<PAGE>
As filed with the Securities and Exchange Commission on June 9, 1998.
REGISTRATION NO. 333-49367
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
AMENDMENT NO.1
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
COMMUNITY FIRST BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 6022 46-0391436
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)
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 and Chief Executive Officer
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 8th Street
Minneapolis, Minnesota 55402
Telephone: (612) 371-3211
Fax: (612) 371-3207
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
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
Title of Each Maximum Maximum
Class of Securities Amount to Price Aggregate Amount of
Being Registered be Registered Per Share Offering Price Registration Fee
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value. 7,000,000 shares (2) (2) (2)
- ----------------------------------------------------------------------------------------------------------------
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</TABLE>
(1) 3,500,000 shares were proposed to be registered upon initial filing of this
Registration Statement on April 3, 1998. On May 15, 1998, the Company
completed a two-for-one stock split in the form of a 100% dividend on the
outstanding shares of Common Stock of the Company. As a result of the
stock dividend, the number of shares to be registered under this
Registration Statement has been adjusted to 7,000,000 shares pursuant to
Rule 416(b).
(2) Registration fees were previously paid with respect to an aggregate
3,500,000 shares registered under this Registration Statement on April 3,
1998 (Maximum Aggregate Offering Price of $176,368,500). Pursuant to Rule
416(b), this amendment is filed to reflect this adjustment and does not
otherwise increase the number of shares to be registered pursuant to Rule
457(a). Therefore, no additional fee is required for registration of the
additional shares resulting from the stock dividend.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION DATED JUNE 9, 1998
COMMUNITY FIRST BANKSHARES, INC.
7,000,000 SHARES OF COMMON STOCK
($.01 Par Value)
Community First Bankshares, Inc. (the "Company") has registered 7,000,000
shares of its Common Stock, $.01 par value (the "Common Stock"), which may be
offered by this Prospectus in acquisition transactions in exchange for shares of
capital stock, partnership interests or other assets representing an interest,
direct or indirect, in other companies or other entities, or in exchange for
assets used in or related to the business of such entities. The terms of such
acquisitions will generally be determined by direct negotiations with the owners
of the business or assets to be acquired or in the case of entities which are
more widely held, through exchange offers to stockholders or documents
soliciting the approval of statutory mergers, consolidations or sales of assets.
Underwriting discounts or commissions will generally not be paid by the Company.
However, under some circumstances, the Company may issue Common Stock covered by
this Prospectus to pay brokers' commissions incurred in connection with
acquisitions.
This Prospectus, as amended or supplemented, may also be used by persons
who receive Common Stock of the Company in acquisitions, including shares sold
hereunder and Common Stock received upon conversion of other equity securities
of the Company or received upon exercise of rights to exchange equity securities
of the Company's subsidiaries issued in acquisitions, and who wish to offer and
sell such shares without further registration on terms then obtainable. Such
persons may be deemed underwriters in connection with such transactions within
the meaning of the Securities Act of 1933, and any profits realized on such
sales by such persons may be regarded as underwriting compensation under the
Securities Act of 1933.
The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "CFBX".
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.
THE DATE OF THIS PROSPECTUS IS ____________________, 1998.
1
<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 THE
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.
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In accordance with the
Exchange Act, the Company files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). The reports,
proxy statements and other information can be inspected and copied at the public
reference facilities that the Commission maintains at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
located at 7 World Trade Center, 13th Floor, New York, New York 10048, and Suite
1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of these
materials can be obtained at prescribed rates from the Public Reference Section
of the Commission at the principal offices of the Commission, 450 Fifth Street,
N.W., Washington D.C. 20549. In addition, 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. The Company's Common
Stock is quoted on the NASDAQ National Market. Reports, proxy statements and
other information also may be inspected at the National Association of
Securities Dealers, Inc., 1735 K. Street N.W., Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on Form
S-4 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Securities. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all the
information set forth in the Registration Statement, certain items of which are
contained in schedules and exhibits to the Registration Statement as permitted
by the rules and regulations of the Commission. Statements made in the
Prospectus concerning the contents of any documents referred to herein are not
necessarily complete. With respect to each such document filed with the
Commission as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description, and each such statement shall be deemed
qualified in its entirety by such reference.
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$," "dollars," "U.S.
dollars," or "U.S.$").
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission (File No. 0-19368) pursuant to the Exchange Act, are hereby
incorporated by reference in this Prospectus: (i) Annual Report on Form
10-K, for the year ended December 31, 1997, as amended on Form 10-K/A filed
with the Commission on March 27, 1998; (ii) the Definitive Proxy Statement of
the Company for the 1998 Annual Meeting of Shareholders held on April 28,
1998; (iii) Quarterly Report on Form 10-Q for the quarter ended March 31,
1998; (iv) Current Report on Form 8-K as filed with the Commission on May 6,
1998; (v) the description of the Company's Common Stock as set forth on its
Form 8-A Registration Statement filed with the Commission and effective on
August 13, 1991; (vi) the description of the Company's Common Stock and
undesignated Preferred Stock, as set forth on its Form 8-A Registration
Statement filed with the Commission on April 7, 1994, as amended on September
19, 1994; and (vii) the description of the Company's Preferred Stock Purchase
Rights, as set forth on its Form 8-A Registration Statement filed with the
Commission on January 9, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus shall be
deemed to be incorporated by reference herein. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed superseded or modified for purposes of this Prospectus to the extent that
a statement contained
3
<PAGE>
herein (or in any other subsequently filed document which also is incorporated
by reference herein or in any Prospectus Supplement by reference) 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 or any Prospectus Supplement.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or
oral request of any such person, a copy of any or all of the documents
incorporated by reference (other than exhibits to such documents which are
not specifically incorporated by reference in such documents.) Written
requests for such copies should be directed to the Company, 520 Main Avenue,
Fargo, North Dakota 58124-0001, Attention: Mark A. Anderson, Executive Vice
President, Chief Information Officer and Chief Financial Officer of the
Company, at (701) 298-5600.
4
<PAGE>
THE COMPANY
Community First Bankshares, Inc. (the "Company"), is a multi-bank
holding company that as of March 31, 1998 operated banks and bank branches
(the "Banks") in 146 communities in Arizona, Colorado, Iowa, Minnesota,
Nebraska, North Dakota, South Dakota, Utah, Wisconsin and Wyoming. Total
assets of the Company were approximately $5.2 billion as of March 31, 1998.
The Company operates community banks primarily in small and medium-sized
communities and the surrounding market areas. The Company provides a full
range of commercial and consumer banking services primarily to individuals
and businesses, including commercial and consumer banking, trust, insurance
and investment services.
The Company's 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.
PENDING ACQUISITIONS. On May 18, 1998, the Company signed a definitive
merger agreement with Guardian Bancorp ("Guardian"), a bank holding company
headquartered in Salt Lake City, Utah. At March 31, 1998, Guardian's
wholly-owned subsidiary, Guardian State Bank had total assets of
approximately $112 million and deposits of approximately $101 million and had
three banking locations in Salt Lake City, Utah and one banking location in
Sandy, Utah. In connection with the transaction, the Company will issue
approximately 1.5 million shares of common stock to holders of Guardian
common stock. The transaction is expected to be accounted for using the
pooling of interests method of accounting. The acquisition of Guardian by
the Company is subject to regulatory approval and is expected to close in the
third quarter of 1998.
On April 2, 1998, the Company signed a definitive merger agreement with
Western Bancshares of Las Cruces, Inc. ("Western"), a one-bank holding
company headquartered in Carlsbad, New Mexico. At March 31, 1998, Western's
wholly-owned subsidiary, Western Bank had total assets of approximately $170
million and deposits of approximately $142 million and had 5 banking offices
located in Las Cruces, Anthony and Hatch, New Mexico. In the transaction,
which is expected to be accounted for using the pooling of interests method
of accounting, the Company will issue approximately 1.9 million shares of
common stock to holders of Western common stock. The acquisition of Western
by the Company is subject to regulatory approval and is expected to close on
July 1, 1998.
RECENT SIGNIFICANT ACQUISITIONS. On May 7, 1998, the Company acquired
FNB, Inc. ("FNB"), a two-bank holding company whose subsidiary banks maintain
banking offices in Greeley and Fort Collins, Colorado. At acquisition, FNB
had total assets of approximately $120 million and deposits of approximately
$109 million. The Company issued approximately 1,135,406 shares of its
common stock to holders of FNB common stock in the transaction, as adjusted
to reflect the Company's two-for-one stock split in the form of a 100% stock
dividend in May 1998 (the "Stock Dividend"). The transaction was accounted
for using the pooling of interests method of accounting,
5
<PAGE>
On April 3, 1998, the Company acquired Community Bancorp, Inc. ("CBI"),
the parent company of Community First National Bank, Thornton, Colorado, with
two banking offices in Thornton, Colorado and one banking office in Arvada,
Colorado. At acquisition, CBI had total assets of approximately $78 million and
total deposits of approximately $72 million. In connection with the
transaction, the Company issued approximately 852,000 shares of its common stock
(as adjusted to reflect the Stock Dividend) to holders of CBI common stock. The
transaction was accounted for using the pooling of interests method of
accounting.
On April 30, 1998, the Company acquired Pioneer Bank of Longmont
("Pioneer"), Longmont, Colorado, with offices in Berthoud, Longmont, Lyons and
Niwot, Colorado. At acquisition, Pioneer had total assets of approximately
$138 million and total deposits of approximately $128 million. The Company
issued approximately 1,432,000 shares of its common stock (as adjusted to
reflect the Stock Dividend) to the holders of Pioneer common stock in connection
with the transaction. The transaction was accounted for using the pooling of
interests method of accounting.
On January 23, 1998, the Company acquired 37 banking offices located in
Arizona, Colorado and Utah (the "Bank One Branches") from three subsidiary banks
of Banc One Corporation (the "Bank One Banks"). At closing, the Bank One
Branches had total deposits of approximately $730 million and loans of
approximately $61 million. The Company paid a purchase price premium of
approximately $43.8 million, equal to 6% of the deposits of the Bank One
Branches at closing. The acquisition was accounted for as an acquisition of
assets and assumption of liabilities and resulted in the recognition by the
Company of deposit-based intangibles in an amount equal to the purchase price
premium of approximately $43.8 million. Following the closing, the 25 Arizona
offices and four Utah offices acquired from the Bank One Banks were merged into
the Republic bank in Phoenix, Arizona that was recently acquired by the Company.
The eight acquired Colorado offices were merged into the Company's existing
Colorado affiliate bank. On January 28, 1998, the Company signed an agreement
to sell one of the former Bank One Branches located in Colorado. The branch
sale is expected to close on June 12, 1998.
On December 1 and November 24, 1997, respectively, the Company acquired
First National Summit Bankshares, Inc., Gunnison, Colorado ("Summit") and
Republic National Bancorp, Inc., Phoenix, Arizona ("Republic"). At closing,
Summit's subsidiary bank had total assets of approximately $90 million,
deposits of approximately $82 million and banking offices in five Colorado
communities, and Republic's subsidiary bank had total assets of approximately
$54 million, deposits of approximately $49 million and one banking office in
Phoenix, Arizona. In connection with the Summit and Republic mergers, the
Company issued 736,038 shares of its common stock (as adjusted to reflect the
Stock Dividend) to the holders of Republic common stock and 629,668 shares of
its common stock (as adjusted to reflect the Stock Dividend) to the holders
of Summit common stock, respectively. In addition, the former holders of
Summit preferred stock received, in the aggregate, $1 million in cash for
their preferred stock surrendered in the merger plus accrued but unpaid
dividends. Each of these business combinations was accounted for as a
pooling of interests.
On July 14, 1997, the Company purchased KeyBank National Association,
Cheyenne, Wyoming ("KeyBank Wyoming"), from KeyCorp, its parent corporation,
("KeyCorp"), for a purchase price of $135 million. KeyBank Wyoming has been
renamed "Community First National Bank." At closing, KeyBank Wyoming had total
assets of approximately $1.1 billion and 28 banking offices located in 24
communities in Wyoming, including Cheyenne, Laramie, Casper, Sheridan and
Jackson. The Company believes its Wyoming banking network is the largest in
Wyoming, providing a full range of commercial and consumer banking services
throughout the state. The transaction was accounted for as a business
combination using the purchase method of accounting and resulted in the
recognition of goodwill by the Company of approximately $60 million.
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. 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 Company issued approximately 10.4 million shares of its common
stock (as adjusted to reflect the Stock Dividend) for a total transaction value
of approximately $142.2 million, based on market value of the shares as of the
date of closing. The transaction was a business combination accounted for as a
pooling of interests.
GENERAL. The Company provides the Banks with the advantages of affiliation
with a multi-bank holding company, such as access to its lines of financial
services, including trust products and administration,
6
<PAGE>
insurance and investment services, data processing services, credit policy
formulation and review, investment management and specialized staff support,
while granting substantial autonomy to managers of the Banks with respect to
day-to-day operations, customer service decisions and marketing. The 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.
7
<PAGE>
SUMMARY 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, 1997 is derived from the audited consolidated financial
statements of the Company, and related notes thereto, incorporated herein by
reference, except for end of period balance sheet amounts at December 31, 1993
which are derived from unaudited consolidated financial statements of the
Company. 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 herein.
<TABLE>
<CAPTION>
Three Months
Ended March 31, Year Ended December 31,
------------------------- ----------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ ------ ------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL OPERATING DATA:
Interest income . . . . . . . . . . . . $ 90,999 $ 58,309 $ 278,597 $ 229,426 $ 192,868 $ 143,237 $ 121,146
Interest expense. . . . . . . . . . . . 39,047 23,914 117,253 95,234 82,891 53,468 47,271
-------- -------- --------- --------- --------- --------- ---------
Net interest income . . . . . . . . . . 51,952 34,395 161,344 134,192 109,977 89,769 73,875
Provision for loan losses . . . . . . . 1,339 1,230 5,352 6,757 2,711 1,839 2,149
-------- -------- --------- --------- --------- --------- ---------
Net interest income after
provision for loan losses. . . . . . 50,613 33,165 155,992 127,435 107,266 87,930 71,726
Noninterest income. . . . . . . . . . . 12,348 7,038 36,564 27,370 22,488 18,992 18,158
Noninterest expense . . . . . . . . . . 43,682 24,949 125,190 104,288 82,593 70,241 60,854
-------- -------- --------- --------- --------- --------- ---------
Income from continuing operations
before income taxes and
extraordinary item . . . . . . . . . 19,279 15,254 67,366 50,517 47,161 36,681 29,030
Provision for income taxes. . . . . . . 5,426 5,138 21,516 18,007 17,208 13,952 10,775
-------- -------- --------- --------- --------- --------- ---------
Income from continuing operations
before extraordinary item. . . . . . 13,853 10,116 45,850 32,510 29,953 22,729 18,255
Discontinued Operations:
Income from discontinued operations,
net of taxes. . . . . . . . . . . (68) 681 967 0 0 0 0
Income before extraordinary
item and cumulative effect
of accounting change . . . . . . . . 13,785 10,797 46,817 32,510 29,953 22,729 18,255
Extraordinary item, net of tax. . . . . 0 (265) (265) 0 0 0 0
Cumulative effect of accounting
change . . . . . . . . . . . . . . . 0 0 0 0 0 0 359
-------- -------- --------- --------- --------- --------- ---------
Net income. . . . . . . . . . . . . . . 13,785 10,532 46,552 32,510 29,953 22,729 18,614
Dividends on preferred stock. . . . . . 0 0 0 1,610 1,610 1,091 0
-------- -------- --------- --------- --------- --------- ---------
Net income applicable to common
equity . . . . . . . . . . . . . . . $ 13,785 $ 10,532 $ 46,552 $ 30,900 $ 28,343 $ 21,638 $ 18,614
-------- -------- --------- --------- --------- --------- ---------
-------- -------- --------- --------- --------- --------- ---------
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
Basic income per share from
continuing operations before
extraordinary item and cumulative
effect of accounting change . . . $ 0.34 $ .29 $ 1.24 $ 0.94 $ 0.92 $ 0.75 $ 0.66
Discontinued operations. . . . . . . 0 0.02 0.03 0 0 0 0
Extraordinary item (1) . . . . . . . 0 (0.01) (0.01) 0 0 0 0
Cumulative effect of accounting
change. . . . . . . . . . . . . . 0 0 0 0 0 0 0.01
-------- -------- --------- --------- --------- --------- ---------
Basic net income . . . . . . . . . . $ 0.34 $ 0.30 $ 1.26 $ 0.94 $ 0.92 $ 0.75 $ 0.67
Diluted income per share from
continuing operations before
extraordinary item and
cumulative effect of accounting
change . . . . . . . . .. . . . . $ 0.33 $ 0.27 $ 1.20 $ 0.90 $ 0.87 $ 0.70 $ 0.64
Discontinued operations. . . . . . . 0 0.02 0.03 0 0 0 0
Extraordinary item (1) . . . . . . . 0 (0.01) (0.01) 0 0 0 0
Cumulative effect of accounting
change. . . . . . . . . . . . . . 0 0 0 0 0 0 0.01
Diluted net income . . . . . . . . . $ 0.33 $ 0.28 $ 1.22 $ 0.90 $ 0.87 $ 0.70 $ 0.65
</TABLE>
8
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<TABLE>
<CAPTION>
Three Months
Ended March 31, Year Ended December 31,
---------------------- -----------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ ------ ------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Average common shares outstanding:
Basic. . . . . . . . . . . . . . . . 40,659,812 34,986,156 36,949,498 33,018,578 30,722,740 28,757,806 27,676,668
Diluted. . . . . . . . . . . . . . . 41,397,456 37,727,816 38,138,156 36,284,754 34,335,300 32,254,500 28,778,512
HISTORICAL OPERATING RATIOS AND OTHER
DATA:
Return on average assets. . . . . . . . 1.12% 1.40% 1.31% 1.13% 1.24% 1.13% 1.10%
Return on average common
stockholders' equity. . . . . . . . . 16.52% 18.77% 18.13% 15.69% 18.19% 16.77% 16.64%
Net interest margin. . . . . . . . . . 4.95% 5.27% 5.17% 5.32% 5.06% 4.95% 4.74%
Net charge-offs to average loans. . . . 0.21% 0.20% 0.24% 0.22% 0.17% 0.00% 0.08%
Ratio of earnings to fixed charges (2):
Excluding interest on deposits. . . 5.63x 6.55x 5.61x 4.14x 4.46x 5.23x 7.60x
Including interest on deposits. . . 1.49x 1.64x 1.57x 1.52x 1.55x 1.66x 1.61x
FINANCIAL CONDITION DATA
(END OF PERIOD):
Assets. . . . . . . . . . . . . . . . . $5,158,045 $3,008,484 $4,855,526 $3,116,398 $2,769,976 $2,130,619 $1,883,794
Loans . . . . . . . . . . . . . . . . . 2,713,565 1,998,247 2,637,057 2,064,108 1,767,193 1,330,146 1,037,666
Investment securities (3) . . . . . . . 1,874,797 732,605 1,679,389 729,236 717,342 613,239 653,722
Deposits. . . . . . . . . . . . . . . . 4,254,716 2,493,500 3,619,334 2,537,440 2,359,716 1,794,565 1,627,989
Long-term debt. . . . . . . . . . . . . 119,529 18,644 116,476 46,750 81,288 38,092 48,354
Company-obligated mandatorily
redeemable preferred securities of
CFB Capital I and II . . . . . . . . 120,000 60,000 120,000 0 0 0 0
Preferred stockholders'
equity . . . . . . . . . . . . . . 0 0 0 22,988 23,000 23,000 0
Common stockholders' equity . . . . . . 345,376 248,739 339,294 221,583 181,004 134,701 125,071
Book value per common share . . . . . . 8.49 6.67 8.35 6.46 5.63 4.61 4.39
Tangible book value per
common share. . . . . . . . . . . . . 5.07 5.60 5.95 5.32 4.54 4.04 3.96
FINANCIAL CONDITION RATIOS
(END OF PERIOD):
Nonperforming assets to total loans
and OREO. . . . . . . . . . . . . . . 0.54% 0.46% 0.61% 0.70% 0.31% 0.34% 0.62%
Allowance for loan losses to
total loans . . . . . . . . . . . . . 1.33% 1.31% 1.37% 1.27% 1.29% 1.30% 1.38%
Allowance for loan losses to
nonperforming loans . . . . . . . . . 332% 290% 286% 201% 608% 537% 296%
REGULATORY CAPITAL RATIOS
(END OF PERIOD):
Tier 1 capital. . . . . . . . . . . . . 9.34% 11.58% 10.65% 8.88% 8.51% 10.64% 10.16%
Total capital . . . . . . . . . . . . . 12.78% 13.25% 14.24% 11.10% 11.18% 13.46% 13.44%
Leverage ratio. . . . . . . . . . . . . 6.24% 9.10% 7.25% 6.62% 6.10% 7.12% 6.12%
NET INCOME AND RATIOS EXCLUDING
GOODWILL AND OTHER INTANGIBLE ASSETS
AMORTIZATION AND BALANCES:
Income applicable to common
equity. . . . . . . . . . . . . . . . $ 15,452 $ 11,387 $ 15,017 $ 33,714 $ 30,522 $ 23,194 $ 19,948
Diluted earnings per common share . . . $ 0.37 $ 0.30 $ 1.34 $ 0.97 $ 0.94 $ 0.75 $ 0.69
Return on average assets. . . . . . . . 1.29% 1.54% 1.46% 1.25% 1.34% 1.22% 1.18%
Return on average common
stockholders' equity. . . . . . . . . 18.52% 20.30% 19.86% 17.12% 19.58% 17.98% 17.83%
</TABLE>
- ------------------------------------
(1) Represents the after-tax effect of pre-payment penalties and unamortized
debt issuance costs in connection with redemption of certain indebtedness.
