices and (c) signs, or those parts thereof,
bearing the BANK ONE or affiliate name and/or logo or that
of a BANK ONE contractor;
(iii) cause the Offices to transfer to BANK ONE's other
operations any deposits other than deposits securing loans
made by BANK ONE which are not Office Loans, except in the
ordinary course of business at the unsolicited request of
depositors or cause any of BANK ONE's other operations to
transfer to the Offices any deposits, except in the
ordinary course of business at the unsolicited request of
depositors; provided, however, that BANK ONE shall be
permitted to make such transfers of
<PAGE>
any deposits to or from the Offices as are in the normal
course of business and do not violate the foregoing
restrictions;
(iv) invest in any Fixed Assets on behalf of any Office, except
for commitments made on or before the date of this
Agreement which are disclosed to BUYER on SCHEDULE C of
this Agreement and for replacements of furniture,
furnishings and equipment and normal maintenance and
refurbishing purchased or made in the ordinary course of
Office business;
(v) enter into or amend any continuing contract (other than
Deposit Liabilities, Office Loans, and Safe Deposit
agreements) relating to the Offices, which cannot be
terminated without cause and without payment of any
amounts as a penalty, bonus, premium or other compensation
for termination, or which is not made in the ordinary
course of Office business;
(vi) hire (other than to replace a departing employee and/or to
bring the number of employees at the Offices to normal
staffing levels), transfer, reassign or terminate any
employee of the Offices, increase the compensation of any
employee of the Offices, or promote any of the employees
of the Offices except pursuant to and consistent with
customary BANK ONE procedures and policies; or
(vii) make any material change to its customary policies for
setting rates on deposits offered at the Offices.
(b) TITLE COMMITMENTS FOR REAL ESTATE. BANK ONE shall deliver to
BUYER, at BANK ONE's expense, with respect to the Owned Real
Estate and Leased Real Estate, no later than thirty (30) days
after the date of this Agreement, a
<PAGE>
commitment or commitments (the "Title Commitments") having an
effective date as near as feasible to the date of delivery of
such Title Commitments from a title insurance company designated
by BANK ONE and reasonably satisfactory to BUYER, to issue to
BUYER as soon as practicable after the Closing Date, as
applicable, an American Land Title Association (ALTA) owners
(Form B, 1970, Rev 1984) and/or leasehold title insurance (1975
Form) policies having an effective date as of the Closing Date in
an amount satisfactory to BUYER (but not in excess of the
appraised value of such properties or, as applicable, the amount
of the leasehold interest to be transferred to BUYER pursuant to
the Third Party Lease) covering the Owned Real Estate and Leased
Real Estate, subject to the exceptions specified in the Title
Commitments. If title to all or part of the Owned Real Estate or
Lease Real Estate is unmarketable or is subject to any defect,
lien, encumbrance, easement, condition, restriction or
encroachment other than the Permitted Exceptions as defined in
Section 10.08(c) herein, then BUYER shall provide written notice
thereof to BANK ONE. BANK ONE shall have thirty days after
written notice thereof from BUYER, to elect to remedy or remove
any such defect, lien, encumbrance, easement, condition,
restriction or encroachment but, if BANK ONE does not, BUYER may
elect to attempt to cure or remove such defect or encumbrance or
other matter, for a period of thirty days thereafter. If such
defect or encumbrance or other matter is not cured, then, in
addition to any other rights which BUYER may have hereunder,
BUYER shall have the right with respect to the relevant Office
(i) to declare this Agreement terminated by written notice to
BANK ONE, or (ii) to waive any objection to such defect or
encumbrance or other matter in which event such defect,
encumbrance, or other matter shall be deemed to be a Permitted
Exception. The Owned Real Estate is being sold by BANK ONE to
BUYER hereunder free and clear of all liens, claims, encumbrances
and rights of tenants in possession except for the Permitted
Exceptions, and the conveyance by Limited Warranty Deed to be
delivered by BANK ONE pursuant hereto shall be subject only to
the Permitted Exceptions. BANK ONE also shall execute and
<PAGE>
deliver to BUYER at the time of Closing such affidavits and other
instruments, if any, as the title insurance issuing the Title
Commitments may require to delete the standard exceptions
appearing as "Schedule B" items in a standard ALTA owners or
leasehold owners title insurance policy, other than those which
may only be deleted by a survey. BANK ONE also shall execute and
deliver a so-called FIRPTA affidavit at Closing. BUYER shall
have the right to obtain at its sole cost and expense duly
certified surveys, and BANK ONE hereby grants to BUYER and its
surveyors, agents and contractors right of access to the Owned
Real Estate and Leased Real Estate, with the prior consent of the
landlord obtained by BUYER, for the purpose of performing the
surveys.
(c) REQUIRED AUTHORIZATIONS. BANK ONE shall obtain and procure all
necessary internal corporate approvals and authorizations, if
any, required by BANK ONE to enable it to fully perform all
obligations imposed on it hereunder which must be performed by it
at or prior to the Closing.
(d) CREATION OF LIENS AND ENCUMBRANCES. With respect to the Owned
Real Estate, BANK ONE shall not create or allow any liens,
imperfections in title, charges, easements, restrictions or
encumbrances other than the Permitted Exceptions.
(e) CONDEMNATION. If prior to Closing all or any portion of the
Owned Real Estate or Leased Real Estate is taken or is made
subject to eminent domain or other governmental acquisition
proceedings, then BANK ONE shall promptly notify BUYER thereof,
and BUYER may either complete the Closing and receive the
proceeds paid or payable on account of such acquisition
proceedings, or terminate this Agreement. If BUYER terminates
this Agreement, both parties shall thereupon be relieved from all
further obligations hereunder.
(f) INSURANCE PROCEEDS, CASUALTY AND CONDEMNATION PAYMENTS. BANK ONE
shall maintain adequate insurance on all the Assets consisting of
Owned Real Estate,
<PAGE>
Leased Real Estate and Fixed Assets. In the event of any damage,
destruction or condemnation affecting such Assets between the
date hereof and the time of the Closing, BANK ONE shall deliver
to BUYER any insurance proceeds and other payments, to the extent
of the applicable amount set forth in Section 1.04(a)(ii) or
(iii) hereof with respect to Owned Real Estate and the
replacement cost with respect to the Fixed Assets, as the case
may be, received (or with respect to insurance proceeds, which
would be received assuming BANK ONE's insurance policy had no
deductible) by BANK ONE as a result thereof unless, in the case
of damage or destruction, BANK ONE has repaired or replaced the
damaged or destroyed property.
(g) IRA ACCOUNTS. Not later than thirty days prior to the expected
Closing Date, BANK ONE shall, at BANK ONE's expense, mail notice
of BANK ONE's resignation as Custodian and the appointment of
BUYER as the Successor Custodian, effective upon Closing, of each
Individual Retirement Account maintained at the Offices. The
notice shall include such other information that is mutually
agreed upon by BANK ONE and BUYER.
(h) ASSIGNMENT OF THE LEASE. BANK ONE shall use its reasonable good
faith efforts to obtain any written consent of any such landlord
as shall be necessary for the effective assignment of the Third
Party Lease and assumption thereof by BUYER as of the Closing
Date. The assignment and assumption by BUYER of the Third Party
Lease shall be substantially the form of SCHEDULE F attached
hereto and incorporated herein.
2.02 COVENANTS OF BUYER. BUYER hereby covenants to BANK ONE that, from the
date hereof until the Closing, it will do or cause the following to
occur:
(a) REGULATORY APPLICATIONS. BUYER shall prepare and submit for
filing, at no expense to BANK ONE, any and all applications,
filings, and registrations with,
<PAGE>
and notifications to, all federal and state authorities required
on the part of BUYER or any shareholder or affiliate of BUYER for
the Acquisition to be consummated at the Closing as contemplated
in Section 6.01 herein and for BUYER to operate the Offices
following the Closing. BUYER shall provide BANK ONE with a draft
copy of each application for BANK ONE's approval prior to filing,
which approval by BANK ONE will not be unreasonably withheld or
delayed. Such applications will be submitted to BANK ONE in
draft form within thirty (30) days from the date of this
Agreement and filed by BUYER without delay following BANK ONE's
approval of such applications; provided, however, that in no
event will such applications be filed later than sixty (60) days
from the date of this Agreement. Thereafter, BUYER shall pursue
all such applications, filings, registrations, and notifications
diligently and in good faith, and shall file such supplements,
amendments, and additional information in connection therewith as
may be reasonably necessary for the Acquisition to be consummated
at such Closing and for BUYER to operate the Offices following
the Closing. BUYER shall deliver to BANK ONE evidence of the
filing of each and all of such applications, filings,
registrations and notifications (except for any confidential
portions thereof), and any supplement, amendment or item of
additional information in connection therewith (except for any
confidential portions thereof). BUYER shall also deliver to BANK
ONE a copy of each material notice, order, opinion and other item
of correspondence received by BUYER from such federal and state
authorities (except for any confidential portions thereof) and
shall advise BANK ONE, at BANK ONE's request, of developments and
progress with respect to such matters.
(b) REQUIRED AUTHORIZATIONS. BUYER shall obtain and procure all
necessary corporate approvals and authorizations, if any,
required on its part to enable it to fully perform all
obligations imposed on it hereunder which must be performed by it
at or prior to the Closing.
<PAGE>
(c) SATISFACTION OF CONDITIONS. BUYER shall not voluntarily
undertake any course of action inconsistent with the satisfaction
of the requirements or the conditions applicable to it, or its
agreements, undertakings, obligations, or covenants set forth in
this Agreement, and it shall promptly do all such reasonable acts
and take all such reasonable measures as may be appropriate to
enable it to perform as early as possible the agreements,
undertakings, obligations, and covenants herein provided to be
performed by it, and to enable the conditions precedent to BANK
ONE's obligations to consummate the Closing of the Acquisition to
be fully satisfied. Additionally, BUYER shall not knowingly,
directly or through any existing or future subsidiary or
affiliate, take any action that would be in conflict with, or
result in the denial, delay, termination, or withdrawal of, any
of the regulatory approvals referred to in this Agreement.
(d) COOPERATION REGARDING LEASED REAL ESTATE. BUYER shall, at BANK
ONE's request in connection with BANK ONE's obtaining the
consents specified in Section 2.01(I), advise, in writing, the
lessor of Leased Real Estate, of BUYER's intent to assume and
comply with the terms of the Third Party Lease (as to matters
arising from and after the Closing Date).
2.03 COVENANTS OF ALL PARTIES. BANK ONE hereby covenants to BUYER, and
BUYER hereby covenants to BANK ONE that, from the date hereof until
the Closing, such party shall cooperate fully with the other party in
attempting to obtain all consents, approvals, permits, or
authorizations which are required to be obtained pursuant to any
federal or state law, or any federal or state regulation thereunder,
for or in connection with the transactions described and contemplated
in this Agreement.
3. REPRESENTATIONS AND WARRANTIES.
3.01 REPRESENTATIONS AND WARRANTIES OF BANK ONE. BANK ONE represents and
warrants to BUYER as follows:
<PAGE>
(a) GOOD STANDING AND POWER OF BANK ONE. BANK ONE is a national
banking association duly organized, validly existing, and in good
standing under the laws of the United States with corporate power
to own its properties and to carry on its business as presently
conducted. BANK ONE is an insured bank as defined in the Federal
Deposit Insurance Act and applicable regulations thereunder.
(b) AUTHORIZATION OF AGREEMENT. The execution and delivery of this
Agreement, and the transactions contemplated hereby, have been
duly authorized by all necessary corporate action on the part of
BANK ONE, and this Agreement is a valid and binding obligation of
BANK ONE.
(c) EFFECTIVE AGREEMENT. Subject to the receipt of any and all
necessary regulatory approvals and required consents, the
execution, delivery, and performance of this Agreement by BANK
ONE and the consummation of the transactions contemplated hereby,
will not conflict with, result in the breach of, constitute a
violation or default, result in the acceleration of payment or
other obligations, or create a lien, charge or encumbrance, under
any of the provisions of Articles of Association or By-Laws of
BANK ONE, under any judgment, decree or order, under any law,
rule, or regulation of any government or agency thereof, or under
any material contract, material agreement or material instrument
to which BANK ONE is subject, where such conflict, breach,
violation, default, acceleration or lien would have a material
adverse effect on the Assets or BANK ONE's ability to perform its
obligations hereunder.
(d) TITLE TO REAL ESTATE AND OTHER ASSETS. Except for the Owned Real
Estate and Leased Real Estate, BANK ONE or an affiliate is the
sole owner of each of the Assets free and clear of any mortgage,
lien, encumbrance or restrictions of any kind or nature. As to
the Owned Real Estate, BANK ONE or an affiliate is the sole owner
of a fee simple interest in, and has good and marketable title
to, such Owned Real Estate, free and clear of all liens, claims,
encumbrances and rights
<PAGE>
of tenants in possession except for the Permitted Exceptions and
shall convey, or cause to be conveyed, such real estate to BUYER
by delivery at the Closing of a limited warranty deed conveying
such title subject only to the Permitted Exceptions. BANK ONE or
an affiliate has a valid leasehold interest in the Leased Real
Estate pursuant, and subject to, the Third Party Lease and has
the use of the Leased Real Estate pursuant to the Third Party
Lease, which will be assigned to BUYER by delivery of an
assignment conveying such leasehold interest to BUYER at the
Closing.
(e) ZONING VARIATIONS. As of the date of this Agreement, BANK ONE
has no knowledge of receipt of, or contemplation of any intent to
provide, BANK ONE with any written notice from any governmental
authority of any uncorrected violations of zoning and/or building
codes relating to the Owned Real Estate or Leased Real Estate.
(f) CONDEMNATION PROCEEDINGS. BANK ONE has received no written
notice of any pending or threatened, nor is it aware of any
contemplated, condemnation proceeding affecting or relating to
the Offices.
(g) TAXES. All federal, state and local payroll, withholding,
property, sales, use and transfer taxes, if any, which are due
and payable by BANK ONE relating to the Offices prior to the date
of Closing shall be paid in full as of the Closing Date or BANK
ONE shall have made appropriate provision for such payment in
accordance with ordinary business practices. Any claims for
refunds of taxes which have been paid by BANK ONE shall remain
the property of BANK ONE.
(h) OPERATIONS LAWFUL. To the knowledge of BANK ONE, the conduct of
banking business at the Offices is in compliance in all material
respects with all federal, state, county and municipal laws,
ordinances and regulations applicable to conduct of such
business.
<PAGE>
(i) THIRD-PARTY CLAIMS. There are no actions, suits or proceedings,
pending or, to BANK ONE's knowledge, threatened against or
affecting BANK ONE which, if determined adversely to BANK ONE,
could have a material adverse effect on the aggregate value of
the banking business and Assets of the Offices.
(j) INSURANCE. BANK ONE maintains such insurance on the Offices and
the Fixed Assets to be purchased by or assigned to BUYER as may
be required or as is customary in the business of banking.
(k) LABOR RELATIONS. No employee located at any of the Offices is
represented, for purposes of collective bargaining, by a labor
organization of any type. BANK ONE has no knowledge of any
efforts during the past three years to unionize or organize any
employees at any Office, and no material claim related to
employees at the Offices under the Fair Labor Standards Act,
National Labor Relations Act, Civil Rights of 1964, Walsh-Healy
Act, Davis Bacon Act, Civil Rights of Act of 1866, Age
Discrimination in Employment Act, Equal Pay Act of 1963,
Executive Order No. 11246, Federal Unemployment Tax Act, Vietnam
Era Veterans Readjustment Act, Occupational Safety and Health
Act, Americans with Disabilities Act or any state or local
employment related law, order, ordinance or regulation, no unfair
labor practice, discrimination or wage-and-hour claim is pending
or, to the best of BANK ONE's knowledge, threatened against or
with respect to BANK ONE.
(l) GOVERNMENTAL NOTICES. BANK ONE has not received notice from any
federal or state governmental agency indicating that it would
oppose or not grant or issue its consent or approval, if
required, with respect to the transactions contemplated by this
Agreement.
(m) ENVIRONMENTAL. To the knowledge of BANK ONE, there are no
actions, proceedings or investigations pending before any
environmental regulatory body,
<PAGE>
federal or state court with respect to or threatened against or
affecting BANK ONE in respect of any Office under the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), or under the any federal,
state, local or municipal environmental statute, ordinance or
regulation in respect thereof and in connection with any release
of any toxic or "hazardous substance," pollutant or contaminant
into the "environment," nor, to the best knowledge of the
executive officers of BANK ONE, is there any reasonable basis for
the institution of any such actions or proceedings or
investigations which is probable of assertion, nor are there any
such actions or proceedings or investigations in which BANK ONE
is a plaintiff or complainant. To the knowledge of BANK ONE,
BANK ONE is not responsible in any material respect under any
applicable environmental law for any release by BANK ONE or for
any release by an other "Person" at or in the vicinity of any
Office of a hazardous or toxic substance, contaminant or
pollutant caused by the spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing of hazardous wastes or other chemical
substances, pollutants or contaminants into the environment, nor
is BANK ONE responsible for any material costs (as a result of
the acts or omissions of BANK ONE, or, to the actual knowledge of
the executive officers of BANK ONE, as a result of the acts or
omissions of any other "person") of any remedial action
including, without limitation, costs arising out of security
fencing, alternative water supplies, temporary evacuation and
housing and other emergency assistance undertaken by any
environmental regulatory body having jurisdiction over BANK ONE
to prevent or minimize any actual or threatened release by BANK
ONE on premises any hazardous wastes or other chemical
substances, pollutants and contaminants into the environment
which would endanger the public health or the environment. All
terms contained in quotation marks in this paragraph and the
paragraph immediately following shall have the meaning ascribed
to such terms as defined in all federal, state and local
statutes, regulations or ordinances.
<PAGE>
(n) ACCESS TO REAL ESTATE. To the knowledge of BANK ONE, no fact or
condition exists which would result in the termination or
impairment of access to the Owned Real Estate from adjoining
public or private streets or ways or which could result in
discontinuation of necessary sewer, water, electric, gas,
telephone, or other utilities or services and sewage, sanitation,
plumbing, refuse disposal, and similar facilities servicing the
Owned Real Estate are in full compliance with applicable
governmental regulations.
(o) MECHANIC'S LIENS. BANK ONE has paid or will pay in full all
bills and invoices for labor and material of any kind arising
from the ownership, operation, management, repair, maintenance,
or leasing as tenant of the Owned Real Estate and the Leased Real
Estate, and no actual or potential mechanic's lien or other
claims are outstanding or available to any party in connection
with the ownership, operation, management, repair, maintenance,
or leasing as tenant of said properties.
(p) DEPOSIT. Attached as SCHEDULE G hereto is a true and accurate
schedule of all Deposit Accounts (including individual retirement
accounts) domiciled at the Offices, prepared as of a date within
thirty (30) days prior to the date of this Agreement, listing by
Office and by category the amount of all deposits and the
interest rates and maturity dates associated with such deposits,
and indicating the deposits that constitute Core Deposits.
(q) OFFICE LOANS. Attached hereto as SCHEDULE H is a true and
accurate schedule of all Office Loans, including accrued and
unpaid interest thereon, computed as of a date within thirty (30)
days prior to the date of this Agreement, excluding, however,
such Office Loans which are more than 30 days past due for
payment.
(r) PERSONAL PROPERTY. SCHEDULE C is a preliminary listing of Fixed
Assets owned by BANK ONE and located at the Offices, which is
subject to non-material change
<PAGE>
prior to the Closing Date. A final listing of Fixed Assets will
be provided to BUYER by BANK ONE prior to the Closing Date.
(s) ASSUMED CONTRACTS AND THIRD PARTY LEASE. SCHEDULE D is a true
and accurate schedule of all Assumed Contracts related to the
Offices. Each Assumed Contract is valid and subsisting and in
full force and effect in accordance with its terms.
(t) FIRPTA. BANK ONE is not a "foreign person" within the meaning of
the Internal Revenue Code Section 1445.
(u) For purposes of this section 3.01, the "knowledge" of BANK ONE
shall mean the actual knowledge of the President of each
respective individual banking association with respect to matters
involving that individual banking association.
3.02 REPRESENTATIONS AND WARRANTIES OF BUYER. BUYER represents and
warrants to BANK ONE as follows:
(a) GOOD STANDING AND POWER OF BUYER. BUYER is a corporation duly
organized, validly existing, and in good standing under the laws
of the State of Delaware and a registered bank holding company
under the Bank Holding Company Act of 1968, as amended, with
corporate power to own its properties and to carry on its
business as presently conducted. Banking subsidiaries of BUYER
are insured banks, as defined in the Federal Deposit Insurance
Act and applicable regulations thereunder.
(b) AUTHORIZATION OF AGREEMENT. The execution and delivery of this
Agreement, and the transactions contemplated hereby, have been
duly authorized by all necessary corporate action on the part of
BUYER, and this Agreement is a valid and binding obligation of
BUYER.
<PAGE>
(c) EFFECTIVE AGREEMENT. Subject to the receipt of any and all
necessary regulatory approvals, the execution, delivery, and
performance of this Agreement by BUYER, and the consummation of
the transactions contemplated hereby, will not conflict with,
result in the breach of, constitute a violation or default,
result in the acceleration of payment or other obligations, or
create a lien, charge or encumbrance, under any of the provisions
of the Articles of Association or By-Laws of BUYER, under any
judgment, decree or order, under any law, rule or regulation of
any government or agency thereof, or under any material
agreement, material contract or material instrument to which
BUYER is subject, where such conflict, breach, violation,
default, acceleration or lien would have a material adverse
effect on BUYER's ability to perform its obligations hereunder.
4. ACTIONS RESPECTING EMPLOYEES AND PENSIONS AND EMPLOYEE BENEFIT PLANS.
4.01 EMPLOYMENT OF EMPLOYEES
(a) BUYER shall extend offers of employment, as of the Closing Date,
to such employees of the Offices listed in SCHEDULE R as may be
employed by BANK ONE at the Offices as of the Closing Date
(including, without limitation, those employees who on the
Closing Date are on family and medical leave, military leave, or
personal or pregnancy leave and who elect to return to work not
later than one (1) year following the Closing Date; individually
and collectively the "Leave Employees" herein) for positions
entailing responsibilities in effect at BANK ONE as of the
Closing Date, and for a base salary not less than that paid by
BANK ONE as of the Closing Date. Employees accepting employment
with BUYER, including but not limited to the Leave Employees, are
referred to herein individually and collectively as the
"Transferred Employees". In the event that BUYER shall transfer
(except in a comparable position and for comparable compensation
to an office not more than 25 miles from the Office at which the
Transferred Employee is employed as of the Closing Date, or at
the request of the
<PAGE>
Transferred Employee), terminate employment of, or reduce the
base salary of, a Transferred Employee (the "Terminated
Employee") between the Closing Date and the date which is one (1)
year from the Closing Date, other than for cause, BUYER shall pay
to the Terminated Employee a sum equal to the greater of that
which the Terminated Employee would have received on the date of
such transfer, termination, or reduction in salary under the
severance plan of BANK ONE applicable to the Terminated Employee
as of the date hereof and set forth in SCHEDULE R or the
severance plan of BUYER otherwise applicable to the Terminated
Employee as of the date of such transfer, termination, or
reduction in base salary. Such payment shall be due and owing the
Terminated Employee on the date of such transfer, termination, or
reduction in salary. Nothing contained in this Agreement shall
restrict or prohibit Buyer and any Transferred Employee from
entering into an agreement satisfactory to both Buyer and the
Transferred Employee providing for resolution of matters set
forth in this section.
(b) BANK ONE will cooperate with BUYER, to the extent reasonably
requested and legally permissible, to provide BUYER with
information about the employees of the Offices including, without
limitation, providing BUYER with the personnel files of those
employees of the Offices who provide BANK ONE with their written
consent thereto, and a means to meet with the subject employees.
BUYER hereby agrees to indemnify and to hold BANK ONE and its
affiliates and its and their officers, directors, agents, and
employees harmless from and against any and all liability, loss,
cost, and expense, however arising, as a result of release of
information and/or files concerning the referenced employees.
4.02 TERMS AND CONDITIONS OF EMPLOYMENT. Except as otherwise provided
explicitly in this Agreement, the terms of employment for each
Transferred Employee shall be determined solely by BUYER's policies,
procedures, and programs; provided, however, that each Transferred
Employee shall be provided employment subject to the following terms
and conditions;
<PAGE>
(a) Base salary shall be at least equivalent to the rate of base
salary
paid by BANK ONE to such Transferred Employee as of the
close of business on the day prior to the Closing Date.
(b) Except as otherwise specifically provided herein, Transferred
Employees shall be provided employee benefits that are no less
favorable in the aggregate than those provided to similarly
situated employees of BUYER. BUYER shall provide such Transferred
Employees with credit for the Transferred Employee's period of
service with BANK ONE (including any service credited from
predecessors by merger or acquisition to BANK ONE) towards the
calculation of eligibility and vesting for such purposes as
vacation, severance and other benefits and participation and
vesting in BUYER's qualified pension and/or Profit sharing 401(k)
plans, as such plans may exist (but, except as set forth in (e)
below and for vacation, not for purposes of benefit accruals,
including, without limitation, funding of accrued pension or
profit sharing plans for such Transferred Employees with respect
to any period prior to the Closing Date).
(c) Each Transferred Employee shall be eligible to participate
in the medical, dental, or other welfare plans of BUYER, as
such plans may exist, on and after the Closing Date, and any
pre-existing conditions provisions of such plans shall be
waived with respect to any such Transferred Employees.
(d) With respect to any Transferred Employee who is also a Leave
Employee, upon conclusion of his or her short-term
disability or temporary leave of absence, subject to the
terms and conditions of the BUYER's plans and policies and
applicable law, each Transferred Employee on such leave
shall receive the salary and vacation benefits in effect
when he or she went on leave, shall otherwise be treated as
a Transferred Employee, and, to the extent practicable,
shall be offered by the BUYER the same or a
<PAGE>
substantially equivalent position to his or her position with
BANK ONE prior to having gone on leave.
(e) Except as provided herein, BANK ONE shall pay, discharge,
and be responsible for (i) all salary and wages arising out of
employment of the Transferred Employees through the Closing Date,
and (ii) any employee benefits (except vacation, sick, and
personal days accrued but unused by the Transferred Employee
through the Closing Date which BUYER hereby agrees to grant to
such Transferred Employees following the Closing Date) arising
under BANK ONE's employee benefit plans and employee programs
prior to the Closing Date (but not including medical benefits, if
any, to Transferred Employees who retire after the Closing Date),
including benefits with respect to claims incurred prior to the
Closing Date but reported after the Closing Date and benefits
inuring to Leave Employees prior to any election by such Leave
Employees to return to work with BUYER. From and after the
Closing Date, BUYER shall pay, discharge, and be responsible for
all salary, wages, and benefits arising out of or relating to the
employment of the Transferred Employees by BUYER from and after
the Closing Date, including, without limitation, all claims for
welfare benefits plans incurred on or after the Closing Date.
Claims are incurred as of the date services are provided
notwithstanding when the injury or illness may have occurred.
(f) To the extent permitted under BUYER's applicable 401(k)
plan, BANK ONE and BUYER shall cooperate in arranging for
the transfer to BUYER's 401(k) plan, as soon as practicable
after the Closing Date and in a manner that satisfies
sections 414(l) and 411(d)(6) of the Internal Revenue Code,
as amended, of those accounts held under BANK ONE's 401(k)
plan on behalf of Transferred Employees.
<PAGE>
4.03 COMPLIANCE WITH LAW. BUYER agrees that it shall comply with any and
all applicable requirements, if any, under the Worker Adjustment and
Retraining Notification Act in connection with the transaction
contemplated by this Agreement. BUYER hereby agrees to indemnify and
to hold BANK ONE and its affiliates and its and their officers,
directors, agents, and employees harmless from and against any and all
liability, loss, cost, and expense, however arising, as a result of
the failure of BUYER to comply with its obligations as set forth in
this section.
4.04 ACTIONS TO BE TAKEN BY BANK ONE. BANK ONE covenants to BUYER that it
will do or cause the following to occur:
(a) SOLICITATION OF TRANSFERRED EMPLOYEES. Except with the written
consent of BUYER, for a period of six months following the
Closing Date, BANK ONE will not directly solicit Transferred
Employees as prospective officers or employees of BANK ONE;
provided, however, that BANK ONE shall not be prohibited or
restricted from hiring a Transferred Employee if such Transferred
Employee contacts BANK ONE or an affiliate or the parent
organization of BANK ONE to seek hiring or retention, whether in
response to general advertising or otherwise, or if a Transferred
Employee is terminated by BUYER.
(b) EMPLOYEE BENEFIT PROGRAMS. BANK ONE's obligations to employees
of the Offices, including Transferred Employees, will be as set
forth in established policies of BANK ONE CORPORATION and/or BANK
ONE, and BANK ONE shall continue its employee benefit programs in
full force and effect as benefit programs for Transferred
Employees through the Closing Date. After the Closing, BANK ONE
shall retain the responsibility and liability for the funding and
payment of all claims incurred under such employee benefit
programs through the Closing Date. BUYER shall have no
obligation or liability to compensate Transferred Employees for
benefits of any kind earned, accrued, promised and/or provided to
Transferred Employees as employees of BANK
<PAGE>
ONE, except with respect to eligibility and vesting as set forth
in Section 4.02, above.
(c) EMPLOYEES OF THE OFFICES. BANK ONE shall not, without BUYER's
prior written consent (i) increase the aggregate full-time
equivalent size of the work force at the Offices above the
aggregate normal staffing levels designated by BANK ONE for the
Offices at the date hereof, (ii) terminate any Transferred
Employee prior to the Closing Date, unless such person is
terminated for cause as determined at the sole discretion of BANK
ONE, or (iii) increase the compensation of any Transferred
Employee except pursuant to existing BANK ONE policies and
procedures.
The obligations of BANK ONE pursuant to this Section 4.04 shall
survive the Closing.
5. CONDITIONS PRECEDENT TO CLOSING.
5.01 CONDITIONS TO BANK ONE'S OBLIGATIONS. The obligations of BANK ONE to
consummate the Acquisition are subject to the satisfaction, or the
waiver in writing by BANK ONE to the extent permitted by applicable
law, of the following conditions at or prior to the Closing:
(a) PRIOR REGULATORY APPROVAL. All filings and registrations with,
and notifications to, all federal and state authorities required
for consummation of the Acquisition shall have been made, all
approvals and authorizations of all federal and state authorities
required for consummation of the Acquisition shall have been
received and shall be in full force and effect, and all
applicable waiting periods shall have passed.
(b) CORPORATE ACTION. The Board of Directors of BUYER shall have
taken all corporate action necessary by it to effectuate this
Agreement and the Acquisition
<PAGE>
and BUYER shall have furnished BANK ONE with a certified copy of
each such resolution adopted by the Board of Directors of BUYER
evidencing the same.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of BUYER set forth in this Agreement shall be true and
correct in all material respects on the Closing Date with the
same effect as though all such representations and warranties had
been made on and as of such date, and BUYER shall have delivered
to BANK ONE a Certificate to that effect, dated as of the Closing
Date to the effect specified in SCHEDULE I to this Agreement.
(d) COVENANTS. Each and all of the covenants and agreements of BUYER
to be performed or complied with at or prior to Closing pursuant
to this Agreement shall have been duly performed or complied with
in all material respects by BUYER, or waived by BANK ONE, and
BUYER shall have delivered to BANK ONE a Certificate to that
effect, dated as of the Closing Date to the effect specified in
SCHEDULE I to this Agreement.
(e) NO PROCEEDING OR PROHIBITION. At the time of the Closing, there
shall not be any litigation, investigation, inquiry, or
proceeding pending or threatened in or by any court or agency of
any government or by any third party which in the judgment of the
executive officers of BANK ONE, with the advice of counsel,
presents a bona fide claim to restrain, enjoin, or prohibit
consummation of the transaction contemplated by this Agreement or
which might result in rescission in connection with such
transactions; and BANK ONE shall have been furnished with a
Certificate, substantially in the form as specified in SCHEDULE I
to this Agreement, dated as of the Closing Date and signed by the
Chairman, President, or an Executive Vice President and Secretary
or Assistant Secretary of BUYER, to the effect that no such
litigation, investigation, inquiry, or proceeding is pending or,
to the best of their knowledge, threatened.
<PAGE>
(f) OPINION OF COUNSEL. BUYER shall have delivered to BANK ONE an
opinion, dated as of the Closing Date, of legal counsel
reasonably satisfactory to BANK ONE and its counsel, in form and
substance reasonably satisfactory to BANK ONE and its counsel, to
the effect specified in SCHEDULE J to this Agreement.
(g) RECEIPT OF CONSENTS OF THIRD PARTIES. BANK ONE shall have
received, in form and substance satisfactory to BANK ONE, any and
all consents,approvals or waivers of third parties as may BANK
ONE, in its sole discretion, may deem necessary or appropriate to
enable it to consummate the transactions contemplated by this
Agreement without additional cost, expense, or liability to BANK
ONE or its affiliates.
5.02 CONDITIONS TO BUYER'S OBLIGATIONS. The obligations of BUYER to
consummate the Acquisition are subject to the satisfaction, or the
waiver in writing by BUYER to the extent permitted by applicable law,
of the following conditions at or prior to the Closing:
(a) PRIOR REGULATORY APPROVAL. All filings and registrations with,
and notifications to, all federal and state authorities required
for consummation of the Acquisition and operation of the Offices
by BUYER shall have been made, all approvals and authorizations
of all federal and state authorities required for consummation of
the Acquisition and operation of the Offices by BUYER shall have
been received and shall be in full force and effect, and all
applicable waiting periods shall have passed.
(b) CORPORATE ACTION. The Board of Directors of BANK ONE shall have
taken all corporate action necessary to effectuate this Agreement
and the Acquisition; and BANK ONE shall have furnished BUYER with
a certified copy of each such resolution adopted by the Board of
Directors of BANK ONE evidencing the same.
<PAGE>
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of BANK ONE set forth in this Agreement shall be true
and correct in all material respects on the Closing Date with the
same effect as though all such representations and warranties had
been made on and as of such date (unless a different date is
specifically indicated in such representations and warranties),
and BANK ONE shall have delivered to BUYER a Certificate to that
effect, dated as of the Closing Date to the effect specified in
SCHEDULE K to this Agreement.