(2) 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.
(3) Includes available-for-sale securities and held-to-maturity securities.
9
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RISK FACTORS
INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING MATTERS IN CONNECTION
WITH AN INVESTMENT IN THE SECURITIES IN ADDITION TO THE OTHER INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT. INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS OR IN ANY PROSPECTUS SUPPLEMENT MAY CONTAIN "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995, WHICH CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH
AS "MAY," "WILL," "EXPECT," "ANTICIPATE," "ESTIMATE" OR "CONTINUE" OR THE
NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. THE
FOLLOWING MATTERS AND OTHER FACTORS NOTED THROUGHOUT THIS PROSPECTUS, ANY
PROSPECTUS SUPPLEMENT ACCOMPANYING THIS PROSPECTUS AND ANY DOCUMENT INCORPORATED
BY REFERENCE INTO THIS PROSPECTUS, AS WELL AS ANY EXHIBITS AND ATTACHMENTS TO
THIS PROSPECTUS AND SUCH PROSPECTUS SUPPLEMENT, CONSTITUTE CAUTIONARY STATEMENTS
IDENTIFYING IMPORTANT FACTORS WITH RESPECT TO ANY SUCH FORWARD-LOOKING
STATEMENTS, INCLUDING CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS.
RISKS INVOLVED IN ACQUISITION STRATEGY
The Company's acquisitions will continue to present material risks. 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 acquisition of financial institutions, the Company may from
time to time acquire new businesses that are different from its core business of
commercial banking and which present operating and strategic risks different
from those confronted in its core business. These various acquisition risks can
be heightened by larger transactions. To date, the Bank One Branches, KeyBank
Wyoming and Mountain Parks represent the largest institutions acquired by the
Company, and have been completed at or near the same time as a number of other
completed or proposed mergers. See "The Company."
Managing growth through acquisitions, including integration and training of
personnel, combination of office and operations procedures and related matters,
is a difficult process. In connection with its recent significant
acquisitions, the Company has experienced challenges with data and item
processing conversion, management training, staffing and other operational
integration areas. These issues have resulted in the need for management and
support personnel to allocate increased time to the integration process, in some
cases slowing the acquired institutions' marketing and business development
efforts. Although the Company has taken steps to address the issues resulting
from recent acquisitions, the Company may experience such issues in connection
with future acquisitions, and there can be no assurance that these problems will
not result in disruption or expense.
Management believes future growth in the assets and earnings of the Company
will depend in significant part on consummation of further acquisitions. The
ability of the Company to pursue this strategy depends in part on its capital
position and, in the case of cash acquisitions, on its cash assets or ability to
acquire cash. Further, acquisition candidates may not be available in the
future on terms favorable to the Company. The Company must compete with a
variety of individuals and institutions, including major regional bank holding
companies, for suitable acquisition candidates. Although the Company has
focused its attention on smaller markets, in which the Company believed there
was less
10
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competition from the money center banks and major regional bank holding
companies, the Company recently acquired operations in metropolitan areas. The
Company may make further acquisitions of companies with operations in
metropolitan areas, in which case it will face more competition for such
acquisitions from larger institutions. Further, certain regional holding
companies have focused in some cases on the smaller markets traditionally
targeted by the Company, and there can be no assurance that the acquisition
activities of competitors in these markets will not increase. Such competition
is likely to affect the Company's ability to make acquisitions, increase the
price that the Company pays for certain acquisitions and increase the Company's
costs in analyzing possible acquisitions.
NEED FOR ADDITIONAL FINANCING
The Company's ability to execute its business strategy depends to a
significant degree on its ability to obtain additional indebtedness and equity
capital. Other than as described in this Prospectus or any Prospectus
Supplement, the Company has no commitments for additional borrowings or sales of
equity capital and there can be no assurance that the Company will be successful
in consummating any such future financing transactions on terms satisfactory to
the Company, if at all. Factors which could affect the Company's access to the
capital markets, or the costs of such capital, include changes in interest
rates, general economic conditions and the perception in the capital markets of
the Company's business, results of operations, leverage, financial condition and
business prospects. Each of these factors is to a large extent subject to
economic, financial, competitive and other factors beyond the Company's control.
In addition, covenants under the Company's current and future debt securities
and credit facilities may significantly restrict the Company's ability to incur
additional indebtedness and to issue Preferred Stock.
YEAR 2000 ISSUE
The Company is evaluating the potential impact of what is commonly referred
to as the "Year 2000" issue, concerning the inability of certain information
systems to properly recognize and process dates containing the year 2000 and
beyond. If not corrected, these systems could fail or create erroneous results.
The Company is in the process of determining which of its systems, if any, may
present Year 2000 issues, the magnitude of these issues, and the steps that may
be necessary to correct them. Therefore, the potential liabilities and costs
associated with Year 2000 compliance cannot be estimated with certainty at this
time. Regardless of the Year 2000 compliance of the Company's systems, there
can be no assurance that the Company will not be adversely affected by the
failure of others to become Year 2000 compliant. Such risks may include
potential losses related to loans made to third parties whose businesses are
adversely affected by the Year 2000 issue, the disruption or inaccuracy of data
provided by non-Year 2000 compliant third parties and business disruption caused
by the failure of service providers, such as security and data processing
companies, to become Year 2000 compliant. Because of these uncertainties, there
can be no assurance that the Year 2000 issue will not have a material financial
impact in any future period.
KEY PERSONNEL
Continued profitability of the Banks and the Company are dependent on a
limited number of key persons, including Donald R. Mengedoth, the President and
Chief Executive Officer, Mark A. Anderson, the Executive Vice President, Chief
Financial Officer and Chief Information Officer, Ronald K. Strand, the Executive
Vice President, Banking Group, and David E. Groshong, the Executive Vice
President, Financial Services, of the Company. There would likely be a
difficult transition period in case the services of any of these individuals
were lost to the Company because of death or other reasons. There is no
assurance that the Company will be able to retain its current key personnel or
attract additional qualified key persons as needed.
11
<PAGE>
OFFERED SECURITIES
The securities of the Company which may be offered from time to time by
this Prospectus consist of up to 7,000,000 shares of Common Stock, which the
Company proposes to issue in a continuing program of acquisitions. The
consideration for any acquisition may consist of notes or other evidences of
debt, assumptions of liabilities, equity securities, cash, or a combination
thereof, as determined from time to time by negotiations between the Company and
the owners of businesses or properties to be acquired. In general, the terms of
acquisitions will be determined by direct negotiations between the
representatives of the Company and the owners of the businesses or properties to
be acquired or, in the case of entities more widely held, through exchange
offers to shareholders or documents soliciting approval of statutory mergers,
consolidations or sales of assets. Underwriting discounts or commissions will
generally not be paid by the Company. However, under some circumstances, the
Company may issue Common Stock covered by this Prospectus or cash to pay
brokers' commissions incurred in connection with acquisitions.
This Prospectus, as appropriately amended or supplemented, has also been
prepared for use by persons who receive shares issued by the Company in
acquisitions, including Common Stock received upon conversion of other equity of
the Company or its subsidiaries issued in acquisitions, and who wish to offer
and sell such shares, on terms then available (such persons being referred to
under this caption as "Selling Shareholders"). Resales may be made pursuant to
this Prospectus, as amended or supplemented, pursuant to Rule 145(d) under the
Securities Act of 1933, or pursuant to another exemption from the registration
requirements of such Act. Selling Shareholders may be deemed underwriters
within the meaning of the Securities Act of 1933, and profits realized on
resales by Selling Shareholders under certain circumstances may be regarded as
underwriting compensation under the Securities Act of 1933.
Resales by Selling Shareholders may be made directly to investors or
through a securities firm acting as an underwriter, broker or dealer. When
resales are to be made through a securities firm, such securities firm may be
engaged to act as the Selling Shareholder's agent in the sale of shares by such
Selling Shareholder, or such securities firm may purchase shares from the
Selling Shareholder as principal and thereafter resell such shares from time to
time. The fees earned by or paid to such securities firm may be the normal stock
exchange commission or negotiated commissions or underwriting discounts to the
extent permissible. In addition, such securities firm may effect resales
through other securities dealers, and customary commissions or concessions to
such other dealers may be allowed. Sales of shares may be at negotiated prices,
at fixed prices, at market prices or at prices related to market prices then
prevailing. Any such sales may be made on the NASDAQ National Market or other
exchange on which such shares are traded, in the over-the-counter market, by
block trade, in special or other offerings, directly to investors or through a
securities firm acting as agent or principal, or a combination of such methods.
A participating securities firm may be indemnified against certain civil
liabilities, including liabilities under the Securities Act of 1933. Any
participating securities firm may be deemed to be an underwriter within the
meaning of the Securities Act of 1933, and any commissions earned by such firm
may be deemed to be underwriting discounts or commissions under such Act.
A Prospectus Supplement, if required, will be filed under Rule 424(b) under
the Securities Act of 1933, disclosing the name of the Selling Shareholder, the
participating securities firm, if any, the number of shares involved, and other
details of resales, as appropriate.
12
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 82,000,000 shares of stock,
consisting of 80,000,000 shares of Common Stock, par value $0.01 per share,
and 2,000,000 shares of Preferred Stock, $.01 par value per share, of which
230,000 shares are designated as 7% Cumulative Convertible Preferred Stock
and 150,000 shares are designated as Series A Junior Participating Preferred
Stock. On April 28, 1998, the Company's shareholders approved an amendment
to the Company's Restated and Amended Certificate of Incorporation to
increase the number of authorized shares of the Company's Common Stock from
30,000,000 shares to 80,000,000 shares. The number of authorized shares of
Preferred Stock did not change. On February 3, 1998, the Board of Directors
approved a two-for-one stock split in the form of a 100% stock dividend,
subject to approval of this amendment. The stock dividend was paid on May
15, 1998 to shareholders of record on May 1, 1998.
As of May 27, 1998, the Company had issued and outstanding 44,139,536
shares of Common Stock, net of treasury shares, and no issued and outstanding
shares of Preferred Stock. As of such date, there were approximately 1,440
holders of record of the outstanding shares of Common Stock and an additional
estimated 7,000 beneficial holders.
COMMON STOCK
The following summary of the characteristics of the Company's Common Stock
is qualified in its entirety by reference to the Company's Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation"), its Amended
Bylaws (the "Bylaws"), and the Delaware General Corporation Law, as amended (the
"Delaware Law").
GENERAL. There are no preemptive rights, conversion rights, or redemption
or sinking fund provisions with respect to the shares of Common Stock. All of
the outstanding shares of Common Stock are duly and validly authorized and
issued, fully paid and non-assessable.
VOTING. Holders of Common Stock (the "Common Stockholders") are entitled
to one vote for each share held on each matter submitted to a vote of the Common
Stockholders; except that each stockholder may cumulate votes in the election of
directors. In such elections, each Common Stockholder will have a number of
votes equal to the number of shares held by such holder multiplied by the number
of directors to be elected. Such votes may be cast for a single candidate or
divided among any number of candidates. In certain circumstances, cumulative
voting rights allow the holders of less than a majority of Common Stock to elect
directors when such holders may not be able to elect any directors if cumulative
voting was not allowed.
DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS. Subject to the rights of the
Preferred Stock, the Common Stockholders are entitled to receive dividends as
and when declared by the Board of Directors of the Company. Under Delaware
corporate law, the Company may declare and pay dividends out of surplus, or if
there is no surplus, out of net profits for the fiscal year in which the
dividend is declared and/or the preceding year. No dividends may be declared,
however, if the capital of the Company has been diminished by depreciation,
losses or otherwise to an amount less than the aggregate amount of capital
represented by any issued and outstanding stock having a preference on
distribution. The Company's ability to pay dividends on its issued and
outstanding Shares may be limited, from time to time, by covenants in connection
with outstanding indebtedness of the Company.
13
<PAGE>
Federal banking laws and regulations limit the Company's ability to redeem
its equity securities. In general, bank holding companies are required to
obtain the prior approval of the Federal Reserve Board before any redemption of
permanent equity or other capital instruments, if the aggregate amount of such
redemptions over a twelve-month period exceeds ten percent of the net worth of
the company . However, a bank holding company is not required to obtain the
prior Federal Reserve Board approval for the redemption if (i) both before and
immediately after the redemption, the bank holding company is well capitalized;
(ii) the bank holding company is well managed; and (iii) the bank holding
company is not the subject of any unresolved supervisory issues. The Company
currently satisfies all of these criteria. Finally, any perpetual preferred
stock with a feature permitting redemption at the option of the issuer may
qualify as capital only if the redemption is subject to the prior approval of
the Federal Reserve Board.
If the Company were liquidated, the Common Stockholders would be entitled
to receive, pro rata, all assets available for distribution to them after full
satisfaction of the Company's liabilities and any payment applicable to the
Preferred Stock then outstanding.
SHAREHOLDER RIGHTS PLAN. Pursuant to a Rights Agreement dated as of
January 5, 1995 (the "Rights Agreement") between the Company and Norwest Bank
Minnesota, N.A., as Rights Agent, each share of Common Stock has attached one
preferred share purchase right (a "Right"). Except as set forth below, each
Right entitles the registered holder to purchase from the Company one
one-hundredth (1/100) of a share of Series A Junior Participating Preferred
Stock, par value $.01 per share (the "Junior Participating Preferred Stock"), at
a price of $63 per one one-hundredth of a share (the "Purchase Price").
Until the Distribution Date, as hereinafter defined, the Rights will be
transferred with and only with Common Stock certificates. The Rights will
separate from the shares of Common Stock and a "Distribution Date" for the
Rights will occur upon the earlier of ten days following (i) a public
announcement that, without the prior consent of the Board of Directors, a person
or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of voting
securities having 15% or more of the voting power of the Company (the "Stock
Acquisition Date"), or (ii) the commencement of (or a public announcement of an
intention to make) a tender offer or exchange offer which would result in any
person or group and related persons having beneficial ownership of voting
securities having 15% or more of the voting power of the Company.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on January 5, 2005, unless earlier redeemed by the Company.
In the event that any person becomes the beneficial owner of 15% or more of
the voting power of the Company, ten days thereafter (the "Flip-In Event") each
holder of a Right will thereafter have the right to receive, upon exercise
thereof at the then current Purchase Price of the Right, Common Stock (or, in
certain circumstances, a combination of cash, other property, Common Stock or
other securities) which has a value of two times the Purchase Price of the Right
(such right being called the "Flip-In Right"). In the event that the Company is
acquired in a merger or other business combination transaction where the Company
is not the surviving corporation or in the event that 50% or more of its assets
or earning power is sold, proper provision shall be made so that each holder of
a Right will thereafter have the right to receive, upon the exercise thereof at
the then current Purchase Price of the Right, common stock of the acquiring
entity which has a value of two times the Purchase Price of the Right (such
right being called the "Flip-Over Right"). The holder of a Right will continue
to have the Flip-Over Right whether or not such holder exercises the Flip-In
Right. Upon the occurrence of the Flip-In Event, any Rights that are or were at
any time owned by an Acquiring Person shall become null and void insofar as they
relate to the Flip-In Right.
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<PAGE>
The Purchase Price payable, and the number of shares of Junior
Participating Preferred Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution under certain circumstances.
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the voting power of
the Company and prior to the acquisition by such person or group of 50% or more
of the voting power of the Company, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group which have
become void), in whole or in part, at an exchange ratio of one share of Common
Stock, or one one-hundredth of a share of Junior Participating Preferred Stock
(or of a share of a class or series of the Company's preferred stock having
equivalent rights, preferences and privileges) per Right (subject to
adjustment).
At any time prior to the earlier to occur of (i) the tenth day after the
Stock Acquisition Date, or (ii) the expiration of the Rights, the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"), at such time as the Board of Directors shall establish.
Additionally, the Continuing Directors may, following the Stock Acquisition
Date, redeem the then outstanding Rights in whole, but not in part, at the
Redemption Price provided that either (a) the Acquiring Person reduces his
beneficial ownership to less than 15% of the voting power of the Company in a
manner which is satisfactory to the Continuing Directors and there are no other
Acquiring Persons, or (b) such redemption is incidental to a merger or other
business combination transaction or series of transactions involving the Company
but not involving an Acquiring Person or any person who was an Acquiring Person.
The redemption of Rights described in the preceding sentence shall be effective
only after ten (10) business days prior notice. Upon the effective date of the
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
The Junior Participating Preferred Stock purchasable upon exercise of the
Rights will be nonredeemable. Each share of Junior Participating Preferred
Stock will have a preferential quarterly dividend in an amount equal to 100
times the dividend declared on each share of Common Stock. In the event of
liquidation, the holders of Junior Participating Preferred Stock will receive a
preferred liquidation payment of $100 per whole share of Junior Participating
Preferred Stock. Each whole share of Junior Participating Preferred Stock will
have 100 votes, voting together with the Common Stock. In the event of any
merger, consolidation or other transaction in which Common Stock are exchanged,
each share of Junior Participating Preferred Stock will be entitled to receive
100 times the amount and type of consideration received per share of Common
Stock. The rights of the Junior Participating Preferred Stock as to dividends
and liquidations, and in the event of mergers and consolidations, are protected
by customary anti-dilution provisions.
Until a Right is exercised, it will not entitle the holder to any rights as
a shareholder of the Company (other than those as an existing shareholder),
including, without limitation, the right to vote or to receive dividends.
The terms of the Rights may be amended by the Board of Directors of the
Company (i) prior to the Distribution Date in any manner, and (ii) on or after
the Distribution Date to cure any ambiguity, to correct or supplement any
provision of the Rights Agreement which may be defective or inconsistent with
any other provisions, or in any manner not adversely affecting the interests of
the holders of the Rights.
INDEMNIFICATION AND LIMITED LIABILITY. The Company's Certificate of
Incorporation and Bylaws require the Company to indemnify the directors and
officers of the Company to the fullest extent permitted
15
<PAGE>
by law. In addition, as permitted by Delaware Law, the Company's Certificate of
Incorporation and Bylaws provide that no director of the Company will be
personally liable to the Company or its stockholders for monetary damages for
such director's breach of duty as a director, except from liability for (i) any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) any liability under Section 174 of Delaware
Law for unlawful distributions or (iv) any transaction from which the director
derived an improper personal benefit. This provision of the Certificate of
Incorporation will limit the remedies available to a stockholder who is
dissatisfied with a decision of the Board of Directors protected by this
provision, and such stockholder's only remedy in that circumstance may be to
bring a suit to prevent the action of the Board of Directors. In many
situations, this remedy may not be effective, including instances when
stockholders are not aware of a transaction or an event prior to action of the
Board of Directors in respect of such transaction or event.
Subject to certain limitations, the Company's officers and directors are
insured against losses arising from claims made against them for wrongful acts
which they may become obligated to pay or for which the Company may be required
to indemnify them.
RESTRICTION ON BUSINESS COMBINATIONS.
Section 203 of the Delaware General Corporation Law prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless (i)
prior to the date of the business combination, the transaction is approved by
the Board of Directors of the corporation, (ii) upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owns at least 85% of the outstanding
voting stock, or (iii) on or after such date the business combination is
approved by the Board of Directors of the corporation and by the affirmative
vote of at least 66-2/3% of the outstanding voting stock which is not owned by
the interested stockholder. A "business combination" includes mergers, asset
sales and other transactions resulting in a financial benefit to the
stockholder. An "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
the corporation's voting stock. None of the Company's stockholders is currently
classified as an "interested person."
OTHER MATTERS. The Common Stock is listed on NASDAQ National Market under
the symbol "CFBX." Norwest Bank Minnesota, N.A., Minneapolis, Minnesota, is the
transfer agent and registrar for the Common Stock.
PREFERRED STOCK
The description of certain provisions of the Preferred Stock set forth
below does not purport to be complete and is subject to and qualified in its
entirety by reference to the Company's Certificate of Incorporation, and the
Certificate of Designation relating to each series of Preferred Stock.
GENERAL. The Board of Directors of the Company has the authority, without
approval of the Company's stockholders, to issue a maximum of 2,000,000 shares
of Preferred Stock, $.01 par value, and to establish one or more classes or
series of Preferred Stock having such voting powers, and such designations,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations or restrictions thereof, as the Board of Directors
may determine. There are currently reserved for issuance up to 150,000 shares
of Junior Participating Preferred Stock issuable under the Rights Agreement.
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<PAGE>
The authority of the Board of Directors with respect to each such class or
series shall include, but is not limited to, the determination of: (i) the
distinctive serial designation of such class or series and the number of shares
constituting such class or series, (ii) the dividend rate for such class or
series, and whether dividends shall be cumulative, (iii) whether the shares of
such class or series are redeemable and, if so, the terms and conditions of such
redemption, (iv) the obligation, if any, to establish a sinking fund, (v) the
terms, if any, under which such class or series is convertible or exchangeable
for shares of any other class or series, (vi) whether the shares have voting
rights and, if so, the terms and conditions of such voting rights, (vii) the
rights of the shares of such class or series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Company, and (viii)
any other relative rights, powers, preferences, qualifications, limitations or
restrictions thereof relating to such class or series. The shares of Preferred
Stock of any one class or series shall be identical with each other in all
respects except as to the dates from and after which dividends shall cumulate,
if cumulative. The Preferred Stock will have the dividend, liquidation and
voting rights set forth below unless otherwise provided in the accompanying
Prospectus Supplement relating to a particular series of Preferred Stock.
Preferred Stock will be fully paid and nonassessable upon issuance against full
payment of the purchase price therefor.
DIVIDEND RIGHTS. Holders of the Preferred Stock of each series will be
entitled to receive when, as and if declared by the Board of Directors of the
Company, out of funds legally available therefor, cash dividends at such rates
and on such dates as are set forth in the accompanying Prospectus Supplement.
Such rate may be fixed or variable or both. Each such dividend will be payable
to the holders of record as they appear on the stock books of the Company on
such record dates as will be fixed by the Board of Directors of the Company.
Dividends on any series of the Preferred Stock may be cumulative or
noncumulative, as provided in the accompanying Prospectus Supplement. If the
Board of Directors of the Company fails to declare a dividend payable on a
dividend payment date on any series of Preferred Stock for which dividends are
noncumulative, then the right to receive a dividend in respect of the dividend
period ending on such dividend payment date will be lost, and the Company will
have no obligation to pay the dividend accrued for that period, whether or not
dividends are declared for any future period. Dividends on shares of each
series of Preferred Stock for which dividends are cumulative will accrue from
the date set forth in the accompanying Prospectus Supplement.
RIGHTS UPON LIQUIDATION. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of each
series of Preferred Stock will be entitled to receive out of assets of the
Company available for distribution to stockholders, before any distribution of
assets is made to holders of Common Stock, liquidating distributions in the
amount set forth in the accompanying Prospectus Supplement plus an amount equal
to accrued and unpaid dividends. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the amounts payable with
respect to the Preferred Stock of any series are not paid in full, the holders
of the Preferred Stock of such series will share ratably in any such
distribution of assets of the Company in proportion to the full respective
preferential amounts (which may include accumulated dividends) to which they are
entitled. After payment of the full amount of the liquidating distribution to
which they are entitled, the holders of such series of Preferred Stock will have
no right or claim to any of the remaining assets of the Company. Neither the
sale of all or a portion of the Company's assets nor the merger or consolidation
of the Company into or with any other corporation shall be deemed to be a
dissolution, liquidation or winding up, voluntary or involuntary, of the
Company.
VOTING RIGHTS. Except as indicated in the accompanying Prospectus
Supplement, or except as expressly required by Delaware Law, the holders of the
Preferred Stock will not be entitled to a vote on matters submitted for a vote
of Company stockholders. In the event the Company issues shares of a series of
the Preferred Stock, unless otherwise indicated in the Prospectus Supplement
relating to such series,
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<PAGE>
each share will be entitled to one vote on matters on which holders of such
series are entitled to vote. In the case of any series of Preferred Stock
having one vote per share on matters on which holders of such series are
entitled to vote, the voting power of such series, on matters on which holders
of such series and holders of any other series of Preferred Stock are entitled
to vote as a single class, will depend on the number of shares in such series,
not the aggregate stated value, liquidation preference or initial offering price
of the shares of such series of the Preferred Stock.
So long as any Preferred Stock of any series remains outstanding, the
Company will not, without the consent of the holders of the outstanding
Preferred Stock of such series and outstanding shares of all series of Preferred
Stock ranking on a parity with the Preferred Stock of such series (hereinafter
the "Preference Stock") either as to dividends or the distribution of assets
upon liquidation, dissolution or winding up and upon which like voting rights
have been conferred and are then exercisable, by a vote of at least two-thirds
of all such outstanding Preferred Stock and Preference Stock voting together as
a class, given in person or by proxy, either in writing or at a meeting, (i)
authorize, create or issue, or increase the authorized or issued amount of, any
class or series of stock ranking prior to the Preferred Stock with respect to
payment of dividends or the distribution of assets on liquidation, dissolution
or winding up, or (ii) amend, alter or repeal, whether by merger, consolidation
or otherwise, the provisions of the Company's Restated Certificate of
Incorporation, as amended, or of the resolutions contained in a Certificate of
Designation for any series of the Preferred Stock designating such series of the
Preferred Stock and the preferences and relative, participating, optional or
other special rights and qualifications, limitations and restrictions thereof,
so as to materially and adversely affect any right, preference, privilege or
voting power of the Preferred Stock or the holders thereof; provided, however,
that any increase in the amount of the authorized Preferred Stock or Preference
Stock or the creation and issuance of other series of Preferred Stock or
Preference Stock, or any increase in the amount of authorized shares of any
series of Preferred Stock or Preference Stock, in each case ranking on a parity
with or junior to the Preferred Stock with respect to the payment of dividends
and the distribution of assets upon liquidation, dissolution or winding up will
not be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers.
LEGAL MATTERS
The validity of the Company's Common Stock offered hereby will be passed
upon by Lindquist & Vennum P.L.L.P., Minneapolis, Minnesota. Patrick Delaney, a
member of Lindquist & Vennum, is a director and a holder of Common Stock and
options to purchase Common Stock of the Company.
EXPERTS
The consolidated financial statements of the Company at December 31, 1997
and 1996, and for each of the three years in the period ended December 31, 1997,
incorporated by reference in this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing and incorporated by reference elsewhere herein which,
as to the year 1995, are based in part on the report of Arthur Andersen LLP,
formerly independent accountants for
18
<PAGE>
Mountain Parks Financial Corp. As of the date of their report and during the
period covered by the financial statements on which they reported, Arthur
Andersen LLP were independent public accountants with respect to Mountain
Parks Financial Corp., within the meaning of the Securities Act and the
applicable published rules and regulations thereunder. The consolidated
financial statements referred to above are incorporated 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 National Association (Wyoming) as of
and for the year ended December 31, 1996 appearing in the Company's Current
Report on Form 8-K/A filed on September 22, 1997 with the Securities and
Exchange Commission have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report 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.
19
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus and, if given or made, such other information or representations
must not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any
securities other than the registered securities to which it relates. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy such securities in any circumstances in which such offer or solicitation is
unlawful.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE. . . . . . . . . . . . . . . . . . . . . . . . . 3
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
OFFERED SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
DESCRIPTION OF CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . 13
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
7,000,000 SHARES
COMMUNITY FIRST
BANKSHARES, INC.
------------------------
PROSPECTUS
------------------------
______________, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Amended and Restated Certificate of Incorporation (the
"Certificate") and the Company's Amended and Restated Bylaws (the "Bylaws")
provide that the Company shall indemnify, to the full extent permitted by law,
any person against liabilities arising from their service as directors,
officers, employees or agents of the Company. Section 145 of Delaware Law
empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner 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, had
no reasonable cause to believe his conduct was unlawful.
Section 145 also empowers a corporation to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation
unless, and only to the extent that, the Court of Chancery or the court in which
such action was brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
Section 145 further provides that the indemnification provided for by
Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled, and that the corporation is empowered to
purchase and maintain insurance on behalf of a director or officer of the
corporation against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 145.
The Certificate and the Bylaws provide that no director of the Company
shall be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of Delaware
Law or (iv) for any transaction from which the director derived an improper
personal benefit. Any repeal or modification of this provision related to
director's liability shall not adversely affect any right or protection of a
director of the Company existing immediately prior to such repeal or
modification. Further, if Delaware Law shall be repealed or modified, the
elimination of liability
II-1
<PAGE>
of a director provided in the Certificate and the Bylaws shall be to the fullest
extent permitted by Delaware Law, as so amended.
Pursuant to Registration Rights Agreements with certain stockholders of the
Company, the Company has agreed to indemnify such stockholders against certain
liabilities, including liabilities under the Securities Act or otherwise. For
the undertaking with respect to indemnification, see Item 17 herein.
ITEM 21. EXHIBITS
EXHIBIT NO.
- -----------
2.1 Master Agreement dated July 22, 1994, between the Registrant and
Bank of Colorado Holding Company, including as Exhibit A the form
of Purchase and Assumption Agreement executed by Colorado
Community First State Bank of Steamboat Springs and Vail Bank
(incorporated by reference to Exhibit 2.13 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994).
2.2 Agreement and Plan of Merger dated as of August 12, 1994, between
the Registrant and Minowa Bancshares, Inc. (incorporated by
reference to Exhibit 2.1 to the Registrant's Registration
Statement on Form S-4 [File No. 33-84746], as declared effective
by the Securities and Exchange Commission (the "Commission") on
January 23, 1995).
2.3 Agreement and Plan of Merger dated as of November 28, 1994,
between the Registrant and Abbott Bank Group, Inc. (incorporated
by reference to Exhibit 10.2 to the Form 8-K report of the
Registrant dated January 20, 1995).
2.4 Restated Agreement and Plan of Merger dated as of December 6,
1994, among the Registrant, Colorado Acquisition Corporation and
First Community Bankshares, Inc. (incorporated by reference to
Exhibit 10.1 to the Form 8-K report of the Registrant dated
January 20, 1995).
2.5 Stock Purchase Agreement dated as of June 7, 1995 by and among
BNCCORP, Inc., Gregory Cleveland and Tracy Scott, and the
Registrant relating to Farmers & Merchants Bank of Beach
(incorporated by reference to Exhibit 2.12 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1995).
2.6 Agreement and Plan of Merger dated as of March 8, 1996 among the
Registrant, Trinidad Acquisition Corporation and Financial
Bancorp, Inc. (the holding company for Trinidad National Bank)
(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).
2.7 Agreement and Plan of Reorganization dated as of June 25, 1996
between the Registrant and Mountain Parks Financial Corp.
(incorporated by reference to the Appendix to the Registrant's
Joint Proxy Statement with Mountain Parks Financial Corp.
included in the Registration Statement on Form S-4
[File No. 333-14439], as declared effective by the Commission
on November 7, 1996).
2.8 Stock Purchase Agreement dated as of February 18, 1997 by and
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
Commission as of May 8, 1997).
II-2
<PAGE>
2.9 Restated Agreement and Plan of Merger dated as of August 22,
1997, including Agreement and First Amendment to Agreement
dated as of the same date, between the Registrant and First
National Summit Bankshares, Inc.(incorporated by reference to
Appendices A and B to the Proxy Statement-Prospectus contained
in the Registrant's Registration Statement on Form S-4
[File No. 333-38997] filed with the Commission on October 29,
1997).
2.10 Restated Agreement and Plan of Merger dated as of August 28,
1997 between the Registrant and Republic National Bancorp,
Inc. (incorporated by reference to Appendix A to the Proxy
Statement-Prospectus contained in Registrant's Registration
Statement on Form S-4 [File No. 333-38225] filed with the
Commission on October 20, 1997).
2.11 Office Purchase and Assumption Agreement dated as of the 10th day
of September, 1997 by and between Bank One, Arizona, National
Association, Bank One, Colorado, National Association, Bank One,
Utah, National Association and the Registrant, (incorporated by
reference to Exhibit 2.6 to the Registrant's Registration
Statement on Form S-4 [File No. 333-36091], filed with the
Commission on September 22, 1997).
2.12 Agreement and Plan of Merger dated as of November 6, 1997
among the Registrant, Community First National Bank and
Pioneer Bank of Longmont (incorporated by reference to Exhibit
2.7 to the Registrant's Registration Statement on Form S-4
[File No. 333-37527], filed with the Commission on November
21, 1997).
2.13 First Amendment to Agreement and Plan of Merger dated as of the
19th day of December, 1997 by and among the Registrant, Community
First National Bank and Pioneer Bank of Longmont (incorporated by
reference to Appendix B to the Proxy Statement-Prospectus
contained in Registrant's Registration Statement on Form S-4
[File No. 333-48825] filed with the Commission on March 31,
1998).
2.14 Agreement and Plan of Merger dated as of January 8, 1998 between
the Registrant and Community Bancorp, Inc.
2.15 First Amendment to Agreement and Plan of Merger dated as of the
9th day of March, 1998 between the Registrant and Community
Bancorp, Inc.
2.16 Agreement and Plan of Merger dated as of January 12, 1998 between
the Registrant and FNB, Inc.
2.17 Agreement and Plan of Merger dated as of April 2, 1998 between
the Registrant and Western Bancshares of Las Cruces, Inc.
2.18 Agreement and Plan of Merger dated as of May 18, 1998 between
the Registrant and Guardian Bancorp.
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).
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 Specimen Common Stock Certificate of the Registrant (incorporated
by reference to Exhibit 4 to the 1991 S-1).
4.2 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")).
4.3 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 Company, regarding legality of securities being registered.
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 Arthur Andersen LLP.
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.*
- -------------------------
*Previously filed.
II-3
<PAGE>
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this 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
(notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more
than 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement).
(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;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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; and
(3) 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.
The undersigned Registrant hereby undertakes that, for the 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 this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
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 Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each 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.
The undersigned Registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act of 1939, as amended (the "Act"),
in accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Act.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-4 and has duly caused this
Amendment to the Form S-4 Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Fargo, State of
North Dakota, on the 9th day of June, 1998.
COMMUNITY FIRST BANKSHARES, INC.
By: /s/Mark A. Anderson
--------------------------------------------------
Mark A. Anderson, Executive Vice President, Chief
Financial Officer and Chief Information Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to the Form S-4 Registration Statement has been signed below
on the 9th day of June, 1998, by the following persons in the capacities
indicated.
SIGNATURE TITLE
- --------- -----
* President, Chief Executive Officer and
- ---------------------------------- Chairman of the Board (Principal
Donald R. Mengedoth Executive Officer)
/s/ Mark A. Anderson Executive Vice President, Chief Financial
- ---------------------------------- Officer and Chief Information Officer
Mark A. Anderson (Principal Financial and Accounting Officer)
* Director
- ----------------------------------
Patricia A. Adam
* Director
- ----------------------------------
James T. Anderson
II-6
<PAGE>
* Director
- ----------------------------------
Patrick E. Benedict
* Director
- ----------------------------------
Patrick Delaney
* Director
- ----------------------------------
John H. Flittie
* Director
- ----------------------------------
Dennis M. Mathisen
* Director
- ----------------------------------
Thomas C. Wold
* Director
- ----------------------------------
Harvey L. Wollman
* Director
- ----------------------------------
Darrell G. Knudson
* By: /s/ Mark A. Anderson
-----------------------------
Mark A. Anderson
Attorney-in-fact
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.14 Agreement and Plan of Merger dated as of January 8, 1998
between the Registrant and Community Bancorp, Inc.
2.15 First Amendment to Agreement and Plan of Merger dated as of
the 9th day of March, 1998 between the Registrant and
Community Bancorp, Inc.
2.16 Agreement and Plan of Merger dated as of January 12, 1998
between the Registrant and FNB, Inc.
2.17 Agreement and Plan of Merger dated as of April 2, 1998
between the Registrant and Western Bancshares of Las Cruces,
Inc.
2.18 Agreement and Plan of Merger dated as of May 18, 1998
between the Registrant and Guardian Bancorp.