(d) COVENANTS. Each and all of the covenants and agreements of BANK
ONE to be performed or complied with pursuant to this Agreement
shall have been duly performed or complied with in all material
respects by BANK ONE, or waived by BUYER, and BANK ONE shall have
delivered to BUYER a Certificate to that effect, dated as of the
Closing Date to the effect specified in SCHEDULE K to this
Agreement.
(e) NO PROCEEDINGS OR PROHIBITIONS. At the time of the Closing,
there shall not be any litigation, investigation, inquiry, or
proceeding pending or threatened in or by any court or agency of
any government or by any third party which in the judgment of the
executive officers of BUYER, with the advice of counsel, presents
a bona fide claim to restrain, enjoin, or prohibit consummation
of the transactions contemplated by this Agreement or which might
result in rescission in connection with such transactions; and
BUYER shall have been furnished with a Certificate, in
substantially the form specified in SCHEDULE K to this Agreement,
dated as of the Closing Date and signed by the Chairman,
President, or Vice President, and the Secretary or Assistant
Secretary of BANK ONE, to the effect that no such litigation,
investigation, inquiry, or proceeding is pending or threatened to
the best of their knowledge.
(f) OPINION OF COUNSEL. BANK ONE shall have delivered to BUYER an
opinion, dated as of the Closing Date, of legal counsel
reasonably satisfactory to BUYER
<PAGE>
and its counsel, in form and substance reasonably satisfactory to
BUYER and its counsel, to the effect specified in SCHEDULE L to
this Agreement.
(g) REAL PROPERTY. The Title Commitment (as defined in Section
2.01(c) herein) shall have been delivered to BUYER, and updated
to or as close as practicable to (but in no event more than five
(5) business days prior to) the Closing Date, in accordance with
the terms of such Section, and such updated Title Commitment
shall not include any special exceptions other than those set
forth in the original Title Commitment and any other Permitted
Exceptions.
(h) FIXED ASSETS. There shall have been no material alteration in or
adjustment to the Fixed Assets. For purposes of this subsection
(h), it will not be considered to be a material alteration or
adjustment to the Fixed Assets if (i) there is damage or
destruction to the Fixed Assets as contemplated by Section
2.01(g) herein and BANK ONE complies with said Section 2.01(g),
(ii) BANK ONE makes additions to the Fixed Assets with the prior
written consent of BUYER or (iii) BANK ONE makes additions to the
Fixed Assets without BUYER's consent in order to correct
emergency situations which are threatening to impair BANK ONE's
operations at an Office.
5.03 NON-SATISFACTIONS OF CONDITIONS PRECEDENT. The non-occurrence or
delay of the Closing of the Acquisition by reason of the failure of
timely satisfaction of all conditions precedent to the obligations of
any party hereto to consummate the Acquisition shall in no way relieve
such party of any liability to the other party hereto, nor be deemed a
release or waiver of any claims the other party hereto may have
against such party, if and to the extent the failure of timely
satisfaction of such conditions precedent is attributable to the
actions or inactions of such party.
5.04 WAIVERS OF CONDITIONS PRECEDENT. The conditions specified in
Sections 5.01 and 5.02 herein shall be deemed satisfied or, to the
extent not satisfied, waived if the Closing
<PAGE>
occurs unless such failure of satisfaction is reserved in a writing
executed by BUYER and BANK ONE at or prior to the Closing.
6. CLOSING.
6.01 CLOSING AND CLOSING DATE. The Acquisition contemplated by this
Agreement shall be consummated and closed (the "Closing") at such
location as shall be mutually agreed upon by BUYER and BANK ONE, on a
date to be mutually agreed upon by BUYER and BANK ONE which date is
after all required regulatory approvals have been obtained and all
applicable regulatory waiting periods associated therewith have
expired. The precise date on which the Closing shall occur (the
"Closing Date") shall be confirmed by the parties in writing not less
than five (5) days after receiving all required regulatory approvals.
6.02 BANK ONE'S ACTIONS AT CLOSING. At the Closing (unless another time is
specifically stated in Section 6.04 hereof), BANK ONE shall, with
respect to the Offices:
(a) deliver to BUYER at the Offices such of the Assets purchased
hereunder as shall be capable of physical delivery, including,
without limitation, all assets comprising the safe deposit box
business, if any, of the Offices; and
(b) execute, acknowledge and deliver to BUYER all such limited
warranty deeds (qualified, as necessary, to reflect all Permitted
Exceptions), endorsements, assignments, bills of sale, and other
instruments of conveyance, assignment, and transfer as shall
reasonably be necessary or advisable to consummate the sale,
assignment, and transfer of the Assets sold or assigned to BUYER
hereunder and such other documents as the title company may
reasonably require; the originals of all blueprints, construction
plans, specifications and plat relating to the Owned Real Estate,
which are now in BANK ONE's possession or which BANK ONE has
reasonable access to; and such other documents or instruments as
may be
<PAGE>
reasonably required by BUYER, required by other provisions of
this Agreement, or reasonably necessary to effectuate the Closing;
(c) execute, acknowledge and deliver to BUYER a duly executed and
recordable assignment to BUYER of the Third Party Lease and a
consent to assignment from the landlord of the Third Party Lease
all in substantially as set forth in SCHEDULE F attached hereto
and incorporated herein by reference;
(d) assign, transfer, and make available to BUYER such of the
following records as exist and are available and maintained at
the Offices (in whatever form or medium then maintained by BANK
ONE) pertaining to the Deposit Liabilities and Office Loans:
(i) signature cards, orders and contracts and agreements
between BANK ONE and depositors of the Offices and
borrowers with respect to Office Loans, and records of
similar character; and
(ii) canceled checks and/or negotiable orders of withdrawal
representing charges to depositors; and
(iii) a trial balance listing of records of account; and
(iv) all other miscellaneous records, statements and other data
and materials maintained by BANK ONE relative to any
Deposit Liabilities being assumed by BUYER and Office
Loans being acquired by BUYER; and
(e) assign, transfer, and deliver to BUYER such safe deposit and
safekeeping files and records (in whatever form or medium then
maintained by BANK ONE) pertaining to the safe deposit business
of the Offices transferred to BUYER hereunder as exist and are
available, together with the contents of the safe deposit
<PAGE>
boxes maintained at the Offices, as the same exist as of the
close of business on the day immediately preceding the Closing
Date (subject to the terms and conditions of the leases or other
agreements relating to the same) and all securities and other
records, if any, held by the Offices for their customers as of
the close of business on the day immediately preceding the
Closing Date (subject to the terms and conditions of the
agreements or receipts relating to the same); and
(f) make available and transfer to BUYER on the Closing Date and
prior to the conclusion of the Closing any funds required to be
paid to BUYER pursuant to the terms of this Agreement; and
(g) execute, acknowledge and deliver to BUYER all Certificates and
other documents required to be delivered to BUYER by BANK ONE at
the Closing pursuant to the terms of this Agreement; and
(h) assign by endorsement substantially in a form as provided in
SCHEDULE M attached hereto, transfer and deliver to BUYER the
contract, promissory note or other evidence of indebtedness
related to the Office Loans together with the loan file and
records (in whatever form or medium then maintained by BANK ONE)
pertaining to such Office Loans; and
(i) assign to BUYER all BANK ONE's rights in and to the Assumed
Contracts which are assignable and which constitute part of the
Assets.
6.03 BUYER'S ACTIONS AT CLOSING. At the Closing (unless another time is
specifically stated in Section 6.04 hereof), BUYER shall, with respect
to the Offices:
(a) execute, acknowledge, and deliver to BANK ONE, to evidence the
assumption of the liabilities and obligations of BANK ONE by
BUYER hereunder, an
<PAGE>
instrument of assumption in the form set forth in SCHEDULE N to
this Agreement, and BANK ONE shall then accept, execute, and
acknowledge such instrument. Copies of such instrument may be
recorded in the public records at the option of either party
hereto. The execution and acknowledgment of such instrument
shall not be deemed to be a waiver of any rights or obligations
of any party to this Agreement;
(b) receive, accept and acknowledge delivery of all Assets, and all
records and documentation relating thereto, sold, assigned,
transferred, conveyed or delivered to BUYER by BANK ONE
hereunder; and
(c) execute and deliver to BANK ONE such written receipts for the
Assets, properties, records, and other materials assigned,
transferred, conveyed, or delivered to BUYER hereunder as BANK
ONE may reasonably have requested at or before the Closing;
(d) pay to BANK ONE on the Closing Date and prior to the conclusion
of the Closing any funds required to be paid to BANK ONE at the
Closing pursuant to the terms of this Agreement;
(e) execute, acknowledge and deliver to BANK ONE all Certificates and
other documents required to be delivered to BANK ONE by BUYER at
the Closing pursuant to the terms hereof; and
(f) execute, acknowledge and deliver to BANK ONE an agreement wherein
BUYER assumes obligations with respect to the Third Party Lease
and Assumed Contracts and the IRA's for all periods following the
Closing Date with respect thereto.
<PAGE>
6.04 METHODS OF PAYMENT. Subject to the adjustment procedures set forth in
this Section 6.04, the transfer of the funds, if any, due to BUYER or
to BANK ONE, as the case may be, as set forth pursuant to the terms of
Section 1.04(a) hereof, shall be made on the Closing Date in
immediately available United States Federal Funds. At least two
business days prior to the Closing, BANK ONE and BUYER shall provide
written notice to one another indicating the account and bank to which
such funds shall be wire transferred. In order to facilitate the
Closing, the parties agree: (i) that the amount of funds transferred
on the Closing Date, pursuant to Section 1.04(a) hereof, shall be
computed based upon (a) the aggregate book value plus accrued interest
of the Office Loans as of the close of business on the day immediately
preceding the Closing Date, (b) cash on hand at the Offices as of the
close of business on the day immediately preceding the Closing Date,
and (c) the aggregate balance of all Deposit Accounts (including
interest posted or accrued to such accounts and Individual Retirement
Accounts which have become IRAs as a result of the written appointment
of BUYER as the successor custodian and the failure of the account
holders to object to such appointment) as of the close of business on
the day immediately preceding the Closing Date, and the parties shall
execute a Preliminary Closing Statement in substantially the form set
forth in SCHEDULE P attached. Furthermore, within ten (10) business
days after the Closing, the parties shall make appropriate
post-closing adjustments, consistent with the provisions of Section
1.04 hereof, based upon actual Deposit Accounts, Office Loans and cash
transactions which took place on the Closing Date or which took place
prior to the Closing Date but which were not reflected as of the close
of business on the day immediately preceding the Closing Date and
execute the Final Settlement Statement in substantially the form set
forth in SCHEDULE Q attached. In addition, prorations of prepaid and
deferred income and expenses that cannot be reasonably calculated at
the Closing shall be settled and paid based on actual amounts and
calculations as soon as possible after the Closing.
<PAGE>
6.05 AVAILABILITY OF CLOSING DOCUMENTS. The documents proposed to be used
and delivered at the Closing shall be made available for examination
by the respective parties not later than 12:00 noon, Ohio time, on the
tenth Business Day prior to the Closing Date.
6.06 EFFECTIVENESS OF CLOSING. Upon the satisfactory completion of the
Closing, which does not include and shall not require completion of
the adjustment and proration arrangements set forth in Section 6.04,
the Acquisition shall be deemed to be effective and the Closing shall
be deemed to have occurred.
7. CERTAIN TRANSITIONAL MATTERS.
7.01 TRANSITIONAL ACTION BY BUYER. After the Closing, unless another time
is otherwise indicated:
(a) BUYER shall: (i) pay in accordance with the law and customary
banking practices and applicable Deposit Account contract terms,
all properly drawn and presented checks, negotiable orders of
withdrawal, drafts, debits, and withdrawal orders presented to
BUYER by mail, over the counter, through electronic media, or
through the check clearing system of the banking industry, by
depositors of the Deposit Accounts assumed by BUYER hereunder,
whether drawn on checks, negotiable orders or withdrawal, drafts,
or withdrawal order forms provided by BUYER or BANK ONE; and
(ii) in all other respects discharge, in the usual course of the
banking business, the duties and obligations of BANK ONE with
respect to the balances due and owing to the depositors whose
Deposit Accounts are assumed by BUYER hereunder; PROVIDED,
HOWEVER, that any obligations of BUYER pursuant to this Section
7.01 to honor checks, negotiable orders of withdrawal, drafts,
and withdrawal orders on forms provided by BANK ONE and carrying
its imprint (including its name and transit routing number) shall
not apply to any checks, drafts, withdrawal orders, or returned
items (i) presented to BUYER more than one hundred eighty (180)
days following the Closing Date, or (ii) on which a stop payment
has been requested by the deposit
<PAGE>
customer. The provisions of this subsection 7.01(a) shall in no
way limit BUYER's duties or obligations arising under
Section 1.03(b) hereof.
(b) BUYER shall, not earlier than the time of procurement of all
regulatory approvals required for consummation of the transaction
contemplated by this Agreement nor later than ten days prior to
the Closing Date, notify all depositors of the Offices by letter,
acceptable to BANK ONE, produced in, if appropriate, several
similar, but different forms calculated to provide necessary and
specific information to the owners of particular types of
accounts, of BUYER's pending assumption of the Deposit
Liabilities hereunder, and, in appropriate instances, notify
depositors that on and after the Closing Date certain BANK ONE
deposit-related services and/or BANK ONE's debit card and
automatic teller machine services impacted by the transactions
contemplated by this Agreement, will be terminated. As an
enclosure to such notices, BUYER may furnish appropriate
depositors with brochures, forms and other written materials
related or necessary to the assumption of the Deposit Accounts by
BUYER and the conversion of said accounts to BUYER accounts,
including the provision of checks to appropriate depositors using
the forms of BUYER with instructions to such depositors to
utilize such BUYER checks on and after the Closing Date and
thereafter to destroy any unused checks on BANK ONE's forms. The
expenses of the printing, processing and mailing of such letter
notices and providing new BUYER checks and other forms and
written materials to appropriate customers shall be borne by
BUYER. Before Closing, except as provided in this paragraph,
BUYER will not contact BANK ONE's customers except as may occur
in connection with advertising or solicitations directed to the
public generally or in the course of obtaining the requisite
regulatory approvals of the transaction.
(c) BUYER shall promptly pay to BANK ONE an amount equivalent to the
amount of any checks, negotiable orders of withdrawal, drafts,
withdrawal orders, or returned items (net of the applicable
Acquisition Consideration paid by BUYER
<PAGE>
with respect to the Deposit Liabilities represented by any such
instrument) credited as of the close of business on the Closing
Date to a Deposit Account assumed by BUYER hereunder which are
returned uncollected to BANK ONE after the Closing Date. The
foregoing shall include an amount equivalent to holds placed upon
such deposit account for items cashed by BANK ONE as of the close
of business on the Closing Date.
(d) All tasks and obligations concerning the provision of data
processing services to or for the Offices after the Closing,
other than those specifically set forth in, and to the extent
assumed by BANK ONE pursuant to, Section 7.02(b) herein, if any,
are the sole and exclusive responsibility of, and shall be
performed solely and exclusively by, BUYER.
(e) BUYER shall, not later than the close of business on the business
day immediately following the Closing Date, supply suitable
government-backed securities as security for any deposits of
governmental units included among the Deposit Liabilities for
which BANK ONE had provided similar security.
(f) BUYER shall, as soon as practicable after the Closing Date,
prepare and transmit at BUYER's expense to each of the obligors
on Office Loans transferred to BUYER pursuant to this Agreement a
notice to the effect that the loan has been transferred and
directing that payment be made to BUYER at the address specified
by BUYER, with BUYER's name as payee on any checks or other
instruments used to make payments, and, with respect to such loan
on which a payment notice or coupon book has been issued, to
issue a new notice or coupon book reflecting the name and an
address of BUYER as the person to whom and place at which
payments are to be made.
(g) If the balance due on any Office Loan transferred to BUYER
pursuant to this Agreement has been reduced by BANK ONE as a
result of a payment by check
<PAGE>
or draft received prior to the close of business on the Closing
Date, which item is returned unpaid to BANK ONE after the day
immediately preceding the Closing Date, the asset value
represented by the loan transferred shall be correspondingly
increased and an amount in cash equal to such increase shall be
promptly paid by BUYER to BANK ONE.
(h) BUYER shall use its best efforts to cooperate with BANK ONE in
assuring an orderly transition of ownership of the Assets and
responsibility for the liabilities, including the Deposit
Liabilities, assumed by BUYER hereunder.
(i) The duties and obligations of Buyer in this section 7.01 shall
survive the Closing.
7.02 TRANSITIONAL ACTION BY BANK ONE. After the Closing, unless another
time is otherwise indicated:
(a) BANK ONE shall use its best efforts to cooperate with BUYER in
assuring an orderly transition of ownership of the Assets and
responsibility for the liabilities, including the Deposit
Liabilities, assumed by BUYER hereunder. BANK ONE shall provide
final statements as of the Closing Date, in conjunction with
appropriate Deposit Liabilities, with interest and service
charges pro-rated to close of business on the Closing Date.
(b) BANK ONE's sole and exclusive responsibilities concerning the
provision of data processing services to or for the Deposit
Accounts of the Offices after the Closing Date, if any, shall be
as set forth in this Section 7.02(b). As soon as practicable
following the date of this Agreement, BANK ONE shall provide
BUYER with applicable product functions and specifications
relating to the data processing support required for the Deposit
Accounts, Office Loans, and safe deposit business (if such data
processing support currently is provided with
<PAGE>
respect to such business) maintained at the Offices (such Deposit
Accounts, Office Loans and safe deposit business, if applicable,
hereinafter called the "Accounts"). As soon as practicable
following the date of this Agreement, BANK ONE shall provide to
BUYER file formats relating to the Accounts and up to three (3)
sets of test tapes related to the Accounts in generic form which
are machine readable on IBM (or IBM compatible) equipment or
which shall be on eighteen track 3480 cartridges (non-compressed
data) or on nine channel 6250 B.P.I. EBCDIC formatted tape. By
not later than 2:00 P.M. local Phoenix, Arizona, time on the day
immediately following the Closing Date, BANK ONE shall make the
foregoing documents and materials available for pick-up by BUYER
at the BANK ONE Phoenix Data Processing Center.
(c) Prior to the Closing Date, BANK ONE shall cooperate with BUYER,
at BUYER's expense and at no expense to BANK ONE, in making
Transferred Employees available at reasonable times for whatever
program of training BUYER deems advisable; PROVIDED, HOWEVER,
that BUYER shall conduct such training program in a manner that
does not materially interfere with or prevent the performance of
the normal duties and activities of such Transferred Employees.
BUYER shall make request of BANK ONE for training opportunities
prior to the Closing Date. Such requests, which shall specify
the time, duration and place of such training, must be approved
by BANK ONE.
(d) BANK ONE shall cooperate with BUYER, at no expense to BANK ONE,
to make provision for the installation of teller and platform
equipment in the Offices subject to approval by BANK ONE;
PROVIDED, HOWEVER, that BUYER shall arrange for the installation
and placement of such equipment at such times and in a manner
that does not significantly interfere with the normal business
activities and operation of BANK ONE or the Offices.
<PAGE>
(e) BANK ONE shall resign as custodian of each IRA account maintained
at the Offices and assign the custodianship of such accounts to
BUYER upon Closing.
(f) Not sooner than one (1) business day prior to the Closing nor
later than the close of business on the Closing Date, BANK ONE
shall terminate its ATM/debit card service. Such terminations
will be preceded by the notice described in Section 7.01(b)
herein. BANK ONE shall have no obligation with respect to
conversion or change over with respect to direct deposit or
payroll and retirement payments service relating to the Deposit
Accounts following the Closing and, further, BUYER shall assume
all responsibility and liability with respect thereto following
the Closing. BANK ONE will continue to redirect and/or pass
through relevant ACH transactions on Deposit Accounts for a
period of 90 days following the Closing Date.
(g) As of the opening of business on the first business day after the
Closing Date, BANK ONE and BUYER shall provide the appropriate
Federal Reserve Bank (the "FRB") with all information necessary
in order to expedite the clearing and sorting of all checks,
drafts, instruments and other commercial paper relative to the
Deposit Liabilities and/or the Office Loans (hereinafter
collectively referred to as "Paper Items"). BUYER shall bear all
charges and costs imposed by the Federal Reserve in connection
with the reassignment of account number ranges for sorting the
Paper Items.
In the event the Federal Reserve and/or any other regional or
local clearinghouse for negotiable instruments fails, refuses or
is unable to direct sort such Paper Items for delivery to BUYER
with the result that such Paper Items are presented to BANK ONE,
by not later than 2:00 P.M. Phoenix, Arizona, time on each
business day following the Closing and continuing for one hundred
twenty (120) days after the Closing, BANK ONE will make available
to BUYER for pick up from BANK ONE's offices or the offices of
BANK ONE's agent and/or
<PAGE>
processor at the BANK ONE Phoenix or Denver Data Processing
Centers, all of the Paper Items which are received by BANK ONE
from the FRB and/or any regional or local clearinghouse during
the morning of each such business day on an "as-received basis."
At the same time BANK ONE shall also make available to BUYER
information and records, including but not limited to systems
printouts, concerning such Paper Items and concerning incoming
Automated Clearing House items ("ACH items") as well as
outstanding Automatic Teller Machine ("ATM") transactions. Such
information and records, including but not limited to systems
printouts, will utilize the most recent account number designated
by BANK ONE for each of the Deposit Accounts and/or the Office
Loans. BUYER shall initiate appropriate Notification of Change
requests relating to appropriate routing matters at the sole
expense of BUYER within 30 days of execution and delivery of this
Agreement. Each business day BANK ONE will endeavor to see that
the sum of (a) the actual Paper Items provided to BUYER plus
(b) all ACH items and ATM transactions captured by BANK ONE in
its information and records balance with the sum of (c) the
information and records, including but not limited to systems
printouts, provided by BANK ONE relative to the Paper Items plus
(d) the information and records, including but not limited to
systems printouts, provided relative to the ACH items and ATM
transactions affecting the Deposit Accounts and/or the Office
Loans.
Except as otherwise expressly noted, BANK ONE shall provide the
foregoing at no charge to BUYER for a period not to exceed thirty
(30) days from the Closing Date except that BUYER shall pay any
charges assessed to BANK ONE by the FRB, a national or local
clearinghouse and/or BANK ONE's agent and/or processor to the
extent such assessments relate to the Deposit Accounts. BUYER
shall be responsible for pick up of the data to be provided by
BANK ONE and shall compensate BANK ONE for activity subsequent to
the referenced 30 day period in the amount of $50.00 per day and
$.25 per item.
<PAGE>
BANK ONE and BUYER shall arrange for appropriate daily settlement
between the parties in order that the transmission of all monies
associated with the matters set forth in this Section 7.02(g)
might be effected promptly.
BANK ONE shall not be liable to BUYER for any failure to provide
the data required by this Section 7.02(g) to the extent any such
failure results from causes beyond BANK ONE's control including
war, strike or other labor disputes, acts of God, errors or
failures of the FRB, and/or a participating regional or local
clearinghouse, or equipment failure or other emergency wherein
BANK ONE and/or its agent processor has been unable to process
inclearings from the FRB or such clearinghouse.
(h) BANK ONE shall, not earlier than the time of procurement of all
regulatory approvals required for consummation of the transaction
contemplated by this Agreement nor later than twenty days prior
to the Closing Date, notify all depositors of the Offices and all
borrowers of any Office Loan by letter acceptable to BUYER,
produced in, if appropriate, several similar, but different forms
calculated to provide necessary and specific information to the
owners of particular types of accounts and/or loans, of BUYER's
pending assumption of the Deposit Liabilities and acquisition of
the Office Loans hereunder, and, in appropriate instances, notify
depositors that on and after the Closing Date certain BANK ONE
deposit-related services and/or BANK ONE's debit card and
automatic teller machine services, will be terminated. The
expenses of the printing, processing and mailing of such letter
notices shall be borne by BANK ONE.
(i) For a period of sixty (60) days after the Closing Date, BANK ONE
will forward to BUYER, within two (2) business days of receipt,
loan payments received by BANK ONE with respect to the Office
Loans. BUYER will forward, within two (2) business days of
receipt payments received by BUYER with respect to any
<PAGE>
loans not assigned to BUYER under this Agreement. BUYER and BANK
ONE further agree to refer customers to the offices of the other
when such customers present payments over the counter to the
party not holding their respective loan. BUYER shall reimburse
BANK ONE within 30 days of notice by BANK ONE to BUYER for any
payments tendered by borrowers which were credited to the
outstanding balance of any Office Loan prior to the Closing Date
and which are subsequently returned or otherwise withdrawn for
any reason and BANK ONE shall assign to BUYER any rights of BANK
ONE to recovery of such payments as against the relevant
borrower.
(j) The duties and obligations of the parties in this section 7.02
shall survive the Closing.
7.03 OVERDRAFTS AND TRANSITIONAL ACTION. Overdrafts paid on the Deposit
Accounts with respect to ledger dates after the Closing Date will be
the responsibility and risk of BUYER. Overdrafts approved with
respect to ledger dates more than four (4) business days prior to the
Closing Date will be the responsibility and risk of BANK ONE.
Overdrafts approved with respect to ledger dates during the period
beginning four (4) business days prior to the Closing Date through the
Closing Date, inclusive, will initially be the responsibility and risk
of BUYER (other than overdrafts of customers who are specifically
identified in writing by BUYER to BANK ONE not less than four (4)
business days prior to the Closing Date); provided, however, that
BUYER shall have the right to retransfer any such overdrafts back to
BANK ONE for BANK ONE's responsibility and at its risk within six (6)
days following the Closing Date, and BANK ONE will repurchase all
rights in respect of such overdrafts from BUYER for the amount of each
such overdraft outstanding at the time it is retransferred back to
BANK ONE less the amount of the Acquisition Consideration paid by
BUYER to BANK ONE attributable to such overdrafts; provided, however,
that BUYER shall have closed all accounts on which each such overdraft
exists not later than the date of such retransfer.
<PAGE>
7.04 ATMS AND DEBIT CARDS
(a) BANK ONE shall provide to BUYER no later than sixty (60) days
prior to the Closing Date, a test tape, along with a file format
or file layout and a production tape thirty (30) days before the
Closing Date, containing customer name, card number, withdrawal
limits, the Deposit Accounts activated by, accessible to or
committed to such cards issue dates and/or open dates, last
transaction dates, and expiration dates as to all ATM and debit
cards issued to customers of the BANK ONE Offices processor to
deactivate the operation of the BANK ONE ATM and debit cards
completely or to deactivate or disconnect the Deposit Accounts
from such BANK ONE ATM and debit cards no later than the business
day cutoff on the date prior to the Closing Date so that all
activity generated by the BANK ONE ATM and debit cards shall have
settled prior to the Closing Date. All transactions and activity
related to the BANK ONE ATM and debit cards following the Closing
Date w which are received or forwarded to BANK ONE will be
accepted and forwarded by BANK ONE to BUYER along with all
corresponding funds. BANK ONE thereafter agrees to immediately
notify its processor to deactivate such ATM and debit cards and
to forward all transactions related thereto directly to BUYER.
(b) BANK ONE agrees to deactivate the ATMs located at the Offices on
or before the business day cutoff on the day prior to the Closing
Date. Thereafter, BUYER shall reconfigure the ATMs to its
standards for activation after the business day cutoff on the
Closing Date.
(c) BUYER and BANK ONE agree to cooperate with each other to assure
that all transactions originated through the ATM or originated
with the ATM Cards prior to or on the Closing Date shall be for
the account of BANK ONE and all transactions originated after the
Closing Date shall be for the account of BUYER. A post closing
adjustment shall be made in the manner set forth in
<PAGE>
Section 6.04 hereof to reflect all such transactions which cannot
be reasonably calculated as of the Closing.
7.05 ENVIRONMENTAL MATTERS.
(a) BANK ONE has provided to BUYER, and BUYER hereby acknowledges
receipt of, copies of Phase I environmental site assessments (the
"Phase I Assessments" herein) for all Owned Real Estate. Such
Phase I Assessments have been dated (or supplemented) on or after
January 1, 1997.
(b) If such Phase I Assessments reasonably indicated the necessity or
desirability of further investigation to determine whether or not
an Environmental Hazard exists at such Owned Real Estate, BUYER
shall notify BANK ONE in writing, not later than ten (10) days
after the signing of this Agreement, of BUYER's desire to have
an environmental consultant selected by BANK ONE (the
"ENVIRONMENTAL CONSULTANT"), to the extent reasonable and
appropriate, conduct Phase II environmental site assessments
(the "Phase II Assessments" herein). Any such further
investigation or testing shall be conducted in such a manner so
as not to interfere with the normal operation of the Office(s)
involved. All such Phase II Assessments shall be treated as
information subject to Section 8.01 of this Agreement, shall be
completed not less than thirty (30) days after the signing of
this Agreement, and shall be conducted at no cost or expense to
BANK ONE. Further, BUYER shall indemnify and hold harmless BANK
ONE and its affiliates and its and their employees, officers,
directors, agents, tenants, and landlords from and against any
and all liability, loss, cost, and expense, however arising,
including attorney fees, as a direct or indirect result of any
injuries to
<PAGE>
persons or property occurring in conjunction with conduct of the
Phase II Assessments.
(c) BANK ONE shall have a period of 10 business days from receipt of
such notice to elect, at its sole option, to consent to conduct
of the Phase II Assessment or to terminate this Agreement with
respect to the relevant Office which is the proposed subject of
the Phase II Assessment (the "Removed Office") and any and all
assets and liabilities associated therewith. In the event of such
termination, if the Removed Office is the only Office which is
the subject of this Agreement this Agreement shall be deemed
terminated in accordance with Section 9.01 herein and the Deposit
described in Section 10.15 shall be refunded to BUYER. In the
event of such termination where the Removed Office is not the
only Office which is the subject of this Agreement, this
Agreement shall remain in full force and effect except that the
Removed Office and any and all assets and liabilities associated
therewith shall be deemed not the subject of this Agreement and
eliminated therefrom.
(d) In the event that the Phase II Assessment is conducted and the
Environmental Consultant discovers an Environmental Hazard during
any such Phase II Assessment at any single parcel of Owned Real
Estate, the remediation of which, in the reasonable judgment of
the Environmental Consultant, is or would be the responsibility
of BANK ONE, or BUYER should it acquire such Owned Real Estate,
and will result in projected remediation costs of $100,000 or
more for such single parcel of Owned Real Estate, BUYER shall
lease from BANK ONE such single parcel of Owned Real Estate
pursuant to a Lease Agreement which shall provide as follows:
<PAGE>
(i) Such Lease Agreement shall be for a term of two(2) years from
the Closing Date, with no obligation or right to renew (it being
the intention of BANK ONE that BUYER locate an alternative branch
site during such two years unless remediation occurs pursuant to
this Section 7.05), at a rental equal to a fair market rental
value;
(ii) BANK ONE may sell such Owned Real Estate to any person at
any time during the term of such Lease Agreement, subject to such
Lease Agreement, for a price;
(iii) During the term of such Lease Agreement, in the event that
BANK ONE shall deliver to BUYER a report of a qualified
environmental engineer or consultant certifying that the
Environmental Hazard, at or on any such parcel of Owned Real
Estate which is the subject ofthe Lease Agreement, has been
remediated to the extent reasonably required under applicable
Environmental Laws, BUYER shall be required to purchase such
parcel of Owned Real Estate at the net book value as of the close
of business of the month-end day most recently preceding the
Closing Date; and
(iv) Other terms and conditions of the Lease Agreement shall
be typical to branch leases in the relevant market of the
subject Owned Real Estate and as negotiated between BANK ONE
and BUYER.
If the projected remediation cost is less than $100,000 for any single
parcel of Owned Real Estate, BUYER shall acquire such parcel and such
cost shall be borne by BUYER without indemnity, price adjustment, or
set off under this Agreement, and BUYER shall be deemed to have waived
any and all claims against BANK ONE and its affiliates and its and
their officers, directors,
<PAGE>
employees, or arising directly or indirectly as a result of the
Environmental Hazards.
(e) BUYER agrees that it and the Environmental Consultant shall
conduct any Phase II Assessments or other investigations pursuant
to this Section with reasonable care and subject to customary
practices among environmental consultants and engineers,
including, without limitation, following completion thereof, the
restoration of any site to the extent practicable to its
condition prior to such site assessment or investigation and the
removal of all monitoring wells.
(f) Any lease of a parcel of Owned Real Estate pursuant to this
Section 7.05 shall in no way affect the transfer of any related
assets or liabilities, other than such parcel of Owned Real
Estate, to the BUYER at the Closing.
(g) For purposes of this Section 7.05, the term "Environmental Law"
shall mean any Federal or state law, statute, rule, regulation,
code, order, judgment, decree, injunction, or agreement with any
Federal or state governmental authority, (x) relating to the
protection, preservation, or restoration of the environment
(including, without limitation, air, water, vapor, surface water,
groundwater, drinking water supply, surface land, subsurface
land, plant and animal life or any other natural resource) or to
human health or safety or (y) the exposure to, or the use,
storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal
of hazardous substances, in each case as amended and now in
effect. Environmental Laws include, without limitation, the
Clean Air Act (42 U.S.C. section 7401 et seq.); the Comprehensive
Environmental Response Compensation and Liability Act (42 U.S.C.
section 9601 et seq.); the Federal Water Pollution Control Act
(33 U.S.C. section 1251 et seq.); the Occupational Safety and
Health
<PAGE>
Act (29 U.S.C. section 651 et seq.); provided, however, that the
definition of "Environmental Law" shall not include any Federal
or state law, statute, rule, regulation, code, order, judgment,
decree, injunction or agreement with any governmental authority
relating to asbestos or sbestos-containing materials.
(h) For purposes of this Section 7.05, the term "Environmental
Hazard" shall mean the presence of any Hazardous Substance in
violation of, and reasonably likely to require material
remediation costs under, applicable Environmental Laws; provided,
however, that the definition of Environmental Hazard shall not
include asbestos and asbestos-containing materials.