5.1 Opinion and Consent of Lindquist & Vennum P.L.L.P., Counsel
to the Registrant, regarding the legality of the
securities being registered.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Arthur Andersen LLP.
</TABLE>
<PAGE>
EXHIBIT 2.14
AGREEMENT AND PLAN OF MERGER
dated as of January 8, 1998
between
COMMUNITY FIRST BANKSHARES, INC.
and
COMMUNITY BANCORP, INC.
<PAGE>
INDEX TO AGREEMENT AND PLAN OF MERGER
<TABLE>
<CAPTION>
Page
<S> <C>
AGREEMENT AND PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effects of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Calculation of Company Value . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Conversion of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Exchange Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Shareholders' Right of Dissent. . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Exchange Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Exchange Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
(c) Distributions with Respect to Unexchanged Shares; Voting. . . . . . . . . . 5
(d) Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(f) Termination of Exchange Fund. . . . . . . . . . . . . . . . . . . . . . . . 6
(g) Lost or Destroyed Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Representations and Warranties of Company. . . . . . . . . . . . . . . . . . . . 7
(a) Bank Subsidiary Organization. . . . . . . . . . . . . . . . . . . . . . . . 7
(b) Company Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Limitation of Bank's Powers . . . . . . . . . . . . . . . . . . . . . . . . 8
(e) Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(f) Insured Status of Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(g) No Default; Creation of Liens . . . . . . . . . . . . . . . . . . . . . . . 8
(h) Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(i) Fidelity Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(j) Employment Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(k) Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(l) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(m) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
(n) Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
(o) Insurance Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
i
<PAGE>
(p) Bank Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
(q) Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
(r) Loan Allowance and Documentation. . . . . . . . . . . . . . . . . . . . . .11
(s) Leases and Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . .12
(t) Shareholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
(u) Bank Principals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
(v) Information Supplied. . . . . . . . . . . . . . . . . . . . . . . . . . . .12
(w) Agreements with Bank Regulators . . . . . . . . . . . . . . . . . . . . . .13
3.2 Representations and Warranties of CFBI . . . . . . . . . . . . . . . . . . . . .13
(a) CFBI Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
(b) Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
(c) Required Filings and Consents . . . . . . . . . . . . . . . . . . . . . . .14
(d) Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
(e) Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
(f) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
(g) Absence of Certain Changes. . . . . . . . . . . . . . . . . . . . . . . . .15
(h) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
(i) Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . .16
(j) Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
(k) No Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
(l) Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
(m) No Default; Creation of Liens . . . . . . . . . . . . . . . . . . . . . . .17
(n) Information Supplied. . . . . . . . . . . . . . . . . . . . . . . . . . . .17
(o) Insured Status of CFBI Subsidiary Banks . . . . . . . . . . . . . . . . . .17
(p) No Default; Creation of Liens . . . . . . . . . . . . . . . . . . . . . . .18
ARTICLE 4 COVENANTS OF COMPANY AND CFBI . . . . . . . . . . . . . . . . . . . . . . . . .18
4.1 Covenants of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
(a) Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
(b) Shareholder Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
(c) Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
(d) Confidential Information. . . . . . . . . . . . . . . . . . . . . . . . . .19
(e) Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
(f) No Solicitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(g) No Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(h) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(i) Pooling Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(j) Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(k) Additional Covenants of Company . . . . . . . . . . . . . . . . . . . . . .21
4.2 Covenants of CFBI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
(a) Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
(b) Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
(c) Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
ii
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(d) Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
(e) Shares to be Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
(f) Blue Sky. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
(g) Confidential Information. . . . . . . . . . . . . . . . . . . . . . . . . .24
4.3 Covenants of Company and CFBI. . . . . . . . . . . . . . . . . . . . . . . . . .25
(a) Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
(b) Advice of Changes; Government Filings . . . . . . . . . . . . . . . . . . .25
(c) Title of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
(d) Environmental Assessment. . . . . . . . . . . . . . . . . . . . . . . . . .26
ARTICLE 5 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.1 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.2 Access to Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.3 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
5.4 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
5.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
5.6 Additional Agreements; Best Efforts. . . . . . . . . . . . . . . . . . . . . . .28
5.7 Insurance, Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
ARTICLE 6 CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
6.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . .29
(a) Stockholder Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . .29
(b) Nasdaq Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
(c) Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
(d) No Injunctions or Restraints; Illegality. . . . . . . . . . . . . . . . . .29
(e) No Unduly Burdensome Condition. . . . . . . . . . . . . . . . . . . . . . .29
6.2 Conditions to Obligations of CFBI. . . . . . . . . . . . . . . . . . . . . . . .30
(a) Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . .30
(b) Performance of Obligations of Company . . . . . . . . . . . . . . . . . . .30
(c) Minimum Book Value of the Company . . . . . . . . . . . . . . . . . . . . .30
(e) Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
6.3 Conditions to Obligations of Company . . . . . . . . . . . . . . . . . . . . . .30
(a) Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . .31
(b) Performance of Obligations of CFBI. . . . . . . . . . . . . . . . . . . . .31
(c) Consents Under Agreements . . . . . . . . . . . . . . . . . . . . . . . . .31
(d) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
(e) Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
(f) Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . .31
ARTICLE 7 TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . .32
7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
7.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
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7.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
7.4 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
ARTICLE 8 GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
8.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
8.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
8.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
8.5 Entire Agreement: Third Party Beneficiaries; Rights of Ownership . . . . . . . .34
8.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
8.7 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
8.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
8.9 Enforcement of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 8, 1998 (the
"Agreement"), by and between Community First Bankshares, Inc., a Delaware
corporation ("CFBI"), and Community Bancorp, Inc., a Colorado corporation
("Company").
WHEREAS, the Boards of Directors of CFBI and Company 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 Company will be merged with and into CFBI and Company's
subsidiary Community First National Bank ("Bank") thereby become a wholly-owned
subsidiary of CFBI (the "Merger");
WHEREAS, CFBI and Company 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) 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, (i) articles of merger (the "Articles of Merger") in substantially
the form as attached hereto as EXHIBIT 1.1A shall be duly prepared, executed and
acknowledged by CFBI and Company 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"), and (ii) a certificate of merger
(the "Certificate of Merger") in substantially the form as attached hereto as
EXHIBIT 1.1B shall be duly prepared, executed and acknowledged by CFBI and
Company and thereafter delivered for filing to the Secretary of State of the
State of Delaware, as provided in the Delaware General Corporation Law (the
"Delaware Law"), 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 and the filing of the Certificate of Merger with
the Secretary of State of Delaware or at such other time as CFBI and Company may
agree in writing to provide in the Articles of Merger and the Certificate 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.
<PAGE>
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 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
Company shall cease and the Company shall be merged with and into CFBI, (ii)
the Articles of Incorporation of CFBI, 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 CFBI, 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) the holders of the outstanding capital stock of CFBI
shall continue as shareholders of the Surviving Corporation; (v) the holders
of certificates representing shares of Company Common Stock (as defined in
Section 2.1(b) below) shall cease to have any rights as shareholders of
Company, 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 CFBI Common Stock (as defined in Section 2.1(b)
below) into which their shares of Company 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 CFBI Common Stock into which their
shares of Company Common Stock have been converted as provided herein.
(b) As used in this Agreement, the term "Constituent Corporations"
shall mean CFBI and the Company. The term "Surviving Corporation" shall mean
CFBI, after giving effect to the Merger.
1.4 CALCULATION OF COMPANY 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"), Company shall prepare a consolidated balance sheet
of Company 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 June
30, 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 CFBI as soon as
they are prepared so that CFBI and its accountants may review and confirm their
accuracy. For purposes of this Agreement, the "Company Value" shall be the sum
of (i) Twenty Million Four Hundred Thousand Dollars, plus (ii) Interim Income
multiplied by 3.9139, plus (iii) average daily Interim
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<PAGE>
Income, multiplied by the number of days from the Determination Date to the
day prior to the Closing Date (excluding the Determination Date), multiplied
by 3.9139.
For purposes of the calculations of this Section 1.4, Interim Income shall be
determined in accordance with generally accepted accounting principles as pretax
income generated in the ordinary course of business operations from and after
June 30, 1997 to the Determination Date, less (i) income from the sale of assets
out of the ordinary course of business, (ii) income from the sale of securities
prior to maturity; (iii) income tax distributions equal to 41% of pretax income,
and (iv) dividends in the amount of $140,000, paid in the third calendar quarter
of 1997, and $90,000, to be paid in the fourth calendar quarter of 1997. In
addition, it is agreed that the ratio of Allowance for Loan and Lease Losses to
gross total loans will be no lower than 0.476% (the ratio at June 30, 1997) at
Closing. Interim Income shall not take into account any adjustments for
unrealized gains or losses on securities available for sale in accordance with
SFAS 115,
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, par value $1.00, of Company ("Company Common Stock"), subject to Section
2.2(e), each issued and outstanding share of Company Common Stock, other than
shares of Company 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
Sections 7-113-101 of the Colorado Act, shall be converted into shares of
validly issued, fully paid and nonassessable shares of common stock of CFBI,
$.01 par value ("CFBI Common Stock"). All such shares of Company Common Stock
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist. Each Company shareholder's certificate or
certificates previously representing shares of Company Common Stock (each a
"Company Common Certificate") shall be aggregated (if a single stockholder holds
more than one Company Common Certificate) and exchanged for a certificate or
certificates representing whole shares of CFBI Common Stock and cash in lieu of
any fractional share issued in consideration therefor upon the surrender of such
Company 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 CFBI 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 CFBI'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 CFBI Common Stock into which a share of Company Common
Stock shall be converted will equal the number of shares of CFBI Common Stock
that the holders of shares of Company Common Stock would have received pursuant
to such reorganization, recapitalization, reclassification, stock dividend,
stock split,
3
<PAGE>
reverse stock split or other similar change had the record date therefor
been immediately following the Closing Date.
(b) EXCHANGE RATE. Subject to the adjustments provided above and
below, the number of shares of CFBI Common Stock to be exchanged for each share
of Company Common Stock (the "Exchange Rate") shall be determined by dividing
the Company Share Value by the CFBI Trading Value.
For purposes of this Agreement, the "Company Share Value" shall be
determined by dividing the Company Value, determined in accordance with Section
1.4, above, by the number of shares of Company Common Stock outstanding or
subject to option, warrant or other right of issuance, whether or not vested or
accrued as of the Effective Time.
For purposes of this Agreement, the "CFBI Trading Value" of the CFBI Common
Stock shall be the average of the per share closing price for the CFBI Common
Stock as reported by the Nasdaq National Market 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 CFBI
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. Any fractional share
of CFBI 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(b) hereto and incorporated herein by reference.
(c) SHAREHOLDERS' RIGHT OF DISSENT. Notwithstanding anything to the
contrary contained herein, shares of Company Common Stock which are issued and
outstanding immediately prior to the Effective Time and which are held by
shareholders who have not voted such shares in favor of the Merger and who shall
have properly exercised their dissenters' rights for such shares in the manner
provided by the Colorado Act (the "Dissenting Shares") shall not be converted
into or be exchangeable for the right to receive shares of CFBI Common Stock and
cash in lieu of fractional shares, unless and until such holder shall have
failed to perfect or shall have effectively withdrawn or lost his right to
dissent and payment, as the case may be. If such holder shall have so failed to
perfect or shall have effectively withdrawn or lost such right, his shares shall
thereupon be deemed to have been converted into and to have become exchangeable
for, at the Effective Time, the right to receive shares of CFBI Common Stock and
cash in lieu of fractional shares, without any interest thereon. The Company
shall give CFBI prompt notice of any Dissenting Shares (and shall also give CFBI
prompt notice of any withdrawals of such demands for dissenters' rights) and
CFBI shall have the right to direct all negotiations and proceedings with
respect to any such demands. Neither the Company nor the surviving
4
<PAGE>
corporation of the Merger shall, except with the prior written consent of
CFBI, voluntarily make any payment with respect to, or settle or offer to
settle, any such demand for dissenters' rights.
2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. At the Closing, CFBI 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
Company Stock, certificates dated the Closing Date representing the shares of
CFBI 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 Company Common Stock. (Such cash and certificates for shares of CFBI
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, CFBI shall cause the Exchange Agent to mail to each holder of
record of a Company Certificate or Company Certificates (i) a letter of
transmittal which shall specify that delivery shall be effective, and risk of
loss and title to the Company Certificate(s) shall pass, only upon delivery of
the Company Certificate(s) to the Exchange Agent and which shall be in such form
and have such other provisions as CFBI and Company may reasonably specify not
later than five business days before the Closing Date and (ii) instructions for
use in effecting the surrender of the Company Common Certificate(s) in exchange
for a certificate representing shares of CFBI Common Stock and the cash to be
paid in lieu of any fractional share. Upon surrender of a shareholder's Company
Common Certificate or Company Common Certificates for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, the
holder of such Company Common Certificate(s) shall be entitled to receive in
exchange therefor (1) a certificate or certificates representing the number of
whole shares of CFBI 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 Company Common Certificate(s) surrendered, as provided in Section 2.2(c)
below, and the Company 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 Company Common
Certificates. In the event of a transfer of ownership of Company Common Stock
which is not registered in the transfer records of Company, a CFBI Certificate
representing the proper number of shares of CFBI Common Stock, and/or a check
for the cash to be paid, may be issued to such a transferee if the Company
Common Certificate representing such Company 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 CFBI.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES; VOTING. The
Exchange Agent shall receive and hold, for distribution without interest to the
record holder of the certificate or certificates representing shares of Company
Common Stock, all dividends and other distributions paid on shares of CFBI
Common Stock held in the Exchange Agent's name as agent. Holders of
unsurrendered Company Common Certificates shall not be entitled to vote
5
<PAGE>
after the Closing Date at any meeting of CFBI shareholders until they have
exchanged their Company Common Certificates.
(d) TRANSFERS. After the Effective Time, there shall be no transfers
on the stock transfer books of Company of the shares of Company Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Company Certificates are presented to the Surviving Corporation, they
shall be canceled and exchanged for the shares of CFBI 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. Company Certificates surrendered for exchange by any person
constituting an "affiliate" of Company for purposes of Rule 145(c) under the
Securities Act of 1933, as amended (the "Securities Act"), shall not be
exchanged until CFBI has received a written agreement from such person as
provided in Section 5.5.
(e) FRACTIONAL SHARES. No fractional shares of CFBI Common Stock
shall be issued pursuant hereto. In lieu of the issuance of any fractional
share, cash will be paid to holders in respect of any fractional share of CFBI
Common Stock that would otherwise be issuable, and the amount of such cash shall
be equal to such fractional proportion of the Trading Value of a share of CFBI
Common Stock. For purposes of calculating fractional shares, a holder of
Company Common Stock with more than one Company Certificate shall receive cash
only for the fractional share remaining after aggregating all of its, his or her
Company 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 CFBI Common Stock)
that remains unclaimed by the shareholders of Company for twelve months after
the Closing Date shall be paid to CFBI. Any shareholders of Company who have
not theretofore complied with this Article 2 shall thereafter look only to CFBI
for payment of their shares, and cash in an amount as determined in accordance
with the provisions of Section 2.1(a) and this Section 2.2, without any interest
thereon. Notwithstanding the foregoing, none of CFBI, the Exchange Agent nor
any other person shall be liable to any former holder of shares of Company 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 Company Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Company 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 CFBI may direct as indemnity against any claim that may
be made against it with respect to such Company Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Company Certificate
the shares of CFBI 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.
6
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF COMPANY. In order to induce CFBI to
enter into this Agreement, Company represents and warrants to CFBI, 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 3.1
(the "Company Disclosure Schedule") and the schedules thereunder which are
numbered to correspond to the representations set forth below:
(a) BANK SUBSIDIARY ORGANIZATION. Community First National 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 $500,000, consisting of 5,000 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, non-assessable, and there are no stock options
or other commitments outstanding 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) COMPANY ORGANIZATION. The Company 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 50,000 shares of common
stock, $1,00 par value per share, of which _______ shares are issued and
outstanding. Company 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 Company. Company is registered as a company
under Section 1841 of Title 12, United States Code, as amended (the "Bank
Holding Company Act"). Except as set forth in Section 3.1(b) of the Company
Disclosure Schedule, the Company 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 Company Disclosure Schedule, the Company 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 Company, Company 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 Company and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Company. Subject to approval by the Company
shareholders and of government agencies and other governing bodies having
regulatory authority over Company or the Bank as may be required by statute or
regulation, this Agreement constitutes a valid and binding obligation of
Company, enforceable against it in accordance with its terms.
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(d) LIMITATION OF BANK'S POWERS. 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. Company'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 CFBI on or before the date of this
Agreement. The minute books of Company 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 (including committees of the
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 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 of the FDIC. The Bank possesses and is in
substantial 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 Company.
(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 Company 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 Company 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 Company Common Stock or any of the
Bank's capital stock.
(h) FINANCIAL STATEMENTS. The following financial statements of the
Bank and Company (the "Financial Statements") have been delivered to CFBI 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 June 30, 1997; and
(ii) The audited consolidated financial statements of
Company, 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
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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 Company as of the dates and for
the periods therein set forth. To the knowledge of Company, such financial
statements did not, as of the date of the preparation thereof, include 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 December 31, 1996, there has been no material
adverse change in the financial condition, results of operation or business
of the Bank and Company, 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).
(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, or, except as set forth in Section 3.1(i)
of the Company 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 Company Disclosure Schedule, neither Company 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 Company 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 Company 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 Company maintain or to which the Bank or Company contribute on
behalf of current or former employees of the Bank or Company. All of the plans
and programs listed in Section 3.1(k) of the Company 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. Each of the Plans that is a defined benefit pension
plan has assets with an aggregate value that exceeds the present value of its
liability for accrued benefits, all as determined on a termination basis. 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 set forth in Section 3.1(l) of the Company
Disclosure Schedule, no claims have been asserted by written notice to Company
and no relief has been sought against Company, the Bank or any of the Plans in
any pending litigation or governmental proceedings or otherwise. Neither
Company nor the Bank is a party to any unsatisfied order, judgment or decree
which is adverse to Company or the Bank, and neither Company nor the
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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 Company, there do not exist facts that would reasonably
be expected to give rise to a material claim against Company or the Bank
after the Closing Date.
(m) TAXES. Each of Company 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 Company or the Bank; neither Company 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 Company
Disclosure Schedule, there are no other taxes of any kind or character for which
either Company 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. Company has delivered to CFBI true, accurate
and complete copies of all insurance policies of Company 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), Company 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 Company, there is
no legal, administrative, or other proceeding, claim, investigation (with
respect to which Company is aware), inquiry, order, hearing or action of any
nature seeking to impose, or that would
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<PAGE>
reasonably be expected to result in the imposition, on Company 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 Company, threatened against Company or the Bank; to the
knowledge of Company 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 Company 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 Company 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.
(q) CONDUCT OF BUSINESS. Except for the facts set forth in the
Assessment, the Bank and Company 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 Company.
(r) LOAN ALLOWANCE AND DOCUMENTATION. Company's consolidated
allowance for losses on loans included in the Financial Statements as of June
30, 1997 was $____________, representing 0.476% of its total consolidated loans
held in portfolio. To the knowledge of the Company, 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 Company, there
are no facts which would cause it to increase the level of such allowance for
losses on loans. The loan portfolio of the Bank as of June 30, 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. 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. Company has provided to CFBI
such written information concerning the loan portfolios of the Bank as CFBI has
requested, which information is true, correct and complete in all material
respects.
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(s) LEASES AND CONTRACTS. Except as set forth in Section 3.1(s) of
the Company Disclosure Schedule, neither the Bank nor Company 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 Company 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 Company is a party or
by which the Bank or Company 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. Company has furnished to CFBI 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 common stock of Company and
(ii) identifies each shareholder who is an officer or director of the Bank or
Company.
(u) BANK PRINCIPALS. No director or executive officer of Company or
the Bank, nor any holder of ten percent or more of the outstanding capital stock
of Company, 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 Company Disclosure Schedule, no Bank Principal holds any
position with any depository organization other than the Bank or Company. 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 Company or the Bank for inclusion or incorporation by reference in
the "Proxy Statement" (as hereinafter defined) and any amendment or supplement
thereto will, at the date of mailing to the Company stockholders and at the
times of the meeting of stockholders of Company to be held in connection with
the Merger, contain any untrue statement of a material fact or omit to state any
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<PAGE>
material fact required to be stated therein or necessary in order to make the
statements therein not misleading.
(w) AGREEMENTS WITH BANK REGULATORS. Except as set forth in Section
3.1(w) of the Company Disclosure Schedule, neither Company 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 Company or engaged in the insurance of bank deposits
("Bank Regulators"), nor has Company 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 CFBI. CFBI represents and warrants
to Company, 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 3.2 (the "CFBI Disclosure Schedule") and the schedules thereunder which
are numbered to correspond to the representations set forth below:
(a) CFBI ORGANIZATION. CFBI 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 ____________ shares of common stock, par
value of $.01 per share, of which _________ shares were issued and outstanding
as of December __, 1997 and __________ shares of preferred stock, of which
_______ shares of ____________ preferred stock, stated value $100.00 per share,
were issued and outstanding as of December, 1997. CFBI 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. CFBI is
registered as a corporation under Section 1841 of Title 12, United States Code,
as amended (the "Bank Holding Company Act"). Since such date, (i) no additional
shares of capital stock of CFBI have been issued, except pursuant to the terms
existing on the date hereof of CFBI's stock option and employee stock purchase
plans and other similar employee benefit plans (the "CFBI Stock Plans") and (ii)
no options or other rights to acquire shares of CFBI's capital stock have been
granted (other than an aggregate of ___________ options to acquire CFBI Common
Stock granted pursuant to the terms existing on the date hereof of CFBI's Stock
Plans). CFBI has no outstanding bonds, debentures, notes or other obligations
the holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the stockholders of
CFBI on any matter (other than __________________). All issued and outstanding
shares of Company Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. There are not at the date of this
Agreement any existing options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligate CFBI or
any of the CFBI Subsidiaries to issue, transfer or sell any shares of capital
stock of CFBI or any of the CFBI Subsidiaries (other than under the CFBI Stock
Plans).
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(b) SUBSIDIARIES. CFBI owns directly or indirectly each of the
outstanding shares of capital stock (or other ownership interests having by
their terms ordinary voting power to elect a majority of directors or others
performing similar functions with respect to such CFBI Subsidiary) of each of
the CFBI Subsidiaries. Each of the outstanding shares of capital stock of each
of the CFBI Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and is owned directly or indirectly, by CFBI. Each of the
outstanding shares of capital stock of each subsidiary of CFBI is owned,
directly or indirectly, by CFBI free and clear of all liens, pledges, security
interests, claims or other encumbrances other than liens imposed by local law
which are not material.
(c) REQUIRED FILINGS AND CONSENTS. The execution and delivery of
this Agreement by CFBI does not, and the performance of this Agreement and the
consummation of the transactions contemplated hereby will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental entity, except (i) for (A) applicable requirements, if any,
of the Exchange Act, the Securities Act, Blue Sky Laws and state takeover laws,
(B) the pre-merger notification requirements of the HSR Act, (C) applicable
approvals of the Federal Reserve Bank pursuant to the Bank Holding Company Act
of 1956, as amended, (D) filing and recordation of appropriate merger and
similar documents as required by Delaware law and Colorado law, (E) applicable
requirements, if any, of the Code and state, local and foreign tax laws, and
(ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of any of the transactions contemplated hereby in any material
respect, or otherwise prevent CFBI from performing its obligations under this
Agreement in any material respect, and would not, individually or in the
aggregate, have a material adverse effect on the business, results of operations
or financial condition of CFBI.
(d) COMPLIANCE. Neither CFBI nor any CFBI subsidiary is in conflict
with, or in default or violation of, (i) any law, rule, regulation, order,
judgment or decree applicable to CFBI or any CFBI subsidiary or by which any
property or asset of CFBI or any CFBI subsidiary is bound or affected, or (ii)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which CFBI or any CFBI
subsidiary is a party or by which CFBI or any CFBI subsidiary or any property or
asset of CFBI or any CFBI subsidiary is bound or affected, in each case except
for any such conflicts, defaults or violations that would not, individually or
in the aggregate, have a material adverse effect on the business, results of
operations or financial condition of CFBI. CFBI and its subsidiaries have
obtained all licenses, permits and other authorizations and have taken all
actions required by applicable law or governmental regulations in connection
with their business as now conducted, where the failure to obtain any such item
or to take any such action would have, individually or in the aggregate, a
material adverse effect on the business, results of operations or financial
condition of CFBI.
(e) REPORTS. Since September 30, 1994, CFBI and the
CFBI Subsidiaries have filed all forms, reports, registration statements, and
documents 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
14
<PAGE>
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 "CFBI Reports." As of
their respective dates, the CFBI Reports complied or will comply 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, or will
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. CFBI 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").
Each of the consolidated balance sheets included in or incorporated by
reference into the CFBI Reports (including the related notes and schedules)
fairly presents the consolidated financial position of CFBI and CFBI
Subsidiaries as of its date, and each of the consolidated statetments of
income, retained earnings and cash flows included in or incorporated by
reference into the CFBI Reports (including any related notes and schedules)
fairly presents the results of operations, retained earnings or cash flows,
as the case may be, of CFBI and the CFBI Subsidiaries for the periods set
forth therein (subject, in the case of unaudited statements, to normal
year-end audit adjustments which would not be material in amount or effect),
in each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be noted
therein. Neither CFBI nor any of the CFBI Subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise), that would be required to be reflected on, or reserved against
in, a balance sheet of CFBI or in the notes thereto, prepared in accordance
with generally accepted accounting principles consistently applied, except
for (i) liabilities and obligations that were reserved on or reflected in
(including the notes to), the consolidated balance sheet of CFBI as of
September 30, 1997, (ii) liabilities arising in the ordinary course of
business since September 30, 1997, (iii) liabilities or obligations which
would not, individually or in the aggregate, have a material adverse effect
on the business, results of operations or financial condition of CFBI.
(f) LITIGATION. There are no actions, suits or proceedings
pending against CFBI or the CFBI Subsidiaries or, to the actual knowledge of
the executive officers of CFBI, threatened against CFBI or the CFBI
Subsidiaries, at law or in equity, or before or by any federal or state
commission, board, bureau, agency or instrumentality, that are reasonably
likely to have a material adverse effect on the business, results of
operation or financial condition of CFBI.
(g) ABSENCE OF CERTAIN CHANGES. Except as specifically
contemplated by this Agreement, since December 31, 1996, there has not been
(i) any material adverse effect to the business, results of operations or
financial condition of CFBI; (ii) any declaration, setting aside or payment
of any dividend or other distribution with respect to its capital stock
(other than regular quarterly cash dividends including any increase thereof
consistent with past practice), or (iii) any material change in its
accounting principles, practices or methods.
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(h) TAXES. Each of CFBI and the CFBI Subsidiaries has filed all
material tax returns and reports required to be filed by it, or requests for
extensions to file such returns or reports have been timely filed and granted
and have not expired, and all tax returns and reports are complete and
accurate in all respects, except to the extent that such failures to file,
have extensions granted that remain in effect or be complete and accurate in
all respects, as applicable, individually or in the aggregate, would not have
a material adverse effect on the business results of operations or financial
condition of CFBI. CFBI and each of the CFBI Subsidiaries has paid (or CFBI
has paid on its behalf) all taxes shown as due on such tax returns and
reports. The most recent financial statements contained in the CFBI Reports
reflect an adequate reserve for all taxes payable by CFBI and the CFBI
Subsidiaries for all taxable periods and portions thereof accrued through the
date of such financial statements, and no deficiencies for any taxes have
been proposed, asserted or assessed against CFBI or any CFBI Subsidiary that
are not adequately reserved for, except for inadequately reserved taxes and
inadequately reserved deficiencies that would not, individually, or in the
aggregate, have a material adverse effect to the business, results of
operations or financial condition of CFBI. No requests for waivers of the
time to assess any taxes against CFBI or any CFBI Subsidiary have been
granted or are pending, except for requests with respect to such taxes that
have been adequately reserved for in the most recent financial statements
contained in the CFBI Reports, or, to the extent not adequately reserved, the
assessment of which would not, individually or in the aggregate, have a
material adverse effect to the business, results of operations or financial
condition of CFBI.
(i) EMPLOYEE BENEFIT PLANS. Except as described in the CFBI
Reports or as would not have a material adverse effect to the business,
results of operations or financial condition of CFBI, (i) all employee
benefit plans or programs maintained for the benefit of the current or former
employees or directors of CFBI or any CFBI Subsidiary that are sponsored,
maintained or contributed to by CFBI or any CFBI Subsidiary, or with respect
to which CFBI or any CFBI Subsidiary has any liability, including without
limitation any such plan that is an "employee benefit plan" as defined in
Section 3(3) of ERISA, are in compliance with all applicable requirements of
law, including ERISA and the Code, and (ii) neither CFBI nor any CFBI
Subsidiary has any liabilities or obligations with respect to any such
employee benefit plans or programs, whether accrued, contingent or otherwise,
nor to the knowledge of the executive officers of CFBI are any such
liabilities or obligations expected to be incurred. Except as disclosed in
the CFBI Reports, the execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any such
benefit plan, policy, arrangement or agreement or any trust or loan that will
or may result in any distribution, increase in benefits or obligation to fund
benefits with respect to any employee.
(j) LABOR MATTERS. There is no labor strike, labor dispute, work
slowdown, stoppage or lockout actually pending, or to the knowledge of the
executive officers of CFBI, threatened against or affecting CFBI or any CFBI
Subsidiary, except as would not, individually or in the aggregate, have a
material adverse effect on the business, results of operations or financial
condition of CFBI. There is no unfair labor practice or labor arbitration
proceeding pending or, to the knowledge of the executive offices of CFBI,
threatened against CFBI or its
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Subsidiaries relating to their business, except for any such proceeding which
would not have a material adverse effect on the business, results of
operations or financial condition of CFBI.
(k) NO BROKERS. CFBI has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of the Company or CFBI to pay any finder's fee, brokerage or
agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby. Other than the foregoing arrangements,
CFBI is not aware of any claim for payment by CFBI of any finder's fees,
brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
(l) ENFORCEABILITY. The execution, delivery and performance of
this Agreement by CFBI and the consummation of the transactions contemplated
hereby have been duly authorized by the Board of Directors of CFBI. Subject
to approval by the government agencies and other governing bodies having
regulatory authority over CFBI as may be required by statute or regulation,
this Agreement constitutes a valid and binding obligation of CFBI,
enforceable against it in accordance with its terms. This Agreement does not
require the approval of CFBI shareholders.
(m) 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
CFBI may be subject, or any contract, agreement or instrument to which CFBI
is a party or by which CFBI is bound or committed, or the Articles of
Incorporation or Bylaws of CFBI, 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 CFBI Common Stock.
(n) INFORMATION SUPPLIED. None of the information supplied or to
be supplied by CFBI for inclusion or incorporation by reference in the
Prospectus (as hereinafter defined) or the Proxy Statement and any amendment
or supplement thereto will, at the date of mailing to Company stockholders
and at the times of the meeting of stockholders of Company 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.
(o) INSURED STATUS OF CFBI SUBSIDIARY BANKS. The CFBI Subsidiary
Banks are each insured banks 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 CFBI Subsidiary Banks exists
that could reasonably be expected to have a material adverse effect on its
status as an insured bank thereunder. All of the CFBI Subsidiary Banks'
deposits are insured by the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC. The CFBI Subsidiary Banks possess and are in
substantial compliance with all
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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 CFBI.
(p) 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 CFBI may be
subject, (B) any of its material contracts, or (C) the Certificate of
Incorporation/Articles of Association or Bylaws of CFBI or the CFBI
Subsidiary Banks, 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 CFBI
Common Stock.
ARTICLE 4
COVENANTS OF COMPANY AND CFBI
4.1 COVENANTS OF COMPANY. During the period from the date of this
Agreement and continuing until the Effective Time, Company agrees as follows:
(a) ORDINARY COURSE. Except as otherwise required under this
Agreement or by CFBI, Company 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 and names, 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. Company 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 Company 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. Company will cause to be duly called,
and will cause to be held not later than sixty (60) days of the date hereof,
a meeting of its shareholders and will direct that this Agreement be
submitted to a vote at such meeting. Company 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.
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(c) PROXY STATEMENT. Company will promptly prepare the Proxy
Statement (including financial statements, prepared in accordance with
generally accepted accounting principles, in form suitable for inclusion in
the Proxy Statement), and will provide all information requested by CFBI in
connection with any statement or application made by CFBI to any governmental
body in connection with the Merger. Company agrees promptly to advise CFBI
if at any time prior to the Effective Date of the Merger, any information
provided by or on behalf of Company becomes incorrect or incomplete in any
material respect and to provide the information needed to correct such
inaccuracy or omission.
(d) CONFIDENTIAL INFORMATION. Company will hold in confidence all
documents and nonpublic information concerning CFBI and its subsidiaries
furnished to Company 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 Company'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 CFBI (except to the extent that such
information can be shown to be previously known to Company, in the public
domain, or later acquired by Company from other legitimate sources) and, upon
request, all such documents, any copies thereof and extracts therefrom shall
immediately thereafter be returned to CFBI.
(e) BENEFIT PLANS. Company and the Bank will, to the extent
legally permissible, take all action necessary or required (i) to terminate
or amend, if requested by CFBI and at CFBI'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.
Except as set forth in Section 3.1(k) of the Company Disclosure
Schedule, and except as otherwise required pursuant to this Section 4.1(e),
Company agrees as to itself and the Bank that it will not, without the prior
written consent of CFBI, (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
Company or any of the Bank and one or more of its directors or officers;
provided, however, that Company 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 Company 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 Company in excess of 105% of
that in effect as of December 31, 1997, 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
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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 Company 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. Company 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. Company
shall promptly advise CFBI 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
Company or any proposal or offer to acquire in any manner a substantial
equity interest in, or a substantial portion of the assets of Company 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 Company Disclosure Schedule, or (ii) acquisitions which
may be mutually agreed to by the parties, Company shall not, nor shall permit
Company or 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 Company assets in each
case in the ordinary course of business.
(h) INSURANCE. Company 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 Company, the Bank nor CFBI shall take any action which,
with respect to Company, would disqualify the Merger as a "pooling of
interests" for accounting purposes.
(j) FINANCIAL STATEMENTS. Company shall have prepared, filed and
submitted to CFBI all quarterly and management prepared financial statements
for any periods ending at least 30 days before the Closing Date.
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(k) ADDITIONAL COVENANTS OF COMPANY. From the date of this
Agreement to the Closing Date or the earlier termination of this Agreement,
Company, EXCEPT WITH THE PRIOR WRITTEN CONSENT OF CFBI (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(k) of the Company
Disclosure Schedule, issue, sell or commit to issue or sell any shares
of capital stock of Company or the Bank, securities convertible into
or exchangeable for capital stock of Company 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 Company;
(ii) Redeem, purchase or otherwise acquire directly or
indirectly, any shares of capital stock of Company or the Bank or any
securities convertible or exercisable for any shares of capital stock
of Company or the Bank;
(iii) Split, combine or reclassify any of capital stock of
Company 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 Company 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;
(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 Company's Articles of Association,
Articles of Incorporation, Bylaws or other governing documents;
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(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
$500,000, to any one borrower, unless said loan is made pursuant to a
properly documented and legally enforceable commitment of the Bank to
the borrower made prior to the date of this Agreement; (B) make, or
agree to make, any unsecured loan or increase any unsecured loan by
$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
material 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 shall provide its
decision within two (2) business days of receipt of request,
accompanied by appropriate information for evaluation of the loan
request, and the loan shall be deemed approved if CFB fails to
disapprove within such two (2) business day period of review.
(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 Company 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
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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 CFBI 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 Company
if such failure would have a material adverse effect upon Company;
(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
have a loan loss reserve at closing of at least equal to 0.476% of
total loans;
(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 (i) after the Determination Date or (ii) which would have
the effect of reducing the book value of the Company as of the Closing
Date to less than $5,214,000; 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 Company or the Bank under any loan or credit agreement,
note, mortgage, indenture, lease, license or other agreement or
instrument.
4.2 COVENANTS OF CFBI. During the period from the date of this
Agreement and continuing until the Effective Time, CFBI agrees as follows:
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(a) ORDINARY COURSE. Except as set forth in Section 4.2(a) of the
CFBI Disclosure Schedule, CFBI 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 Company
and its affiliates, CFBI 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. CFBI will furnish to Company copies of the
Prospectus to be sent to the shareholders of Company. CFBI agrees promptly
to advise Company if at any time prior to the Effective Date of the Merger,
any information provided by CFBI in the Prospectus becomes incorrect or
incomplete in any material respect and to provide the information needed to
correct such inaccuracy or omission. At the time of mailing thereof to the
Company shareholders, at the time of the Company shareholders' meeting
referred to in Section 4.1(b) hereof and at the Effective Time of the Merger,
the Prospectus 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 Company shareholders' meeting.
(d) LISTING. CFBI will file all documents required to be filed to
obtain approval for listing the CFBI Common Stock to be issued pursuant to
the Merger on the Nasdaq National Market and use its best efforts to effect
said listing.
(e) SHARES TO BE ISSUED. The shares of CFBI Common Stock to be
issued by CFBI to the shareholders of Company 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 CFBI Common Stock to be delivered to the shareholders of
Company pursuant to this Agreement are and will be free of any preemptive
rights of the stockholders of CFBI.
(f) BLUE SKY. CFBI 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.
(g) CONFIDENTIAL INFORMATION. CFBI will hold in confidence all
documents and information concerning Company 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
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competition with Company (except to the extent that such information can be
shown to be previously known to CFBI, in the public domain, or later acquired
by CFBI from other legitimate sources) and, upon request, all such documents,
copies thereof or extracts therefrom shall immediately thereafter be returned
to Company.
4.3 COVENANTS OF COMPANY AND CFBI. During the period from the date of
this Agreement and continuing until the Effective Time, Company and CFBI
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) 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.
(b) 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. CFBI 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 Company copies of all such
reports promptly after the same are filed. CFBI, Company and each subsidiary
of CFBI or Company 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.