(i) For purposes of this Section 7.05, the term "Hazardous Substance"
shall mean any substance, whether liquid, solid, or gas, (a)
listed, identified or designated as hazardous or toxic to a level
which requires remediation under any Environmental Law; (b)
which, applying criteria specified in any Environmental Law, is
hazardous or toxic; or (c) the use or disposal of which is
regulated under Environmental Law.
7.06 EFFECT OF TRANSITIONAL ACTION. Except as and to the extent expressly
set forth in this Article 7, nothing contained in this Article 7 shall
be construed to be an abridgment or nullification of the rights,
customs and established practices under applicable banking laws and
regulations as they affect any of the matters addressed in this
Article 7.
8. GENERAL COVENANTS AND INDEMNIFICATION.
8.01 CONFIDENTIALITY OBLIGATIONS OF BUYER. From and after the date hereof,
BUYER and its affiliates and parent company shall treat all
information received from BANK ONE concerning the business, assets,
operations, and financial condition of BANK ONE and its affiliates and
its and their customers (including without limitation the Offices),
<PAGE>
as confidential, unless and to the extent that BUYER can demonstrate
that such information was already known to BUYER and its affiliates,
if any, or in the public domain or received from a third person not
known by BUYER to be under any obligation to BANK ONE; and BUYER shall
not use any such information (so required to be treated as
confidential) for any purpose except in furtherance of the
transactions contemplated hereby. Upon the termination of this
Agreement, BUYER shall, and shall cause its affiliates, if any, to,
promptly return all documents and workpapers containing, and all
copies of, any such information (so required to be treated as
confidential) received from or on behalf of BANK ONE in connection
with the transactions contemplated hereby. The covenants of BUYER
contained in this Section 8.01 are of the essence and shall survive
any termination of this Agreement, but shall terminate at the Closing,
if it occurs, with respect to any information that is limited solely
to the activities and transactions of the Offices; PROVIDED, HOWEVER,
that neither BUYER nor any of its affiliates shall be deemed to have
violated the covenants set forth in this Section 8.01 if BUYER shall
in good faith disclose any of such confidential information in
compliance with any legal process, order or decree issued by any court
or agency of government of competent jurisdiction. It is expressly
acknowledged by BANK ONE that all information provided to BUYER
related to this purchase and assumption transaction may be provided to
BUYER's affiliates as necessary for the purpose of consummating the
transaction which is the subject of this Agreement.
8.02 CONFIDENTIALITY OBLIGATIONS OF BANK ONE. From and after the date
hereof, BANK ONE, its affiliates and its parent corporation shall
treat all information received from BUYER concerning BUYER's business,
assets, operations, and financial condition as confidential, unless
and to the extent BANK ONE can demonstrate that such information was
already known to BANK ONE or its affiliates or in the public domain,
and BANK ONE shall not use any such information (so required to be
treated as confidential) for any purpose except in furtherance of the
transactions contemplated hereby. Upon the termination of this
Agreement, BANK ONE shall promptly return
<PAGE>
all documents and workpapers containing, and all copies of, any such
information (so required to be treated as confidential) received from
or on behalf of BUYER in connection with the transactions contemplated
hereby. The covenants of BANK ONE contained in this Section 8.02 are
of the essence and shall survive any termination of this Agreement;
PROVIDED, HOWEVER, that BANK ONE nor any of its affiliates shall be
deemed to have violated the covenants set forth in this Section 8.02
if BANK ONE shall in good faith disclose any of such confidential
information in compliance with any legal process, order or decree
issued by any court or agency of government of competent jurisdiction.
It is expressly acknowledged by BUYER that all information provided to
BANK ONE related to this purchase and assumption transaction may be
provided to BANC ONE CORPORATION and BANK ONE's affiliates for the
purpose of consummating the transaction which is the subject of this
Agreement.
8.03 INDEMNIFICATION BY BANK ONE. From and after the Closing Date, BANK
ONE shall indemnify, hold harmless, and defend BUYER from and against
all losses and liabilities, including reasonable attorneys' fees and
expenses, arising out of any actions, suits, or proceedings commenced
prior to the Closing (other than proceedings to prevent or limit the
consummation of the Acquisition) relating to operations at the Offices
and/or the Deposit Liabilities or Office Loans of the Offices; and
BANK ONE shall further indemnify, hold harmless, and defend BUYER from
and against all losses and liabilities, including reasonable
attorneys' fees and expenses, arising out of any actions, suits, or
proceedings commenced on or after the Closing to the extent the same
relate to operations at the Offices and/or the Deposit Liabilities or
Office Loans prior to the Closing. The obligations of BANK ONE under
this Section 8.03 shall be contingent upon BUYER giving BANK ONE
written notice (i) of receipt by BUYER of any process and/or pleadings
in or relating to any actions, suits, or proceedings of the kinds
described in this Section 8.03, including copies thereof, and (ii) of
the assertion of any claim or demand relating to the operation of the
Offices and/or the Deposit Liabilities or Office Loans prior to the
Closing, including, to the extent known to BUYER, the identity of the
person(s) or entity(ies) asserting such claim or making
<PAGE>
such demand and the nature thereof, and including copies of any
correspondence or other writings relating thereto. The rights of BUYER
under this section shall not apply to any suits, judgments, demands,
set-offs, or other claims arising directly or indirectly in
conjunction with the Office Loans or other Assets transferred in
accordance with this Agreement except claims for personal injury
arising from injuries occurring at the Offices prior to the Closing.
All notices required by the preceding sentence shall be given within
fifteen days of the receipt by BUYER of any such process or pleadings
or any oral or written notice of the assertion of any such claims or
demands. BANK ONE shall have the right to take over BUYER's defense
in any such actions, suits, or proceedings through counsel selected by
BANK ONE, to compromise and/or settle the same and to prosecute any
available appeals or reviews of any adverse judgment or ruling that
may be entered therein. The obligations of BANK ONE pursuant to this
Section 8.03 shall survive the Closing.
8.04 INDEMNIFICATION BY BUYER. From and after the Closing Date, BUYER
shall indemnify, hold harmless and defend BANK ONE from and against
all claims, losses, liabilities, demands and obligations, including
without limitation reasonable attorneys' fees and operating expenses
which BUYER may receive, suffer, or incur in connection with (i) any
losses incurred by BANK ONE related to BANK ONE's compliance with
instructions from BUYER made pursuant to Section 7.04 of this
Agreement and not related to any negligence or malfeasance on the part
of BANK ONE and (ii) operations and transactions occurring after the
Closing and which involve the Assets transferred, the Deposit
Liabilities or Office Loans and the other obligations and liabilities
assumed pursuant to this Agreement. The obligations of BUYER under
this Section 8.04 shall be contingent upon BANK ONE giving BUYER
written notice (i) of the receipt by BANK ONE of any process and/or
pleadings in or relating to any actions, suits or proceedings of the
kinds described in this Section 8.04, including copies thereof, and
(ii) of the assertion of any claim or demand relating to the Assets
transferred to and/or the Deposit Liabilities or Office Loans and the
other obligations and liabilities assumed by BUYER on or after the
Closing, including, to the extent
<PAGE>
known to BANK ONE, the identity of the person(s) or entity(ies)
asserting such claim or making such demand and the nature thereof, and
including copies of any correspondence or other writings relating
thereto. All notices required by the preceding sentence shall be
given within fifteen (15) days of the receipt by BANK ONE of any such
process or pleadings or any oral or written notice of the assertion of
any such claims or demands. BUYER shall have the right to take over
BANK ONE's defense in any such actions, suits, or proceedings through
counsel selected by BUYER, to compromise and/or settle the same and to
prosecute any available appeals or review of any adverse judgment or
ruling that may be entered therein. The obligations of BUYER pursuant
to this Section 8.04 shall survive the Closing.
8.05 SOLICITATION OF CUSTOMERS BY BUYER PRIOR TO CLOSING. At any time
prior to the Closing Date, BUYER will not, and will not permit any of
its affiliates, if any, to conduct any marketing, media or customer
solicitation campaign which is targeted to induce customers whose
Deposit Account liabilities are to be assumed or Office Loans are to
be acquired by BUYER pursuant to this Agreement to discontinue their
account or business relationships with BANK ONE or its affiliates.
Additionally, at any time prior to the Closing, BUYER shall not, with
respect to its offices in the same market as the Offices, offer to pay
on any transaction accounts or any new or renewal savings accounts or
certificates of deposits, rates of interest greater than those offered
or then being paid on similar accounts for like term and amount by
other offices of BUYER located in the referenced market. Among other
matters, it is the intent of this provision to prevent BUYER from
paying or offering to pay a rate of interest on any deposit accounts
in excess of that rate paid for like accounts at other offices of
BUYER within the market of the Offices prior to execution of this
Agreement.
8.06 SOLICITATION OF CUSTOMERS BY BANK ONE AFTER THE CLOSING. From the
date of this Agreement and for one (1) year following the Closing
Date, BANK ONE will not knowingly directly solicit a) deposit accounts
from customers whose Deposit Liabilities and/or Office Loans are
assumed or acquired by BUYER pursuant to this
<PAGE>
Agreement, or b) refinancing of Office Loans from borrowers whose
Office Loans are being acquired by BUYER hereunder, except as may
occur in connection with (i) advertising or solicitations directed to
the public generally, (ii) solicitations outside the designated market
area of the Offices and (iii) customers or borrowers with a banking or
other relationship with BANK ONE or its affiliates at offices other
than the Offices, or who have or maintain more than one place of
business.
8.07 FURTHER ASSURANCES. From and after the date hereof, each party hereto
agrees to execute and deliver such instruments and to take such other
actions as the other party hereto may reasonably request in order to
carry out and implement this Agreement. Without limiting the
foregoing, BANK ONE agrees to execute and deliver such deeds, bills of
sale, acknowledgments, and other instruments of conveyance and
transfer as, in the reasonable judgment of BUYER, shall be necessary
and appropriate to vest in BUYER the legal and equitable title to the
Assets of BANK ONE being conveyed to BUYER hereunder. Further, BUYER,
at its sole cost and expense, shall prepare and shall file, or shall
cause to be prepared and filed, with any appropriate third parties,
any and all documents and notices which are necessary and proper to
transfer to BUYER any security interests and other rights of BANK ONE
in and to collateral securing the Office Loans not later than 30 days
following the Closing Date. BANK ONE shall cooperate with BUYER in
executing any necessary and proper documents and notices as may be
appropriate in furtherance of the foregoing covenant and consistent
with the terms of this Agreement provided, however, that nothing
contained herein shall relieve BUYER of its obligations as set forth
herein. The covenants of each of the parties hereto pursuant to this
Section 8.07 shall survive the Closing.
8.08 OPERATION OF THE OFFICES. Except as otherwise expressly provided in
this Agreement, after the Closing Date neither BANK ONE, its
subsidiaries, affiliates or parent corporation shall be obligated to
provide for any managerial, financial, business, or other services to
the Offices, including without limitation any personnel, employee
benefit, data processing, accounting, risk management, or other
services or assistance
<PAGE>
that may have been provided to the Offices prior to the close of
business on the Closing Date, and BUYER shall take such action as may
in its judgment appear to be necessary or advisable to provide for the
ongoing operation and management of, and the provision of services and
assistance to, the Offices after the Closing Date. Upon the Closing,
BUYER shall change the legal name of the Offices and, except for any
documents or materials in possession of the customers of the Offices
(including but not limited to deposit tickets and checks), shall not
use and shall cause the Offices to cease using any signs, stationery,
advertising, documents, or printed or written materials that refer to
the Offices by any name that includes the words "BANK ONE" or "BANC
ONE" or the name of any affiliate of BANC ONE CORPORATION. Preceding
the Closing, BANK ONE shall cooperate with any reasonable requests of
BUYER directed to obtaining specifications for the procurement of new
signs of BUYER's choosing for installation by BUYER of new signs
immediately following the close of business on the Closing Date;
PROVIDED, HOWEVER, that BUYER's receipt of all sign specifications
shall be obtained by BUYER in a manner that does not significantly
interfere with the normal business activities and operations of the
Offices and shall be at the sole and exclusive expense of BUYER. As
indicated in, and as limited by, Section 1.02(c), BANK ONE will retain
its signs located at the Offices. If removed by BUYER in conjunction
with its installation of new signs, BUYER shall obtain BANK ONE's
approval for such removal and shall insure that said signs are removed
without damage to same. It is understood by the parties hereto that,
with the exception of the signs, all mounting facilities for the signs
shall be considered as Fixed Assets for purposes of this Agreement.
8.09 INFORMATION AFTER CLOSING. For a period of seven (7) years following
the Closing, upon written request of BANK ONE to BUYER or BUYER to
BANK ONE, as the case may be, such requested party shall provide the
requesting party with reasonable access to, or copies of, information
and records relating to the Offices which are then in the possession
or control of the requested party reasonably necessary to permit the
requesting party or any of its subsidiaries or affiliates to comply
with or contest any
<PAGE>
applicable legal, tax, banking, accounting, or regulatory policies or
requirements, or any legal or regulatory proceeding thereunder or
requests related to customer relationships at the Offices prior to
Closing. In the event of any such requests, the requesting party
shall reimburse the requested party for the reasonable costs of the
requested party related to such request.
8.10 SURVIVAL OF COVENANTS. The obligations and covenants of the parties
under this Section 8 shall survive the Closing.
8.11 INDIVIDUAL RETIREMENT ACCOUNTS. All Individual Retirement Accounts
related to the Offices that shall not have become IRAs by the close of
business on the 30th day following the Closing shall not be assigned
by BANK ONE to BUYER or assumed by BUYER. BANK ONE may thereafter, at
its option, elect to retain such Individual Retirement Accounts,
advise the account holders that it has withdrawn its resignation as
custodian or transfer the amount in such Individual Retirement
Accounts to the account holders.
8.12 COVENANT NOT TO COMPETE. From and after the Closing and for a
period of two (2) years following the Closing Date, BANK ONE
shall not, and shall not enter into any agreement to, acquire,
lease, purchase, own, operate or use any building, office or
other facility or premises located within a three (3) mile radius
of any Office for the purpose of operating a full service branch
and making loans, accepting deposits or cashing checks; provided,
however, that the foregoing prohibition shall not apply to: i)
performance by BANK ONE or any current or future affiliate or
successor of BANK ONE of any of the foregoing activities
utilizing ATMs, CBCTs, ALMs, cash dispensing machines,
remote service facilities, terminals, or similar devices, or ii)
performance by BANK ONE or any current or future affiliate or
successor of BANK ONE of the foregoing activities as a result of
a merger or other combination with, or acquisition of or by, BANK
<PAGE>
ONE, BANC ONE CORPORATION, or an affiliate thereof with any third
party following the Closing Date.
9. TERMINATION.
9.01 TERMINATION BY MUTUAL AGREEMENT. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned by mutual
consent of the parties authorized by a vote of a majority of the Board
of Directors (or by the vote of the Executive Committee of such Board,
if so empowered) of each of BANK ONE and BUYER.
9.02 TERMINATION BY BANK ONE. This Agreement may be terminated and the
transactions contemplated hereby abandoned by a vote of a majority of
the Board of Directors (or by the vote of the Executive Committee of
such Board, if so empowered) of BANK ONE:
(a) in the event of a material breach by BUYER of this Agreement; or
(b) in the event any of the conditions precedent specified in Section
5.01 of this Agreement has not been met as of the date required
by this Agreement and, if not so met, has not been waived by BANK
ONE; or
(c) in the event any regulatory approval for the consummation of the
Acquisition is denied by the applicable regulatory authority or
in the event that at any time prior to the Closing Date it shall
become reasonably certain to BANK ONE, with the advice of
counsel, that a regulatory approval required for consummation of
the Acquisition will not be obtained within a time reasonably
satisfactory to BANK ONE; or
(d) on or after midnight, Ohio time, December 15, 1997, (the
"Termination Date") if the Closing has not then occurred
unless the failure to
<PAGE>
consummate by such time is due to a breach of this Agreement by
BANK ONE; or
(e) at the option of BANK ONE in the event that BUYER enters into an
agreement or agreements, or intends to enter into an agreement or
agreements, providing for the merger, acquisition, or sale of
substantially all of the assets of BUYER or its parent company
such as would require prior regulatory approval under the Change
in Bank Control Act, as amended, or the Bank Holding Company Act
of 1956, as amended, or similar law or regulation.
(f) at the option of BANK ONE in the event that there is a material
adverse change in the financial condition or results of operation
of BUYER, or pending or threatened litigation or claims with
respect to the transactions contemplated by this Agreement which,
in the opinion of BANK ONE, may hinder or delay the ability of
the parties to consummate the transactions contemplated by this
Agreement.
(g) at the option of BANK ONE in the event that consents to the
transactions contemplated by this Agreement from such third
parties as BANK ONE may reasonably deem necessary or appropriate
are not available prior to the Closing Date without additional
cost or expense to BANK ONE or in the event that releases of BANK
ONE by such third parties as BANK ONE may reasonable deem
necessary or appropriate are not available prior to the Closing
Date without additional cost or expense to BANK ONE.
9.03 TERMINATION BY BUYER. This Agreement may be terminated and the
transactions contemplated hereby abandoned by a vote of a majority of
the Board of Directors (or by the vote of the Executive Committee of
such Board, if so empowered) of BUYER:
<PAGE>
(a) in the event of a material breach by BANK ONE of this Agreement;
or
(b) in the event any of the conditions precedent specified in Section
5.02 of this Agreement has not been met as of the date required
by this Agreement and, if not so met, has not been waived by
BUYER; or
(c) in the event any regulatory approval required for consummation of
the Acquisition is denied by the applicable regulatory authority
or in the event that at any time prior to the Closing Date it
shall become reasonably certain to BUYER, with the advice of
counsel, that a regulatory approval required for consummation of
the Acquisition will not be obtained; or
(e) on or after the Termination Date if the Closing has not then
occurred unless the failure to consummate by such time is due to
a breach of this Agreement by BUYER.
9.04 EFFECT OF TERMINATION. The termination of this Agreement pursuant to
Sections 9.02 or 9.03 of this Article 9 shall not release any party
hereto from any liability or obligation to the other party hereto
arising from (i) a breach of any provision of this Agreement occurring
prior to the termination hereof or (ii) the failure of timely
satisfaction of conditions precedent to the obligations of a party to
the extent that such failure of timely satisfaction is attributable to
the actions or inactions of such party.
10. MISCELLANEOUS PROVISIONS.
10.01 EXPENSES. Except as and to the extent specifically
allocated otherwise herein, each of the parties hereto shall
bear its own expenses, whether or not the transactions
contemplated hereby are consummated.
10.02 CERTIFICATES. All statements contained in any certificate
("Certificate") delivered by or on behalf of BANK ONE or BUYER
pursuant to this Agreement or in
<PAGE>
connection with the transactions contemplated hereby shall be
deemed to be representations and warranties of the party
delivering the Certificate hereunder. Each such Certificate
shall be executed on behalf of the party delivering the
Certificate by duly authorized officers of such party.
10.03 TERMINATION OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of BANK ONE and BUYER contained or
referred to in this Agreement or in any Certificate, schedule, or
other instrument delivered or to be delivered pursuant to this
Agreement shall terminate at the Closing, except for:
(a) those representations and warranties contained in any warranty
deeds delivered by BANK ONE to BUYER at the Closing;
(b) those representations and warranties contained in any bill of
sale relating to the Assets delivered by BANK ONE to BUYER at
Closing;
(c) those representations and warranties contained in any instrument
of assumption or in any Certificate in the forms of SCHEDULE I
and SCHEDULE N, respectively, attached hereto and delivered by
BUYER to BANK ONE at the Closing;
(d) those representations and warranties contained in any Certificate
in the form of SCHEDULE K attached hereto, delivered by BANK ONE
to BUYER at the Closing; and
(e) those representations and warranties of BANK ONE contained in
Section 3.01(o) of this Agreement.
10.04 WAIVERS. Each party hereto, by written instrument signed by duly
authorized officers of such party, may extend the time for the
performance of any of the
<PAGE>
obligations or other acts of the other party hereto and may
waive, but only as affects the party signing such instrument:
(a) any inaccuracies in the representations or warranties of the
other party contained or referred to in this Agreement or in any
document delivered pursuant hereto;
(b) compliance with any of the covenants or agreements of the other
party contained in this Agreement;
(c) the performance (including performance to the satisfaction of a
party or its counsel) by the other party of such of its
obligations set out herein; and
(d) satisfaction of any condition to the obligations of the waiving
party pursuant to this Agreement.
10.05 NOTICES. All notices and other communications hereunder may be
made by mail, hand-delivery or by courier service and notice
shall be deemed to have been given when received; provided,
however, if notices and other communications are made by
nationally recognized overnight courier service for overnight
delivery, such notice shall be deemed to have been given one
business day after being forwarded to such a nationally
recognized overnight courier service for overnight delivery.
<PAGE>
If to BANK ONE:
Bank One, Arizona, National Association
Attention: R. Michael Welborn, Chairman and CEO
241 North Central Ave.
Phoenix, Arizona 85004
Bank One, Colorado, National Association
Attention: Kenneth W. Charlton, Chairman and CEO
1125 17th Street
Denver, Colorado 80202
Bank One, Utah, National Association
Attention: Brad R. Baldwin, Chairman, President, and CEO
50 West Broadway
Salt Lake City, Utah 84101
With a copy to:
BANC ONE CORPORATION
Attention: Steven A. Bennett
Senior Vice President and General Counsel
100 East Broad Street
18th Floor
Columbus, Ohio 43271-0158
If to BUYER:
Community First Bankshares, Inc.
520 Main Ave.
Fargo, North Dakota 561124-0001
Attention: Donald R. Mengedoth, President and CEO
With a copy to:
Steven J. Johnson, Esq.
Lindquist & Vennum, P.L.L.P.
4200 IDS Center
80 South Eighth St.
Minneapolis, Minnesota 55402-2205
<PAGE>
or such other person or address as any such party may designate
by notice to the other parties, and shall be deemed to have been
given as of the date received.
10.06 PARTIES IN INTEREST: ASSIGNMENT; AMENDMENT. The rights and
obligations of each individual banking association which is a
party hereto shall be exclusively and individually binding upon,
and shall inure exclusively and individually to the benefit of,
that banking association and its respective permitted successors
or assigns. Representations, warranties, and covenants of BANK
ONE contained herein shall be deemed made by the appropriate
respective banking association which is the owner of the
respective asset or obligor of the respective liability related
thereto and shall not be deemed made by or on behalf of any
banking association for any other banking association. This
Agreement is binding upon and is for the benefit of the parties
hereto and their respective successors, legal representatives,
and assigns, and no person who is not a party hereto (or a
permitted successor or assignee of such party) shall have any
rights or benefits under this Agreement, either as a third party
beneficiary or otherwise. This Agreement cannot be assigned by
BUYER by action of law or otherwise, and this Agreement cannot be
amended or modified, except by a written agreement executed by
the parties hereto or their respective permitted successors and
assigns. Anything to the contrary herein notwithstanding, BUYER
may assign various assets and liabilities to wholly-owned
subsidiary insured depository institutions while remaining
jointly and severally liable, together with such assignee, for
any duties and obligations relating thereto with the exception of
payment of Deposit Liabilities.
10.07 HEADINGS. The headings, table of contents, and index to defined
terms (if any) used in this Agreement are inserted for
convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
<PAGE>
10.08 TERMINOLOGY. The specific terms of art that are defined in
various provisions of this Agreement shall apply throughout this
Agreement (including without limitation each Schedule hereto),
unless expressly indicated otherwise. In addition, the following
terms and phrases shall have the meanings set forth for purposes
of this Agreement (including such Schedule):
(a) The term "business day" shall mean any day other than a
Saturday, Sunday, or a day on which either BANK ONE or
BUYER is closed in accordance with applicable law or
regulation. Any action, notice, or right which is to be
taken or given or which is to be exercised or lapse on or
by a given date which is not a business day may be taken,
given, or exercised, and shall not lapse, until the next
business day following.
(b) The term "affiliate" shall mean, with respect to any
person, any other person directly or indirectly
controlling, controlled by or under common control with
such person.
(c) The term "Permitted Exceptions" shall mean, with respect
to the Owned Real Estate and the Leased Real Estate,
(i) those five standard exceptions appearing as SCHEDULE B
items in a standard ALTA owners or leasehold title
insurance policy, and any other exceptions, restrictions,
easements, rights of way, and encumbrances referenced in
the Title Commitment delivered by BANK ONE to BUYER as
indicated in Section 2.01(c) of this Agreement;
(ii) statutory liens for current taxes or assessments not
yet due, or if due not yet delinquent, or the validity of
which is being contested in good faith by appropriate
proceedings; (iii) such other liens, imperfections in
title, charges, easements, restrictions, and encumbrances
(but in all cases of Owned Real Estate excluding those
which secure borrowed money) which, individually and in
the aggregate, do not materially detract from the value
of, or materially interfere with the present use of, any
property
<PAGE>
subject thereto or affected thereby; and (iv) such other
exceptions as are approved by BUYER in writing.
(d) The term "person" shall mean any individual, corporation
partnership, limited liability company, association,
trust, or other entity, whether business, personal, or
otherwise.
(e) Unless expressly indicated otherwise in a particular
context, the terms "herein," "hereunder," "hereto,"
"hereof," and similar references refer to this Agreement
in its entirety and not to specific articles, sections,
schedules, or subsections of this Agreement. Unless
expressly indicated otherwise in a particular context,
references in this Agreement to enumerated articles,
sections, and subsections refer to designated portions of
this Agreement (but do not refer to portions of any
Schedule unless such Schedule is specifically referenced)
and do not refer to any other document.
(f) The term "subsidiary" shall mean a corporation,
partnership, limited liability company, joint venture, or
other business organization more than 50% of the voting
securities or interests in which are beneficially owned or
controlled by the indicated parent of such entity.
10.09 FLEXIBLE STRUCTURE. References in this Agreement to federal or
state laws or regulations, jurisdictions, or chartering or
regulatory authorities shall be interpreted broadly to allow
maximum flexibility in consummating the transactions contemplated
hereby in light of changing business, economic, and regulatory
conditions. Without limiting the foregoing, in the event BANK
ONE and BUYER agree in writing to alter the legal structure of
the Acquisition contemplated by this Agreement references in this
Agreement to such laws, regulations, jurisdictions, and
authorities shall be deemed to be altered to reflect
<PAGE>
the laws, regulations, jurisdictions, and authorities that are
applicable in light of such change.
10.10 PRESS RELEASES. BANK ONE and BUYER shall approve the form and
substance of any press release of any matters relating to this
Agreement issued by the other.
10.11 ENTIRE AGREEMENT. This Agreement supersedes any and all oral or
written agreements and understandings heretofore made relating to
the subject matter hereof and contains the entire agreement of
the parties relating to the subject matter hereof. All
schedules, exhibits, and appendices to this Agreement are
incorporated into this Agreement by reference and made a part
hereof.
10.12 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Ohio and
the laws of the United States, as well as regulations issued by
relevant agencies thereof.
10.13 COUNTERPARTS. This Agreement may be executed in several counter-
parts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.14 TAX MATTERS. BUYER and BANK ONE agree that they will file
applicable tax returns and other related schedules and documents
related to their respective interests based on the allocations in
this Agreement.
10.15 GOOD FAITH DEPOSIT. BUYER and BANK ONE acknowledge the deposit
by BUYER of the sum of $500,000.00 for each state in which an
Office which is the subject of this Agreement is located (in
aggregate, the "Deposit" herein). BUYER agrees that BANK ONE may
retain the Deposit in the event that BUYER fails to consummate
the transactions contemplated herein by the date set forth in
Section 9.02(d) herein through no material fault of BANK ONE, in
the
<PAGE>
event that BANK ONE elects to terminate the transactions
contemplated by this Agreement pursuant to the provisions of
Section 9.02 herein, and/or in the event of a breach by BUYER of
any of its duties and obligations hereunder. Any such retention
shall not be deemed to constitute liquidated damages or a waiver
by BANK ONE of any rights in law or in equity arising out of a
breach by BUYER of the terms and conditions of this Agreement.
Subject to the foregoing, the Deposit shall be credited to the
account of BUYER upon the Closing of the transactions
contemplated hereunder in accordance with the terms hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized, all as of the
date first above written.
Bank One, Arizona,
ATTEST: National Association
/s/ Lila Kilgas By: /s/ R. Michael Welborn
- -------------------------- -------------------------
R. Michael Welborn
Its: Chairman and CEO
ATTEST: Bank One, Colorado,
National Association
/s/ Patrick Gree By: /s/ Kenneth W. Charlton
- -------------------------- -------------------------
Kenneth W. Charlton
Its: Chairman and CEO
ATTEST: Bank One, Utah,
National Association
/s/ M. Craig Zollinger By: /s/ Brad R. Baldwin
- -------------------------- -------------------------
Brad R. Baldwin
Its: Chairman, President and
CEO
<PAGE>
ATTEST: Community First Bankshares,
Inc.
/s/ Bruce A. Heysse By: /s/ Ronald K. Strand
- -------------------------- -------------------------
Ronald K. Strand
Its: Executive Vice President
Banking Group
<PAGE>
SCHEDULES
TO
OFFICE PURCHASE AND ASSUMPTION AGREEMENT
Schedule A - Description of Owned Real Estate
Schedule B - Description of Leased Real Estate and Third Party Lease
Schedule C - Furniture, Fixtures and Equipment
Schedule D - Assumed Contracts
Schedule E - List of Leases, Safekeeping Items and Agreements
Schedule F - Form of Assignment and Assumption of Lease and Estoppel
Certificate
Schedule G - Deposit Accounts
Schedule H - Office Loans
Schedule I - Form of Certification of BUYER
Schedule J - Form of Opinion of Counsel for BUYER
Schedule K - Form of Certification of BANK ONE
Schedule L - Form of Opinion of Counsel for BANK ONE
Schedule M - Form of Assignment of Office Loans, Notes,
Agreements and Pledge
Schedule N - Form of Instrument of Assumption
Schedule O - Form of Assignment, Transfer and Appointment of Successor
Custodian for IRAs
Schedule P - Form of Preliminary Closing Statement
Schedule Q - Form of Final Closing Statement
Schedule R - Listing of Employees of Offices
<PAGE>
Schedule S - Put Provisions for Office Loans
<PAGE>
Exhibit 4.1
COMMUNITY FIRST BANKSHARES, INC.
AS ISSUER
TO
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
AS TRUSTEE
INDENTURE
$60,000,000
7.30% SUBORDINATED NOTES DUE 2004
JUNE 24, 1997
<PAGE>
7.30% SUBORDINATED NOTES DUE 2004
COMMUNITY FIRST BANKSHARES, INC.