(c) TITLE OF PROPERTY. Company agrees to deliver to CFBI (at
Company's expense) within thirty (30) days of the date hereof, a title
insurance commitment for all real property owned by Company or the Bank in
the State of Colorado (including property held as OREO) (the "Title
Commitment") CFBI shall have thirty (30) days after receipt by CFBI's counsel
of said Title Commitment within which to notify Company, in writing, of
CFBI'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 Company 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 CFBI, CFBI 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.
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(d) ENVIRONMENTAL ASSESSMENT. Company shall engage at its expense
an independent, qualified environmental engineering firm, acceptable to CFBI
for the purpose of conducting (or updating, as the case may be) Phase I
Hazardous Waste Assessments (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. CFBI 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 Company stating either
that (i) such Assessment is approved by CFBI or (ii) such Assessment is not
approved by CFBI and the reasons therefor.
If CFBI gives a notice pursuant to (ii) above which sets forth specific
objections to the Assessment, then CFBI 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 Company corrects or satisfies
such objections, or indemnifies CFBI against loss, liability or expense, to
the reasonable satisfaction of CFBI.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 REGULATORY MATTERS.
(a) 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").
Company and CFBI 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
Company or CFBI, 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.
(b) Company and CFBI shall promptly furnish each other with copies
of written communications received by Company or CFBI, 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 ACCESS TO INFORMATION. Upon reasonable notice and subject to
applicable laws relating to the exchange of information, Company and CFBI
shall each (and cause each of its subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of CFBI, access
during normal business hours during the period prior to the Effective Time,
to all
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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, Company and CFBI 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 CFBI shall conduct an examination of Company 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.
5.3 AFFILIATES. Each of Company and CFBI 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 Company or
CFBI 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 5.3.
5.4 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 CFBI, 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 CFBI
vacation program, vacation taken by a Bank Employee in the year in which the
Merger occurs will be deducted from the total CFBI benefit. Each Bank
Employee shall be eligible for participation, as a new employee with the
credit for past service described above, in the CFBI Plans under the terms
thereof. CFBI shall cause the Bank to approve and adopt the severance plans
described in EXHIBIT 5.4 attached hereto.
5.5 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. The
expenses (including but not limited to legal, accounting and investment
banker fees) incurred or to be incurred by Company in connection with the
Merger shall not be accrued as expenses on the Interim Income Statement;
instead, 61.75% of such expenses shall be subtracted from Company Value,
determined in accordance with Section 1.4 hereof.
27
<PAGE>
5.6 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, the parties agree to continue to abate all
proceedings incident to that certain pending matter styled COMMUNITY FIRST
NATIONAL BANK OF THORNTON, ET AL. V. COMMUNITY FIRST BANKSHARES, INC., ET AL.
in the Federal District Court for the District of Colorado, during the term
of this Agreement.
5.7 INSURANCE, INDEMNITY.
(a) From and after the Effective Time, CFBI shall indemnify,
defend and hold harmless to the fullest extent that the Company would have
been permitted under applicable law each person who is now, or has been at
any time prior to the date hereof, an officer or director of the Company
(individually, an "Indemnified Party" and collectively, the "Indemnified
Parties"), against all losses, claims, damages, liabilities, costs or
expenses (including attorneys' fees), judgments, fines, penalties and amounts
paid in settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or omissions, or alleged
acts or omissions, by them in their capacities as such occurring at or prior
to the Effective Time. In the event of any such claim, action, suit,
proceeding or investigation (an "Action"), (i) any Indemnified Party wishing
to claim indemnification shall promptly notify CFBI thereof, (ii) CFBI shall
pay the reasonable fees and expenses of counsel selected by the Indemnified
Party, which counsel shall be reasonably acceptable to CFBI, in advance of
the final dispositon of any such Action to the full extent permitted by
applicable law, upon receipt of any undertaking required by applicable law,
and (iii) CFBI will cooperate in the defense of any such matter; provided,
however, that CFBI shall not be liable for any settlement effected without
its written consent and provided, further, that CFBI shall not be obligated
pursuant to this Section to pay the fees and disbursements of more than one
counsel for all Indemnified Parties in any single Action except to the extent
that, in the opinion of counsel for the Indemnified Parties, under applicable
standards of professional conduct, there is a conflict in any one significant
issue between the positions of two or more of such Indemnified Parties.
(b) For a period of four years after the Effective Time, CFBI shall
cause to be maintained officers' and directors' liability insurance covering
the Indemnified Parties who are currently covered, in their capacities as
officers and directors, by the Company's existing officers' and directors'
liability insurance policies on terms substantially no less advantageous to
the Indemnified Parties than such existing insurance; provided, however, that
CFBI shall not be required in order to maintain or procure such coverage to
pay an annual premium in excess of one and one-half times the current annual
premium paid by the Company for its existing coverage (the "Cap"); and
provided, further, that if equivalent coverage cannot be obtained, or can be
obtained by paying an annual premium in excess of the Cap, CFBI shall only be
required
28
<PAGE>
to obtain as much coverage as can be obtained by paying an annual premium
equal to the Cap; and provided, further, however, that such directors and
officers may be required to make application and provide customary
representations and warranties to CFBI's insurance carrier for the purpose of
obtaining such coverage.
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 Company Common Stock entitled to vote thereon.
(b) NASDAQ LISTING. The shares of CFBI Common Stock issuable to
the Company stockholders pursuant to this Agreement shall have been approved
for listing on the Nasdaq National Market, 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) 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.
(e) 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 CFBI, Company, or any of their Subsidiaries which would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this
29
<PAGE>
Agreement as to render inadvisable, in the reasonable business judgment of
the Board of Directors of either CFBI or Company, the consummation of the
Merger.
6.2 CONDITIONS TO OBLIGATIONS OF CFBI. The obligation of CFBI to
effect the Merger are also subject to the satisfaction or waiver by CFBI
prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Company 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 Company, and CFBI
shall have received a certificate signed on behalf of Company by the Chief
Executive Officer and Chief Financial Officer of Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF COMPANY. Company 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 CFBI shall
have received a certificate signed on behalf of Company by the Chief
Executive Officer and Chief Financial Officer of Company to such effect.
(c) MINIMUM BOOK VALUE OF THE COMPANY. The book value of the
Company as of the Determination Date shall not be less than $5,214,000. The
confirmation of the minimum book value of the Company shall be made pursuant
to the procedures set forth in Section 1.4.
(d) POOLING LETTER. CFBI shall have received a letter from Ernst &
Young L.L.P., in form and substance reasonably satisfactory to CFBI,
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 L.L.P. pooling letter, Ernst & Young L.L.P. and CFBI shall have
received a letter from Company's accountants, in form and substance
reasonably satisfying to Ernst & Young L.L.P., confirming certain facts on
behalf of Company.
(e) LEGAL OPINION. CFBI shall have received the opinion of
Slivka, Robinson, Waters & O'Dorisio, P.C., counsel to Company, 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 COMPANY. The obligation of Company to
effect the Merger is also subject to the satisfaction or waiver by Company
prior to the Effective Time of the following conditions:
30
<PAGE>
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of CFBI 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 Company shall have received a certificate
signed on behalf of CFBI by the Chairman and Chief Executive Officer and by
the Chief Financial Officer of CFBI to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF CFBI. CFBI 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 Company
shall have received a certificate signed on behalf of CFBI and the
Acquisition Subsidiary by the Chairman and Chief Executive Officer and by the
Chief Financial Officer of CFBI to such effect.
(c) CONSENTS UNDER AGREEMENTS. CFBI 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 CFBI 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 Company, individually or in
the aggregate, have a material adverse effect on CFBI or upon the
consummation of the transactions contemplated hereby.
(d) TAX OPINION. CFBI and Company shall have received the opinion
of Slivka, Robinson, Waters & O'Dorisio, P.C., counsel to Company, 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) CFBI and Company will each be a party to that
reorganization within the meaning of Section 368(b) of the Code,
(iii) shareholders of Company who exchange their shares of Company Common
Stock for shares of CFBI 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) Company will not recognize gain or loss,
for purposes of federal income tax, as a result of consummation of the Merger.
(e) LEGAL OPINION. Company shall have received the opinion of
Lindquist and Vennum, P.L.L.P., counsel to CFBI, 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.
(f) EMPLOYMENT AGREEMENTS. Charles E. Johnston, Blake A. Feik and
John J. Hall shall have entered into employment agreements with the Bank,
substantially in the form of Exhibits 6.3(f) (1), (2) and (3), respectively.
31
<PAGE>
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 Company or CFBI, only in the following
circumstances:
(a) by mutual consent of CFBI and Company 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 CFBI or Company 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;
(c) by either CFBI or Company if the Merger shall not have been
consummated on or before June 30, 1998, 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; or
(d) by either CFBI or Company 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.
(e) by CFBI pursuant to the terms of Section 4.3(c) or 4.3(d), as
applicable.
7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either CFBI or Company 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(g), 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 shareholders of Company, provided, however, that after any such
approval, no amendment shall be made which by law requires further approval
by such shareholders, 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.
32
<PAGE>
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.
ARTICLE 8
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No representation
or warranty contained in this Agreement shall survive the Merger.
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 CFBI, 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 Company, to: Community Bancorp, Inc.
Attn: Charles E. Johnston, President
1200 North Washington
Thornton, CO 80241
with copies to: Ernest J. Panasci, Esq.
Slivka, Robinson, Waters & O'Dorisio, P.C.
1099-18th Street, Suite 2600
Denver, CO 80202-1926
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
33
<PAGE>
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.
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(e) are intended for the benefit of the Company
shareholders; and Section 5.5 is intended for the benefit of employees of the
Bank; and Secton 5.8 is intended for the benefit of the Indemnified Parties.
CFBI 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, Inc., so long as
this Agreement is in effect, neither CFBI nor Company 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 having
jurisdiction. The enforcing party shall be entitled to recover its attorneys
fees incurred if it is successful in enforcing of the terms and provisions of
this Agreement.
34
<PAGE>
IN WITNESS WHEREOF, CFBI and Company 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
COMMUNITY BANCORP, INC.
By: /s/ Charles E. Johnston
-------------------------------------
Name: Charles E. Johnston
Attest: Title: President
/s/ Lee S. Carlson
- -------------------------------------
Name: Lee S. Carlson
Title: Secretary
35
<PAGE>
TABLE OF EXHIBITS
EXHIBIT 1.1A -- Articles of Merger
EXHIBIT 1.1B -- Certificate of Merger
EXHIBIT 2.1(b) -- Illustrations of Exchange Rate Calculations
EXHIBIT 3.1 -- Company Disclosure Schedule
EXHIBIT 3.2 -- CFBI Disclosure Schedule
EXHIBIT 5.3 -- Affiliate Agreement
EXHIBIT 5.4 -- Severance Plan
EXHIBIT 6.2 -- Slivka, Robinson, Waters & O'Dorisio Opinion
EXHIBIT 6.3 -- Lindquist & Vennum Opinion
EXHIBIT 6.3(f) -- Employment Agreements
<PAGE>
EXHIBIT 2.15
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER is dated as of the
9th day of March, 1998 and made and entered into by and among COMMUNITY FIRST
BANKSHARES, INC., a Delaware corporation ("CFBI"), and COMMUNITY BANCORP, INC.,
a Colorado corporation ("Company").
WHEREAS, the parties hereto are parties to an Agreement and Plan of
Merger dated as of January 8, 1998 (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. DETERMINATION DATE. Notwithstanding anything to the contrary in
the Merger Agreement, in the event the Closing Date is within the first ten
days of a month, the Determination Date will be the end of the month next
preceding the Closing Date. For example, assuming a Closing Date of April 3,
1998, the Determination Date would be February 28, 1998.
2. DETERMINATION OF COMPANY VALUE. Notwithstanding anything to the
contrary in the Merger Agreement, the Average Daily Interim Income will be
calculated in accordance with Section 1.4 of the Merger Agreement, by
dividing Interim Income by the number of days from, and including, July 1,
1997 to the Determination Date. The portion of Company Value under
Section 1.4(ii) of the Merger Agreement, shall be determined by multiplying
Average Daily Interim Income by the number of days from the Determination to
the Date prior to the Closing Date (excluding the Determination Date), and
then multiplying that product by 3.9139. Thus, in the above example, Interim
Income for the period from, and including, July 1, 1997 to February 28, 1998
would be divided by 243 (the number of days from, and including, July 1, 1997
to, and including, February 28, 1998), then multiplied by 33 (the number of
days from, and including, March 1, 1998 to, and including, April 2, 1998),
and then multiplied by 3.9139.
3. ROUNDING. All calculations throughout this process shall be
rounded to four places to the right of the decimal point.
<PAGE>
4. AMENDMENT TO SECTION 3.1(B). The first sentence of Section 3.1(b)
of the Merger Agreement is amended to state as follows:
The Company 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 200,000 shares of common stock, $10.00 par
value per share, of which 70,134 shares are issued and outstanding.
5. AMENDMENT TO SECTION 5.7. Section 5.7 of the Merger Agreement is
restated in its entirety as follows:
5.7 INSURANCE, INDEMNITY.
(a) From and after the Effective Time, CFBI shall indemnify,
defend and hold harmless to the fullest extent that the Company or the
Bank, as the case may be, would have been permitted under applicable
law each person who is now, or has been at any time prior to the date
hereof, an officer or director of the Company or the Bank
(individually, an "Indemnified Party" and collectively, the
"Indemnified Parties"), against all losses, claims, damages,
liabilities, costs or expenses (including attorneys' fees), judgments,
fines, penalties and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation arising out of or
pertaining to acts or omissions, or alleged acts or omissions, by them
in their capacities as such occurring at or prior to the Effective
Time. In the event of any such claim, action, suit, proceeding or
investigation (an "Action"), (i) any Indemnified Party wishing to
claim indemnification shall promptly notify CFBI thereof, (ii) CFBI
shall pay the reasonable fees and expenses of counsel selected by the
Indemnified Party, which counsel shall be reasonably acceptable to
CFBI, in advance of the final dispositon of any such Action to the
full extent permitted by applicable law, upon receipt of any
undertaking required by applicable law, and (iii) CFBI will cooperate
in the defense of any such matter; provided, however, that CFBI shall
not be liable for any settlement effected without its written consent
and provided, further, that CFBI shall not be obligated pursuant to
this Section to pay the fees and disbursements of more than one
counsel for all Indemnified Parties in any single Action except to the
extent that, in the opinion of counsel for the Indemnified Parties,
under applicable standards of professional conduct, there is a
conflict in any one significant issue between the positions of two or
more of such Indemnified Parties.
(b) For a period of four years after the Effective Time, CFBI
shall cause to be maintained officers' and directors' liability
insurance covering the Indemnified Parties who are currently covered,
in their
2
<PAGE>
capacities as officers and directors, by the Bank's and
Company's existing officers' and directors' liability insurance
policies on terms substantially no less advantageous to the
Indemnified Parties than such existing insurance; provided, however,
that CFBI shall not be required in order to maintain or procure such
coverage to pay an annual premium in excess of one and one-half times
the current annual premium paid by the Company for its existing
coverage (the "Cap"); and provided, further, that if equivalent
coverage cannot be obtained, or can be obtained by paying an annual
premium in excess of the Cap, CFBI shall only be required to obtain as
much coverage as can be obtained by paying an annual premium equal to
the Cap; and provided, further, however, that such directors and
officers may be required to make application and provide customary
representations and warranties to CFBI's insurance carrier for the
purpose of obtaining such coverage.
6. 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.
Except as hereinabove set forth, there are no other changes to the
Merger Agreement, and the same is expressly ratified and confirmed.
3
<PAGE>
IN WITNESS WHEREOF, CFBI, and Company have caused this Amendment to be
signed by their respective officers thereunto duly authorized as of the date
first above written.
COMMUNITY FIRST BANKSHARES, INC.
By: /s/ Bruce A. Heysse
-------------------------------------------
Name: Bruce A. Heysse
Title: Senior Vice President - Acquisitions
COMMUNITY BANCORP, INC.
By: /s/ Charles E. Johnston
-------------------------------------------
Name: Charles E. Johnston
Title: President
4
<PAGE>
EXHIBIT 2.16
AGREEMENT AND PLAN OF MERGER
dated as of January 12, 1998
between
COMMUNITY FIRST BANKSHARES, INC.
and
FNB, INC.
<PAGE>
INDEX TO AGREEMENT AND PLAN OF MERGER
<TABLE>
<CAPTION>
<S> <C>
Page
----
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 FNB Share 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(b) Exchange Rate. . . . . . . . . . . . . . . . . . . . . . . . . . .4
(c) Adjustments to Exchange Rate Based on CFB Trading Value. . . . . .4
(d) Adjustments to Exchange Rate Based on FNB Value. . . . . . . . . .4
(e) Shareholders' Right of Dissent . . . . . . . . . . . . . . . . . .4
2.2 Exchange of Certificates. . . . . . . . . . . . . . . . . . . . . . . .5
(a) Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . .5
(b) Exchange Procedures. . . . . . . . . . . . . . . . . . . . . . . .5
(c) Distributions with Respect to Unexchanged Shares; Voting . . . . .5
(d) Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
(e) Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . .6
(f) Termination of Exchange Fund . . . . . . . . . . . . . . . . . . .6
(g) Lost or Destroyed Shares . . . . . . . . . . . . . . . . . . . . .6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . .7
3.1 Representations and Warranties of FNB . . . . . . . . . . . . . . . . .7
(a) Bank Subsidiaries Organization . . . . . . . . . . . . . . . . . .7
(b) FNB Organization. . . . . . . . . . . . . . . . . . . . . . . . .7
(c) Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . .7
(d) Limitation of Banks' Powers . . . . . . . . . . . . . . . . . . .8
(e) Corporate Records . . . . . . . . . . . . . . . . . . . . . . . .8
(f) Insured Status of Banks . . . . . . . . . . . . . . . . . . . . .8
(g) No Default; Creation of Liens . . . . . . . . . . . . . . . . . .8
(h) Financial Statements. . . . . . . . . . . . . . . . . . . . . . .8
(i) Fidelity Insurance. . . . . . . . . . . . . . . . . . . . . . . .9
(j) Employment Contracts. . . . . . . . . . . . . . . . . . . . . . .9
(k) Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . .9
(l) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(m) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(n) Title. to Property . . . . . . . . . . . . . . . . . . . . . . . 11
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(o) Insurance. Policies. . . . . . . . . . . . . . . . . . . . . . . 11
(p) Bank. Property . . . . . . . . . . . . . . . . . . . . . . . . . 11
(q) Conduct. of Business . . . . . . . . . . . . . . . . . . . . . . 12
(r) Loan. Allowance and Documentation. . . . . . . . . . . . . . . . 12
(s) Leases. and Contracts. . . . . . . . . . . . . . . . . . . . . . 12
(t) Shareholder. Lists . . . . . . . . . . . . . . . . . . . . . . . 13
(u) Bank. Principals . . . . . . . . . . . . . . . . . . . . . . . . 13
(v) Information. Supplied. . . . . . . . . . . . . . . . . . . . . . 13
(w) Agreements with Bank Regulators. . . . . . . . . . . . . . . . . 13
3.2 Representations and Warranties of CFB . . . . . . . . . . . . . . . . 14
(a) CFB. Organization. . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Enforceabilit.y. . . . . . . . . . . . . . . . . . . . . . . . . 14
(d) No. Default; Creation of Liens . . . . . . . . . . . . . . . . . 15
(e) Information. Supplied. . . . . . . . . . . . . . . . . . . . . . 15
(f) No. Plan to Transfer Assets. . . . . . . . . . . . . . . . . . . 15
(g) Registration. Statement. . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 4 COVENANTS. OF FNB AND CFB. . . . . . . . . . . . . . . . . . . . . . 15
4.1 Covenants of FNB. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) Ordinary. Course . . . . . . . . . . . . . . . . . . . . . . . . 15
(b) Shareholder. Meeting . . . . . . . . . . . . . . . . . . . . . . 16
(c) Proxy. 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 FNB . . . . . . . . . . . . . . . . . . 18
4..2 Covenants of CFB . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) Ordinary. Course . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) Application. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Registration. Statement and Prospectus . . . . . . . . . . . . . 21
(d) Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(e) Shares. to be Issued . . . . . . . . . . . . . . . . . . . . . . 22
(f) Blue. Sky. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(g) Confidential. Information. . . . . . . . . . . . . . . . . . . . 22
4..3 Covenants of FNB and CFB . . . . . . . . . . . . . . . . . . . . . . 22
(a) Governing. Documents . . . . . . . . . . . . . . . . . . . . . . 23
(b) Other. Actions . . . . . . . . . . . . . . . . . . . . . . . . . 23
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(c) Advice. of Changes; Government Filings . . . . . . . . . . . . . 23
(d) Title. to Property . . . . . . . . . . . . . . . . . . . . . . . 23
(e) Environmental. Assessment. . . . . . . . . . . . . . . . . . . . 23
ARTICLE 5 ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . 24
5..1 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . 24
5..2 Letters of Financial Officers . . . . . . . . . . . . . . . . . . . 24
5..3 Access to Information . . . . . . . . . . . . . . . . . . . . . . . 25
5..4 Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5..5 Employment and Noncompetition Agreement . . . . . . . . . . . . . . 25
5..6 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . 25
5..7 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5..8 Additional Agreements ; Best Efforts . . . . . . . . . . . . . . . . 26
ARTICLE 6 CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . 26
6..1 Conditions to Each Party's Obligation to Effect the Merger. . . . . 26
(a) Stockholder Approval. . . . . . . . . . . . . . . . . . . . . . 26
(b) Nasdaq Listing. . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . 27
(d) Registration Statement. . . . . . . . . . . . . . . . . . . . . 27
(e) Blue Sky. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(f) No Injunctions or Restraints; Illegality. . . . . . . . . . . . 27
(g) No Unduly Burdensome Condition. . . . . . . . . . . . . . . . . 27
(h) Cancellation of Prior Agreements. . . . . . . . . . . . . . . . 27
(i) Execution of Employment and Noncompetition Agreement. . . . . . 27
6..2 Conditions to Obligations of CFB. . . . . . . . . . . . . . . . . . 28
(a) Representations and Warranties. . . . . . . . . . . . . . . . . 28
(b) Performance of Obligations of FNB . . . . . . . . . . . . . . . 28
(c) Minimum FNB Value . . . . . . . . . . . . . . . . . . . . . . . 28
(d) Pooling Letter. . . . . . . . . . . . . . . . . . . . . . . . . 28
(e) Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 28
(f) Cancellation of Prior Agreements. . . . . . . . . . . . . . . . 28
(g) Execution of Employment Agreement and Noncompetition Agreement. 28
6..3 Conditions to Obligations of FNB. . . . . . . . . . . . . . . . . . 29
(a) Representations and Warranties. . . . . . . . . . . . . . . . . 29
(b) Performance of Obligations of CFB . . . . . . . . . . . . . . . 29
(c) Consents Under Agreements . . . . . . . . . . . . . . . . . . . 29
(d) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(e) Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 7 TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . 30
7..1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7..2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . 30
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7..3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7..4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 8 GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . 31
8..1 Non-Survival of Representations and Warranties. . . . . . . . . . . 31
8..2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8..3 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8..9 Enforcement of Agreement. . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 12, 1998 (the
"Agreement"), by and between Community First Bankshares, Inc., a Delaware
corporation ("CFB"), and FNB, Inc., a Colorado corporation ("FNB").
WHEREAS, the Boards of Directors of CFB and FNB 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 FNB will be merged with and into CFB (the
"Merger");
WHEREAS, CFB and FNB 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) 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, a certificate of merger (the "Certificate of Merger") in
substantially the form as attached hereto as EXHIBIT 1.1A shall be duly
prepared, executed and acknowledged by CFB and FNB and thereafter delivered
for filing to the Secretary of State of the State of Delaware, as provided in
the Delaware Corporation Law (the "Delaware Law") and articles of merger (the
"Articles of Merger") in substantially the form attached hereto as EXHIBIT
1.1B shall be duly prepared, executed and acknowledged by CFB and FNB 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 Certificate of Merger with the
Secretary of State of Colorado or at such other time as CFB and FNB may agree
in writing to provide in the Certificate 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 Denver, Colorado, 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 completed within thirty (30)
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 FNB
shall cease and FNB shall be merged with and into CFB; (ii) the Certificate
of Incorporation of CFB, as in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation until
duly amended in accordance with applicable law; (iii) the By-laws of CFB, 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)
the holders of the outstanding capital stock of CFB shall continue as
shareholders of the Surviving Corporation; and (v) the holders of
certificates representing shares of FNB Common Stock (as defined in Section
2.1(a) below) shall cease to have any rights as shareholders of FNB, except
such rights, if any, as they may have pursuant to Article 113 of Title 7 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(a)
below) into which their shares of FNB 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 FNB Common Stock have been converted as provided herein.
(b) As used in this Agreement, the term "Constituent Corporations"
shall mean FNB and CFB. The term "Surviving Corporation" shall mean CFB,
after giving effect to the Merger.
(c) At and after the Effective Time, the Merger will have the
effects set forth in Section 252 of the Delaware Law and Section 7-111-106 of
the Colorado Act.
1.4 CALCULATION OF FNB SHARE VALUE. Subject to the provisions of
Section 4.1(k) and 7.1(e), as of the last day of the month immediately
preceding the Effective Time (the "Determination Date"), FNB shall prepare a
consolidated balance sheet of FNB in accordance with generally accepted
accounting principles, 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 for the period from
January 1, 1998 to the Determination Date (the "Interim Income Statement"),
such consolidated statement of income shall be prepared in accordance with
generally accepted accounting principles, 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
2
<PAGE>
of this Agreement, the "FNB Value" shall be be equal to the total
consolidated assets of FNB minus the total consolidated liabilities of FNB,
as reflected on the Determination Date Balance Sheet, prepared in accordance
with this Section 1.4. Total consolidated liabilities of FNB shall include,
without limitation, provisions for taxes and the expenses of preparation of
final tax returns of FNB. Notwithstanding anything to the contrary above,
total consolidated assets of FNB shall include the value of any net operating
loss carryforwards of FNB as of the Closing Date, to the extent of any net
financial benefit realized by the Surviving Corporation and not otherwise
reflected in FNB Value.
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. 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, of FNB ("FNB Common Stock"), subject to Section 2.2(e), each
issued and outstanding share of FNB Common Stock, other than shares of FNB
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
Title 7 of the Colorado Act, shall be converted into validly issued, fully
paid and nonassessable shares of common stock of CFB, $.01 par value ("CFB
Common Stock"). The number of shares of CFB Common Stock exchanged for
shares of FNB Common Stock shall be calculated in accordance with Section
2.1(b). All such shares of FNB Common Stock shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist.
Each FNB shareholder's certificate or certificates previously representing
shares of FNB Common Stock (each a "FNB Certificate") shall be aggregated (if
a single stockholder holds more than one FNB 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 FNB 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 FNB Common Stock shall be converted will equal
the number of shares of CFB Common Stock that the holders of shares of FNB
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. Subject to the adjustments provided in Section
2.1(c) hereof, all of the issued and outstanding shares of FNB Common Stock
and any outstanding options,
3
<PAGE>
warrants or other rights to FNBCommon Stock shall be exchanged for Five
Hundred Fifty Thousand (550,000) 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 FNB Common Stock shall as of the Closing Date 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 FNB
less than ten (10) business days prior to the Closing Date.
(c) 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 $45.00 per share, then
FNB shall have the right to terminate the transaction pursuant to Section
7.1 hereof;
(ii) If the CFB Trading Value is greater than $55.00 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 $30,250,000.
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 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 or shares of a different issuer by
reason of any reclassification, recapitalization, split-up, combination,
merger, consolidation, exchange of shares or readjustment or stock dividend).
Calculations will be rounded to three decimal places. 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(c) hereto and incorporated herein by reference.
(d) ADJUSTMENTS TO EXCHANGE RATE BASED ON FNB VALUE. In the event
that the FNB Value, calculated in accordance with Section 1.4, above, shall
be greater than $9,111,000, then, at the election of FNB and subject to the
requirements of Section 6.2(e) hereof, either (i) the difference shall be
paid by special dividend to FNB shareholders immediately prior to the
Determination Date or (ii) the Exchange Rate determined in accordance with
Section 2.1(c) shall be subject to increase. The amount of increase shall be
determined by (i) subtracting the difference between the FNB Value and
$9,111,000, and then (ii) dividing such difference by the CFB Trading Value,
without regard to the limitations of Section 2.1(c) above.
(e) SHAREHOLDERS' RIGHT OF DISSENT. Any holder of shares of FNB
Common Stock who does not vote in favor of the Merger at the meeting of
shareholders of FNB 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 FNB Common Stock if the Merger is effectuated, shall be
4
<PAGE>
entitled to receive the value of the FNB Common Stock so held by him or her
in accordance with Article 113 of Title 7 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 FNB Common Stock, certificates dated the Closing Date representing
the shares of CFB Common Stock and the cash to be paid in lieu of fractional
shares (such cash and certificates for shares of CFB Common Stock together
with any dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund") to be issued and paid pursuant to Section
2.1 in exchange for the outstanding shares of FNB Common Stock.
(b) EXCHANGE PROCEDURES. Within five (5) business days after the
Closing Date, CFB shall cause the Exchange Agent to mail to each holder of
record of a FNB Certificate or FNB Certificates (i) a letter of transmittal
which shall specify that delivery shall be effective, and risk of loss and
title to the FNB Certificate(s) shall pass, only upon delivery of the FNB
Certificate(s) to the Exchange Agent and which shall be in such form and have
such other provisions as CFB and FNB may reasonably specify not later than
five business days before the Closing Date and (ii) instructions for use in
effecting the surrender of the FNB 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 FNB
Certificate or FNB Certificates for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, the holder of such
FNB 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 FNB
Certificate(s) surrendered, as provided in Section 2.2(c) below, and the FNB
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 FNB Certificates. In the event
of a transfer of ownership of FNB Common Stock which is not registered in the
transfer records of FNB, a CFB Certificate representing the proper number of
shares of CFB Common Stock, together with a check for the cash to be paid in
lieu of a fractional share, may be issued to such a transferee if the FNB
Certificate representing such FNB Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer.
(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 FNB 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 FNB Certificates shall not be entitled to vote after
the Closing Date at any meeting of CFB shareholders until they have exchanged
their FNB Certificates.
5
<PAGE>
(d) TRANSFERS. After the Effective Time, there shall be no
transfers on the stock transfer books of FNB of the shares of FNB Common
Stock which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, FNB Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged for the shares of CFB
Common Stock and cash, in an amount as determined in accordance with the
provisions of Section 2.1(a) and this Section 2.2, deliverable in respect
thereof pursuant to this Agreement. FNB Certificates surrendered for
exchange by any person constituting an "affiliate" of FNB 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 5.4.
(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 FNB Common Stock with more than one FNB
Certificate shall receive cash only for the fractional share remaining after
aggregating all of its, his or her FNB 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 FNB for twelve months
after the Closing Date shall be paid to CFB. Any shareholders of FNB who
have not theretofore complied with this Article 2 shall thereafter look only
to CFB for payment of their shares of CFB Common Stock, and cash in an amount
as determined in accordance with the provisions of 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 FNB 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 FNB Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such FNB 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 FNB Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed FNB
Certificate the shares of CFB Common Stock, and cash in an amount as
determined in accordance with the provisions of Section 2.1(a) and this
Section 2.2, deliverable in respect thereof pursuant to this Agreement.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF FNB. In order to induce CFB to
enter into this Agreement, FNB 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
3.1 (the "FNB Disclosure Schedule"), which FNB Disclosure Schedule has been
provided to CFB for review not less than three (3) business days prior to
execution of this Agreement, and the schedules thereunder (which are numbered
to correspond to the representations set forth below):
(a) BANK SUBSIDIARIES ORGANIZATION. The First National Bank of
Greeley (the "Greeley Bank") is a national banking association duly organized
and validly existing and in good standing under the laws of the United
States. The Poudre Valley Bank (the "Fort Collins Bank", and, collectively
with the Greeley Bank, the "Banks") is a Colorado banking corporation duly
organized and validly existing and in good standing under the laws of the
State of Colorado. The Greeley Bank has authorized capital of $200,000,
consisting of 2,000 shares of one class of common stock, par value $10.00 per
share. The Fort Collins Bank has authorized capital of $800,000, consisting
of 160,000 shares of one class of common stock, par value $5.00 per share.
All of the shares of stock of the Banks which are presently issued and
outstanding, have been validly issued, fully paid and non-assessable, and
there are no stock options or other commitments outstanding pursuant to which
either of the Banks is obligated to issue additional shares of such stock or
purchase or redeem any outstanding shares of such stock.
(b) FNB ORGANIZATION. FNB 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 500,000 shares of
common stock, no par value per share, of which 277,859 shares are issued and
outstanding. In addition to the 277,859 shares outstanding, FNB has
outstanding fully-vested stock options pursuant to which 41,000 additional
shares of FNB Common Stock would be issued as of the Closing Date. FNB 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, charter,
license or franchise would not reasonably be expected to have a material
adverse effect on the business, operations, prospects or financial condition
of FNB. FNB is registered as a company under Section 1841 of Title 12,
United States Code, as amended (the "Bank Holding Company Act"). FNB has no
direct or indirect subsidiaries except the Banks and is not a partner to any
partnership. FNB owns all of the shares of stock of each of the Banks, free
and clear of any liens or encumbrances.
(c) ENFORCEABILITY. Subject only to the required approval of the
Merger by the shareholders of FNB, FNB 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 FNB and the
consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of FNB. Subject to approval by the FNB
shareholders and of government agencies and other governing bodies having
regulatory authority over FNB or
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the Banks as may be required by statute or regulation, this Agreement
constitutes a valid and binding obligation of FNB, enforceable against it in
accordance with its terms, except insofar as enforceability may be affected
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect affecting creditors' rights generally or by
principles governing the availability of equitable remedies.
(d) LIMITATION OF BANKS' POWERS. There are no proceedings or actions
pending by any federal or state regulatory body having authority over either of
the Banks to limit or impair any of the their powers, rights or privileges, to
terminate deposit insurance or to dissolve either of the Banks. Neither of the
Banks has received any written protest, complaint or criticism in the last three
(3) years by the public or any regulatory agency relating to such Bank's
performance under the Community Reinvestment Act or any other consumer
protection statute or regulation.
(e) CORPORATE RECORDS. FNB's Articles of Incorporation and Bylaws,
and the Banks' respective Articles of Association/Incorporation and Bylaws are
each unchanged from the form in which they were delivered to CFB during the
review period provided in Section 5.3 hereof. The minute books of FNB and the
Banks contain reasonably complete and accurate records of all meetings and
corporate actions of each of their respective shareholders and Boards of
Directors (including committees of the Boards of Directors).
(f) INSURED STATUS OF BANKS. Each of the Banks 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 either of the Banks exists that could reasonably be expected to have a
material adverse effect on its status as an insured bank thereunder. Each of
the Banks 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 FNB or the
Banks.
(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 FNB or either of the Banks may be
subject, (B) any of the "Material Contracts," as hereinafter defined, or (C) the
Certificate of Incorporation/Articles of Association/Incorporation or Bylaws of
FNB or the Banks, 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 FNB Common
Stock or any of the Banks' capital stock.
(h) FINANCIAL STATEMENTS. The following financial statements of the
Banks and FNB (the "Financial Statements") have been delivered to CFB and are
incorporated by reference herein:
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(i) The Consolidated Reports of Condition and Income of the
Banks as of December 31 for each of the years 1994, 1995 and 1996 and the
period ending September 30, 1997; and
(ii) The reviewed consolidated financial statements of FNB,
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 by independent accountants) the financial position and results of
operation of each of the respective Banks and FNB as of the dates and for the
periods therein set forth. To the knowledge of FNB, such financial statements
did not, as of the date of the preparation thereof, include 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 December 31, 1996, there has been no material adverse change in the
financial condition, results of operation or business of the Banks and FNB,
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).
(i) FIDELITY INSURANCE. The Banks are each insured under a Banker's
Blanket Bond which is in full force and effect and neither of the Banks has
received notice of cancellation or non-renewal thereof, or filed any claim
thereunder during the past five years. There are no unresolved claims.
(j) EMPLOYMENT CONTRACTS. Except for the agreements described in
Section 3.1(j) of the FNB Disclosure Schedule, including the Stock Redemption
Agreement dated January 1, 1995, between Royce B. Clark ("Clark") and FNB (the
"Stock Redemption Agreement") and the Salary Continuation Agreement dated
January 1, 1994 among the Greeley Bank, FNB and Clark (the "Salary Continuation
Agreement"), neither FNB nor either of the Banks is a party to or bound by any
written or oral (i) employment or consulting contract that is not terminable
without penalty by FNB or the Banks on 30 days' or less notice or (ii) any
collective bargaining agreement covering employees.
(k) EMPLOYEE BENEFITS. Section 3.1(k) of the FNB 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 Banks or FNB maintain or to which the Banks or FNB contribute on behalf of
current or former employees of the Banks or FNB. All of the plans and programs
listed in Section 3.1(k) of the FNB Disclosure Schedule (hereinafter referred to
as the "Plans") are in compliance in all material respects with all applicable
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requirements of ERISA and all other applicable federal and state laws. Each of
the Plans that is a defined benefit pension plan has assets with an aggregate
value that exceeds the present value of its liability for accrued benefits, all
as determined on a termination basis. 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.
FNB has delivered to CFB (or shall make available to CFB during the
review period provided in Section 5.3 hereof) copies of (i) each Plan or if no
plan document exists, a written summary of the material terms thereof, (ii)
current summary plan descriptions of each Plan for which they are required,
(iii) each trust agreement, insurance policy or other instrument relating to the
funding of any Plan, (iv) the most recent Annual Reports (Form 5500 series) and
accompanying schedules filed with the IRS or United States Department of Labor
with respect to each Plan for which they are required, (v) the most recent
determination letter issued by the IRS with respect to each Plan that is
intended to qualify under Section 401 of the Code, (vi) the most recent
available financial statements for each Plan that has assets, and (vii) the most
recent audited financial statements for each Plan for which audited financial
statements are required by ERISA.
(l) LITIGATION. No claims have been asserted by written notice to
FNB or either of the Banks and no relief has been sought against FNB, either of
the Banks or any of the Plans in any pending litigation or governmental
proceedings or otherwise. Neither FNB nor the either of the Banks is a party to
any unsatisfied order, judgment or decree which is adverse to FNB or the Banks,
and neither FNB nor either of the Banks (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 FNB, there do not exist facts that
would reasonably be expected to give rise to a material claim against FNB or
either of the Banks after the Closing Date.