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939, AS AMENDED
AND INDENTURE, DATED AS OF JUNE 24, 1997
Trust Indenture Act Indenture
Section Section
------- -------
Section 310 (a)(1). . . . . . . . . . . . . . . . . . . . . 608
Section 310 (a)(2). . . . . . . . . . . . . . . . . . . . . 608
Section 310 (a)(3). . . . . . . . . . . . . . . . . . . . . Inapplicable
Section 310 (a)(4). . . . . . . . . . . . . . . . . . . . . Inapplicable
(b) . . . . . . . . . . . . . . . . . . . . 605
. . . . . . . . . . . . . . . . . . . . 609
Section 311 . . . . . . . . . . . . . . . . . . . . 605
Section 312 (a) . . . . . . . . . . . . . . . . . . . . 701
. . . . . . . . . . . . . . . . . . . . 702
(b) . . . . . . . . . . . . . . . . . . . . 702
(c) . . . . . . . . . . . . . . . . . . . . 702
Section 313 (a) . . . . . . . . . . . . . . . . . . . . 703
(b)(1) Inapplicable
(b)(2) 703
(c) . . . . . . . . . . . . . . . . . . . . 703
(d) . . . . . . . . . . . . . . . . . . . . 703
Section 314 (a) . . . . . . . . . . . . . . . . . . . . 704
. . . . . . . . . . . . . . . . . . . . 1012
(b) . . . . . . . . . . . . . . . . . . . . Inapplicable
(c)(1) 102
(c)(2) 102
(c)(3) Inapplicable
(d) . . . . . . . . . . . . . . . . . . . . Inapplicable
(e) . . . . . . . . . . . . . . . . . . . . 102
Section 315 (a) . . . . . . . . . . . . . . . . . . . . 601
. . . . . . . . . . . . . . . . . . . . 603
(b) . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . 601
. . . . . . . . . . . . . . . . . . . . 603
(e) . . . . . . . . . . . . . . . . . . . . 603
. . . . . . . . . . . . . . . . . . . . 607
ii
<PAGE>
Section 316 (a)(1)(A) . . . . . . . . . . . . . . . . . . . 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . 513
(a)(2) Inapplicable
(b) . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . 104
Section 317 (a)(1) 503
(a)(2) 504
(b) . . . . . . . . . . . . . . . . . . . . 1003
Section 318 (a) 108
- ---------------------------------------------------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
iii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE ONE - DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION . . . . . . . . . . 1
Section 101. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Acceleration Event. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Acquired Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authorized Newspaper. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Business Day. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Capitalized Lease Obligation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Certificated Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commission. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Net Income (Net Loss). . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Net Worth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Corporate Trust Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Cumulative Consolidated Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Cumulative Consolidated Net Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Depository. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Derivative Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Government Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Holder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Independent Public Accountants. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Institutional Accredited Investor . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Initial Interest Accrual Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Issue Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Legal Holiday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
iv
<PAGE>
Maturity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Note" or "NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Note Register" and "Note Registrar. . . . . . . . . . . . . . . . . . . . . . . . . . 7
Office or Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Original Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Place of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Predecessor Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Qualified Institutional Buyers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Restricted Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Restrictive Legend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Securities". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Securities Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Series B Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Transfer Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Vice President. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Voting Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Section 102. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . .10
Section 103. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . .11
Section 104. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Section 105. Notices, Etc. to Trustee and Company . . . . . . . . . . . . . . . . . . .13
Section 106. Notice to Holders of Notes; Waiver . . . . . . . . . . . . . . . . . . . .14
Section 107. Language of Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Section 108. Conflict with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . .14
Section 109. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . .14
Section 110. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . .14
Section 111. Separability Clause. . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Section 112. Benefits of Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . .15
v
<PAGE>
Section 113. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Section 114. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Section 115. Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Section 116. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE TWO - FORM OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Section 201. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Section 202. Global Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE THREE - THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Section 301. Title and Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Section 302. Currency; Denominations. . . . . . . . . . . . . . . . . . . . . . . . . .17
Section 303. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . .18
Section 304. Temporary Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Section 305. Registration, Transfer and Exchange. . . . . . . . . . . . . . . . . . . .19
Section 306. Mutilated, Destroyed, Lost and Stolen Notes. . . . . . . . . . . . . . . .22
Section 307. Payment of Interest; Rights to Interest Preserved. . . . . . . . . . . . .23
Section 308. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Section 310. Authentication and Delivery of Original Issue. . . . . . . . . . . . . . .25
Section 311. Computation of Interest. . . . . . . . . . . . . . . . . . . . . . . . . .25
ARTICLE FOUR - SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . .25
Section 401. Satisfaction and Discharge of Indenture. . . . . . . . . . . . . . . . . .25
Section 402. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . .26
ARTICLE FIVE - REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Section 501. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Section 502. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . .29
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee. . . . . .30
Section 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . .31
Section 505. Trustee May Enforce Claims without Possession of Notes . . . . . . . . . .31
Section 506. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . .32
Section 507. Limitations on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Section 508. Unconditional Right of Holders to Receive Principal and Interest . . . . .33
Section 509. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . .33
Section 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . .33
Section 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . .34
Section 512. Control by Holders of Notes. . . . . . . . . . . . . . . . . . . . . . . .34
Section 513. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . . . . .34
Section 514. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . .35
vi
<PAGE>
ARTICLE SIX - THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Section 601. Certain Duties and Responsibilities. . . . . . . . . . . . . . . . . . . .35
Section 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Section 603. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . .36
Section 604. Not Responsible for Recitals or Issuance of Notes. . . . . . . . . . . . .37
Section 605. May Hold Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 606. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 607. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . .38
Section 608. Corporate Trustee Required; Eligibility. . . . . . . . . . . . . . . . . .39
Section 609. Resignation and Removal; Appointment of Successor. . . . . . . . . . . . .39
Section 610. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . .41
Section 611. Merger, Conversion, Consolidation or Succession to Business. . . . . . . .41
Section 612. Appointment of Authenticating Agent. . . . . . . . . . . . . . . . . . . .41
ARTICLE SEVEN - HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.. . . . . . . . . . . .43
Section 701. Company to Furnish Trustee Names and Addresses of Holders. . . . . . . . .43
Section 702. Preservation of Information; Communications to Holders . . . . . . . . . .43
Section 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Section 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
ARTICLE EIGHT - CONSOLIDATION, MERGER AND SALES . . . . . . . . . . . . . . . . . . . . .46
Section 801. Company May Consolidate, Etc., Only on Certain Terms . . . . . . . . . . .46
Section 802. Successor Person Substituted for Company . . . . . . . . . . . . . . . . .47
ARTICLE NINE - SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . . . . . . . . . .47
Section 901. Supplemental Indentures without Consent of Holders . . . . . . . . . . . .47
Section 902. Supplemental Indentures with Consent of Holders. . . . . . . . . . . . . .48
Section 903. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . .49
Section 904. Effect of Supplemental Indentures. . . . . . . . . . . . . . . . . . . . .49
Section 905. Reference in Notes to Supplemental Indentures. . . . . . . . . . . . . . .49
Section 906. Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
Section 907. Effect on Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . . .50
ARTICLE TEN - COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
Section 1001. Payment of Principal and Interest . . . . . . . . . . . . . . . . . . . .50
Section 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . .50
Section 1003. Money for Note Payments to Be Held in Trust . . . . . . . . . . . . . . .50
Section 1004. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Section 1005. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . .52
Section 1006. Restrictions on Dividends and Other Payments. . . . . . . . . . . . . . .52
Section 1007. [Intentionally Left Blank]. . . . . . . . . . . . . . . . . . . . . . . .53
Section 1008. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
vii
<PAGE>
Section 1009. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . .53
Section 1010. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
Section 1011. Statement by Officers as to Default . . . . . . . . . . . . . . . . . . .54
Section 1012. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . .54
ARTICLE ELEVEN - SUBORDINATION OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . .54
Section 1101. Notes Subordinated to Senior Indebtedness . . . . . . . . . . . . . . . .54
Section 1102. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Section 1103. Obligation of Company Unconditional . . . . . . . . . . . . . . . . . . .56
Section 1104. Payments on Notes Permitted . . . . . . . . . . . . . . . . . . . . . . .57
Section 1105. Effectuation of Subordination by Trustee. . . . . . . . . . . . . . . . .57
Section 1106. Knowledge of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . .57
Section 1107. Trustee May Hold Senior Indebtedness. . . . . . . . . . . . . . . . . . .57
Section 1108. Rights of Holders of Senior Indebtedness Not Impaired . . . . . . . . . .58
EXHIBIT A - FORM OF NOTE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
</TABLE>
viii
<PAGE>
INDENTURE, dated as of June 24, 1997 (the "Indenture"), between COMMUNITY
FIRST BANKSHARES, INC., a corporation duly organized and existing under the laws
of the State of Delaware (hereinafter called the "Company"), having executive
offices located at 520 Main Avenue, Fargo, North Dakota 58124 and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association duly organized
and existing under the laws of the United States of America (hereinafter called
the "Trustee"), having its principal corporate trust office at Sixth Street and
Marquette Avenue, Minneapolis, Minnesota 55479.
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its 7.30% Subordinated Notes due 2004
(hereinafter called the "Notes"), to be issued in such amount and to have such
provisions as are hereinafter set forth. All things necessary to make this
Indenture a valid agreement of the Company, in accordance with its terms, have
been done.
This Indenture is subject to the provisions of the Trust Indenture Act of
1939, as amended, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder that are required to be part of this Indenture
and, to the extent applicable, shall be governed by such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes by
the Holders (as hereinafter defined) thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders from time to time
of the Notes, as follows:
ARTICLE ONE - DEFINITIONS AND OTHER
PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
Except as otherwise expressly provided in this Indenture or unless the
context otherwise requires, for all purposes of this Indenture:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act (as hereinafter defined), either directly or by reference
therein, have the meanings assigned to them therein;
1
<PAGE>
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect
to any computation required or permitted hereunder shall mean such
accounting principles as are generally accepted in the United States at the
date of such computation;
(4) the words "herein", "hereof", "hereto" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(5) the word "or" is always used inclusively (for example, the phrase
"A or B" means "A or B or both", not "either A or B but not both").
Certain terms used principally in certain Articles hereof are defined in
those Articles.
"ACCELERATION EVENT" has the meaning specified in Section 502.
"ACQUIRED INDEBTEDNESS" means indebtedness of a Person existing at the time
such Person becomes a Subsidiary of the Company or assumed in connection with
the acquisition by the Company or a Subsidiary of the Company of assets from
such Person, and not incurred in connection with, or in anticipation of, such
Person becoming a Subsidiary of the Company or such acquisition.
"ACT", when used with respect to any Holder, has the meaning specified in
Section 104.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AUTHENTICATING AGENT" means any Person authorized by the Trustee pursuant
to Section 612 to act on behalf of the Trustee to authenticate Notes.
"AUTHORIZED NEWSPAPER" means a newspaper, in an official language of the
place of publication or in the English language, customarily published on each
day that is a Business Day in the place of publication, whether or not published
on days that are Legal Holidays in the place of publication, and of general
circulation in each place in connection with which the term is used or in the
financial community of each such place. Where successive publications are
required to be made in Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any day that is a Business Day in the
place of publication.
2
<PAGE>
"BOARD OF DIRECTORS" means the board of directors of the Company or any
committee of that board duly authorized to act generally or in any particular
respect for the Company hereunder.
"BOARD RESOLUTION" means a copy of one or more resolutions, certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification, delivered to the Trustee.
"BUSINESS DAY", with respect to any Place of Payment or other location,
means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a Legal
Holiday in such Place of Payment or other location.
"CAPITALIZED LEASE OBLIGATION" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real or personal property which obligations are
required to be classified and accounted for as capital lease obligations on a
balance sheet of such Person under generally accepted accounting principles and,
for purposes of this Indenture, the amount of such obligations at any date shall
be the capitalized amount thereof at such date, determined in accordance with
generally accepted accounting principles.
"CERTIFICATE OF AUTHENTICATION" means the certificate set forth in Exhibit
A or Section 612.
"CERTIFICATED NOTE" means a Note which is not a Global Note.
"COMMISSION" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934 or, if at
any time after the execution of this Indenture such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"COMPANY" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person, and any other obligor upon the Notes.
"COMPANY REQUEST" and "COMPANY ORDER" mean, respectively, a written request
or order, as the case may be, signed in the name of the Company by the Chairman
of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the
President, a Vice President, the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of the Company, or by another officer of
the Company duly authorized to sign by a Board Resolution, and delivered to the
Trustee.
"CONSOLIDATED" when used in conjunction with any other defined term means
the aggregate amount of the items included within the defined term of the
Company on a consolidated basis, eliminating inter-company items.
3
<PAGE>
"CONSOLIDATED NET INCOME (NET LOSS)" means the amount of net income (loss)
of the Company and its Subsidiaries determined in accordance with generally
accepted accounting principles; PROVIDED, HOWEVER, that there shall not be
included in Consolidated Net Income (1) any net income (loss) of a Subsidiary
for any period during which it was not a Consolidated Subsidiary or (2) any net
income (loss) of businesses, properties or assets acquired or disposed of (by
way of merger, consolidation, purchase, sale or otherwise) by the Company or any
Subsidiary for any period prior to the acquisition thereof or subsequent to the
disposition thereof.
"CONSOLIDATED NET WORTH" means the excess, as determined in accordance with
generally accepted accounting principles, after making appropriate deductions
for any minority interest in the net worth of Consolidated Subsidiaries, of (1)
the assets of the Company and its Consolidated Subsidiaries over (2) the
liabilities of the Company and its Consolidated Subsidiaries; PROVIDED, HOWEVER,
that any write-up in the book value of any assets owned subsequent to the date
of this Indenture (other than a write-up required for assets acquired in
connection with the purchase of a Person or business and taken at the time of
such acquisition) shall not be taken into account.
"CONSOLIDATED SUBSIDIARY" means a Subsidiary of the Company the financial
statements of which are included in the financial statements of the Company and
its Subsidiaries.
"CORPORATE TRUST OFFICE" means the principal corporate trust office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of original execution of this Indenture
is located at Minneapolis, Minnesota.
"CORPORATION" includes corporations, associations, companies and business
trusts.
"CUMULATIVE CONSOLIDATED NET INCOME" means the excess, if any, of:
(1) the sum of (A) Consolidated Net Income, if any, for each
completed fiscal year of the Company commencing subsequent to December 31,
1996 and (B) Consolidated Net Income, if any, for any completed month
ending after the end of the most recently completed fiscal year of the
Company; over
(2) the sum of (A) Consolidated Net Loss, if any, for each completed
fiscal year of the Company commencing subsequent to December 31, 1996 and
(B) Consolidated Net Loss, if any, for any completed month ending after the
end of the most recently completed fiscal year of the Company.
"CUMULATIVE CONSOLIDATED NET LOSS" means the excess, if any, of:
(1) the sum of (A) Consolidated Net Loss, if any, for each completed
fiscal year of the Company commencing subsequent to December 31, 1996 and
(B) Consolidated Net Loss, if any, for any completed month ending after the
end of the most recently completed fiscal year of the Company; over
4
<PAGE>
(2) the sum of (A) Consolidated Net Income, if any, for each
completed fiscal year of the Company commencing subsequent to December 31,
1996 and (B) Consolidated Net Income, if any, for any completed month
ending after the end of the most recently completed fiscal year of the
Company.
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"DEFINITIVE NOTES" means Notes that are in the form of the Notes attached
hereto as Exhibit A, that do not include the information called for by footnotes
1 and 3 thereof.
"DEPOSITORY" means, with respect to any Note issued in the form of one or
more Global Notes, the Person designated as Depository by the Company in or
pursuant to this Indenture, which Person must be, to the extent required by
applicable law or regulation, a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and any successor to such Person. If at any
time there is more than one such Person, "Depository" shall mean, with respect
to any Notes, the qualifying entity which has been appointed with respect to
such Notes.
"DERIVATIVE OBLIGATIONS" means any obligations of the Company to make
payment pursuant to the terms of any securities contracts and foreign currency
exchange contracts, derivative instruments, such as swap agreements (including
interest rate and currency and foreign exchange rate swap agreements), cap
agreements, floor agreements, collar agreements, interest rate agreements,
foreign exchange agreements, options, commodity futures contracts and commodity
options contracts other than obligations on account of indebtedness for money
borrowed ranking pari passu with or subordinate to the Notes.
"EVENT OF DEFAULT" has the meaning specified in Section 501.
"EXCHANGE OFFER" means the offer that may be made by the Company pursuant
to the Registration Rights Agreement to exchange Series B Notes for the Original
Notes.
"GLOBAL NOTE" means a Note that contains the paragraph referred to in
footnote 1 and the additional schedule referred to in footnote 3 to the form of
the Note attached hereto as Exhibit A.
"GOVERNMENT OBLIGATIONS" means direct obligations of the United States of
America, or any Person controlled or supervised by and acting as an agency or
instrumentality of such government, in each case where the payment or payments
thereunder are unconditionally guaranteed as a full faith and credit obligation
by such government and which are not callable or redeemable at the option of the
issuer or issuers thereof, and shall also include a depository receipt issued by
a bank or trust company as custodian with respect to any such Government
Obligation or a specific payment of interest on or principal of or other amount
with respect to any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, PROVIDED that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the
5
<PAGE>
Government Obligation or the specific payment of interest on or principal of or
other amount with respect to the Government Obligation evidenced by such
depository receipt.
"HOLDER", when used with respect to the Notes, means the Person in whose
name such Note is registered in the Note Register.
"INDENTURE" means this instrument as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.
"INDEPENDENT PUBLIC ACCOUNTANTS" means a nationally recognized firm of
accountants that, with respect to the Company, are independent public
accountants within the meaning of the Securities Act of 1933, as amended, and
the rules and regulations promulgated by the Commission thereunder, who may be
the independent public accountants regularly retained by the Company or who may
be other independent public accountants. Such accountants or firm shall be
entitled to rely upon any Opinion of Counsel as to the interpretation of any
legal matters relating to the Indenture or certificates required to be provided
hereunder.
"INSTITUTIONAL ACCREDITED INVESTOR" means a person described in Rule
501(a)(1), (2), (3) or (7) under the Securities Act.
"INITIAL INTEREST ACCRUAL DATE" as to any Note means the date from which
interest shall begin to accrue in connection with the original issuance of such
Note, which shall be the date as of which such Note originally issued by the
Company to the initial purchaser thereof shall be dated, which shall be the date
upon which it was originally sold to such initial purchaser as designated by the
Company Order requesting authentication and delivery thereof.
"INTEREST PAYMENT DATE" means the Stated Maturity of an installment of
interest on the Notes.
"ISSUE DATE" means the date on which the Notes are originally issued in
accordance with the terms of this Indenture.
"LEGAL HOLIDAY" with respect to any Place of Payment or other location,
means a Saturday, a Sunday or a day on which banking institutions or trust
companies in such Place of Payment or other location are not authorized or
obligated to be open.
"MATURITY" means the date on which the principal of the Notes or an
installment of principal becomes due and payable as provided in this Indenture,
whether at the Stated Maturity or by declaration of acceleration.
6
<PAGE>
"MONEY", with respect to any payment, deposit or other transfer pursuant to
or contemplated by the terms hereof, means United States dollars or other
equivalent unit of legal tender for payment of public or private debts in the
United States of America.
"NOTE" or "NOTES" means any note or notes, as the case may be,
authenticated and delivered under this Indenture.
"NOTE REGISTER" AND "NOTE REGISTRAR" have the respective meanings specified
in Section 305.
"OFFICE OR AGENCY" means an office or agency of the Company maintained or
designated in a Place of Payment for the Notes pursuant to Section 1002 or any
other office or agency of the Company maintained or designated for the Notes
pursuant to Section 1002 or, to the extent designated or required by Section
1002 in lieu of such office or agency, the Corporate Trust Office of the
Trustee.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the Chief Executive Officer, the President
or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary
or an Assistant Secretary of the Company, that complies with the requirements of
Section 314(e) of the Trust Indenture Act and is delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be an
employee of or counsel for the Company or other counsel who shall be reasonably
acceptable to the Trustee, that complies with the requirements of Section 314
(e) of the Trust Indenture Act.
"ORIGINAL NOTES" means $60,000,000 aggregate principal amount of Notes
originally issued pursuant to this Indenture.
"OUTSTANDING", when used with respect to any Notes, means, as of the date
of determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(1) any Note theretofore canceled by the Trustee or the Note Registrar or
delivered to the Trustee or the Note Registrar for cancellation;
(2) any Note or portion thereof for whose payment at the Maturity thereof
Money in the necessary amount has been theretofore deposited pursuant
hereto with the Trustee or any Paying Agent (other than the Company)
in trust or set aside and segregated in trust by the Company (if the
Company shall act as its own Paying Agent) for the Holders of the
Notes;
(3) any Note with respect to which the Company has effected defeasance
pursuant to Clauses (1)(b) and (3) of Section 401 hereof; and
7
<PAGE>
(4) any Note which has been paid pursuant to Section 306 or in exchange
for or in lieu of which other Notes have been authenticated and
delivered pursuant to this Indenture, unless there shall have been
presented to the Trustee proof satisfactory to it that such Note is
held by a bona fide purchaser in whose hands such Note is a valid
obligation of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in making any
such determination or relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes which the Trustee knows to be
so owned shall be so disregarded. Notes so owned which shall have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee (a) the pledgee's right so to act with respect to
such Notes and (b) that the pledgee is not the Company or any other obligor upon
the Notes or any Affiliate of the Company or such other obligor.
"PAYING AGENT" means any Person authorized by the Company to pay the
principal of or interest on any Note on behalf of the Company.
"PERSON" means any individual, Corporation, partnership, joint venture,
joint stock company, limited liability company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"PLACE OF PAYMENT" has the meaning set forth in Section 301.
"PREDECESSOR NOTE" of a Note means every previous Note evidencing all or a
portion of the same debt as that evidenced by such particular Note; and, for the
purposes of this definition, any Note authenticated and delivered under Section
306 in exchange for or in lieu of a lost, destroyed, mutilated or stolen Note
shall be deemed to evidence the same debt as the lost, destroyed, mutilated or
stolen Note.
"QUALIFIED INSTITUTIONAL BUYERS" has the meaning set forth in Rule 144A
under the Securities Act.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated as of June 24, 1997, by and among the Company and the other parties named
on the signature pages thereof, as such agreement may be amended, modified or
supplemented from time to time.
"REGULAR RECORD DATE" for the interest payable on any Note on any Interest
Payment Date therefor means the date specified in Exhibit A as the "Regular
Record Date".
8
<PAGE>
"RESPONSIBLE OFFICER" means any officer of the Trustee in its Corporate
Trust Office and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
"RESTRICTED PAYMENT" has the meaning specified in Section 1006.
"RESTRICTIVE LEGEND" has the meaning set forth in Section 305(b).
"SECURITIES" or "Notes" means, prior to the Exchange Offer, the Original
Notes, and after the Exchange Offer, the Original Notes (if any) and the Series
B Notes, in each case as amended or modified from time to time in accordance
with the terms hereof, issued under this Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR INDEBTEDNESS" means the principal of, premium, if any, and interest
on (1) all indebtedness of the Company for money borrowed (including
indebtedness of others guaranteed by the Company) other than the Notes and the
Junior Subordinated Debentures of the Company issued pursuant to the
Subordinated Indenture dated as of February 5, 1997, between the Company and
Wilmington Trust Company, as Trustee, whether outstanding on the date hereof or
thereafter created, assumed or incurred, (2) any amendments, renewals,
extensions, modifications and refundings of any such indebtedness, unless in
either case in the instrument creating or evidencing any such indebtedness or
pursuant to which it is outstanding it is provided that such indebtedness is not
superior in right of payment to the Notes, and (3) Derivative Obligations. For
the purposes of this definition, "indebtedness for money borrowed" is defined as
(a) any obligation of the Company for the repayment of borrowed money, whether
or not evidenced by bonds, debentures, notes or other written instruments, (b)
any deferred payment obligation of the Company for the payment of the purchase
price of property or assets evidenced by a note or similar instrument, and (c)
any obligation of the Company for the payment of rent or other amounts under a
lease of property or assets which obligation is required to be classified and
accounted for as a capitalized lease on the balance sheet of the Company under
generally accepted accounting principles; PROVIDED, HOWEVER, that the foregoing
shall not include any obligation that constitutes a trade payable or accrued
liability arising in the ordinary course of business.
"SERIES B NOTES" means the Series B 7.30% Subordinated Notes due 2004, in
substantially the form set forth as Exhibit A hereto, to be issued pursuant to
this Indenture in connection with the Exchange Offer; provided, however, that
any Series B Note may be called a "7.30% Subordinated Note due 2004," without
the need to use the phrase "Series B."
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest on any Note
means a date fixed by the Trustee pursuant to Section 307.
9
<PAGE>
"STATED MATURITY" with respect to any Note or any installment of principal
thereof or interest thereon means the date established by this Indenture as the
fixed date on which the principal of such Note or such installment of principal
or interest is due and payable.
"SUBSIDIARY" means any Corporation of which at the time of determination
the Company or one or more Subsidiaries owns or controls directly or indirectly
more than 50% of the shares of Voting Stock.
"TRANSACTION" has the meaning specified in Section 1015.
"TRANSFER RESTRICTIONS" has the meaning set forth in Section 305(b).
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended,
and any reference herein to the Trust Indenture Act or a particular provision
thereof shall mean such Act or provision, as the case may be, as amended or
replaced from time to time or as supplemented from time to time by rules or
regulations adopted by the Commission under or in furtherance of the purposes of
such Act or provision, as the case may be.
"TRUSTEE" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
each Person who is then a Trustee hereunder.
"UNITED STATES", except as otherwise provided herein, means the United
States of America (including the states thereof and the District of Columbia),
its territories and possessions and other areas subject to its jurisdiction.
"VICE PRESIDENT", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "Vice President".
"VOTING STOCK" means stock of a Corporation of the class or classes having
general voting power under ordinary circumstances to elect at least a majority
of the board of directors, managers or trustees of such Corporation PROVIDED
that, for the purposes hereof, stock which carries only the right to vote
conditionally on the happening of an event shall not be considered Voting Stock
whether or not such event shall have happened.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent, if any, have been complied with, except
that in the case of any such
10
<PAGE>
application or request as to which the furnishing of such documents or any of
them is specifically required by any provision of this Indenture relating to
such particular application or request, no additional certificate or opinion
need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, such
individual has made such examination or investigation as is necessary to
enable such individual to express an informed opinion as to whether or not
such condition or covenant has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer's certificate or opinion is
based are erroneous. Any such certificate of counsel or Opinion of Counsel or
representation of counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
11
<PAGE>
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture or any Note, they may, but need not, be
consolidated and form one instrument.
SECTION 104. ACTS OF HOLDERS.
(1) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing. Except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent, or of the
holding by any Person of a Note, shall be sufficient for any purpose of
this Indenture and (subject to Section 315 of the Trust Indenture Act)
conclusive in favor of the Trustee and the Company and any agent of the
Trustee or the Company, if made in the manner provided in this Section.
Without limiting the generality of this Section, unless otherwise
provided in or pursuant to this Indenture, a Holder, including a Depository
that is a Holder of a Global Note, may make, give or take, by a proxy, or
proxies, duly appointed in writing, any request, demand, authorization,
direction, notice, consent, waiver or other action provided in or pursuant
to this Indenture to be made, given or taken by Holders, and a Depository
that is a Holder of a Global Note may provide its proxy or proxies to the
beneficial owners of interests in any such Global Note through such
Depository's standing instructions and customary practices.
The Trustee shall fix a record date for the purpose of determining the
Persons who are beneficial owners of interest in any permanent Global Note
held by a Depository entitled under the procedures of such Depository to
make, give or take, by a proxy or proxies duly appointed in writing, any
request, demand, authorization, direction, notice, consent, waiver or other
action provided in or pursuant to this Indenture to be made, given or taken
by Holders. If such a record date is fixed, the Holders on such record
date or their duly appointed proxy or proxies, and only such Persons, shall
be entitled to make, give or take such request, demand, authorization,
direction, notice, consent, waiver or other action, whether or not such
Holders remain Holders after such record date. No such request, demand,
authorization, direction, notice, consent, waiver or other action shall be
valid or effective if made, given or taken more than 90 days after such
record date.
(2) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient and in
12
<PAGE>
accordance with such reasonable rules as the Trustee may determine; and the
Trustee may in any instance require further proof with respect to any of
the matters referred to in this Section.
(3) The ownership, principal amount and serial numbers of Notes held
by any Person, and the date of the commencement and the date of the
termination of holding the same, shall be proved by the Note Register.
(4) If the Company shall solicit from the Holders of any Notes any
request, demand, authorization, direction, notice, consent, waiver or other
Act, the Company may at its option (but is not obligated to), by Board
Resolution, fix in advance a record date for the determination of Holders
of Notes entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other Act. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other
Act may be given before or after such record date, but only the Holders of
Notes of record at the close of business on such record date shall be
deemed to be Holders for the purpose of determining whether Holders of the
requisite proportion of Outstanding Notes have authorized or agreed or
consented to such request, demand, authorization, direction, notice,
consent, waiver or other Act, and for that purpose the Outstanding Notes
shall be computed as of such record date; PROVIDED that no such
authorization, agreement or consent by the Holders of Notes on such record
date shall be deemed effective unless it shall become effective pursuant to
the provisions of this Indenture not later than six months after the record
date.
(5) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind every future
Holder of the same Note and the Holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done or suffered to be done by the Trustee, any Note
Registrar, any Paying Agent or the Company in reliance thereon, whether or
not notation of such action is made upon such Note.
SECTION 105. NOTICES, ETC. TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with:
(1) the Trustee by any Holder or the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, or sent by facsimile and
U.S. mail, first-class postage prepaid, to
13
<PAGE>
the Company addressed to the attention of its Chief Financial Officer at
the address of its principal office specified in the first paragraph of
this instrument or at any other address previously furnished in writing to
the Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS OF NOTES; WAIVER.
Except as otherwise expressly provided in this Indenture, where this
Indenture provides for notice to Holders of Notes of any event, such notice
shall be sufficiently given to Holders of Notes if in writing and mailed,
first-class postage prepaid, to each Holder of a Note affected by such event, at
such Holder's address as it appears in the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice.
In any case where notice to Holders of Notes is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder of a Note shall affect the sufficiency of such notice with
respect to other Holders of Notes. Any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given or
provided. In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders of Notes shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
SECTION 107. LANGUAGE OF NOTICES.
Any request, demand, authorization, direction, notice, consent, election or
waiver required or permitted under this Indenture shall be in the English
language.
SECTION 108. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with any duties
under any required provision of the Trust Indenture Act imposed hereon by
Section 318(d) thereof, such required provision shall control.
SECTION 109. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 110. SUCCESSORS AND ASSIGNS.
14
<PAGE>
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 111. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, either wholly or partially, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, and such provisions shall be given effect to the fullest
extent permitted by law.
SECTION 112. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied, shall give
to any Person, other than the parties hereto, any Note Registrar, any Paying
Agent, any Authenticating Agent and their respective successors hereunder and
the Holders of Notes, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 113. GOVERNING LAW.
This Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of Minnesota applicable to agreements made
or instruments entered into and, in each case, performed in said state.
SECTION 114. LEGAL HOLIDAYS.
In any case where any Interest Payment Date or Stated Maturity of any Note
shall be a Legal Holiday at any Place of Payment, then (notwithstanding any
other provision of this Indenture) payment need not be made at such Place of
Payment on such date, but may be made on the next succeeding day that is a
Business Day at such Place of Payment with the same force and effect as if made
on the Interest Payment Date or at the Stated Maturity, and no interest shall
accrue on the amount payable on such date or at such time for the period from
and after such Interest Payment Date or Stated Maturity, as the case may be.
SECTION 115. SCHEDULES.
Any Schedules attached hereto are by this reference made a part hereof with
the same effect as if herein set forth in full.
SECTION 116. COUNTERPARTS.
This Indenture may be executed in any number of counterparts, each of which
shall be an original; but such counterparts shall together constitute but one
and the same instrument.
15
<PAGE>
ARTICLE TWO - FORM OF NOTES
SECTION 201. FORMS GENERALLY.
Each Note issued pursuant to this Indenture, including Global Notes, shall
be in substantially the form included in Exhibit A hereto, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture or any indenture supplemental hereto and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any law or with
any rule or regulation of any stock exchange or national market system or as
may, consistently herewith, be determined by the officers executing such Note as
evidenced by their execution of such Note. The Notes shall be issuable without
coupons in fully registered form only. Any portion of the text of any Note may
be set forth on the reverse thereof, with an appropriate reference thereto on
the face of the Note.
The Notes shall be printed, lithographed or engraved or produced by any
combination of these methods on a steel engraved border or steel engraved
borders or may be produced in any other manner, all as determined by the
officers of the Company executing such Notes, as evidenced by their execution of
such Notes.
The Notes have not been registered under the Securities Act and may not be
offered or sold except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. The Notes will
be offered only to Qualified Institutional Buyers in reliance on the exemption
from the registration requirements of the Securities Act provided by Rule 144A,
and to a limited number of Institutional Accredited Investors.
Unless otherwise agreed to by the Company, no Note shall be authenticated
and delivered hereunder to an Institutional Accredited Investor unless and
until each such purchaser of a beneficial interest in such Note shall have
executed and delivered to the Company and the underwriter(s) or placement
agent(s), if any, for the offering of such Note a purchaser letter in the form
attached as Exhibit B to the Purchase Agreement dated June 19, 1997 between the
Company and Piper Jaffray Inc. and Keefe, Bruyette & Woods, Inc.
SECTION 202. GLOBAL NOTES.
Notes issuable to Qualified Institutional Buyers shall be issued as one or
more Global Notes. Ownership of beneficial interests in a Global Note will be
limited to persons who have accounts with the Depository ("participants") or
persons who hold interests through participants. Ownership of beneficial
interests in the Global Note will be shown on, and the transfer of the ownership
interests will be effected only through, records maintained by the Depository or
its nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants).
Any endorsement of any Note in global form to reflect the amount, or any
increase or decrease in the amount, or changes in the rights of Holders, of
Outstanding Notes
16
<PAGE>
represented thereby shall be made in such manner and by such Person or Persons
as shall be specified therein or in the Company Order to be delivered pursuant
to Section 303 or 304 with respect thereto. Subject to the provisions of
Section 303 and, if applicable, Section 304, the Trustee shall deliver and
redeliver any Global Note in permanent global form in the manner and upon
instructions given by the Person or Persons specified therein or in the
applicable Company Order. If a Company Order pursuant to Section 303 or 304 has
been, or simultaneously is, delivered, any instructions by the Company with
respect to a Global Note shall be in writing but need not be accompanied by or
contained in an Officers' Certificate and need not be accompanied by an Opinion
of Counsel.
ARTICLE THREE - THE NOTES
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $60,000,000 except for Notes
authenticated and delivered upon transfer of, or in exchange for, or in lieu of
other Notes pursuant to Sections 304, 305, 306 and 905.
The Notes shall be known and designated as the 7.30% Subordinated Notes due
2004 of the Company. Their Stated Maturity shall be June 30, 2004, and they
shall bear interest from the date and at the rate per annum specified in, and
such interest shall be payable on the dates specified in, the form of Note set
forth in Exhibit A until the principal thereof is paid or made available for
payment.
The principal of and interest on the Notes shall be payable at the Office
or Agency of the Company in Minneapolis, Minnesota ("PLACE OF PAYMENT")
maintained for such purposes pursuant to Section 1002; PROVIDED, HOWEVER, that,
at the option of the Company, payment of interest may be made (subject to
collection) (i) by check mailed to the address of the Person entitled thereto as
such address shall appear on the Note Register or (ii) by wire transfer to an
account maintained by the Person entitled thereto as specified in the Note
Register.
The Notes shall be subordinated in right of payment to Senior Indebtedness,
whether outstanding at the date of this Indenture or thereafter created, as
provided in Article Eleven.
SECTION 302. CURRENCY; DENOMINATIONS.
The principal of and interest on the Notes shall be payable in United
States dollars or other equivalent unit of legal tender for payment of public or
private debts in the United States of America. Notes shall be issuable in fully
registered form only without coupons in denominations of $1,000 and any integral
multiple thereof.
17
<PAGE>
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
Notes shall be executed on behalf of the Company by its Chairman of the
Board, one of its Vice Chairmen of the Board, its Chief Executive Officer, its
President, its Treasurer or one of its Vice Presidents under its corporate seal
reproduced thereon and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Notes may be manual
or facsimile.
Notes bearing the manual or facsimile signatures of individuals who were at
any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Notes, executed by the Company, to the
Trustee for authentication and, PROVIDED that a Company Order for the
authentication and delivery of such Notes has been delivered to the Trustee, the
Trustee, in accordance with the Company Order and subject to the provisions
hereof, shall authenticate and deliver such Notes.
The Company shall establish by Company Order that the Notes to be issued in
whole or in part to Qualified Institutional Buyers shall be in the form of one
or more Global Notes. The Company shall execute and the Trustee shall, in
accordance with this Section and the Company Order with respect to such Notes,
authenticate and deliver one or more Global Notes in permanent form that (i)
shall represent and shall be denominated in an amount equal to the aggregate
principal amount of the Outstanding Notes to be represented by such Global Note
or Notes, (ii) shall be registered in the name of the Depository for such Global
Note or Notes or the nominee of such Depository, (iii) shall be delivered by the
Trustee to such Depository or pursuant to such Depository's instruction and (iv)
shall bear a legend substantially to the following effect: "Unless and until it
is exchanged in whole or in part for Notes in certificated form, this Note may
not be transferred except as a whole by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository" or to such other
effect as the Depository and the Trustee may agree.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a Certificate
of Authentication substantially in the form provided for in Exhibit A or Section
612 executed by or on behalf of the Trustee by the manual signature of one of
its authorized officers or by an Authenticating Agent. Such certificate upon
any Note shall be conclusive evidence, and the only evidence, that such Note has
been duly authenticated and delivered hereunder.
18
<PAGE>
SECTION 304. TEMPORARY NOTES.
Pending the preparation of Definitive Notes, the Company may execute and
deliver to the Trustee and, upon Company Order, the Trustee shall authenticate
and deliver, in the manner provided in Section 303, temporary Notes in lieu
thereof which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
Definitive Notes in lieu of which they are issued, in registered form and with
such appropriate insertions, omissions, substitutions and other variations as
the officers of the Company executing such Notes may determine, as conclusively
evidenced by their execution of such Notes.
Except in the case of temporary Global Notes, which shall be exchanged in
accordance with the provisions thereof, if temporary Notes are issued, the
Company shall cause Definitive Notes to be prepared without unreasonable delay.
After the preparation of Definitive Notes, such temporary Notes shall be
exchangeable for such Definitive Notes upon surrender of such temporary Notes at
an Office or Agency for such Notes, without charge to any Holder thereof. Upon
surrender for cancellation of any one or more temporary Notes, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of Definitive Notes of authorized denominations. Unless
otherwise provided in or pursuant to this Indenture with respect to a temporary
Global Note, until so exchanged the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.
SECTION 305. REGISTRATION, TRANSFER AND EXCHANGE.
(a) The Company shall cause to be kept a register (herein sometimes
referred to as the "NOTE REGISTER") at an Office or Agency maintained pursuant
to Section 1002 in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of the Notes and of
transfers of the Notes. The Trustee is hereby initially appointed as Note
Registrar for the Notes. In the event that the Trustee shall cease to be Note
Registrar it shall have the right to examine the Note Register at all reasonable
times.
Upon surrender for registration of transfer of any Note at the Office or
Agency of the Company, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes, denominated as authorized in this Indenture,
of a like aggregate principal amount bearing a number not contemporaneously
outstanding and containing identical terms and provisions.
At the option of the Holder, Notes (except a Global Note representing all
of the Outstanding Notes) may be exchanged for other Notes, in any authorized
denominations, and of a like aggregate principal amount, upon surrender of the
Notes to be exchanged at such Office or Agency. Whenever any Notes are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Notes which the Holder making the exchange is
entitled to receive.
19
<PAGE>
Whenever any Notes are surrendered for exchange as contemplated by the
immediately preceding two paragraphs, the Company shall execute, and the Trustee
shall authenticate and deliver, the Notes which the Holder making the exchange
is entitled to receive.
No beneficial owner of an interest in a Global Note will be able to
transfer that interest except in accordance with the applicable procedures of
the Depository (in addition to other procedures specified herein).
Notwithstanding the foregoing, except as otherwise provided in or pursuant
to this Indenture, no Global Note shall be exchangeable in whole or in part for
Definitive Notes unless (i) an Institutional Accredited Investor has purchased
an interest in the Global Note, (ii) the Depository is at any time unwilling,
unable or ineligible to continue as Depository and a successor depository is not
appointed by the Company within 90 days of the date the Company is so informed
in writing, (iii) the Company executes and delivers to the Trustee a Company
Order to the effect that such Global Note shall be so exchangeable, or (iv) an
Event of Default has occurred and is continuing with respect to the Notes which
entitles the Holders to accelerate the maturity thereof. If the beneficial
owners of interests in a Global Note are entitled to exchange such interests for
Definitive Notes of such series and of like tenor and principal amount of any
authorized form and denomination as specified as contemplated by Section 304,
then without unnecessary delay but in any event not later than the earliest date
on which such interests may be so exchanged, the Company shall deliver to the
Trustee Definitive Notes in such form and denominations as are required by or
pursuant to this Indenture, containing identical terms and in aggregate
principal amount equal to the principal amount of such Global Note, executed by
the Company. On or after the earliest date on which such interests may be so
exchanged, such Global Note shall be surrendered from time to time by the
Depository, and in accordance with instructions given to the Trustee and the
Depository (which instructions shall be in writing but need not be contained in
or accompanied by an Officers' Certificate or be accompanied by an Opinion of
Counsel), as shall be specified in the Company Order with respect thereto to the
Trustee, as the Company's agent for such purpose, to be exchanged. Promptly
following any such exchange in part, such Global Note shall be returned by the
Trustee to such Depository in accordance with the instructions of the Company
referred to above. If a Note is issued in exchange for any portion of a Global
Note after the close of business at the Office or Agency for such Note where
such exchange occurs on or after (i) any Regular Record Date for such Note and
before the opening of business at such Office or Agency on the next Interest
Payment Date, or (ii) any Special Record Date for such Note and before the
opening of business at such Office or Agency on the related proposed date for
payment of interest or Defaulted Interest, as the case may be, interest shall
not be payable on such Interest Payment Date or proposed date for payment, as
the case may be, in respect of such Note, but shall be payable on such Interest
Payment Date or proposed date for payment, as the case may be, only to the
Person to whom interest in respect of such portion of such Global Note shall be
payable in accordance with the provisions of this Indenture.
Notwithstanding any other provision of this Indenture, a Global Note may
not be transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary.
20
<PAGE>
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company evidencing the same debt and
entitling the Holders thereof to the same benefits under this Indenture as the
Notes surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Note Registrar for such
Note) be duly endorsed by, or be accompanied by a written instrument of transfer
in form satisfactory to the Company and the Note Registrar duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Notes, other than exchanges
pursuant to Section 304 or 905 not involving any transfer.
(b) Notes shall be subject to the restrictions on transfer (the "Transfer
Restrictions") provided in the applicable legend(s) (the "Restrictive Legends")
required to be set forth on the reverse of each Note as contemplated by Exhibit
A, and each Holder of a Note, by its acceptance thereof, agrees to be bound by,
and to comply with, the Transfer Restrictions, in each case unless compliance
with the Transfer Restrictions shall be waived by the Company in writing
delivered to the Trustee. The Trustee will not be responsible for determining
whether any transfer complies with the registration provisions or exemptions
under the Securities Act or any applicable State securities laws.
The Transfer Restrictions shall cease and terminate with respect to any
particular Note upon receipt by the Company of evidence satisfactory to it
(which may include an opinion of independent counsel experienced in matters of
United States federal securities law) that, as of the date of determination,
such Note (a) could be transferred by the Holder thereof pursuant to Rule 144(k)
promulgated under the Securities Act, (b) has been sold pursuant to an effective
registration statement under the Securities Act, or (c) has been transferred (i)
in a transaction satisfying all the requirements of Rule 903 or 904 (as
applicable) of Regulation S promulgated under the Securities Act or (ii)
pursuant to Rule 144 under the Securities Act, and receipt by the Trustee of an
Officer's Certificate certifying that the Company has received such evidence and
that the Transfer Restrictions have ceased and terminated with respect to such
Note. All references in the preceding sentence to any Regulation, Rule or
provision thereof shall be deemed also to refer to any successor provisions
thereof. In addition, the Company may terminate the Transfer Restrictions with
respect to any particular Note in such other circumstances as it determines are
appropriate for this purpose and shall deliver to the Trustee an Officer's
Certificate certifying that the Transfer Restrictions have ceased and terminated
with respect to such Note.
At the request of the Holder and upon the surrender of such Note to the
Trustee or Company for exchange in accordance with the provisions of this
Section 305, any Note as to which the Transfer Restrictions shall have
terminated in accordance with the preceding paragraph shall be
21
<PAGE>
exchanged for a new Note, of like tenor and aggregate principal amount, but
without the Restrictive Legends.
The Company shall notify the Trustee of the effective date of any
registration statement registering any Notes under the Securities Act and shall
ensure that any opinion of counsel received by it in connection with the removal
of any Restrictive Legend is also addressed to the Trustee. The Trustee shall
not be liable for any action taken or omitted to be taken by it in good faith
and without negligence on its part in accordance with such notice or any opinion
of counsel.
As used in this Section 305, the term "transfer" encompasses any sale,
pledge, transfer or other disposition of any Notes referred to herein.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
If any mutilated Note, including a Global Note, is surrendered to the
Trustee, subject to the provisions of this Section, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a new Note
containing identical terms and of like principal amount and bearing a number not
contemporaneously outstanding.
If there be delivered to the Company and to the Trustee (1) evidence to
their satisfaction of the destruction, loss or theft of any Note, including a
Global Note if the destroyed, lost or stolen Note was a Global Note, and (2)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and, upon the Company's request the Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
destroyed, lost or stolen Note, a new Note containing identical terms and of
like principal amount and bearing a number not contemporaneously outstanding.
Notwithstanding the foregoing provisions of this Section, in case any
mutilated, destroyed, lost or stolen Note has become or is about to become due
and payable for any reason, the Company in its discretion may, instead of
issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section in lieu of any destroyed,
lost or stolen Note shall constitute an additional original contractual
obligation of the Company, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Notes duly issued hereunder.
22
<PAGE>
The provisions of this Section, as amended or supplemented pursuant to this
Indenture, shall be exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes.
SECTION 307. PAYMENT OF INTEREST; RIGHTS TO INTEREST PRESERVED.
Any interest on any Note which shall be payable and is punctually paid or
duly provided for on any Interest Payment Date shall be paid to the Person in
whose name such Note (or one or more Predecessor Notes) is registered as of the
close of business on the Regular Record Date for such interest.
Any interest on any Note which shall be payable, but shall not be
punctually paid or duly provided for, on any Interest Payment Date for such Note
(herein called "DEFAULTED INTEREST") shall forthwith cease to be payable to the
Holder thereof on the relevant Regular Record Date by virtue of having been a
Holder on such date; and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in Clause (1) or (2) below.
(1) The Company may elect to make payment of any Defaulted Interest
to the Person in whose name such Note (or a Predecessor Note thereof) shall
be registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on such Note and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of Money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit on or prior to the date of the
proposed payment. Such Money when so deposited shall be held in trust for
the benefit of the Person entitled to such Defaulted Interest. Thereupon,
the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less than
10 days prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to the Holder of such
Note (or a Predecessor Note thereof) at such Holder's address as it appears
in the Note Register not less than 10 days prior to such Special Record
Date. In addition to the mailing, the Trustee may, in its discretion, in
the name and at the expense of the Company cause a similar notice to be
published at least once in an Authorized Newspaper of general circulation
in each Place of Payment, but such publication shall not be a condition
precedent to the establishment of such Special Record Date and the failure
of a Holder to observe such published notice shall not entitle such Holder
to additional benefits or interest with respect to such Holder's Notes.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been mailed as aforesaid, such Defaulted
Interest shall be paid to the Person in whose name such Note
23
<PAGE>
(or a Predecessor Note thereof) shall be registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange or national market system on which the Notes may be
listed, and upon such notice as may be required by such exchange or
national market system, if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this Clause, such payment shall
be deemed practicable by the Trustee.
At the option of the Company, interest on the Notes may be paid (i) by
mailing a check to the address of the Person entitled thereto as such address
shall appear in the Note Register, or (ii) by wire transfer to an account
maintained by the Person entitled thereto as specified in the Note Register.
Subject to the foregoing provisions of this Section and Section 305, each
Note delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Note shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Note.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Note for registration of transfer or
exchange, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Note is registered in the Note Register
as the owner of such Note for the purpose of receiving payment of principal of
and (subject to Sections 305 and 307) interest on such Note and for all other
purposes whatsoever, whether or not any payment with respect to such Note shall
be overdue, and neither the Company, nor the Trustee or any agent of the Company
or the Trustee shall be affected by notice to the contrary.
Payments on Global Notes will be made to the Depository, or its nominee, as
the registered owner thereof. Neither the Company, the Trustee nor any paying
agent will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in the
Global Notes or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
No holder of any beneficial interest in any Global Note held on its behalf
by a Depositary shall have any rights under this Indenture with respect to such
Global Note or any Note represented thereby, and such Depositary may be treated
by the Company, the Trustee, and any agent of the Company or the Trustee as the
owner of such Global Note or any Note represented thereby for all purposes
whatsoever. Notwithstanding the foregoing, with respect to any Global Note,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee, from giving effect to any written certification, proxy
or other authorization furnished by a Depositary
24
<PAGE>
Holder of such Global Note, or impair, as between a Depositary and the owners of
beneficial interests in such Global Note, the operation of customary practices
governing the exercise of the rights of the Depositary (or its nominees) as
Holder of such Global Note. None of the Company, the Trustee, any Paying Agent
or the Note Registrar will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests of a Global Note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
SECTION 309. CANCELLATION.
All Notes surrendered for payment, registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee, and any such Notes, as well as Notes surrendered directly to the
Trustee for any such purpose, shall be canceled promptly by the Trustee. The
Company may at any time deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Notes so delivered shall be canceled
promptly by the Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Notes held by the Trustee shall be
destroyed by the Trustee, unless by a Company Order the Company directs their
return to it.
SECTION 310. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE.
Forthwith upon the execution and delivery of this Indenture, or from time
to time thereafter, Notes up to the aggregate principal amount of $60,000,000
may be executed by the Company and delivered to the Trustee for authentication,
and shall thereupon be authenticated and delivered by the Trustee upon Company
Order, without any further action by the Company.
SECTION 311. COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a 360-day year of
twelve 30-day months. Interest shall be payable to and excluding any Interest
Payment Date and interest shall be payable to and excluding the Maturity.
ARTICLE FOUR - SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
Upon the direction of the Company by a Company Order, this Indenture shall
cease to be of further effect and the Trustee, on receipt of such Company Order,
at the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
25
<PAGE>
(1) either
(a) all Notes theretofore authenticated and delivered (other
than (i) Notes which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 306 and (ii) Notes
for whose payment Money has theretofore been deposited in trust with
the Trustee or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(b) as to all Notes not so theretofore delivered to the Trustee
for cancellation the Company has irrevocably deposited or caused to be
deposited with the Trustee, as trust funds and/or obligations in trust
for such purpose, Money and/or Government Obligations which through
the payment of interest and principal in respect thereof in accordance
with their terms, without consideration of any reinvestment thereof,
will provide not later than the opening of business on the due dates
of any payment of principal and interest with respect thereto, or a
combination thereof, Money in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore
delivered to the Trustee for cancellation, including the principal
thereof and interest thereon, to the date of such deposit (in the case
of Notes which have become due and payable) or to the Maturity
thereof, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company, including amounts owing to the Trustee; and
(3) the Company has delivered to the Trustee a certificate of
Independent Public Accountants certifying as to the sufficiency of the
amounts deposited pursuant to subclause (b) of Clause (1) of this Section
for payment of the principal and interest on the dates such payments are
due, and an Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent herein providing for or relating to the
satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 612 and, if Money and/or
Government Obligations shall have been deposited with the Trustee pursuant to
subclause (b) of Clause (1) of this Section, the obligations of the Trustee
under Section 402 and the last paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all Money
and Government Obligations deposited with the Trustee pursuant to Section 401
and all Money received by the Trustee in respect of Government Obligations
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
26
<PAGE>
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such Money has or Government Obligations have been deposited with
or received by the Trustee; but such Money and Government Obligations need not
be segregated from other funds of the Trustee except to the extent required by
law.
ARTICLE FIVE - REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"EVENT OF DEFAULT", wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or be effected by operation of law pursuant to any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body):
(1) default in the payment of any interest on any Note when such
interest becomes due and payable, and continuance of such default for a
period of 10 days; or
(2) default in the payment of the principal of any Note when it
becomes due and payable at its Maturity; or
(3) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture or the Notes (other than a
covenant or warranty a default in the performance or the breach of which is
elsewhere in this Section specifically dealt with), and continuance of such
default or breach for a period of 30 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal amount
of the Outstanding Notes a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(4) default in the payment at stated maturity of any indebtedness of
the Company or any Subsidiary for money borrowed in principal amount due at
stated maturity in excess of $2,000,000, and such default shall continue,
without being cured, waived or consented to and without such indebtedness
being discharged, for a period of 30 days beyond any applicable period of
grace, PROVIDED, HOWEVER, that the provisions of this Section 501(4) shall
not apply to any indebtedness of the Company or any Subsidiary under which
the rights and remedies of the lender in the event of default are limited
to repossession or sale of property securing such obligation, with no
recourse to the Company or any Subsidiary; or
(5) the occurrence of an event of default as defined in any mortgage,
indenture or instrument under which there may be issued, or by which there
may be secured or evidenced, any indebtedness of the Company or any
Subsidiary for money borrowed (or the
27
<PAGE>
payment of which is guaranteed by the Company), whether such indebtedness
now exists or shall hereafter be created, PROVIDED, HOWEVER, that no such
event of default shall constitute an Event of Default hereunder unless such
event of default results in the acceleration of such indebtedness prior to
its expressed maturity, which together with the principal amount of any
such other indebtedness so caused to be accelerated, aggregates $2,000,000
or more at any one point in time and such default shall not have been cured
or waived and such acceleration shall not have been rescinded or annulled,
PROVIDED, HOWEVER, that the provisions of this Section 501(5) shall not
apply to any indebtedness of the Company or any Subsidiary under which the
rights and remedies of the lender in the event of default are limited to
repossession or sale of property securing such obligation, with no recourse
to the Company or any Subsidiary; or
(6) the entry by a court or agency or supervisory authority having
competent jurisdiction of:
(a) a decree or order for relief in respect of the Company or
any Subsidiary in an involuntary proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar law and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or
(b) a decree or order adjudging the Company or any Subsidiary to
be insolvent, or approving a petition seeking reorganization,
arrangement, adjustment or composition of the Company or any
Subsidiary and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(c) a decree or order appointing any Person to act as a
custodian, receiver, liquidator, assignee, trustee or other similar
official of the Company or any Subsidiary or of any substantial part
of the property of the Company or any Subsidiary, as the case may be,
or ordering the winding up or liquidation of the affairs of the
Company or any Subsidiary and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or
(7) the commencement by the Company or any Subsidiary of a voluntary
proceeding under any applicable bankruptcy, insolvency, reorganization or
other similar law or of a voluntary proceeding seeking to be adjudicated
insolvent or the consent by the Company or any Subsidiary to the entry of
a decree or order for relief in an involuntary proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar law or
to the commencement of any insolvency proceedings against it, or the filing
by the Company or any Subsidiary of a petition or answer or consent
seeking reorganization or relief under any applicable law, or the consent
by the Company or any Subsidiary to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or similar official of the Company or any Subsidiary or
any substantial part of the property of the Company or any Subsidiary or
the making by the
28
<PAGE>
Company or any Subsidiary of an assignment for the benefit of creditors,
or the taking of corporate action by the Company or any Subsidiary in
furtherance of any such action; or
(8) a final judgment, judicial decree or order for the payment of
money in excess of $1,000,000 shall be rendered against the Company or any
Subsidiary and such judgment, decree or order shall continue unsatisfied
for a period of 60 days without a stay of execution.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default specified in Subsection 501(6) or Subsection 501(7)
occurs and is continuing (an "Acceleration Event"), then the Trustee or the
Holders of not less than 25% in principal amount of the outstanding Notes may
declare the principal of all the Notes, and the interest accrued thereon, to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the Holders), and upon any such declaration such amount
shall become immediately due and payable; provided, however, that any Event of
Default specified in Subsection 501(7) shall result in immediate and automatic
acceleration of maturity of the outstanding Notes, and the principal of all the
Notes and the interest accrued thereon shall be due and payable immediately
without notice, as if a declaration of acceleration, as contemplated in this
Section 502, had been made.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the Money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of not less
than a majority in principal amount of the Outstanding Notes, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum of Money
sufficient to pay
(a) all overdue installments of any interest on all Notes,
(b) the principal of any Notes which have become due otherwise
than by such declaration of acceleration and interest thereon at the
rate borne by such Notes,
(c) to the extent that payment of such interest is lawful,
interest upon overdue installments of any interest at the rate borne
by such Notes, and
(d) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
29
<PAGE>
(2) all Events of Default, other than the non-payment of the
principal of and interest on Notes which shall have become due solely by
reason of such Acceleration Event, shall have been cured or waived as
provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any installment of interest on
any Note when such interest shall have become due and payable and such default
continues for a period of 10 days, or
(2) default is made in the payment of the principal of any Note at
its Maturity, the Company shall, upon demand of the Trustee, pay to the Trustee,
for the benefit of the Holders of such Notes, the whole amount of money then due
and payable with respect to such Notes, with interest upon the overdue principal
and, to the extent that payment of such interest shall be legally enforceable,
upon any overdue installments of interest at the same rate of interest as is
payable on the principal amount of the Notes, and, in addition thereto, such
further amount of Money as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
If the Company fails to pay the Money it is required to pay the Trustee
pursuant to the preceding paragraph forthwith upon the demand of the Trustee,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the Money so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Notes and collect the Money
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon such Notes, wherever situated.
If an Event of Default with respect to the Notes occurs and is continuing,
the Trustee may in its discretion proceed to protect and enforce its rights and
the rights of the Holders of Notes by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or such Notes or in aid of the exercise of any power granted herein or
therein, or to enforce any other proper remedy.
The rights and remedies under this Section 503 are in addition to the other
rights and remedies available under this Article 5 or otherwise legally
available.
30
<PAGE>
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Notes
or the property of the Company or such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Company for the payment
of any overdue principal or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of the principal
and interest owing and unpaid in respect of the Notes and to file such
other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents or counsel) and of the Holders of Notes allowed in such judicial
proceeding, and
(2) to collect and receive any Money or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Notes to make such payments to the Trustee and, in the event that
the Trustee shall consent to the making of such payments directly to the Holders
of Notes, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel and any other amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Note any
plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof, or to authorize the Trustee to vote
in respect of the claim of any Holder of a Note in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture or any of the Notes
may be prosecuted and enforced by the Trustee without the possession of any of
the Notes or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery or judgment, after provision for
the payment of the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, shall be for the ratable benefit of each
and every Holder of a Note in respect of which such judgment has been recovered.
31
<PAGE>
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any Money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such Money on account of principal or interest,
upon presentation of the Notes, and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 607;
SECOND: In the case the principal of the Notes shall not have become
due and payable, to the payment of the amounts then due and unpaid upon the
Notes for interest in respect of which or for the benefit of which such
Money has been collected, in the order of the Maturity of the installments
of such interest, with interest, to the extent that such interest is lawful
and has been collected by the Trustee, upon overdue installments of
interest at the rate borne by the Notes, such payments to be made ratably,
without preference or priority of any kind, according to the aggregate
amounts due and payable on such Notes for interest;
THIRD: In the case the principal of the Notes shall have become due
and payable, to the payment of the amounts then due and unpaid upon the
Notes for principal and interest in respect of which or for the benefit of
which such Money has been collected, with interest, to the extent that such
interest is lawful and has been collected by the Trustee, upon overdue
installments of interest at the rate borne by the Notes, such payments to
be made ratably, without preference or priority of any kind, according to
the aggregate amounts due and payable on such Notes for principal and
interest, respectively; and
FOURTH: The balance, if any, to the Person or Persons entitled
thereto.
SECTION 507. LIMITATIONS ON SUITS.
No Holder of any Note shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
32
<PAGE>
(3) such Holder or Holders have offered to the Trustee indemnity
satisfactory to the Trustee against the costs, fees, expenses and
liabilities to be incurred in compliance with such request (including
reasonable fees of counsel);
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Notes;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture or any Note to affect, disturb or prejudice the rights of any
other Holders, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all such Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND
INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of any
Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and (subject to Sections 305 and 307) interest on
such Note on the respective Stated Maturity or Maturities therefor specified in
such Note and to institute suit for the enforcement of any such payment, and
such right shall not be impaired without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder of a Note has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and each such Holder shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and each such
Holder shall continue as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 306,
no right or remedy herein conferred upon or reserved to the Trustee or to each
and every Holder of a Note is intended to be exclusive of any other right or
remedy, and every right and remedy, to the extent permitted by law, shall be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or
33
<PAGE>
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to any Holder of a Note may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or by such Holder, as the
case may be.
SECTION 512. CONTROL BY HOLDERS OF NOTES.
The Holders of a majority in principal amount of the Outstanding Notes
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to the Notes, PROVIDED that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(3) subject to Section 601, the Trustee need not take any action
which might be unjustly prejudicial to the rights of the other Holders of
Notes not joining in such action.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Notes on behalf of the Holders of all the Notes may waive any past
default hereunder and its consequences, except a default
(1) in the payment of the principal of or interest on any Note, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Note.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
34
<PAGE>
SECTION 514. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants that (to the extent that it may lawfully do so) it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company expressly waives (to the extent
that it may lawfully do so) all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
ARTICLE SIX - THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
(1) Except during the continuance of an Event of Default,
(a) the Trustee undertakes to perform such duties, and only such
duties, as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(b) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture.
(2) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(3) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(a) this Subsection shall not be construed to limit the effect of
Subsection (1) of this Section;
35
<PAGE>
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of a majority in principal amount of the Outstanding Notes,
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture with respect to the Notes, provided
such direction shall not be in conflict with any rule of law or with this
Indenture; and
(d) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(4) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 602. NOTICE OF DEFAULTS.
Within 90 days after the occurrence of any default hereunder, the Trustee
shall transmit to the Holders of Notes, in the manner and to the extent provided
in Section 313 (c) of the Trust Indenture Act, notice of such default hereunder
known to the Trustee, unless such default shall have been cured or waived;
PROVIDED, HOWEVER, that, except in the case of a default in the payment of the
principal of or interest on any Note, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interest of the Holders of Notes; and PROVIDED, FURTHER, that in the case of any
default of the character specified in Section 501 (3) with respect to Notes, no
such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, an
Event of Default.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to Sections 315(a) through 315(d) of the Trust Indenture Act:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon or other paper or document
36
<PAGE>
reasonably believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or a Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence shall be herein specifically prescribed) may, in the absence
of bad faith on its part, rely upon an Officers' Certificate and/or Opinion
of Counsel;
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders of Notes pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, fees, expenses and liabilities which might be incurred
by it, including reasonable fees of counsel, in complying with such request
or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine,
during business hours and upon reasonable notice, the books, records and
premises of the Company, personally or by agent or attorney; and
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.
The recitals contained herein and in the Notes, except the Trustee's
Certificate of Authentication, shall be taken as the statements of the Company
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Notes, except that the
37
<PAGE>
Trustee represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Notes and perform its obligations hereunder.
Neither the Trustee nor any Authenticating Agent shall be accountable for the
use or application by the Company of the Notes or the proceeds thereof. The
Trustee shall not be responsible for any statement made in any prospectus or
similar document used to sell the Notes.
SECTION 605. MAY HOLD NOTES.
The Trustee, any Authenticating Agent, any Paying Agent, any Note Registrar
or any other Person that may be an agent of the Trustee or the Company, in its
individual or any other capacity, may become the owner or pledgee of Notes and,
subject to Sections 310(b) and 311 of the Trust Indenture Act, may otherwise
deal with the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Note Registrar or such other Person.
SECTION 606. MONEY HELD IN TRUST.
Except as provided in Section 402 and Section 1003, Money held by the
Trustee in trust hereunder need not be segregated from other funds except to the
extent required by law and shall be held uninvested. The Trustee shall be under
no liability for interest on any Money received by it hereunder except as
otherwise agreed with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by the Trustee hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable costs, expenses, disbursements
and advances incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to the Trustee's
negligence or bad faith; and
(3) to indemnify the Trustee and its agents for, and to hold them
harmless against, any loss, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection with
the acceptance or administration of the trust hereunder, including the
costs and expenses of defending themselves against any claim or liability
in connection with the exercise or performance of any of their powers or
duties hereunder.
38
<PAGE>
As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Notes upon all property
and funds held or collected by the Trustee as such, except funds held in trust
for the payment of principal of and interest on Notes. "Trustee" for the
purposes of this Section includes any predecessor Trustee, but negligence or bad
faith of any Trustee shall not be attributed to any other Trustee.
When the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 501(6) or Section 501(7), the expenses
(including the reasonable compensation and the expenses and disbursements of
reasonable compensation and the expenses and disbursements of its counsel) and
the compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The obligations of the Company under this Section to compensate and
indemnify the Trustee and each predecessor Trustee and to pay or reimburse the
Trustee and each predecessor Trustee for expenses, disbursements and advances
shall constitute an additional obligation hereunder and shall survive the
satisfaction and discharge of this Indenture and the resignation or removal of
the Trustee and each predecessor Trustee.
SECTION 608. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder that is a Corporation
organized and doing business under the laws of the United States of America, any
state thereof or the District of Columbia, authorized under such laws to
exercise corporate trust powers, or any other person permitted by the Trust
Indenture Act to act as trustee under an indenture qualified under the Trust
Indenture Act and that has a combined capital and surplus (computed in
accordance with Section 310(a)(2) of the Trust Indenture Act) of at least
$50,000,000. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 609. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(1) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee pursuant to Section 610.
(2) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor
Trustee required by Section 610 shall not have been delivered to the
Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(3) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Notes delivered to the
Trustee and the Company.
39
<PAGE>
(4) If at any time:
(a) the Trustee shall fail to comply with the obligations
imposed upon it under Section 310(b) of the Trust Indenture Act
after written request therefor by the Company or any Holder of a
Note who has been a bona fide Holder of a Note for at least six
months, or
(b) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or
of its property shall be appointed or any public officer shall
take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company, by or pursuant to a Board
Resolution, may remove the Trustee, or (ii) subject to Section 315 (e) of
the Trust Indenture Act, any Holder of a Note who has been a bona fide
Holder of a Note for at least six months may, on behalf of such Holder and
all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
(5) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
the Company, by or pursuant to a Board Resolution, shall promptly appoint a
successor Trustee and shall comply with the applicable requirements of
Section 610. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall
be appointed by Act of the Holders of a majority in principal amount of the
Outstanding Notes delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 610,
become the successor Trustee and supersede the successor Trustee appointed
by the Company. If no successor Trustee shall have been so appointed by
the Company or the Holders of Notes and accepted appointment in the manner
required by Section 610, any Holder of a Note who has been a bona fide
Holder of a Note for at least six months may, on behalf of such Holder and
all others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(6) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by
mailing written notice of such event by first-class mail, postage prepaid,
to the Holders of Notes as their names and addresses appear in the Note
Register. Each notice shall include the name of the successor Trustee and
the address of its Corporate Trust Office.
40
<PAGE>
SECTION 610. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Upon the appointment hereunder of any successor Trustee, such successor
Trustee so appointed shall execute, acknowledge and deliver to the Company and
the retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties hereunder of the retiring
Trustee; but, on the request of the Company or such successor Trustee, such
retiring Trustee, upon payment of all of its charges, shall execute and deliver
an instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and Money held by such retiring Trustee
hereunder, subject nevertheless to its claim, if any, provided for in Section
607.
Upon request of any Person appointed hereunder as a successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts referred to in this Section.
No Person shall accept its appointment hereunder as a successor Trustee
unless at the time of such acceptance such successor Person shall be qualified
and eligible under this Article.
SECTION 611. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any Corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any Corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
Corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated but
not delivered by the Trustee then in office, any successor by merger, conversion
or consolidation to such authenticating Trustee may adopt such authentication
and deliver the Notes so authenticated with the same effect as if such successor
Trustee had itself authenticated such Notes.
SECTION 612. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint one or more Authenticating Agents acceptable to the
Company with respect to the Notes which shall be authorized to act on behalf of
the Trustee to authenticate Notes issued upon original issue, exchange,
registration of transfer, or pursuant to Section 306, and Notes so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and delivery
of Notes by the Trustee or the Trustee's Certificate of Authentication, such
reference shall be deemed to include authentication and delivery on behalf of
the Trustee by an Authenticating Agent and a Certificate of Authentication
executed on behalf of the Trustee by an Authenticating Agent.
41
<PAGE>
Each Authenticating Agent shall be acceptable to the Company and, except as
provided in this Indenture, shall at all times be a Corporation that would be
permitted by the Trust Indenture Act to act as trustee under an indenture
qualified under the Trust Indenture Act, is authorized under applicable law and
by its charter to act as an Authenticating Agent and has a combined capital and
surplus (computed in accordance with Section 310(a) (2) of the Trust Indenture
Act) of at least $50,000,000. If at any time an Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect specified in this Section.
Any Corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any Corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall be the successor of
such Authenticating Agent hereunder, provided such Corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of Notes,
if any, as their names and addresses appear in the Note Register. Any successor
Authenticating Agent, upon acceptance of its appointment hereunder, shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Company agrees to pay each Authenticating Agent from time to time
reasonable compensation for its services under this Section. If the Trustee
makes such payments, it shall be entitled to be reimbursed for such payments,
subject to the provisions of Section 607.
The provisions of Sections 308, 604 and 605 shall be applicable to each
Authenticating Agent.
If an Authenticating Agent is appointed pursuant to this Section, the Notes
may have endorsed thereon, in addition to or in lieu of the Trustee's
Certificate of Authentication, an alternate Certificate of Authentication in the
following form:
42
<PAGE>
This is one of the Notes described herein.
-----------------------------------------------
As Authenticating Agent
By
---------------------------------------------
Authorized Signatory
Authentication Date
- --------------------
ARTICLE SEVEN - HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
In accordance with Section 312 (a) of the Trust Indenture Act, the Company
shall furnish or cause to be furnished to the Trustee
(1) semi-annually on January 1 and July 1 of each year, a list, in
each case in such form as the Trustee may reasonably require, of the names
and addresses of Holders as of the applicable date, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished,
PROVIDED, HOWEVER, that so long as the Trustee is the Note Registrar no such
list shall be required to be furnished for Notes for which the Trustee acts as
Note Registrar.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
The Trustee shall comply with the obligations imposed upon it pursuant to
Section 312 of the Trust Indenture Act.
Every Holder of Notes, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company, the Trustee, any Paying Agent
nor any Note Registrar shall be held accountable by reason of the disclosure of
any such information as to the names and addresses of the Holders of Notes in
accordance with Section 312 of the Trust Indenture Act, regardless of the source
from which such information was derived, and that the Trustee shall not be held
accountable
43
<PAGE>
by reason of mailing any material pursuant to a request made under Section
312(b) of the Trust Indenture Act.
SECTION 703. REPORTS BY TRUSTEE.
(1) Within 60 days after May 15 of each year, if required by Section
313(a) of the Trust Indenture Act, the Trustee shall transmit, pursuant to
Section 313(c) of the Trust Indenture Act, a brief report dated as of such
May 15 with respect to any of the events specified in said Section 313 (a)
which may have occurred since the later of the immediately preceding May 15
and the date of this Indenture.
(2) The Trustee shall transmit the reports required by Section 313(a)
of the Trust Indenture Act at the times specified therein.
(3) Reports pursuant to this Section shall be transmitted in the
manner and to the Persons required by Sections 313(c) and 313(d) of the
Trust Indenture Act.
SECTION 704. REPORTS BY COMPANY.
(1) The Company, pursuant to Section 314(a) of the Trust Indenture
Act, shall:
(a) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the
annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Company is not
required to file information, documents or reports pursuant to
either of said Sections, then it shall file with the Trustee and
the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports
which may be required pursuant to Section 13 of the Securities
Exchange Act of 1934 in respect of a Note listed and registered
on a national securities exchange or national market system as
may be prescribed from time to time in such rules and
regulations; provided that notwithstanding the requirements of
such rules and regulations, so long as any Note is Outstanding
the Company shall file with the Trustee at a minimum (a) as soon
as practicable, but in any event no more than ninety (90) days,
after the end of each fiscal year, copies of a balance sheet and
statements of income and retained earnings of the Company as of
the end of and for such fiscal year, audited by Independent
Public Accountants, and (b) as soon as practicable, but in any
event no more than forty-five (45) days, after the end of each
quarterly fiscal period, except for
44
<PAGE>
the last quarterly fiscal period in each fiscal year, a summary
statement (which need not be audited) of income and retained
earnings of the Company for such period;
(b) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports
with respect to compliance by the Company, as the case may be,
with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations;
(c) transmit to the Holders of Notes within 30 days after the
filing thereof with the Trustee, in the manner and to the extent
provided in Section 313(c) of the Trust Indenture Act, such
summaries of any information, documents and reports required to
be filed by the Company pursuant to paragraphs (a) and (b) of
this Section as may be required by rules and regulations
prescribed from time to time by the Commission; PROVIDED that
notwithstanding the requirements of such rules and regulations,
so long as the Company has a class of securities registered
pursuant to the Securities Exchange Act of 1934, the Company
shall transmit to the Holders of Notes, in the manner and to the
extent provided in Section 313(c) of the Trust Indenture Act, the
information, documents and other reports of the Company as are
furnished to the holders of such class of securities registered
under the Securities Exchange Act of 1934; PROVIDED FURTHER that
so long as any Note is Outstanding, the Company shall transmit to
the Holders of Notes at a minimum (a) as soon as practicable, but
in any event no more than ninety (90) days, after the end of each
fiscal year, copies of a balance sheet and statements of income
and retained earnings of the Company as of the end of and for
such fiscal year, audited by Independent Public Accountants, and
(b) as soon as practicable, but in any event no more than
forty-five (45) days, after the end of each fiscal quarterly
period, except for the last quarterly fiscal period in each
fiscal year, a summary statement (which need not be audited) of
income and retained earnings of the Company for such period; and
(d) furnish to the Trustee the Officers' Certificates and
notices required by Section 1011 hereof.
(2) At any time when the Company is not subject to Section 13 or
15(d) of the Securities Exchange Act of 1934 and is not exempt from
reporting pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934, upon the request of a Holder of a Note or a beneficial owner of an
interest in a Global Note, the Company shall promptly furnish or cause to
be furnished "Rule 144A Information" (as defined below) to such Holder or
beneficial owner of a Note, or to a prospective purchaser of such Note or
beneficial interest in a Global Note designated by such Holder or
beneficial owner in order to permit
45
<PAGE>
compliance by such Holder or beneficial owner with Rule 144A under the
Securities Act of 1933 in connection with the resale of such Note by such
Holder or beneficial owner; provided, however, the Company shall not be
required to furnish such information in connection with any request made on
or after the date which is three years from the later of (i) the date such
Note or Global Note (or any predecessor Note) was acquired from the Company
or (ii) the date such Note or Global Note (or any predecessor Note) was
last acquired from an affiliate of the Company within the meaning of Rule
144 under the Securities Act of 1933; and provided, further, the Company
shall not be required to furnish such information at any time to a
prospective purchaser located outside the United States who is not a "U.S.
person" within the meaning of Regulation S under the Securities Act of 1933
if such Note or interest, as the case may be, may then be sold to such
prospective purchaser in accordance with Rule 904 under the Securities Act
of 1933 (or any successor provision thereto), as the same may be amended
from time to time. "Rule 144A Information" shall be such information as is
specified pursuant to paragraph (d)(4) of Rule 144A (or any successor
provision thereto), as such provisions (or successor provisions) may be
amended from time to time.
ARTICLE EIGHT - CONSOLIDATION, MERGER AND SALES
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
Nothing contained in this Indenture shall prevent any consolidation or
merger of the Company with or into any other Person or Persons (whether or not
affiliated with the Company), or successive consolidations or mergers in which
the Company or its successor or successors shall be a party or parties, or shall
prevent any conveyance, transfer or lease of the property of the Company as an
entirety or substantially as an entirety, to any other Person (whether or not
affiliated with the Company); PROVIDED, HOWEVER, that:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, the entity formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a Person organized and existing under
the laws of the United States of America, any state thereof or the District
of Columbia and shall expressly assume, by an indenture supplemental
hereto, executed by the successor Person and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of the
principal of and interest on all the Notes and the performance of every
other covenant of this Indenture on the part of the Company to be performed
or observed;
(2) immediately after giving effect to such transaction, no event
which, after notice or lapse of time, or both, would become an Event of
Default shall have occurred and be continuing; and
46
<PAGE>
(3) either the Company or the successor Person shall have delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, stating
that such consolidation, merger, conveyance, transfer or lease and such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with.
SECTION 802. SUCCESSOR PERSON SUBSTITUTED FOR COMPANY.
Upon any consolidation or merger or any conveyance, transfer or lease of
the properties and assets of the Company substantially as an entirety to any
Person in accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein;
and thereafter, except in the case of a lease to another Person, the predecessor
Person shall be released from all obligations and covenants under this Indenture
and the Notes.
ARTICLE NINE - SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holder of Notes, the Company (when authorized by
or pursuant to a Board Resolution) and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, which shall
conform with the requirements of the Trust Indenture Act as then in effect and
be in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company herein
and in the Notes; or
(2) to add to or change any of the provisions of this Indenture to
change or eliminate any restrictions on the payment of principal of or
interest on Notes or to permit or facilitate the issuance of Notes in
uncertificated form, provided any such action shall not adversely affect
the interests of the Holders of Notes in any material respect; or
(3) to cure any ambiguity or to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not adversely affect the
interests of the Holders of Notes in any material respect; or
47
<PAGE>
(4) to supplement any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the defeasance and
discharge of any Notes pursuant to Article Four; provided that any such
action shall not adversely affect the interests of any Holder of a Note in
any material respect; or
(5) to add to the covenants of the Company for the benefit of the
Holders of the Notes (as shall be specified in such supplemental indenture
or indentures) or to surrender any right or power herein conferred upon the
Company; or
(6) to evidence and provide acceptance of the appointment of a
successor Trustee hereunder.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Notes, by Act of said Holders delivered to the Company
and the Trustee, the Company (when authorized by or pursuant to a Board
Resolution), and the Trustee may enter into one or more indentures supplemental
hereto (which shall conform with the requirements of the Trust Indenture Act as
then in effect) for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture or of modifying in
any manner the rights of the Holders of Notes under this Indenture; PROVIDED,
HOWEVER, that no such supplemental indenture, without the consent of the Holder
of each Outstanding Note, shall
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or change the rate of interest
thereon, or change the Place of Payment, currency in which the principal of
or interest on, is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof, or
(2) reduce the percentage in principal amount of the Outstanding
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section, or Section 513 or
Section 1012, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Note.
It shall not be necessary for any Act of Holders of Notes under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
48
<PAGE>
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
As a condition to executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trust created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 315 of the Trust Indenture Act) shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of a Note theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
SECTION 905. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company shall so determine, new Notes so
modified as to conform, in the opinion of the Trustee and the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding Notes.
SECTION 906. RECORD DATE.
If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
but shall not be obligated to, fix a record date for the purpose of determining
the Holders entitled to consent to any supplemental indenture, agreement or
instrument or any waiver, and shall promptly notify the Trustee of any such
record date. If a record date is fixed those Persons who were Holders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to consent to such supplemental indenture, agreement or instrument or
waiver or to revoke any consent previously given, whether or not such Persons
continue to be Holders after such record date. The record date shall be a date
no more than 30 days prior to the first solicitation of Holders generally in
connection therewith and no later than the date such solicitation is completed.
No such consent shall be valid or effective for more than six months after such
record date. Subject to applicable law, until any supplemental indenture,
agreement, instrument or waiver becomes effective, or a consent to it by a
Holder of a Note shall cease to be valid and effective as set forth in the
preceding sentence, such consent is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note.
49
<PAGE>
SECTION 907. EFFECT ON SENIOR INDEBTEDNESS.
No supplemental indenture shall directly or indirectly modify the
provisions of Article Eleven in any manner which might terminate or impair the
rights and benefits of subordination provided to the holders of Senior
Indebtedness pursuant to Article Eleven.
ARTICLE TEN - COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL AND INTEREST.
The Company will duly and punctually pay the principal of and interest on
the Notes in accordance with the terms thereof and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in each Place of Payment an Office or Agency
where Notes may be presented or surrendered for payment, where Notes may be
surrendered for registration, transfer or exchange and where notices and demands
to or upon the Company in respect of the Notes and this Indenture may be served.
The Company will give prompt written notice to the Trustee of the location, and
any change in the location, of such Office or Agency. The Company hereby
initially designates the Corporate Trust Office of the Trustee as its Office or
Agency for each of the foregoing purposes. If at any time the Company shall
fail to maintain any such required Office or Agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee, and
the Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
SECTION 1003. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it shall, on
or before each due date of the principal of or interest on the Notes, segregate
and hold in trust for the benefit of the Persons entitled thereto a sum of Money
sufficient to pay the principal or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided, and
shall promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it shall, on or
prior to each due date of the principal of or interest on the Notes, deposit
with any Paying Agent a sum of Money sufficient to pay the principal or interest
so becoming due, such sum to be held in trust for the benefit of the Persons
entitled thereto, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
50
<PAGE>
The Company shall cause each Paying Agent other than the Trustee or the
Company to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent shall:
(1) hold all sums held by it for the payment of the principal of or
interest on Notes in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as
provided in this Indenture;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Notes) in the making of any payment of principal or
interest on the Notes; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same terms as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such Money.
Any Money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or interest on any
Note and remaining unclaimed for five years after such principal or interest
shall have become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Note shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust Money, and all liability of the
Company as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in an Authorized
Newspaper in each Place of Payment, or to be mailed to Holders of Notes, or
both, notice that such Money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication
or mailing, any unclaimed balance of such Money then remaining will be repaid to
the Company.
SECTION 1004. CORPORATE EXISTENCE.
Subject to Article Eight, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate
existence, rights (charter and statutory) and franchises of the Company and its
Subsidiaries, and shall comply with all statutes, rules, regulations and orders
of and restrictions imposed by governmental and administrative authorities and
agencies applicable to the Company and its Subsidiaries; PROVIDED, HOWEVER, that
the foregoing shall not
51
<PAGE>
obligate the Company to preserve any such right or franchise if the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Subsidiaries and that the loss
thereof is not disadvantageous in any material respect to any Holder.
SECTION 1005. MAINTENANCE OF PROPERTIES.
The Company will:
(1) cause its properties and the properties of its Subsidiaries
(other than properties obtained by the Company or any Subsidiary through
foreclosure or other resolution of any loan or properties subject to valid
and binding leases with customers of the Company or any Subsidiary) used or
useful in the conduct of the business of the Company and its Subsidiaries
to be maintained and kept in good condition, repair and working order and
supplied with all necessary facilities and equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; PROVIDED, HOWEVER, that
the foregoing shall not prevent the Company or a Subsidiary from
discontinuing the operation and maintenance of any of its properties if
such discontinuance is, in the judgment of the Company, desirable in the
conduct of its business and not disadvantageous in any material respect to
any Holder;
(2) take all appropriate steps to preserve, protect and maintain the
trademarks, trade names, copyrights, licenses and permits used in the
conduct of the business of the Company and its Subsidiaries; PROVIDED,
HOWEVER, that the foregoing shall not prevent the Company or a Subsidiary
from selling, abandoning or otherwise disposing of any such trademark,
trade name, copyright, license or permit if such sale, abandonment or
disposition is, in the judgment of the Company, desirable in the conduct of
its business and not disadvantageous in any material respect to any Holder;
and
(3) The Company and each of its Subsidiaries shall comply with all
statutes, laws, ordinances, or government rules and regulations to which it
is subject, noncompliance with which would materially adversely affect the
business, prospects, earnings, properties, assets or condition (financial
or otherwise) of the Company and its Subsidiaries taken as a whole.
SECTION 1006. RESTRICTIONS ON DIVIDENDS AND OTHER PAYMENTS.
The Company shall not (i) declare or pay any dividend, either in cash or
property, on any shares of its capital stock (except dividends or other
distributions payable solely in shares of capital stock of the Company) or (ii)
purchase, redeem or retire any shares of its capital stock or any warrants,
rights or options to purchase or acquire any shares of its capital stock or
(iii) make any other payment or distribution, either directly or indirectly
through any Subsidiary, in respect of its capital stock (such dividends,
purchases, retirements, payments and distributions being herein collectively
called "RESTRICTED PAYMENTS") if, after giving effect thereto, an Event of
Default shall
52
<PAGE>
have occurred or be continuing. Notwithstanding the foregoing, the Company may
make a previously-declared Restricted Payment if the declaration of such
Restricted Payment was permitted under this Section when made. For purposes of
this Section, the amount of any Restricted Payment payable in property shall be
deemed to be the fair market value of such property as determined by the Board
of Directors of the Company.
SECTION 1007. [INTENTIONALLY LEFT BLANK].
SECTION 1008. INSURANCE.
Subject to the right to sell, abandon or otherwise dispose of any building
or property whenever in the opinion of the Company the retention thereof is
inadvisable or not necessary to the business of the Company and its
Subsidiaries, the Company will at all times cause all buildings, equipment and
other insurable properties owned or operated by it or any Subsidiary to be
properly insured and kept insured with responsible insurance carriers, or
adequately insured by means of proper inter-insurance contracts, against loss or
damage by fire and other hazards, to the extent that such properties are usually
insured by Corporations owning or operating properties of a similar character;
PROVIDED, HOWEVER, that the foregoing shall not prevent the Company or any
Subsidiary from maintaining any self-insurance program covering minor risks if
adequate reserves are maintained in connection with such program.
SECTION 1009. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (1) all taxes, assessments and governmental
charges levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary and (2) all lawful claims
for labor, material and supplies which, if unpaid, might by law become a lien
upon the property of the Company or any Subsidiary; PROVIDED, HOWEVER, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings and for
which disputed amounts adequate reserves (in the good faith judgment of the
Board of Directors of the Company) have been established.
SECTION 1010. BOOKS AND RECORDS.
The Company shall, and shall cause each Subsidiary to, at all times keep
proper books of record and account in which proper entries shall be made in
accordance with generally accepted accounting principles and, to the extent
applicable, regulatory accounting principles.
53
<PAGE>
SECTION 1011. STATEMENT BY OFFICERS AS TO DEFAULT.
(1) The Company will deliver to the Trustee, within 45 days after the
end of each calendar quarter, an Officers' Certificate, stating whether or
not to the best knowledge of the signers thereof the Company is in default
in the performance and observance of any of the terms, provisions and
conditions of this Indenture, (other than a term, provision or condition
specifically dealt with in Clause (2) of this Section 1011) setting forth
the arithmetical computations required to show compliance with the
provisions of Sections 1006 and 1007 during the previous year, and, if the
Company shall be in default, specifying all such defaults and the nature
and status thereof of which they may have knowledge.
(2) The Company will deliver to the Trustee, within five days after
the occurrence thereof, written notice of any event which after notice or
lapse of time or both would become an Event of Default pursuant to Clause
(4) of Section 501.
SECTION 1012. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 1004 through 1010 with respect to
the Notes if before the time for such compliance the Holders of at least a
majority in principal amount of the Outstanding Notes, by Act of such Holders,
either shall waive such compliance in such instance or generally shall have
waived compliance with such term, provision or condition, but no such waiver
shall extend to or affect such term, provision or condition except to the extent
so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.
ARTICLE ELEVEN - SUBORDINATION OF NOTES
SECTION 1101. NOTES SUBORDINATED TO SENIOR INDEBTEDNESS.
(1) The Company covenants and agrees, and each Holder of the Notes,
by such Holder's acceptance thereof, likewise covenants and agrees, and for
purposes of Section 508 consents, that the indebtedness represented by the
Notes and the payment of the principal of and interest on each and all of
the Notes is hereby expressly subordinated, to the extent and in the manner
hereinafter set forth, in right of payment to the prior payment in full of
all Senior Indebtedness.
(2) Upon any distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization of the Company,
whether in bankruptcy, insolvency, reorganization or receivership
proceedings, or upon an assignment for the benefit of creditors or
marshaling of the assets and liabilities of the Company or otherwise,
except a distribution in connection with a merger or consolidation or a
conveyance or transfer of all
54
<PAGE>
or substantially all of the properties of the Company which complies with
the requirements of Article Eight, or if an event of default shall have
occurred and be continuing with respect to any Senior Indebtedness, or if
the principal of the Notes shall have been declared due and payable
pursuant to Section 502 and such declaration shall not have been rescinded
and annulled as provided in said Section 502, then:
(a) the holders of all Senior Indebtedness shall first be
entitled to receive payment of the full amount due thereon in respect
of principal and interest, or adequate provision shall be made for
such payment, before the Holders of any of the Notes are entitled to
receive any payment on account of the principal of or interest on the
indebtedness evidenced by the Notes;
(b) any payment by, or distribution of assets of, the Company of
any kind or character, whether in cash, property or securities (other
than securities of the Company as reorganized or readjusted or
securities of the Company or any other corporation provided for by a
plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in this Article with
respect to the Notes, to the payment of all Senior Indebtedness,
provided that the rights of the holders of Senior Indebtedness are not
altered by such reorganization or readjustment), to which the Holders
of any of the Notes or the Trustee would be entitled except for the
provisions of this Article shall be paid or delivered by the person
making such payment or distribution, whether a trustee in bankruptcy,
a receiver or liquidating trustee or otherwise, directly to the
holders of Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture
under which any instruments evidencing any such Senior Indebtedness
may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full
of all Senior Indebtedness remaining unpaid after giving effect to any
concurrent payment or distribution (or provision therefor) to the
holders of such Senior Indebtedness, before any payment or
distribution is made to the Holders of the indebtedness evidenced by
the Notes or to the Trustee under this instrument; and
(c) in the event that, notwithstanding the foregoing, any
payment by, or distribution of assets of, the Company of any kind or
character, whether in cash, property or securities (other than
securities of the Company as reorganized or readjusted or securities
of the Company or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in this Article with respect to the
Notes, to the payment of all Senior Indebtedness, provided that the
rights of the holders of Senior Indebtedness are not altered by such
reorganization or readjustment), shall be received by the Trustee or
the Holders of any of the Notes before all Senior Indebtedness is paid
in full, such payment or distribution shall be paid over to the
holders of such Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture
under which any instruments evidencing any of such Senior
55
<PAGE>
Indebtedness may have been issued, ratably as aforesaid, for
application to the payment of all Senior Indebtedness remaining unpaid
until all such Senior Indebtedness shall have been paid in full, after
giving effect to any concurrent payment or distribution (or provision
therefor) to the holders of such Senior Indebtedness.
SECTION 1102. SUBROGATION.
Subject to the payment in full of all Senior Indebtedness, the Holders of
the Notes shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to such Senior Indebtedness until all
amounts owing on the Notes shall be paid in full, and, as between the Company,
its creditors other than holders of Senior Indebtedness, and the Holders of the
Notes, no such payment or distribution made to the holders of Senior
Indebtedness by virtue of this Article which otherwise would have been made to
the Holders of the Notes shall be deemed to be a payment by the Company on
account of the Senior Indebtedness, and no such payments or distributions to the
Holders of the Notes of cash, property or securities otherwise distributable to
the holders of Senior Indebtedness shall, as between the Company, its creditors
other than the holders of Senior Indebtedness, and the Holders of the Notes, be
deemed to be a payment by the Company on account of the Notes, it being
understood that the provisions of this Article are and are intended solely for
the purpose of defining the relative rights of the Holders of the Notes, on the
one hand, and the holders of Senior Indebtedness, on the other hand.
SECTION 1103. OBLIGATION OF COMPANY UNCONDITIONAL.
Nothing contained in this Article or elsewhere in this Indenture or in the
Notes is intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness, and the Holders of the Notes, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders of the Notes the principal of and interest on the Notes as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights, of the Holders of the Notes and
creditors of the Company other than the holders of Senior Indebtedness, nor
shall anything herein or therein prevent the Trustee or the Holder of any Note
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article of the
holders of Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee and the Holders of the Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
any such dissolution, winding up, liquidation or reorganization proceeding
affecting the affairs of the Company is pending or upon a certificate of
56
<PAGE>
the trustee in bankruptcy, receiver, assignee for the benefit of creditors,
liquidating Trustee or agent or other person making any payment or distribution,
delivered to the Trustee or to the Holders of the Notes, for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount paid or
distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 1104. PAYMENTS ON NOTES PERMITTED.
Nothing contained in this Article or elsewhere in this Indenture, or in any
of the Notes, shall affect the obligation of the Company to make, or prevent the
Company from making, payment of the principal of and interest on the Notes in
accordance with the provisions hereof and thereof, except as otherwise provided
in this Article.
SECTION 1105. EFFECTUATION OF SUBORDINATION BY TRUSTEE.
Each Holder of Notes, by such Holder's acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effect the subordination provided in this Article
and appoints the Trustee such Holder's attorney-in-fact for any and all such
purposes.
SECTION 1106. KNOWLEDGE OF TRUSTEE.
Notwithstanding the provisions of this Article or any other provisions of
this Indenture, the Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be charged with knowledge of the
existence of any facts which would prohibit the making of any payment of moneys
to or by the Trustee, or the taking of any other action by the Trustee, unless
and until the Trustee shall have received written notice thereof from the
Company, any Holder of the Notes, any Paying Agent of the Company or the holder
or representative of any class of Senior Indebtedness.
SECTION 1107. TRUSTEE MAY HOLD SENIOR INDEBTEDNESS.
The Trustee shall be entitled to all the rights set forth in this Article
with respect to any Senior Indebtedness at the time held by it, to the same
extent as any other holder of Senior Indebtedness, and nothing in this Indenture
shall deprive the Trustee of any of its rights as such holder.
SECTION 1108. RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT IMPAIRED.
No right of any present or future holder of any Senior Indebtedness to
enforce the subordination herein shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Company or by any
non-compliance by the Company with the terms,
57
<PAGE>
provisions and covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
* * * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
COMMUNITY FIRST BANKSHARES, INC.
By /s/ Donald R. Mengedoth
-------------------------------------------
Name: Donald R. Mengedoth
Title: President and Chief Executive Officer
Attest:
/s/ Patrick Delaney
- ----------------------------------
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, AS
TRUSTEE
By /s/ Curtis D. Schwegman
-------------------------------------------
Name: Curtis D. Schwegman
Title: Assistant Vice President
Attest:
/s/ Jane Schweiger
- ----------------------------------
58
<PAGE>
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
On the 24th day of June, 1997, before me personally came Donald R.
Mengedoth, to me known, who, being by me duly sworn, did depose and say that he
is the President and Chief Executive Officer of Community First Bankshares,
Inc., a Delaware corporation, one of the persons described in and who executed
the foregoing instrument; and that he signed his name thereto by like authority.
/s/ Christine K. Hansen
-------------------------------------------
Notary Public
[NOTARIAL SEAL]
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
On the 24th day of June, 1997, before me personally came Curtis D.
Schwegman, to me known, who, being by me duly sworn, did depose and say that he
is an Assistant Vice President of Norwest Bank Minnesota, National Association,
a national banking association organized and existing under the laws of the
United States of America, one of the persons described in and who executed the
foregoing instrument; and that he signed his name thereto by like authority.
/s/ Jane Schweiger
-------------------------------------------
Notary Public
[NOTARIAL SEAL]
59
<PAGE>
EXHIBIT A - FORM OF NOTE
COMMUNITY FIRST BANKSHARES, INC.
7.30% SUBORDINATED NOTE DUE 2004
$ NO.
------------------------ ---------------------
Community First Bankshares, Inc., a Delaware corporation (herein called the
"Company"), for value received, hereby promises to pay to___________________
__________________________ _______________________________________, or
registered assigns, the principal sum of ________________________ Dollars on
June 30, 2004, and to pay interest thereon at the rate of 7.30% per annum from
the Initial Interest Accrual Date or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, semi-annually on June 30
and December 31 of each year, commencing December 31, 1997 (each an "Interest
Payment Date"), until the principal hereof is paid or made available for
payment.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, except as provided in the Indenture hereinafter
referred to, be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the Regular Record
Date for such interest, which will be the 15th day of the month in which the
relevant Interest Payment Date occurs. Any such interest not so punctually paid
or duly provided for shall forthwith cease to be payable to the Holder on such
Regular Record Date and either may be paid to the Person in whose name this Note
(or one or more Predecessor Notes) is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice whereof shall be given to the Holders not less than ten days
prior to such Special Record Date, or may be paid at any time in any other
lawful manner, all as more fully provided in the Indenture. Payment of the
principal of and interest on this Note will be made at the office or agency of
the Company maintained for that purpose in Minneapolis, Minnesota, or in such
other office or agency as may be established by the Company pursuant to the
Indenture (initially the principal corporate trust office of the Trustee in
Minneapolis, Minnesota (the "Corporate Trust Office")), in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts; PROVIDED, HOWEVER, that payment of interest
may be made at the option of the Company (i) by check mailed to the address of
the Person entitled thereto as such address shall appear in the Note Register or
(ii) by wire transfer to an account maintained by the Person entitled thereto as
specified in the Note Register. Payments of principal and interest at maturity
will be made against presentation of this Note at the Corporate Trust Office (or
such other office as may be established pursuant to the Indenture), by check or
wire transfer.
A-1
<PAGE>
Reference is hereby made to the further provisions of this Note set forth
on the reverse side hereof, which further provisions shall for all purposes have
the same effect as though fully set forth at this place.
Unless the Certificate of Authentication hereon has been executed by the
Trustee or an Authenticating Agent under the Indenture referred to on the
reverse hereof by the manual signature of one of its authorized officers, this
Note shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Note to be signed in its
name by the manual or facsimile signature of its Chief Executive Officer, its
President or one of its Vice Presidents and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.
Date:
COMMUNITY FIRST BANKSHARES, INC.
By:
---------------------------------------
President
ATTEST:
- ------------------------------------
Secretary
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes described in the Indenture.
----------------------------------------
as Trustee
Authentication
Date: By--------------------------------------
------------- Authorized Signatory
A-2
<PAGE>
(Reverse of Note)
COMMUNITY FIRST BANKSHARES, INC.
7.30% SUBORDINATED NOTE DUE 2004
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR A DEPOSIT AND IS NOT INSURED BY
THE UNITED STATES OR ANY AGENCY OF THE UNITED STATES.
[Unless and until it is exchanged in whole or in part for Definitive Notes,
this Note may not be transferred except as a whole by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. Unless this
certificate is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) ("DTC") to the issuer or its agent
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as may be requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or
such other entity as may be requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.](1)
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND
THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR
THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY BE RE SOLD, PLEDGED
OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE
UNITED STATES TO A FOREIGN
- ------------------------------
(1) This paragraph should be included only for a Global Note.
A-3
<PAGE>
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTE
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.(2)
This Note is one of a duly authorized issue of Notes of the Company
designated as its 7.30% Subordinated Notes due 2004 (herein called the "Notes")
limited in aggregate principal amount to $60,000,000 issued and to be issued
under an Indenture dated as of June 24, 1997 (herein called the "Indenture"),
between the Company and Norwest Bank Minnesota, National Association, as Trustee
(herein called the "Trustee," which term includes any successor Trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights thereunder of
the Company, the Trustee and the Holders of the Notes, and the terms upon which
the Notes are, and are to be, authenticated and delivered.
The indebtedness of the Company evidenced by the Notes, including the
principal thereof and interest thereon (including post-default interest), (1) is
expressly subordinated, to the extent and in the manner set forth in the
Indenture, in right of payment of the prior payment in full of all of the
Company's obligations to holders of Senior Indebtedness, and (2) is unsecured by
any collateral, including the assets of the Company or any of its Subsidiaries
or Affiliates. Each Holder of the Notes, by acceptance thereof, (a) agrees to
and shall be bound by such provisions of the Indenture and all other provisions
of the Indenture; (b) authorizes and directs the Trustee to take such action on
such Holder's behalf as may be necessary or appropriate to effectuate the
subordination of the Notes as provided in the Indenture; and (c) appoints the
Trustee as such Holder's attorney-in-fact for any and all such purposes.
The Notes may not be redeemed by the Company prior to Maturity.
If an Acceleration Event with respect to the Notes shall occur and be
continuing, the Trustee or the Holders of not less than 25% in principal amount
of the Outstanding Notes may declare the principal of all the Notes due and
payable in the manner and with the effect provided in the Indenture. An
"Acceleration Event" is an Event of Default relating to bankruptcy, insolvency,
or
- --------------------------------
(2) This legend should be included until the Transfer Restrictions terminate
pursuant to Section 305(b) of the Indenture.
A-4
<PAGE>
reorganization of the Company as more specifically defined by the Indenture.
The Indenture provides that such declaration and its consequences may, in
certain events, be annulled by the Holders of a majority in principal amount of
the Outstanding Notes.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes under the Indenture at any
time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Notes at the time Outstanding.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time Outstanding,
on behalf of the Holders of all Notes, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange therefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provisions of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, places and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note may be registered on the Note Register of the
Company, upon surrender of this Note for registration of transfer at the office
or agency of the Company to be maintained for that purpose in Minneapolis,
Minnesota or at such other office or agency as may be established by the Company
for such purpose pursuant to the Indenture (initially the principal corporate
trust office of the Trustee in Minneapolis, Minnesota), duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company, and duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Notes are issuable only in fully registered form, without coupons, in
denominations of $1,000 or any amount in excess thereof which is an integral
multiple of $1,000. As provided in the Indenture, and subject to certain
limitations therein set forth, the Notes are exchangeable for a like aggregate
principal amount of Notes in authorized denominations, as requested by the
Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
A-5
<PAGE>
Prior to the due presentment of this Note for registration of transfer or
exchange, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Company,
the Trustee, nor any such agent shall be affected by notice to the contrary.
Interest on the Notes shall be computed on the basis of a 360-day year of
twelve 30-day months. Interest shall be payable to and excluding any Interest
Payment Date.
The Trustee, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its Affiliates,
and may otherwise deal with the Company or its Affiliates, as if it were not the
Trustee.
This Note shall not be valid until authenticated by the manual signature of
the Trustee or an Authenticating Agent.
Customary abbreviations may be used in the name of a Holder or an assignee,
such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUT (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
In addition to the rights provided to Holders of Notes under the Indenture,
Holders of Note, shall have all the rights set forth in the Registration Rights
Agreement dated as of June 24, 1997, between the Company and the parties named
on the signature pages thereof (the "Registration Rights Agreement"). The
Registration Rights Agreement provides that the interest payable on this Note is
subject to adjustment in certain events. In the event of, and for the duration
of, such an adjustment, the term "interest" as used in this Note shall mean
interest payable at the adjusted rate.
Each Holder of a Note covenants and agrees by such Holder's acceptance
thereof to comply with and be bound by the foregoing provisions.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
A-6
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's Soc. Sec. or Tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint --------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
---------------
Your Signature:
---------------------------------------------
(Sign exactly as your name appears on the face of
this Note)
Signature Guarantee
A-7
<PAGE>
SCHEDULE OF EXCHANGES FOR DEFINITIVE NOTES (3)
The following exchanges of a part of the Global Note for Definitive Notes
have been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of decrease Amount of increase of this Global Note authorized officer
in in following such of
Principal Amount of Principal Amount of decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ---------------- ------------------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------------------------
(3) This should be included only in a Global Note.
A-8
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
OF TRANSFER OF NOTES (4)
Re: 7.30% Subordinated Notes due 2004 of Community First Bankshares, Inc.
This Certificate relates to $ principal amount of Notes held in
(5) book-entry as part of a Global Note or (5) definitive form as a
Definitive Note by
(the "Transferor").
The Transferor (5):
/ / has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depositary a Definitive
Note or Definitive Notes in registered form of authorized denominations in an
aggregate principal amount equal to its beneficial interest in such Global Note
(or the portion thereof indicated above); or
/ / has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Notes and, as provided in Section
305(b) of such Indenture, the transfer of this Note does not require
registration under the Securities Act (as defined below) because:5
/ / Such Note is being acquired for the Transferor's own account, without
transfer.
/ / Such Note is being transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A or pursuant to an exemption from
registration in accordance with Rule 904 under the Securities Act.
/ / Such Note is being transferred in accordance with Rule 144 under the
Securities Act, or pursuant to an effective registration statement under the
Securities Act.
/ / Such Note is being transferred in reliance on and in compliance with
an exemption from the registration requirements of the Securities Act, other
than Rule 144A, Rule 144 or Rule 904
- ---------------------------------
(4) The following should be included only for Original Notes.
(5) Check applicable box.
A-9
<PAGE>
under the Securities Act. An Opinion of Counsel to the effect that such
transfer does not require registration under the Securities Act accompanies this
Certificate.
--------------------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-----------------------------------------------
Date:
-----------------------
A-10
<PAGE>
Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
Dated as of June 24, 1997
by and among
COMMUNITY FIRST BANKSHARES, INC.,
PIPER JAFFRAY INC.
and
KEEFE, BRUYETTE & WOODS, INC.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement" ) is made and
entered into as of June 24, 1997 by and among COMMUNITY FIRST BANKSHARES,
INC., a corporation organized under the laws of the State of Delaware (the
"Company"), and PIPER JAFFRAY INC. and KEEFE, BRUYETTE & WOODS, INC.
(together, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated June 19,
1997 between the Company and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by the Company to the Initial
Purchasers, severally, of $60,000,000 aggregate principal amount of the
Company's 7.30% Subordinated Notes Due 2004 (the "Initial Securities"). In
order to induce the Initial Purchasers to enter into the Purchase Agreement,
the Company has agreed to provide to the Initial Purchasers and their
respective direct and indirect transferees the registration rights set forth
in this Agreement. The execution of this Agreement is a condition to the
closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
ARTICLE ONE - DEFINITIONS
As used in this Agreement, the following capitalized defined terms shall
have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time
to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Closing Date" shall mean the Closing Time as defined in the Purchase
Agreement.
"Company" shall have the meaning set forth in the preamble and also
includes the Company s successors.
"Depository" shall mean The Depository Trust Company, or any other
depository appointed by the Company.
"Exchange Offer" shall mean the exchange offer by the Company of Exchange
Securities for Registrable Securities pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the 1933
Act effected pursuant to Section 2(a) hereof.
<PAGE>
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto
and all materials incorporated by reference therein.
"Exchange Securities" shall mean 7.30% Subordinated Notes Due 2004
issued by the Company containing terms identical to the Initial Securities
(except that (i) interest thereon shall accrue from the last date on which
interest was paid on the Initial Securities or, if no such interest has been
paid, from the date of their original issue, (ii) the transfer restrictions
thereon shall be eliminated and (iii) certain provisions relating to an
increase in the stated rate of interest thereon shall be eliminated), to be
offered to Holders of Initial Securities in exchange for Initial Securities
pursuant to the Exchange Offer.
"Holders" shall mean the Initial Purchasers, for so long as they own any
Registrable Securities, and each of their respective successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities under the Indenture.
"Indenture" shall mean the Indenture relating to the Initial Securities
dated as of June 24, 1997 between the Company and Norwest Bank Minnesota,
National Association, as trustee, as the same may be amended from time to
time in accordance with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the preamble.
"Majority Holders" shall mean the Holders of a majority of the aggregate
principal amount of outstanding Registrable Securities; provided that
whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the Company shall be disregarded in determining whether such consent or
approval was given by the Holders of such required percentage or amount.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all materials incorporated by
reference therein.
"Purchase Agreement" shall have the meaning set forth in the preamble.
"Registrable Securities" shall mean the Initial Securities; provided,
however, that the Initial Securities shall cease to be Registrable Securities
when (i) a Registration Statement with respect to
2
<PAGE>
such Initial Securities shall have been declared effective under the 1933
Act and such Initial Securities shall have been disposed of pursuant to such
Registration Statement, (ii) such Initial Securities shall have been sold to
the public pursuant to Rule 144 (or any similar provision then in force, but
not Rule 144A) under the 1933 Act, (iii) such Initial Securities shall have
ceased to be outstanding or (iv) upon consummation of the Exchange Offer but
only with respect to Initial Securities held by a Holder that is eligible to
receive fully tradeable Exchange Securities in connection with the Exchange
Offer.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. ("NASD") registration and filing fees, (ii) all fees
and expenses incurred in connection with compliance with state securities or
blue sky laws and compliance with the rules of the NASD (including reasonable
fees and disbursements of counsel for any underwriters or Holders in
connection with blue sky qualification of any of the Exchange Securities or
Registrable Securities), (iii) all expenses of any Persons in preparing or
assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus, any amendments or supplements
thereto, any underwriting agreements, securities sales agreements and other
documents relating to the performance of and compliance with this Agreement,
(iv) all rating agency fees, (v) all fees and expenses incurred in connection
with the listing, if any, of any of the Registrable Securities on any
securities exchange or exchanges (it being understood that such listing shall
be at the sole discretion of the Company), (vi) the fees and disbursements of
counsel for the Company and of the independent public accountants of the
Company, including the expenses of any special audits or cold comfort
letters required by or incident to such performance and compliance, (vii) the
fees and expenses of the Trustee, and any escrow agent or custodian, and
(viii) any fees and disbursements of the underwriters customarily required to
be paid by issuers or sellers of securities and the reasonable fees and
expenses of any special experts retained by the Company in connection with
any Registration Statement, but excluding fees of counsel to the underwriters
or the Holders and underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of Registrable Securities by a
Holder.
"Registration Statement" shall mean any registration statement of the
Company which covers any of the Exchange Securities or Registrable Securities
pursuant to the provisions of this Agreement, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all materials incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) of this
Agreement which covers all of the Registrable Securities on an appropriate
form under Rule 415 under the 1933 Act, or any similar rule that may
3
<PAGE>
be adopted by the SEC, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
materials incorporated by reference therein.
"Trustee" shall mean the trustee with respect to the Initial Securities
under the Indenture.
ARTICLE TWO - REGISTRATION UNDER THE 1933 ACT
(a) EXCHANGE OFFER REGISTRATION. To the extent not prohibited by any
applicable law or applicable interpretation of the staff of the SEC (the
"Staff"), the Company shall use its best efforts (A) to file an Exchange Offer
Registration Statement covering the offer by the Company to the Holders to
exchange all of the Registrable Securities for Exchange Securities with the
SEC within 90 days after the Closing Date, (B) to cause such Registration
Statement to be declared effective by the SEC within 150 days after the
Closing Date, (C) to cause such Registration Statement to remain effective
until the closing of the Exchange Offer and (D) to consummate the Exchange
Offer within 180 days following the Closing Date. Upon the effectiveness of
the Exchange Offer Registration Statement, the Company shall promptly
commence the Exchange Offer, it being the objective of such Exchange Offer to
enable each Holder (other than Participating Broker-Dealers (as defined in
Section 3(f))) eligible and electing to exchange Registrable Securities for
Exchange Securities (assuming that such Holder is not an affiliate of the
Company within the meaning of Rule 405 under the 1933 Act, acquires the
Exchange Securities in the ordinary course of such Holder s business and has
no arrangements or understandings with any person to participate in the
Exchange Offer for the purpose of distributing the Exchange Securities) to
trade such Exchange Securities from and after their receipt without any
limitations or restrictions under the 1933 Act and without material
restrictions under the securities laws of a substantial proportion of the
several states of the United States.
In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Exchange Offer open for not less than 30 days after the
date notice thereof is mailed to the Holders (or longer if required by
applicable law);
(iii) use the services of the Depository for the Exchange Offer;
(iv) permit Holders to withdraw tendered Registrable Securities at any
time prior to the close of business, Minneapolis time, on the last business
day on which the Exchange Offer shall remain open, by sending to the
institution specified in the notice, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the principal
4
<PAGE>
amount of Registrable Securities delivered for exchange, and a statement
that such Holder is withdrawing his election to have such Initial
Securities exchanged; and
(v) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer, the Company
shall:
(i) accept for exchange Registrable Securities duly tendered and not
validly withdrawn pursuant to the Exchange Offer in accordance with the
terms of the Exchange Offer Registration Statement and the letter of
transmittal which is an exhibit thereto;
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities so accepted for exchange by the
Company; and
(iii) cause the Trustee promptly to authenticate and deliver
Exchange Securities to each Holder of Registrable Securities equal in
amount to the Registrable Securities of such Holder so accepted for
exchange.
Interest on each Exchange Security will accrue from the last date on
which interest was paid on the Registrable Securities surrendered in exchange
therefor or, if no interest has been paid on the Registrable Securities, from
the date of its original issue. The Exchange Offer shall not be subject to
any conditions, other than (i) that the Exchange Offer, or the making of any
exchange by a Holder, does not violate applicable law or any applicable
interpretation of the Staff, (ii) the due tendering of Registrable Securities
in accordance with the Exchange Offer, (iii) that no action or proceeding
shall have been instituted or threatened in any court or by or before any
governmental agency with respect to the Exchange Offer which, in the Company
s judgment, would reasonably be expected to impair the ability of the Company
to proceed with the Exchange Offer, (iv) that there shall not have been
adopted or enacted any law, statute, rule or regulation which, in the Company
s judgment, would reasonably be expected to impair the ability of the Company
to proceed with the Exchange Offer, (v) that there shall not have been
declared by U.S. federal, New York or New Jersey authorities a banking
moratorium which, in the Company's judgment, would reasonably be expected to
impair the ability of the Company to proceed with the Exchange Offer, (vi)
that trading generally on the New York Stock Exchange or in the
over-the-counter market shall not have been suspended by order of the SEC or
any other governmental authority, which, in the Company s judgment, would
reasonably be expected to impair the ability of the Company to proceed with
the Exchange Offer and (vii) that each Holder of Registrable Securities
(other than Participating Broker-Dealers) who wishes to exchange such
Registrable Securities for Exchange Securities in the Exchange Offer shall
have represented that (A) it is not an affiliate of the Company, (B) any
Exchange Securities to be received by it were acquired in the ordinary course
of business and (C) at the time of the commencement of the Exchange Offer it
has no arrangement with any person to participate in the distribution (within
the meaning of the 1933 Act) of the Exchange Securities and shall have made
such other representations as may be reasonably necessary under applicable
SEC rules, regulations or
5
<PAGE>
interpretations to render the use of Form S-4 or another appropriate form
under the 1933 Act available; provided, however, that none of the foregoing
conditions shall relieve the Company of its obligations under this Agreement
or effect any increase in the interest rate borne by the Initial Securities
pursuant to this Agreement. To the extent permitted by law, the Company
shall inform the Initial Purchasers of the names and addresses of the Holders
to whom the Exchange Offer is made, and the Initial Purchasers shall have the
right to contact such Holders and otherwise facilitate the tender of
Registrable Securities in the Exchange Offer.
(b) SHELF REGISTRATION. (i) If, because of any change in law or
applicable interpretations thereof by the Staff, the Company is not permitted to
effect the Exchange Offer as contemplated by Section 2(a) hereof, or (ii) if for
any other reason the Exchange Offer Registration Statement is not declared
effective within 150 days following the Closing Date, or (iii) upon the request
of either of the Initial Purchasers (with respect to any Registrable Securities
which it acquired directly from the Company) following the consummation of the
Exchange Offer if such Initial Purchaser shall hold Registrable Securities which
it acquired directly from the Company and if such Initial Purchaser is not
permitted, in the opinion of counsel to the Initial Purchasers, pursuant to
applicable law or applicable interpretation of the Staff to participate in the
Exchange Offer, the Company shall, at its cost:
(A) as promptly as practicable, file with the SEC a Shelf
Registration Statement relating to the offer and sale of the Registrable
Securities by the Holders from time to time in accordance with the methods
of distribution elected by the Majority Holders of such Registrable
Securities and set forth in such Shelf Registration Statement, and use its
best efforts to cause such Shelf Registration Statement to be declared
effective by the SEC by the 210th day after the Closing Date (or promptly
in the event of a request by an Initial Purchaser pursuant to clause (iii)
above). In the event that the Company is required to file a Shelf
Registration Statement upon the request of an Initial Purchaser pursuant to
clause (iii) above, the Company shall file and have declared effective by
the SEC both an Exchange Offer Registration Statement pursuant to Section
2(a) with respect to all Registrable Securities and a Shelf Registration
Statement (which may be a combined Registration Statement with the Exchange
Offer Registration Statement) with respect to offers and sales of
Registrable Securities held by such Holder or the Initial Purchasers after
completion of the Exchange Offer;
(B) use its best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the Prospectus forming part
thereof to be usable by Holders for a period of (1) two years after the
effective date of the Shelf Registration Statement, in the event it is
required to be filed pursuant to clause (i) above, or (2) two years after
the date of original issuance of the Registrable Securities, in the event
the Shelf Registration Statement is required to be filed pursuant to clause
(ii) or (iii) above, or, in either case, such shorter period which will
terminate when all of the Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement; and
6
<PAGE>
(C) notwithstanding any other provisions hereof, use its best efforts
to ensure that (i) any Shelf Registration Statement and any amendment
thereto and any Prospectus forming part thereof and any supplement thereto
complies in all material respects with the 1933 Act and the rules and
regulations thereunder, (ii) any Shelf Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading and (iii) any Prospectus forming part of any Shelf Registration
Statement, and any supplement to such Prospectus (as amended or
supplemented from time to time), does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements, in the light of the circumstances under which they were
made, not misleading.
The Company further agrees, if necessary, to supplement or amend the
Shelf Registration Statement if reasonably requested by the Majority Holders
with respect to information relating to the Holders and otherwise as required
by Section 3(b) below, to use all reasonable efforts to cause any such
amendment to become effective and such Shelf Registration to become usable as
soon as thereafter practicable and to furnish to the Holders of Registrable
Securities copies of any such supplement or amendment promptly after its
being used or filed with the SEC.
(c) EXPENSES. The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a) or 2(b) and, in the
case of any Shelf Registration Statement, will reimburse the Holders or Initial
Purchasers for the reasonable fees and disbursements of one firm or counsel
designated in writing by the Majority Holders to act as counsel for the Holders
of the Registrable Securities in connection therewith, and, in the case of an
Exchange Offer Registration Statement, will reimburse the Initial Purchasers, as
applicable, for the reasonable fees and disbursements of a single counsel in
connection therewith. Each Holder shall pay all expenses of its counsel other
than as set forth in the preceding sentence, underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
such Holder s Registrable Securities pursuant to the Shelf Registration
Statement.
(d) EFFECTIVE REGISTRATION STATEMENT. (i) The Company will be deemed not
to have used its best efforts to cause the Exchange Offer Registration Statement
or the Shelf Registration Statement, as the case may be, to become, or to
remain, effective during the requisite period if the Company voluntarily takes
any action that would result in any such Registration Statement not being
declared effective or in the Holders of Registrable Securities covered thereby
not being able to exchange or offer and sell such Registrable Securities during
that period unless (A) such action is required by applicable law or (B) such
action is taken by the Company in good faith and for valid business reasons (not
including avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets, so long as the Company promptly complies
with the requirements of Section 3(k) hereof, if applicable.
(ii) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof
will not be deemed to have
7
<PAGE>
become effective unless it has been declared effective by the SEC;
provided, however, that if, after it has been declared effective, the
offering of Registrable Securities pursuant to a Registration Statement
is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have been effective during
the period of such interference, until the offering of Registrable
Securities pursuant to such Registration Statement may legally resume.
(e) INCREASE IN INTEREST RATE. In the event that (i) the Exchange Offer
Registration Statement is not filed with, and declared effective by, the SEC
on or prior to the 90th and 150th calendar days after the Closing Date,
respectively (unless changes in law or the applicable interpretation of the
Staff do not permit the Company to effect the Exchange Offer, in which case
clause (iii) shall apply), (ii) the Exchange Offer is not consummated on or
prior to the 180th calendar day after the Closing Date (unless changes in law
or the applicable interpretation of the Staff do not permit the Company to
effect the Exchange Offer, in which case clause (iii) shall apply) or (iii) a
Shelf Registration Statement with respect to the Registrable Securities is
required to be filed due to a change in law or interpretation and such Shelf
Registration Statement is not declared effective on or prior to the later of
the 210th calendar day after the Closing Date and the 45th calendar day after
the publication of the change in law or interpretation, the interest rate
borne by the Initial Securities shall be increased by 0.50% per annum
following such 150-day period in the case of clause (i) above, such 180-day
period in the case of clause (ii) above or such 210-day period or 45-day
period (as applicable) in the case of clause (iv) above; provided that the
aggregate increase in such interest rate will in no event exceed 0.50% per
annum. Upon (w) the filing or effectiveness of the Exchange Offer
Registration Statement after the 90-day or 150-day periods, respectively,
described in clause (i) above, (x) the consummation of the Exchange Offer
after the 180-day period described in clause (ii) above, or (y) the
effectiveness of a Shelf Registration Statement after the 210-day period or
45-day period (as applicable) described in clause (iii) above, the interest
rate borne by the Initial Securities from the date of such filing,
effectiveness or consummation, as the case may be, will be reduced to the
original interest rate.
(f) SPECIFIC ENFORCEMENT. Without limiting the remedies available to
the Initial Purchasers and the Holders, the Company acknowledges that any
failure by the Company to comply with its obligations under Section 2(a) and
Section 2(b) hereof may result in material irreparable injury to the Initial
Purchasers or the Holders for which there is no adequate remedy at law, that
it will not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, the Initial Purchasers or any Holder
may obtain such relief as may be required to specifically enforce the
Company's obligations under Section 2(a) and Section 2(b) hereof.
ARTICLE THREE - REGISTRATION PROCEDURES
In connection with the obligations of the Company with respect to the
Registration Statements pursuant to Sections 2(a) and 2(b) hereof, the Company
shall:
8
<PAGE>
(a) prepare and file with the SEC a Registration Statement, within the
time period specified in Article 2, on the appropriate form under the 1933
Act, which form (i) shall be selected by the Company, (ii) shall, in the case
of a Shelf Registration, be available for the sale of the Registrable
Securities by the selling Holders thereof and (iii) shall comply as to form
in all material respects with the requirements of the applicable form and
include or incorporate by reference all financial statements required by the
SEC to be filed therewith, and use its best efforts to cause such
Registration Statement to become effective and remain effective in accordance
with Article 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary under
applicable law to keep such Registration Statement effective for the
applicable period; cause each Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule
424 under the 1933 Act; and comply with the provisions of the 1933 Act with
respect to the disposition of all securities covered by each Registration
Statement during the applicable period in accordance with the intended method
or methods of distribution by the selling Holders thereof;
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Securities, at least five days prior to filing, that a Shelf
Registration Statement with respect to the Registrable Securities is being
filed and advising such Holders that the distribution of Registrable
Securities will be made in accordance with the method elected by the Majority
Holders; and (ii) furnish to each Holder of Registrable Securities, to
counsel for the Initial Purchasers, to counsel for the Holders and to each
underwriter of an underwritten offering of Registrable Securities, if any,
without charge, as many copies of each Prospectus, including each preliminary
Prospectus, and any amendment or supplement thereof and such other documents
as such Holder or underwriter may reasonably request, including financial
statements and schedules and, if the Holder so requests, all exhibits
(including those incorporated by reference) in order to facilitate the public
sale or other disposition of the Registrable Securities; and (iii) subject to
the last paragraph of Section 3, hereby consent to the use of the Prospectus
or any amendment or supplement thereto by each of the selling Holders of
Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
(d) use its best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement and each underwriter of an underwritten offering of
Registrable Securities shall reasonably request by the time the applicable
Registration Statement is declared effective by the SEC, to cooperate with
the Holders in connection with any filings required to be made with the NASD,
and do any and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Holder; provided,
however, that the Company shall not be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3(d) or (ii) take
any action which would subject it to general service of process or taxation
in any such jurisdiction if it is not then so subject;
9
<PAGE>
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Securities and counsel for the Initial Purchasers promptly and,
if requested by such Holder or counsel, confirm such advice in writing
promptly (i) when a Registration Statement has become effective and when any
post-effective amendments and supplements thereto become effective, (ii) of
any request by the SEC or any state securities authority for post-effective
amendments and supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become effective,
(iii) of the issuance by the SEC or any state securities authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) if, between the
effective date of a Registration Statement and the closing of any sale of
Registrable Securities covered thereby, the representations and warranties of
the Company contained in any underwriting agreement, securities sales
agreement or other similar agreement, if any, relating to such offering cease
to be true and correct in all material respects, (v) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such proposes, (vi) of
the happening of any event or the discovery of any facts during the period a
Shelf Registration Statement is effective which makes any statement made in
such Registration Statement or the related Prospectus untrue in any material
respect or which requires the making of any changes in such Registration
Statement or Prospectus in order to make the statements therein not
misleading and (vii) of any determination by the Company that a
post-effective amendment to a Registration Statement would be appropriate.
(f) (A) in the case of the Exchange Offer, (i) include in the Exchange
Offer Registration Statement a "Plan of Distribution" section covering the
use of the Prospectus included in the Exchange Offer Registration Statement
by broker-dealers who have exchanged their Registrable Securities for
Exchange Securities for the resale of such Exchange Securities, (ii) furnish
to each broker-dealer who desires to participate in the Exchange Offer,
without charge, as many copies of each Prospectus included in the Exchange
Offer Registration Statement, including any preliminary prospectus, and any
amendment or supplement thereto, as such broker-dealer may reasonably
request, (iii) include in the Exchange Offer Registration Statement a
statement that any broker-dealer who holds Registrable Securities acquired
for its own account as a result of market-making activities or other trading
activities (a "Participating Broker-Dealer"), and who receives Exchange
Securities for Registrable Securities pursuant to the Exchange Offer, may be
a statutory underwriter and must deliver a prospectus meeting the
requirements of the 1933 Act in connection with any resale of such Exchange
Securities, (iv) subject to the last paragraph of Section 3, hereby consent
to the use of the Prospectus forming part of the Exchange Offer Registration
Statement or any amendment or supplement thereto, by any broker-dealer in
connection with the sale or transfer of the Exchange Securities covered by
the Prospectus or any amendment or supplement thereto, and (v) include in the
transmittal letter or similar documentation to be executed by an exchange
offeree in order to participate in the Exchange Offer (x) the following
provision:
"If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Securities. If the undersigned is a broker-dealer that will
receive Exchange Securities for its own account in
10
<PAGE>
exchange for Registrable Securities, it represents that the Registrable
Securities to be exchanged for Exchange Securities were acquired by it as
a result of market-making activities or other trading activities and
acknowledges that it will deliver a prospectus meeting the requirements
of the 1933 Act in connection with any resale of such Exchange Securities
pursuant to the Exchange Offer; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the 1933 Act"; and
(y) a statement to the effect that by a broker-dealer making the acknowledgment
described in subclause (x) and by delivering a Prospectus in connection with the
exchange of registrable Securities, the broker-dealer will not be deemed to
admit that it is an underwriter within the meaning of the 1933 Act; and
(B) to the extent any Participating Broker-Dealer participates in the
Exchange Offer, the Company shall use its best efforts to cause to be
delivered at the request of entities representing the Participating
Broker-Dealers (which entities shall be the Initial Purchasers, unless they
elect not to act as such representatives) only one, if any, "cold comfort"
letter with respect to the Prospectus in the form existing on the last date
for which exchanges are accepted pursuant to the Exchange Offer and with
respect to each subsequent amendment or supplement, if any, effected during
the period specified in clause (C) below; and
(C) to the extent any Participating Broker-Dealer participates in the
Exchange Offer, the Company shall use its best efforts to maintain the
effectiveness of the Exchange Offer Registration Statement for a period of
180 days following the closing of the Exchange Offer; and
(D) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement as would
otherwise be contemplated by Section 3(b), or take any other action as a
result of this Section 3(f), for a period exceeding 180 days after the
closing of the Exchange Offer (as such period may be extended by the
Company) and Participating Broker-Dealers shall not be authorized by the
Company to, and shall not, deliver such Prospectus after such period in
connection with resales contemplated by this Section 3.
(g) (A) in the case of an Exchange Offer, furnish counsel for the
Initial Purchasers and (B) in the case of a Shelf Registration, furnish
counsel for the Holders of Registrable Securities copies of any request by
the SEC or any state securities authority for amendments or supplements to a
Registration Statement and Prospectus or for additional information;
(h) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement as soon as
practicable and provide immediate notice to each Holder of the withdrawal of
any such order;
11
<PAGE>
(i) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(j) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends; and cause such Registrable Securities to
be in such denominations (consistent with the provisions of the Indenture)
and registered in such names as the selling Holders or the underwriters, if
any, may reasonably request at least two business days prior to the closing
of any sale of Registrable Securities;
(k) in the case of a Shelf Registration, upon the occurrence of any
event or the discovery of any facts, each as contemplated by Section 3(e)(vi)
hereof, use its best efforts to prepare a supplement or post-effective
amendment to a Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities, such Prospectus will not contain at the time of such
delivery any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Company agrees
to notify each Holder to suspend use of the Prospectus as promptly as
practicable after the occurrence of such an event, and each Holder hereby
agrees to suspend use of the Prospectus until the Company has amended or
supplemented the Prospectus to correct such misstatement or omission. At
such time as such public disclosure is otherwise made or the Company
determines that such disclosure is not necessary, in each case to correct any
misstatement of a material fact or to include any omitted material fact, the
Company agrees promptly to notify each Holder of such determination and to
furnish each Holder such numbers of copies of the Prospectus, as amended or
supplemented, as such Holder may reasonably request;
(l) obtain a CUSIP number for all Exchange Securities, or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement, and provide the Trustee with printed certificates for
the Exchange Securities or the Registrable Securities, as the case may be, in
a form eligible for deposit with the Depository;
(m) (i) cause the Indenture to be qualified under the Trust Indenture
Act of 1939, as amended (the "TIA"), in connection with the registration of
the Exchange Securities, or Registrable Securities, as the case may be, (ii)
cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the TIA and (iii) execute, and use its best
efforts to cause the Trustee to execute, all documents as may be required to
effect such changes, and all other forms and documents required to be filed
with the SEC to enable the Indenture to be so qualified in a timely manner;
(n) in the case of a Shelf Registration enter into agreements (including
underwriting agreements) and take all other customary and appropriate actions
(including those reasonably
12
<PAGE>
requested by the Majority Holders) in order to expedite or facilitate the
disposition of such Registrable Securities and in such connection whether or
not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration:
(i) make such representations and warranties to the Holders of such
Registrable Securities and the underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters in similar
underwritten offerings as may be reasonably requested by them;
(ii) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinion (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and the
holders of a majority in principal amount of the Registrable Securities
being sold) addressed to each selling Holder and the underwriters, if any,
covering the matters customarily covered in opinions requested in sales of
securities or underwritten offerings and such other matters as may be
reasonably requested by such Holders and underwriters;
(iii) obtain letters and updates thereof from the Company's
independent certified public accountants addressed to the underwriters, if
any, and will use best efforts to have such letters addressed to the
selling Holders of Registrable Securities, such letters to be in customary
form and covering matters of the type customarily covered in "cold comfort"
letters to underwriters in connection with similar underwritten offerings;
(iv) enter into a securities sale agreement with the Holders and an
agent of the Holders providing for, among other things, the appointment of
such agent for the selling Holders for the purpose of soliciting purchases
of Registrable Securities, which agreement shall be in form, substance and
scope customary for similar offerings;
(v) if an underwriting agreement is entered into, cause the same to
set forth indemnification provisions and procedures substantially
equivalent to the indemnification provisions and procedures set forth in
Section 5 hereof with respect to the underwriters and all other parties to
be indemnified pursuant to said Section 5; and
(vi) deliver such documents and certificates as may be reasonably
requested and as are customarily delivered in similar offerings.
The above shall be done at (i) the effectiveness of such Registration
Statement (and, if appropriate, each post-effective amendment thereto) and
(ii) each closing under any underwriting or similar agreement as and to the
extent required thereunder. In the case of any underwritten offering, the
Company shall provide written notice to the Holders of all Registrable
Securities of such underwritten offering at least 30 days prior to the filing
of a prospectus supplement for such underwritten offering. Such notice shall
(x) offer each such Holder the right to participate in such underwritten
offering, (y) specify a date, which shall be no earlier than 10 days
following the date
13
<PAGE>
of such notice, by which such Holder must inform the Company of its intent to
participate in such underwritten offering and (z) include the instructions
such Holder must follow in order to participate in such underwritten offering;
(o) in the case of a Shelf Registration, make available for inspection
by representatives of the Holders of the Registrable Securities and any
underwriters participating in any disposition pursuant to a Shelf
Registration Statement and any counsel or accountant retained by such Holders
or underwriters, all financial and other records, pertinent corporate
documents and properties of the Company reasonably requested by any such
persons, and cause the respective officers, directors, employees, and any
other agents of the Company to supply all information reasonably requested by
any such representative, underwriter, special counsel or accountant in
connection with a Registration Statement;
(p) (i) a reasonable time prior to the filing of any Exchange Offer
Registration Statement, any Prospectus forming a part thereof, any amendment
to an Exchange Offer Registration Statement or amendment or supplement to a
Prospectus, provide copies of such document to the Initial Purchasers, and
make such changes in any such document prior to the filing thereof as any of
the Initial Purchasers or their counsel any reasonably request; (ii) in the
case of a Shelf Registration, a reasonable time prior to filing any Shelf
Registration Statement, any Prospectus forming a part thereof, any amendment
to such Shelf Registration Statement or amendment or supplement to such
Prospectus, provide copies of such document to the Holders of Registrable
Securities, to the Initial Purchasers, to counsel on behalf of the Holders
and to the underwriter or underwriters of an underwritten offering of
Registrable Securities, if any, and make such changes in any such document
prior to the filing thereof as the Holders of Registrable Securities, the
Initial Purchasers on behalf of such Holders, their counsel and any
underwriter may reasonably request; and (iii) cause the representatives of
the Company to be available for discussion of such document as shall be
reasonably requested by the Holders of Registrable Securities, the Initial
Purchasers on behalf of such Holders or any underwriter and shall not at any
time make any filing of any such document of which such Holders, the Initial
Purchasers on behalf of such Holders, their counsel or any underwriter shall
not have previously been advised and furnished a copy or to which such
Holders, the Initial Purchasers on behalf of such Holders, their counsel or
any underwriter shall reasonably object;
(q) in the case of a Shelf Registration, use its best efforts to cause
the Registrable Securities to be rated with the appropriate rating agencies,
if so requested by the Majority Holders or by the underwriter or underwriters
of an underwritten offering of Registrable Securities, if any, unless the
Registrable Securities are already so rated;
(r) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering at least 12
months which shall satisfy the provisions of Section 11(a) of the 1933 Act
and Rule 158 thereunder; and
14
<PAGE>
(s) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter and its counsel.
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require
each Holder of Registrable Securities to furnish to the Company such
information regarding such Holder and the proposed distribution by such
Holder of such Registrable Securities as the Company may from time to time
reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder agrees that,
upon receipt of any notice from the Company of the happening of any event or
the discovery of any facts, each of the kind described in Section
3(e)(ii)-(vi) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to a Registration Statement until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(k) hereof, and, if so directed by the Company, such
Holder will deliver to the Company (at its expense) all copies in its
possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice. If the Company shall give any such
notice to suspend the disposition of Registrable Securities pursuant to a
Shelf Registration Statement as a result of the happening of any event or the
discovery of any facts, each of the kind described in Section 3(e)(vi)
hereof, the Company shall be deemed to have used its best efforts to keep the
Shelf Registration Statement effective during such period of suspension
provided that the Company shall use its best efforts to file and have
declared effective (if an amendment) as soon as practicable an amendment or
supplement to the Shelf Registration Statement and shall extend the period
during which the Registration Statement shall be maintained effective
pursuant to this Agreement by the number of days during the period from and
including the date of the giving of such notice to and including the date
when the Holders shall have received copies of the supplemented or amended
Prospectus necessary to resume such dispositions.
ARTICLE FOUR - UNDERWRITTEN REGISTRATIONS
If any of the Registrable Securities covered by any Shelf Registration
are to be sold in an underwritten offering, the investment banker or
investment bankers and manager or managers that will manage the offering will
be selected by the Majority Holders of such Registrable Securities included
in such offering and shall be reasonably acceptable to the Company.
No Holder of Registrable Securities may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Securities on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and
(b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements.
15
<PAGE>
ARTICLE FIVE - INDEMNIFICATION AND CONTRIBUTION
(a) The Company shall indemnify and hold harmless the Initial
Purchasers, each Holder, including Participating Broker-Dealers, each
underwriter who participates in an offering of Registrable Securities, their
respective affiliates, and the respective directors, officers, employees,
agents and each Person, if any, who controls any of such parties within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as
follows:
(i) against any and all losses, liabilities, claims, damages and
expenses whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which Exchange Securities
or Registrable Securities were registered under the 1933 Act, including all
documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all losses, liabilities, claims, damages and
expenses whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred
(including, subject to the provisions of Section 5(c) below, fees and
disbursements of counsel chosen by any indemnified party), reasonably
incurred in investigating, preparing or defending against any litigation, or
investigation or proceeding by any court or governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under subparagraph (i) or (ii)
of this Section 5(a);
provided, however, that this indemnity does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by the Initial Purchasers, any Holder, including Participating
Broker-Dealers or any underwriter expressly for use in the Registration
Statement (or any amendment thereto) or the Prospectus (or any amendment or
supplement thereto).
16
<PAGE>
(b) In the case of a Shelf Registration, each Holder agrees, severally
and not jointly, to indemnify and hold harmless the Company, the Initial
Purchasers, each underwriter who participates in an offering of Registrable
Securities and the other selling Holders and each of their respective
directors and officers (including each officer of the Company who signed the
Registration Statement) and each person, if any, who controls the Company,
the Initial Purchasers, any underwriter or any other selling Holder within
the meaning of Section 15 of the 1933 Act, against any and all losses,
liabilities, claims, damages and expenses described in the indemnity
contained in Section 5(a) hereof, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendment thereto) or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Holder,
as the case may be, expressly for use in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or supplement
thereto); provided, however, that no such Holder shall be liable for any
claims hereunder in excess of the amount of net proceeds received by such
Holder from the sale of Registrable Securities pursuant to such Shelf
Registration Statement.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it
may have other than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action. In
no event shall the indemnifying party or parties be liable for the fees and
expenses of more than one counsel for all indemnified parties in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
(d) In order to provide for just and equitable contribution in
circumstances in which any of the indemnity provisions set forth in this
Section 5 are for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company, the
Initial Purchasers and the Holders shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company, the Initial Purchasers and the
Holders, as incurred; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act)
shall be entitled to contribution from any Person that was not guilty of
such fraudulent misrepresentation. As between the Company, the Initial
Purchasers and the Holders, such parties shall contribute to such aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated
by such indemnity agreement in such proportion as shall be appropriate to
reflect (i) the relative benefits received by the Company on the one hand
and the Initial Purchasers and the Holders on the other hand, from the
offering of the Exchange Securities or Registrable Securities included in
such offering, and (ii) the relative fault of the Company on the one hand
and the Initial Purchasers and the Holders on the other hand, with respect
to the statements or omissions which resulted in such loss, liability,
claim, damage or expense, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Initial Purchasers and the Holders on the
other hand shall be deemed to be in the same proportion
17
<PAGE>
as (x) in the case of the Company, the total proceeds from the offering
pursuant to the Purchase Agreement (before deducting expenses) received by
the Company with respect to the Initial Securities sold by the Initial
Purchasers or any Holder bear to (y) in the case of the Initial Purchasers
or any Holder, the aggregate principal amount of Initial Securities sold by
the Initial Purchasers or any such Holder, as the case may be, less the
amount of proceeds relating to such Initial Securities received by the
Company. The relative fault of the Company, on the one hand and the Initial
Purchasers and any such Holders on the other hand shall be determined by
reference to, among other things, whether the untrue statement of a material
fact or alleged untrue statement or the omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Initial Purchasers or any such Holder, as the case may be, and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or alleged untrue statement or such
omission or alleged omission. The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 5 were to be
determined by pro rata allocation or by any other method of allocation that
does not take into account the relevant equitable considerations. The
obligations of the Initial Purchasers and any Holders in this Section 5(d)
are several in proportion to their respective obligations hereunder and not
joint. Notwithstanding the provisions of this Section 5(d), in no event
shall any Holder of Registrable Securities be required to contribute any
amount greater than the excess of the aggregate principal amount of
Registrable Securities sold by such Holder (net of the proceeds received by
the Company pursuant to the Purchase Agreement with respect thereto) over
the amount that such person has otherwise been required to pay by reason of
such alleged statement or omission. For purposes of this Section 5, each
affiliate of the Initial Purchasers or a Holder, and each director, officer,
employee, agent and Person, if any, who controls the Initial Purchasers or a
Holder or such affiliate within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Initial Purchasers or such Holder, and each director of the Company, each
officer of the Company who signed the Registration Statement, and each
Person, if any, who controls the Company within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company.
ARTICLE SIX - MISCELLANEOUS
(a) RULE 144 AND RULE 144A. For so long as the Company is subject to
the reporting requirements of Section 13 or 15 of the 1934 Act, the Company
covenants that it will file the reports required to be filed by it under the
1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules and
regulations adopted by the SEC thereunder, that if it ceases to be so
required to file such reports, it will continue to file such reports as if
it were still required to do so and that it will upon the request of any
Holder of Registrable Securities (i) make publicly available such
information as is necessary to permit sales pursuant to Rule 144 under the
1933 Act, (ii) deliver such information to a prospective purchaser as is
necessary to permit sales pursuant to Rule 144A under the 1933 Act and it
will take such further action as any Holder of Registrable Securities may
reasonably request, and (iii) take such further action that is reasonable in
the circumstances, in each case, to the extent required from time to time to
enable such Holder to sell its Registrable Securities without registration
under the 1933 Act within the limitation of the exemptions provided by (x)
Rule 144
18
<PAGE>
under the 1933 Act, as such Rule may be amended from time to time, (y) Rule
144A under the 1993 Act, as such Rule may be amended from time to time, or
(z) any similar rules or regulations hereafter adopted by the SEC. Upon the
request of any Holder of Registrable Securities, the Company will deliver to
such Holder a written statement as to whether it has complied with such
requirements.
(b) NO INCONSISTENT AGREEMENTS. The Company has not entered into nor
will the Company on or after the date of this Agreement enter into any
agreement which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any
way conflict with and are not inconsistent with the rights granted to the
holders of the Company's other issued and outstanding securities under any
such agreements.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given unless the Company has obtained the written consent
of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or departure; provided, however, that no amendment,
modification, supplement or waiver or consent to any departure from the
provisions of Section 5 hereof shall be effective as against any Holder of
Registrable Securities unless consented to in writing by such Holder.
(d) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or any courier guaranteeing overnight delivery
(i) if to a Holder, at the most current address given by such Holder to the
Company by means of a notice given in accordance with the provisions of this
Section 6(d), which addresses initially are, with respect to the Initial
Purchasers, the respective addresses set forth in the Purchase Agreement; and
(ii) if to the Company, initially at the Company's address set forth in the
Purchase Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 6(d).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
receipt is acknowledged, if telecopied; and on the next business day, if
timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of each of
the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall
be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms hereof or of the Purchase
Agreement or the Indenture. If any transferee of any
19
<PAGE>
Holder shall acquire Registrable Securities, in any manner, whether by
operation of law or otherwise, such Registrable Securities shall be held
subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities, such Person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement, including the restrictions on resale set forth in this
Agreement and, if applicable, the Purchase Agreement, and such Person shall
be entitled to receive the benefits hereof.
(f) THIRD PARTY BENEFICIARIES. Each of the Initial Purchasers shall be
a third party beneficiary to the agreements made hereunder between the
Company, on the one hand, and the Holders, on the other hand, and shall have
the right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto to separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA.
(j) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability
of any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMMUNITY FIRST BANKSHARES, INC.
By /s/ Donald R. Mengedoth
-----------------------------------------------------
Name: Donald R. Mengedoth
Title: President and Chief Executive Officer
Confirmed and accepted as of the date first above written:
PIPER JAFFRAY INC.
By: /s/ Joyce Nelson Schuette
-------------------------------
Name: Joyce Nelson Schuette
Title: Managing Director
KEEFE, BRUYETTE & WOODS, INC.
By: /s/ Peter J. Wirth
-------------------------------
Name: Peter J. Wirth
Title: Senior Vice President
21
<PAGE>
Exhibit 5.1
[LINDQUIST & VENNUM LETTERHEAD]
September 19, 1997
Board of Directors
Community First Bankshares, Inc.
520 Main Avenue
Fargo, North Dakota 58124-0001
Ladies and Gentlemen:
This opinion is rendered in connection with the filing by Community First
Bankshares, Inc. (the "Company") with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act"), of a Registration
Statement on Form S-4 (the "Registration Statement") with respect to the
issuance by the Company of up to $60,000,000 of 7.30% Subordinated Notes due
2004 (the "New Notes"). The New Notes are being issued under an Indenture dated
June 24, 1997 (the "Indenture"), between the Company and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"). The New Notes are being
issued in exchange for $60,000,000 in previously outstanding 7.30% Subordinated
Notes due 2004 (the "Old Notes") issued in June 1997 pursuant to Rule 144A under
the Act.
We have examined the originals or copies, certified to our satisfaction, of
such corporate instruments and certificates of public officials and officers and
representatives of the Company and have made such examination of law, as we have
deemed relevant and necessary as a basis for the opinion hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the authenticity
and conformity to original documents of documents submitted to us as certified
or photostatic copies.
Based upon the foregoing, we are of the opinion that:
(1) The Indenture has been duly authorized by the Company and constitutes
a valid and legally binding instrument enforceable against the Company in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(2) The New Notes have been duly authorized by the Company and, when
executed, authenticated, issued and delivered in exchange for the Old Notes,
will constitute valid and legally binding obligations of the
<PAGE>
Company entitled to the benefits of the Indenture, subject, as to enforcement,
as aforesaid and further subject to the fact that we do not express any opinion
as to whether the defense of usury or illegality based upon or arising from the
interest payable on the Notes might be available to the Company under the laws
of any jurisdiction other than the State of Minnesota.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of our name in the Prospectus included
therein.
Very truly yours,
LINDQUIST & VENNUM P.L.L.P.
<PAGE>
Exhibit 12.1
COMMUNITY FIRST BANKSHARES, INC.
CALCULATION OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------------- -------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Income before taxes & extraordinary
item and cumulative effect of
accounting change......................... $33,034 $27,308 $ 50,517 $ 47,161 $36,681 $29,030 $23,654
Add: fixed charges.......................... 51,089 46,752 97,736 85,426 55,229 47,271 50,870
------- ------- -------- -------- ------- ------- -------
Earnings including interest
expense - deposits.......................(a) 84,123 74,060 148,253 132,587 91,910 76,301 74,524
Less: interest expense - deposits........... 42,535 39,860 81,655 (71,780) (46,560) (42,873) (47,727)
------- ------- -------- -------- ------- ------- -------
Earnings excluding interest
expense - deposits.......................(b) $41,588 $34,200 $ 66,598 $ 60,807 $45,350 $33,428 $26,797
------- ------- -------- -------- ------- ------- -------
------- ------- -------- -------- ------- ------- -------
Fixed charges:
Interest expense - deposits............... $42,535 $39,860 $ 81,655 $ 71,780 $46,560 $42,873 $47,727
Interest expense - borrowings............. 8,554 5,662 13,579 11,111 6,908 4,398 3,143
Interest expense on capital leases........ 0 0 0 0 0 0 0
Dividends on preferred stock (gross)...... 0 1,230 2,502 2,535 1,761 0 0
------- ------- -------- -------- ------- ------- -------
Fixed charges including interest
expense - deposits.......................(c) 51,089 46,752 97,736 85,426 55,229 47,271 50,870
Less: interest expense - deposits........... 42,535 39,860 81,655 (71,780) (46,560) (42,873) (47,727)
------- ------- -------- -------- ------- ------- -------
Fixed charges excluding interest
expense - deposits.......................(d) $ 8,554 $ 6,892 $ 16,081 $ 13,646 $ 8,669 $ 4,398 $ 3,143
------- ------- -------- -------- ------- ------- -------
------- ------- -------- -------- ------- ------- -------
Preferred dividends......................... $ 0 $ 805 $ 1,610 $ 1,610 $ 1,091 $ 0 $ 0
Effective tax rate.......................... 33.61% 34.56% 35.65% 36.49% 38.04% 37.12% 36.13%
Preferred dividends - grossed
up (1 - tax rate)......................... $ 0 $ 1,230 2,502 $ 2,535 $ 1,761 $ 0 $ 0
Earnings to combined fixed charges
and preferred stock dividends:
Excluding interest on deposits ((b)/(d)).. 4.86x 4.96x 4.14x 4.46x 5.23x 7.60x 8.53x
Including interest on deposits ((a)/(c)).. 1.65x 1.58x 1.52x 1.55x 1.66x 1.61x 1.46x
CALCULATION OF FULLY DILUTED
EARNINGS WITH REGARD TO
CONVERTIBLE DEBENTURES
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------------- -------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- -------- -------- ------- ------- -------
Income before taxes......................... $33,034 $27,308 $ 50,517 $ 47,161 $36,681 $29,030 $23,654
Interest expense on convertible
debentures................................ 0 0 86 137 415 126 0
------- ------- -------- -------- ------- ------- -------
Adjusted income before interest
on convertible debentures................ 33,034 27,308 50,603 47,298 37,096 29,156 23,654
Adjusted income tax provision............... 11,102 9,439 18,058 17,259 14,106 10,822 8,546
------- ------- -------- -------- ------- ------- -------
Adjusted net income......................... $21,932 $17,869 $ 32,545 $ 30,039 $22,990 $18,334 $15,108
------- ------- -------- -------- ------- ------- -------
------- ------- -------- -------- ------- ------- -------
</TABLE>
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Community First
Bankshares, Inc. for the registration of $60,000,000 of 7.30% Subordinated Notes
and to the incorporation by reference therein of our report dated January 23,
1997 (except for Note 3, as to which the date is February 28, 1997), with
respect to the consolidated financial statements of Community First Bankshares,
Inc. incorporated by reference in its Annual Report (Form 10-K) for the year
ended December 31, 1996, filed with the Securities and Exchange Commission.
We also consent to the reference to our firm under the caption "Experts"
and to the use of our report dated September 19, 1997, with respect to the
financial statements of KeyBank National Association (Wyoming), incorporated
by reference in the Registration Statement (Form S-4) and related Prospectus
of Community First Bankshares, Inc. for the registration of $60,000,000 of
7.30% Subordinated Notes.
ERNST & YOUNG LLP
Minneapolis, Minnesota
September 19, 1997
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS OF
MINOWA BANCSHARES, INC. AND SUBSIDIARIES
To the Board of Directors
Minowa Bancshares, Inc. and Subsidiaries
Decorah, Iowa
We consent to the reference to our firm under the caption "Experts" and to
the use of our audit report dated February 1, 1995, with respect to the
consolidated financial statements of Minowa Bancshares, Inc. and Subsidiaries
incorporated by reference in the Registration Statement (Form S-4) and related
Prospectus of Community First Bankshares, Inc. for the registration of
$60,000,000 in 7.30% Subordinated Notes.
Hacker, Nelson & Co., P.C.
Decorah, Iowa
September 17, 1997
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our audit report dated January 26, 1995, with respect to the
consolidated financial statements of First Community Bankshares, Inc. and
subsidiaries incorporated by reference in the Registration Statement (Form S-4)
and related Prospectus of Community First Bankshares, Inc. for the registration
of $60,000,000 in 7.30% Subordinated Notes.
Fortner, Bayens, Levkulich and Co., P.C.
Denver, Colorado
September 17, 1997
<PAGE>
Exhibit 23.5
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report and to all references to our firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
September 19, 1997
<PAGE>
Exhibit 99.2
LETTER OF TRANSMITTAL
-------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
__________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
-------------------------------------------------------------------
COMMUNITY FIRST BANKSHARES, INC.
LETTER OF TRANSMITTAL
7.30% SUBORDINATED NOTES DUE 2004
TO: Norwest Bank Minnesota, National Association, The Exchange Agent
BY REGISTERED OR CERTIFIED MAIL: BY OVERNIGHT COURIER:
Norwest Bank Minnesota, Norwest Bank Minnesota,
National Association National Association
161 North Concord Exchange 161 North Concord Exchange
P.O. Box 738 St. Paul, MN 55075
St. Paul, MN 55075-0738 Attention: Corporate Trust Services
BY HAND: BY FACSIMILE:
Norwest Bank Minnesota, (612) 450-2452
National Association Attention: Customer Service
161 North Concord Exchange
P.O. Box 738
St. Paul, MN 55075-0738 Confirm by telephone:
Attention: Corporate Trust (800) 468-9716
Services
Delivery of this instrument to an address other than as set forth above or
transmission of instructions via a facsimile number other than the one listed
above will not constitute a valid delivery. The instructions accompanying this
Letter of Transmittal should be read carefully before this Letter of Transmittal
is completed.
The undersigned acknowledges that he or she has received the Prospectus
dated ______________, 1997 (the "Prospectus") of Community First Bankshares,
Inc. (the "Company") and this Letter of Transmittal (the "Letter of
Transmittal"), which together constitute the Company's offer (the "Exchange
Offer") to exchange $________ principal amount of its 7.30% Subordinated Notes
due 2004 (the "New Notes") which have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), pursuant to a Registration Statement
of which the Prospectus is a part, for each $________ principal amount of its
outstanding 7.30% Subordinated Notes due 2004 which were issued in 1997 (the
"Old Notes"), of which $60,000,000 principal amount is outstanding. Other
capitalized terms used but not defined herein have the meaning given to them in
the Prospectus.
The Letter of Transmittal is to be used by Holders of Old Notes (i) if
certificates representing the Old Notes are to be physically delivered herewith,
or (ii) if the guaranteed delivery procedures described in the Prospectus are to
be utilized.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Old Notes are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
holder. The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Notes must complete
this letter in its entirety.
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
DESCRIPTION OF 7.30% SUBORDINATED NOTES DUE 2004 ("OLD NOTES")
- -------------------------------------------------------------------------------------------------------
Principal Amount
Name(s) and Address(es) of Registered Aggregate Principal Tendered (must be in
Holder(s) Certificate Amount Represented integral multiple of
(Please fill in, if blank) Number(s) by Certificate(s) $1,000)*
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
Total
- -------------------------------------------------------------------------------------------------------
</TABLE>
* Unless indicated in the column labeled "Principal Amount Tendered," any
tendering Holder of Old Notes will be deemed to have tendered the entire
aggregate principal amount represented by the columns labeled "Aggregate
Principal Amount Represented by Certificate(s)."
If the space provided above is inadequate, list the certificate numbers and
principal amounts on a separate signed schedule and affix the list to this
Letter of Transmittal.
The minimum permitted tender is $1,000 in principal amount of Old Notes.
All other tenders must be in integral multiples of $1,000.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 4, 5 and 6)
To be completed ONLY if certificates for Old Notes in a principal amount
not tendered or not purchased, or New Notes issued in exchange for Old Notes
accepted for exchange, are to be issued in the name of someone other than the
undersigned.
Issue certificate(s) to:
Name
----------------------------------------------------------------------------
(Please Print)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------
(Tax Identification or Social Security No.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 4, 5 and 6)
To be completed ONLY if certificates for Old Notes in a principal amount
not tendered or not purchased, or New Notes issued in exchange for Old Notes
accepted for exchange, are to be sent to someone other than the undersigned, or
to the undersigned at an address other than that shown above.
Mail to:
Name
----------------------------------------------------------------------------
(Please Print)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------
(Tax Identification or Social Security No.)
- --------------------------------------------------------------------------------
2
<PAGE>
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company the principal amount of Old Notes indicated above.
Subject to and effective upon the acceptance for exchange of the principal
amount of Old Notes tendered in accordance with this Letter of Transmittal, the
undersigned sells, assigns and transfers to, or upon the order of, the Company
all right, title and interest in and to the Old Notes tendered hereby. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent its
agent and attorney-in-fact (with full knowledge that the Exchange Agent also
acts as the agent of the Company) with respect to the tendered Old Notes with
full power of substitution to (i) deliver certificates for such Old Notes to the
Company and deliver all accompanying evidences of transfer and authenticity to,
or upon the order of, the Company and (ii) present such Old Notes for transfer
on the books of the Company and receive all benefits and otherwise exercise all
rights of beneficial ownership of such Old Notes all in accordance with the
terms of the Exchange Offer. The power of attorney granted in this paragraph
shall be deemed irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, sell, assign and transfer the Old Notes tendered
hereby and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim, when the same are acquired by the Company. The
undersigned hereby further represents that (i) the New Notes received pursuant
to the Exchange Offer are being acquired in the ordinary course of business of
the person receiving such New Notes (whether or not such person is the Holder),
(ii) neither the Holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Notes, (iii) neither the Holder nor any such other person is an "affiliate," as
defined in Rule 405 under the Securities Act, of the Company, (iv) the Holder is
not engaged in and does not intend to engage in, a distribution of the New
Notes, and (v) if the tendering Holder is a broker or dealer (as defined in the
Exchange Act) (a) it acquired the Old Notes for its own account as a result of
market making activities or other trading activities, (b) it has not entered
into any arrangement or understanding with the Company or any "affiliate" of the
Company (within the meaning of Rule 405 under the Securities Act) to distribute
the new Notes to be received in the Exchange Offer, and (c) it will deliver the
Company's Prospectus dated ________, 1997, as supplemented or amended, in
connection with any resale of such New Notes. By making the representations in
(v)(c) above and by delivering such Prospectus, such broker-dealer will not be
deemed to be admitting that it is an "underwriter" within the meaning of the
Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the assignment, transfer and purchase of the Old Notes
tendered hereby.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Old Notes when, as and if the Company has given oral
or written notice thereof to the Exchange Agent.
If any tendered Old Notes are not accepted for exchange pursuant to the
Exchange Offer for any reason, certificates for any such unaccepted Old Notes
will be returned, without expense, to the undersigned at the address shown below
or at a different address as may be indicated herein under "Special Payment
Instructions" as promptly as practicable after the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer -- Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
3
<PAGE>
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Payment Instructions," please
issue the certificates representing the New Notes issued in exchange for the Old
Notes accepted for exchange and return any Old Notes not tendered or not
exchanged, in the name(s) of the undersigned. Similarly, unless otherwise
indicated under "Special Delivery Instructions," please send the certificates
representing the New Notes issued in exchange for the Old Notes accepted for
exchange and any certificates for Old Notes not tendered or not exchanged (and
accompanying documents, as appropriate) to the undersigned at the address shown
below the undersigned's signature(s). In the event that both "Special Payment
Instructions" and "Special Delivery Instructions" are completed, please issue
the certificates representing the New Notes issued in exchange for the Old Notes
accepted for exchange and return any Old Notes not tendered or not exchanged in
the name(s) of, and send said certificates to, the person(s) so indicated. The
undersigned recognizes that the Company has no obligation pursuant to the
"Special Payment Instructions" and "Special Delivery Instructions" to transfer
any Old Notes from the name of the registered holder(s) thereof if the Company
does not accept for exchange any of the Old Notes so tendered.
Holders of Old Notes who wish to tender their Old Notes and (i) whose Old
Notes are not immediately available, or (ii) who cannot deliver their Old Notes,
this Letter of Transmittal or any other documents required hereby to the
Exchange Agent prior to the Expiration Date, may tender their Old Notes
according to the guaranteed delivery procedures set forth in the Prospectus
under the Caption "The Exchange Offer - Guaranteed Delivery Procedures". See
Instruction 1 regarding the completion of the Letter of Transmittal printed
below.
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
X
- ------------------------------------------ --------------------
Date
X
- ------------------------------------------ --------------------
Signature(s) of Registered Holder(s) Date
or Authorized Signatory
Area Code and Telephone Number:
------------------
The above lines must be signed by the registered holder(s) of Old Notes as
their name(s) appear(s) on the Old Notes or by person(s) authorized to become
registered holder(s) by a properly completed bond power from the registered
holder(s), a copy of which must be transmitted with this Letter of Transmittal.
If Old Notes to which this Letter of Transmittal relates are held of record by
two or more joint holders, then all such holders must sign this Letter of
Transmittal. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, such person must (i) set forth his or her full title
below and (ii) unless waived by the Company, submit evidence satisfactory to the
Company of such person's authority so to act. See Instruction 4 regarding the
completion of this Letter of Transmittal printed below.
4
<PAGE>
Name(s):
-----------------------------------------------------------------
-----------------------------------------------------------------
(Please Print)
Capacity:
-----------------------------------------------------------------
Address:
-----------------------------------------------------------------
-----------------------------------------------------------------
Signature(s) Guaranteed by an Eligible Institution:
(If required by Instruction 4)
---------------------------------------------------
(Authorized Signature)
---------------------------------------------------
(Title)
---------------------------------------------------
(Name of Firm)
Dated: , 1997.
--------------------------------------
5
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES. The tendered
Old Notes, as well as a properly completed and duly executed copy of this Letter
of Transmittal or facsimile hereof and any other documents required by this
Letter of Transmittal, most be received by the Exchange Agent at its address set
forth herein prior to 5:00 P.M., Minneapolis time, on the Expiration Date. The
method of delivery of the tendered Old Notes, this Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the Holder and, except as otherwise provided below, the delivery will be deemed
made only when actually received by the Exchange Agent. Instead of delivery by
mail, it is recommended that the Holder use an overnight or hand delivery
service. In all cases, sufficient time should be allowed to assure timely
delivery. No Letter of Transmittal or Old Notes should be sent to the Company.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, or (ii) who cannot deliver Old Notes, this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to 5:00 P.M., Minneapolis time, on the Expiration Date must tender their Old
Notes according to the guaranteed delivery procedures set forth in the
Prospectus. Pursuant to such procedure: (i) such tender must be made by or
through an Eligible Institution within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended; (ii) prior to the Expiration Date,
the Exchange Agent must have received from the Eligible Institution a properly
completed and duly executed Notice of Guaranteed delivery (by facsimile
transmission, mail or hand delivery) setting forth the name and address of the
Holder of the Old Notes, the certificate number or numbers of such Old Notes and
the principal amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within five New York Stock Exchange trading
days after the Expiration Date, this Letter of Transmittal (or facsimile hereof)
together with the certificate(s) representing the Old Notes and any other
required documents will be deposited by the Eligible Institution with the
Exchange Agent; and (iii) such properly completed and executed Letter of
Transmittal (or facsimile hereof), as well as all other documents required by
this Letter of Transmittal and the certificate(s) representing all tendered Old
Notes in proper form for transfer, most be received by the Exchange Agent within
five New York Stock Exchange trading days after the Expiration Date, all as
provided in the Prospectus under the caption "Guaranteed Delivery Procedures."
Any Holder of Old Notes who wishes to tender his or her Old Notes pursuant to
the guaranteed delivery procedures described above most ensure that the Exchange
Agent receives the Notice of Guaranteed Delivery prior to 5:00 P.M., Minneapolis
time, on the Expiration Date for the Old Notes. Upon request of the Exchange
Agent, a Notice of Guaranteed delivery will be sent to Holders who wish to
tender their Old Notes according to the guaranteed delivery procedures set forth
above.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Old Notes and withdrawal of tendered Old
Notes will he determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any and all Old Notes not properly tendered or any Old Notes the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to particular Old Notes. The Company's interpretation
of the terms and conditions of the Exchange Offer (including the instructions in
this Letter of Transmittal) shall he final and binding on all parties. Unless
waived, any defects or irregularities in connection with tender of Old Notes
most be cured within such time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tender of Old Notes,
nor shall any of them incur any liability for failure to give such notification.
Tender of Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders of Old Notes, unless otherwise provided in this
Letter of Transmittal, as soon as practicable following the Expiration Date.
6
<PAGE>
2. TENDER BY HOLDER. Only a Holder of Old Notes may tender such Old
Notes in the Exchange Offer. Any beneficial holder of Old Notes who is not the
registered holder and who wishes to tender should arrange with the registered
holder to execute and deliver this Letter of Transmittal on his or her behalf or
most, prior to completing and executing this Letter of Transmittal and
delivering his or her Old Notes, either make appropriate arrangements to
register ownership of the Old Notes in such holder's name or obtain a properly
completed bond power from the registered holder.
3. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in
integral multiples of $1,000. If less than the entire principal amount of any
Old Notes is tendered, the tendering Holder should fill in the principal amount
tendered in the fourth column of the box entitled "Description of 7.30%
Subordinated Notes Due 2004" above. The entire principal amount of Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. If the entire principal amount of all Old Notes is not
tendered, then Old Notes for the principal amount of Old Notes not tendered and
a certificate or certificates representing New Note issued in exchange for any
Old Notes accepted will be sent to the Holder at his or her registered address,
unless a different address is provided in the appropriate box on this Letter of
Transmittal, promptly after the Old Notes are accepted for exchange.
4. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEES OF SIGNATURES. If this Letter of Transmittal (or facsimile hereof)
is signed by the record Holder(s) of the Old Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the Old
Notes without alteration, enlargement or any change whatsoever.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered holders or holders of Old Notes tendered and the certificate or
certificates for New Notes issued in exchange therefor are to be issued (or any
untendered principal amount of Old Notes is to be reissued) to the registered
holder, the said holder need not and should not endorse any tendered Old Notes,
nor provide a separate bond power. In any other case, such holder must either
properly endorse the Old Notes tendered or transmit a properly completed
separate bond power with this Letter of Transmittal, with the signatures on the
endorsement or bond power guaranteed by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder or Holders of any Old Notes listed, such Old
Notes must be endorsed or accompanied by appropriate bond powers signed as the
name of the registered Holder or Holders appears on the Old Notes.
If this Letter of Transmittal (or facsimile hereof) or any Old Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact or officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
unless waived by the Company, evidence satisfactory to the Company of their
authority so to act must be submitted with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 4 must be guaranteed by an Eligible Institution.
Except as otherwise provided below, all signatures on this Letter of
Transmittal (or facsimile hereof) must be guaranteed by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States (an "Eligible Institution"). Signatures
on this Letter of Transmittal need not be guaranteed if (i) this Letter of
Transmittal is signed by the registered Holder(s) of the Old Notes tendered
herewith and such Holder(s) have not completed the box set forth herein entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" or (ii) such Old Notes are tendered for the account of an Eligible
Institution.
7
<PAGE>
5. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. Tendering Holders should
indicate, in the applicable box or boxes, the name and address to which New
Notes or substitute Old Notes for principal amounts not tendered or not accepted
for exchange are to be issued or sent, if different from the name and address of
the person signing this Letter of Transmittal. In the case of issuance in a
different name, the taxpayer identification or social security number of the
person named must also be indicated.
6. TAX IDENTIFICATION NUMBER. Federal income tax law requires that a
Holder whose offered Old Notes are accepted for exchange must provide the
Company (as payor) with his or her correct Taxpayer Identification Number
("TIN"), which, in the case of an exchanging Holder who is an individual, is his
or her social security number. If the Company is not provided with the correct
TIN or an adequate basis for exemption, such Holder may be subject to a $50
penalty imposed by the Internal Revenue Service (the "IRS"). In addition,
delivery to such Holder of New Notes may be subject to backup withholding in an
amount equal to 31% of the gross proceeds resulting from the Exchange Offer. If
withholding results in an overpayment of taxes, a refund may be obtained.
Exempt Holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. See the enclosed form W-9 for additional instructions.
To prevent backup withholding, each exchanging Holder must provide his or
her correct TIN by completing the form W-9 enclosed herewith, certifying that
the TIN provided is correct (or that such Note Holder is awaiting a TIN) and
that (i) the Holder is exempt from backup withholding, (ii) the Holder has not
been notified by the IRS that he or she is subject to backup withholding as a
result of a failure to report all interest or dividends or (iii) the IRS has
notified the Holder that he or she is no longer subject to backup withholding.
In order to satisfy the Exchange Agent that a foreign individual qualifies as an
exempt recipient, such Holder must submit a statement signed under penalty or
perjury attesting to such exempt status. Such statements may be obtained from
the Exchange Agent. If the Old Note are in more than one name or are not in the
name of the actual owner, consult the Form W-9 for information on which TIN to
report. If you do not provide your TIN to the Company within 60 days, backup
withholding will begin and continue until you furnish your TIN to the Company.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, certificates representing New Notes or Old Notes for principal amounts
not tendered or accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered Holder
of the Old Notes tendered hereby, or if tendered Old Notes are registered in the
name of any person other than the person signing this Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered Holder or on any other person) will be
payable by the tendering Holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with this Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
Holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Older Notes listed in this Letter of
Transmittal.
8. WAIVER OF CONDITIONS. The Company reserves the absolute right to
amend, waive or modify specified conditions in the Exchange Offer in the case or
any Old Notes tendered.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any tendering Holder
whose Old Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated herein for further instructions.
8
<PAGE>
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
specified in the Prospectus. Holders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Exchange Offer.
(DO NOT WRITE IN SPACE BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CERTIFICATE OLD NOTES OLD NOTES
SURRENDERED TENDERED ACCEPTED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Delivery Prepared by __________________ Checked By __________________
Date ________________, 1997.
9
<PAGE>
Exhibit 99.3
NOTICE OF GUARANTEED DELIVERY
OF
SURRENDER OF 7.30% SUBORDINATED NOTES
OF
COMMUNITY FIRST BANKSHARES, INC.
IN EXCHANGE FOR REGISTERED NOTES
This form or one substantially equivalent may be used to exchange one or
more notes, each representing unregistered 7.30% Subordinated Notes Due 2004
(the "Old Notes") of Community First Bankshares, Inc., a Delaware corporation
(the "Company"), for an equal amount of 7.30% Subordinated Notes Due 2004 of
the Company registered with the Securities and Exchange Commission and having
terms and conditions identical to the Old Notes (the "Registered Notes), if the
Depositary Receipts representing the Old Notes are not immediately available, or
all required documents cannot be delivered to the Depositary prior to 5:00 p.m.
Minneapolis time on _________________, 1997. This form may be delivered by hand
to the Depositary or transmitted by telegram, facsimile transmission, overnight
courier or mail to the Depositary and must include a guarantee by an eligible
financial institution.
THE DEPOSITARY:
NORWEST BANK MINNESOTA, N. A.
<TABLE>
<CAPTION>
BY MAIL: BY OVERNIGHT COURIER OR HAND DELIVERY TO:
<S> <C>
NORWEST BANK MINNESOTA, N.A. NORWEST BANK MINNESOTA, N.A.
Shareowner Services Reorganization Department Shareowner Services Reorganization Department
P.O.Box 64858 161 North Concord Exchange
St. Paul, MN 55164-0858 South St. Paul, MN 55075
</TABLE>
Facsimile (for eligible financial institutions only):
(612) 450-4163
Confirm by telephone:
(612) 450-4185
__________________________________________________
DELIVER OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an eligible financial
institution under the instructions thereto, such signature guarantee must appear
in the applicable space provided in the signature box on the Letter of
Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby surrenders to Community First Bankshares, Inc., a
Delaware corporation, in exchange for identical registered notes upon the terms
and subject to the conditions set forth in the letter to holders of Old Notes
dated June 24, 1997 and the related Letter of Transmittal, receipt of which is
hereby acknowledged, the number of Registered Notes set forth below, all
pursuant to the guaranteed delivery procedures set forth herein.
Number/Amount of Notes: Name(s) of Record Holder(s):
-------- -----------------
Note Certificate Nos.
(if available):
---------------- ---------------------------------------------
- ------------------------------- ---------------------------------------------
Please Print
Address(ee):
- ------------------------------- ---------------------------------
Dated:
------------------------- ---------------------------------------------
Zip Code
Daytime Area Code
and Tel. No.:
--------------------------------
Signature(s):
--------------------------------
---------------------------------------------
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary the certificates representing the Old Notes surrendered hereby, in
proper form for transfer, together with a properly completed and duly executed
Letter of Transmittal, with any required signature guarantees, and any other
required documents, within five trading days after the date hereof.
The eligible financial institution that completes this form must
communicate this guarantee to the Depositary and must deliver the Letter of
Transmittal and Old Notes to the Depositary by 5:00 p.m. Minneapolis time on
_________________, 1997. Failure to do so could result in a financial loss to
such eligible financial institution.
Name of Firm:
-------------------------- -----------------------------------
Authorized Signature
Address: Name:
------------------------------- ------------------------------
Please Print
Title:
- --------------------------------------- -----------------------------
Zip Code
Area Code and Tel. No.: Dated:
---------------- -----------------------------
NOTE: DO NOT SEND OLD NOTES WITH THIS NOTICE. OLD NOTES SHOULD BE SENT
WITH YOUR LETTER OF TRANSMITTAL.
3