(m) TAXES. FNB and each of the Banks 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 or reserved for; no notice of any deficiency,
assessments or additions to tax have been received by FNB or either of the
Banks; neither FNB nor either of the Banks 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 FNB Disclosure Schedule, there are no other taxes of any
kind or character for which either FNB or either of the Banks is or may be
liable which are now past due, delinquent and/or unpaid. Neither FNB nor either
of the banks has made any payments, or been a party to an agreement that under
any circumstances could obligate it to make payments based upon the consummation
of the transactions contemplated hereby constituting a change of the nature
described in Section 2809 of the Code, that are or will
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not be deductible because of Section 2809 of the Code. Consummation of the
transactions contemplated hereby will not result in the loss or
disqualification of net operating loss carry forwards of FNB or either of the
Banks.
(n) TITLE TO PROPERTY. Each of the Banks 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; (v) such liens, mortgages, security interests, encumbrances and charges
that are not in the aggregate material to the assets and properties of such
Bank; (vi) planning and zoning laws and ordinances and similar legal
requirements; and (vii) rights reserved to any governmental authority to
regulate the affected property.
(o) INSURANCE POLICIES. FNB has delivered to CFB (or shall make
available to CFB during the review period provided in Secton 5.3 hereof) true,
accurate and complete copies of all insurance policies of FNB and the Banks 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 each of the Banks (the "Property") are
in good condition, subject to ordinary wear and tear. Except for the facts set
forth in the Assessment (as hereinafter defined), FNB and each of the Banks 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. There
are no underground or above ground storage tanks (whether or not currently in
use) located on or under the Property, and no underground tank previously
located on the Property has been removed therefrom. To the best knowledge of
FNB, there is no legal, administrative, or other proceeding, claim,
investigation (with respect to which FNB 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 FNB or either of the Banks, 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 FNB,
threatened against FNB or either of the Banks; to the knowledge of FNB 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 FNB nor either of the Banks is subject to any agreement,
order, judgment, or decree by or with court, governmental authority or third
party
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imposing any such environmental liability. No claims have been made by any
governmental authority or third party against FNB since it was incorporated,
or either of the Banks 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 Law.
(q) CONDUCT OF BUSINESS. Except for the facts set forth in the
Assessment, each of the Banks and FNB 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 Banks' 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 FNB or the Banks.
(r) LOAN ALLOWANCE AND DOCUMENTATION. FNB's consolidated allowance
for losses on loans included in the Financial Statements as of September 30,
1997 was $726,000, representing 0.91% of its total consolidated loans held in
portfolio. The amount of such allowance for losses on loans was adequate to
absorb reasonably expectable losses in the loan portfolio of the Banks. To the
knowledge of FNB, there are no facts which would cause it to increase the level
of such allowance for losses on loans. The loan portfolios of each of the Banks
as of September 30, 1997 in excess of such reserves is, to the best knowledge
and belief of the executive officers of the respective 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. The documentation relating to loans made by each of the Banks and
relating to all security interests, mortgages and other liens with respect to
all collateral for such loans, taken as a whole, is adequate for the enforcement
of the material terms of such loans and of the related security interests,
mortgages and other liens. 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 either of the Banks 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. FNB has provided to CFB true, correct and complete in all
material respects such written information concerning the loan portfolios of the
Banks as CFB has requested.
(s) LEASES AND CONTRACTS. Neither the Banks nor FNB 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; (iv) contract or option for the purchase or sale of any
real or personal property other than in the ordinary course of business; or (v)
any other contract, agreement or understanding which is not terminable by FNB or
either of the Banks without additional payment or penalty within sixty (60) days
and obligates FNB or either
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of the Banks for payments or other consideration with a value in excess of
$20,000 (all such agreements, contracts, and commitments collectively are
herein referred to as the "Material Contracts"). The Banks and FNB 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
either of the Banks or FNB is a party or by which either of the Banks or FNB
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. FNB 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 common stock of FNB and
(ii) identifies each shareholder who is an officer or director of either of the
Banks or FNB.
(u) BANK PRINCIPALS. No director or executive officer of FNB or
either of the Banks, nor any holder of ten percent or more of the outstanding
capital stock of FNB, 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 Banks, 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 either of the Banks involving an amount in excess of
$10,000. No Bank Principal holds any position with any depository organization
other than one or more of the Banks or with FNB. 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 FNB or the Banks for inclusion or incorporation by reference in the
Prospectus or Proxy Statement (as hereinafter defined) and any amendment or
supplement thereto will, at the date of mailing to the FNB stockholders and at
the time of the meeting of stockholders of FNB 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.
(w) AGREEMENTS WITH BANK REGULATORS. Neither FNB nor either of the
Banks: (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 banks or bank holding companies or engaged in the
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insurance of bank deposits ("Bank Regulators"), nor has FNB been advised by any
Bank Regulator 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
FNB, 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 3.2 the "CFB Disclosure Schedule"), which CFB Disclosure Schedule has
been provided to FNB for review not less than three (3) business days prior to
execution of this agreement; 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 18,630,022 shares were issued and outstanding
as of September 30, 1997 and 2,000,000 shares of preferred stock, of which
380,000 shares were issued and outstanding as of September 30, 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, except where the failure to have any such power, authority, charter,
license or franchise would not reasonably be expected to have a material adverse
effect on CFB. CFB is registered as a company under Section 1841 of Title 12,
United States Code, as amended (the "Bank Holding Company Act").
(b) REPORTS. CFB and its 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 all requisite corporate power and authority to execute
and deliver, to
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perform its obligations under, and to consummate the transactions
contemplated by, this Agreement and other documents or instruments to be
executed and delivered by CFB in connection with the Agreement.
(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 or any of its subsidiaries may be subject, or any contract, agreement or
instrument to which CFB or any of its subsidiaries is a party or by which CFB
or any of its subsidiaries 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 or its subsidiaries for inclusion or incorporation by
reference in the Proxy Statement or Prospectus (as hereinafter defined) and
any amendment or supplement thereto will, at the date of mailing to FNB
stockholders and at the time of the meeting of stockholders of FNB 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.
(f) NO PLAN TO TRANSFER ASSETS. CFB has no plan or intention to
sell or otherwise dispose of any of the assets of the Banks 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. CFB intends to cause the merger or consolidation of the Banks with
and into CFB's Colorado subsidiary bank as soon as practicable following the
Merger.
(g) REGISTRATION STATEMENT. As of the date of this Agreement, CFB
has filed with the SEC a registration statement on Form S-4 covering the CFB
Common Stock to be issued in the Merger (referred to herein, with all
amendments or supplements, as the "Registration Statement"), of which the
Prospectus (as herienafter defined) is a part. The Registration Statement
became effective on Decemer 31, 1997.
ARTICLE 4
COVENANTS OF FNB AND CFB
4.1 COVENANTS OF FNB. During the period from the date of this
Agreement and continuing until the Effective Time, FNB agrees as follows:
(a) ORDINARY COURSE. Except as otherwise required under this
Agreement or by CFB, FNB and each of the Banks 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
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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. FNB shall
not, nor shall it permit either of the Banks to (i) enter into any new
material line of business, (ii) increase or decrease the current number of
the directors of FNB and either of the Banks, (iii) change its or either of
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. FNB 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.
FNB 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) PROXY STATEMENT. Within thirty (30) days of the date hereof,
FNB will prepare a notice of special meeting of shareholders and accompanying
proxy statement (the "Proxy Statement") for distribution to shareholders of
FNB following reasonable opportunity for review and comment by CFB. FNB will
furnish or cause to be furnished to its shareholders all of the information
concerning the Merger, FNB and the Banks required by law or regulation for
inclusion in the Proxy Statement (including financial statements in suitable
form). FNB agrees promptly to advise CFB if at any time prior to the
Effective Date of the Merger, any information contained in the Proxy
Statement becomes incorrect or incomplete in any material respect and to
provide the information to shareholders of FNB needed to correct such
inaccuracy or omission prior to the special meeting.
(d) CONFIDENTIAL INFORMATION. FNB will hold in confidence all
documents and nonpublic information concerning CFB and its subsidiaries
furnished to FNB 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 FNB'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 FNB, in the public domain,
or later acquired by FNB 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. FNB and each of the Banks 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; and (ii) to submit application to the
Internal Revenue Service for a favorable determination letter for each of the
Plans which is
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subject to the qualification requirements of Section 401(a) of the Code prior
to the Effective Time.
Except as otherwise required pursuant to this Section 4.1(e), FNB
agrees as to itself and each of the Banks 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
FNB or either of the Banks and one or more of its directors or officers;
provided, however, that FNB or either of the Banks 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 FNB 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 FNB in excess of 105% of that
in effect as of June 30, 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 FNB or either of the Banks of compensation or benefits
contingent, or the terms of which are materially altered, upon the occurrence
of the Merger.
(f) NO SOLICITATIONS. FNB shall not permit the Banks 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 either of the Banks 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. FNB 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 FNB or any proposal or offer to acquire in any manner a substantial
equity interest in, or a substantial portion of the assets of FNB other than
the transactions contemplated or permitted by this Agreement. This Section
4.1(f) shall expire at the earlier of (i) the Closing Date or (ii) June 30,
1998, regardless of any extensions.
(g) NO ACQUISITIONS. Other than acquisitions which may be
mutually agreed to by the parties, FNB shall not, nor shall permit the Banks
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; PROVIDED, however, that the
foregoing shall not prohibit (i) reorganizations involving only the
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Banks 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 financial assets, in
each case in the ordinary course of business.
(h) INSURANCE. FNB and each of the Banks 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 FNB nor either of the Banks shall take any action which,
with respect to FNB, would disqualify the Merger as a "pooling of interests"
for accounting purposes.
(j) FINANCIAL STATEMENTS. FNB 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 FNB. From the date of this Agreement
to the Closing Date or the earlier termination of this Agreement, FNB, 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
either of the Banks to:
(i) Except with respect to exercise of previously issued options
for 41,000 shares of FNB Common Stock, sell or commit to issue or sell
any shares of capital stock of FNB or either of the Banks, securities
convertible into or exchangeable for capital stock of FNB or either of
the Banks, warrants, options or other rights to acquire such stock, or
enter into any agreement with respect to the foregoing other than
issuance by either of the Banks of capital stock to FNB;
(ii) Redeem, purchase or otherwise acquire (except for trust
account shares) directly or indirectly, any shares of capital stock of
FNB or either of the Banks or any securities convertible or
exercisable for any shares of capital stock of FNB or either of the
Banks;
(iii) Split, combine or reclassify any of capital stock of
FNB or either of the Banks 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 FNB or the either of the
Banks;
(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 either of the Banks or pay any material liability;
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(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 or otherwise in accordance with this Agreement;
(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 either of the Banks' or FNB's Articles of Association,
Certificate of Incorporation, Bylaws or other governing documents;
(x) Fail to maintain a reserve for loss and cost associated with
those litigation matters reflected in Section 3.1(1) of the FNB
Disclosure Schedule to the extent required by generally accepted
accounting principles;
(xi) Cancel any material debt or claim or waive any right of
material value, except in the ordinary course of business;
(xii) 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 ;
(xiii) Originate any loan which is thereafter participated to
another financial institution providing for payment upon default on
any basis other than pro rata;
(xiv) Except with respect to those credits listed in SCHEDULE
4.1(k)(xiv), 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 the Bank's officers
or directors, except advances in the ordinary course of business with
respect to credits of less than $50,000, unless the Bank is under a
legal obligation to do so;
(xv) (A) make, or agree to make, any fully secured loan or
increase any existing fully secured loan for an amount in excess of
$750,000 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
$250,000 or more, unless said loan is made pursuant to a properly
documented and legally enforceable commitment of the Bank to the
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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 shall provide its decision
within three (3) business days of receipt of request, accompanied by
appropriate information for evaluation of the loan request, and the
loan shall be deemed approved if CFB fails to disapprove within such
three (3) business day period of review.
(xvi) 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;
(xvii) Incur any obligation or liability with respect to capital
expenditures which exceeds $25,000 for any single matter or $50,000 in
the aggregate unless pursuant to FNB or the Bank's capital budget as
of the date hereof;
(xviii) Fail to timely pay and discharge all federal and state
taxes and other accounts payable for which it is liable, provided,
that FNB or either of the Banks 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;
(xix) Pay or commit to pay any additional salary or other
compensation to any of the officers, directors or employees of FNB or
either of the Banks, except (i) compensation fully expensed or accrued
as of the Determination Date Financial Statements or (ii) normal
salary increases in the ordinary course of business not to exceed an
aggregate 5% increase over total employee salary expense as of
January 1, 1998;
(xx) 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);
(xxi) 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
either of the Banks may purchase U.S. Treasury or Agencies securities
with maturity dates of 36 months or less;
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(xxii) Fail to charge and pay interest rates on loans and
deposits, respectively, not generally consistent with the Bank's prior
practices and currently prevailing conditions in the respective Bank's
marketplace;
(xxiii) Fail to use its reasonable best efforts to comply with
any law, rule, regulation or order applicable to the Banks and/or FNB
if such failure would have a material adverse effect upon FNB;
(xxiv)With respect to each of the Banks, fail to make all
appropriate and required transfers to such 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 the amount determined hereafter by mutual
agreement of the parties, upon completion of the review provided by
Section 5.3 hereof;
(xxv) 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;
(xxvi) Declare or pay any dividends or distributions with respect
to its stock (i) after the Determination Date or (ii) which would have
the effect of reducing the FNB Value as of the Closing Date to less
than $9,111,000; or
(xxvii) 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 FNB or either of the Banks 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. 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 FNB 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) REGISTRATION STATEMENT AND PROSPECTUS. CFB will furnish to
FNB sufficient copies of a prospectus (the "Prospectus") relating to the CFB
Common Stock to be issued in this transaction. At the time of mailing
thereof to the FNB shareholders, at the time of the FNB
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shareholders' meeting referred to in Section 4.1(b) hereof and at the
Effective Time of the Merger, the Prospectus 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 FNB shareholders' meeting. CFB will
use its reasonable best efforts to cause the Registration Statement to remain
effective under the Securities Act through the Effective Time of the Merger.
At the Effective Time of the Merger, the Registration Statement will comply
in all material respects with the provisions of the Securities Act and the
published rules and regulations thereunder and applicable interpretations by
the staff of the SEC.
(d) 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 Market System and use its best efforts to effect said
listing.
(e) SHARES TO BE ISSUED. The shares of CFB Common Stock to be
issued by CFB to the shareholders of FNB pursuant to this Agreement will,
upon such issuance and delivery to said shareholders pursuant to the
Agreement, be (i) duly authorized, validly issued, fully paid and
nonassessable, and (ii) registered in accordance with applicable federal and
state securities laws and, subject to Section 5.4 hereof, freely transferable
without restriction on and after the Effective Time. The shares of CFB
Common Stock to be delivered to the shareholders of FNB pursuant to this
Agreement are and will be free of any preemptive rights of the stockholders
of CFB.
(f) 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.
(g) CONFIDENTIAL INFORMATION. CFB will hold in confidence all
documents and information concerning FNB and the Banks 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 FNB (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 FNB.
4.3 COVENANTS OF FNB AND CFB. During the period from the date of this
Agreement and continuing until the Effective Time, FNB 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:
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(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, nor 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 6 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 FNB copies of all such reports
promptly after the same are filed. CFB, FNB and each subsidiary of CFB or FNB
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.
(d) TITLE TO PROPERTY. FNB agrees to deliver to CFB (at FNB's
expense) within 30 days of the date hereof, a title insurance commitment (in
an amount equal to FNB's reasonable estimate of the current fair market value
of the properties) for all real property owned by FNB or the either of Banks
in the State of Colorado (other than property held as OREO) (the "Title
Commitments"). CFB shall have 30 days after receipt by CFB's counsel of said
Title Commitments within which to notify FNB, 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 Commitments. In the
event of any such objection, then FNB shall have 30 days from the date of
such objection within which to attempt to eliminate such objections 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, or FNB does not cause an endorsement to the Title Commitments to be
issued insuring against the exception, or FNB does not indemnify CFB against
loss, liability or expense, to the reasonable satisfaction of CFB, CFB may
terminate this Agreement pursuant to Section 7.1 hereof.
(e) ENVIRONMENTAL ASSESSMENT. FNB shall engage at its expense an
independent, a 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 by the Banks. CFB shall review
and approve the scope of engagement for the Assessment, which 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 30 days after the date hereof. CFB
shall have a period of 30 days from the date of receipt
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of the written report of such Assessment to review such Assessment and give
written notice to FNB 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 60 days after the date of such notice
unless during such 60 day period FNB 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) 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"). FNB
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 FNB
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.
(b) FNB and CFB shall promptly furnish each other with copies of
written communications received by FNB 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 FINANCIAL OFFICERS. FNB shall cause to be delivered to
CFB a letter of FNB'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 FNB 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 FNB.
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5.3 ACCESS TO INFORMATION. For a period of sixty (60) days from the
date hereof, CFB shall be permitted full unrestricted access to the books,
records and personnel of FNB and each of the Banks in order to conduct a
complete review thereof and confirm its satisfaction with the financial
condition, asset quality and value (including loans and investment portfolio
assets) and results of operation and prospects of FNB and the Banks. Upon
completion of this review, CFB shall propose in writing the minimum loan loss
reserves of the Banks, as provided in Section 4.1(k)(xxiv), which shall be
accepted or rejected by FNB within ten (10) business days of receipt; failure
to timely reject CFB's proposed loan loss reserve minimums shall be deemed
acceptance by FNB. If CFB is not reasonably satisfied with the results of
its review or FNB shall not accept the loan loss reserve minimums proposed by
CFB, CFB may terminate this Agreement and the transaction contemplated hereby
by delivering written notice of termination to FNB within fifteen (15)
business days of the expiration of the foregoing 30-day review period. In
exercising its termination rights pursuant to this Section 5.3, CFB shall act
reasonably and in good faith; insofar as the review discloses facts which are
inconsistent with the representations and warranties of this Agreement, the
basis for termination of the Agreement must be material or not subject to
remedy by appropriate adjustment to the Exchange Rate.
Upon reasonable notice and subject to applicable laws relating to the
exchange of information, FNB and CFB shall each (and cause each of its
subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of each, 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, FNB
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
FNB and each of the Banks 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.
5.4 AFFILIATES. Each of FNB 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 FNB 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 EMPLOYMENT AND NONCOMPETITION AGREEMENT. FNB and Clark shall enter
into an Employment and Noncompetition Agreement effective as of the Closing
Date in substantially the form attached hereto as EXHIBIT 5.5.
5.6 EMPLOYEE BENEFIT PLANS. Each person who is an employee of either
of the Banks as of the Effective Time ("Bank Employees") shall be
participants in the employee welfare plans,
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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 either of the Banks, or to any
predecessor-in-interest of either of the Banks to the extent such service is
presently given credit under the Plans of the respective 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 quarter which begins at least 180
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, except as may be permitted by Section 7.2. All
of the expenses (including but not limited to broker's professional fees)
incurred or to be incurred by FNB in connection with the Merger and not paid
as of the Determination Date shall be accrued as expenses on the
Determination Date Balance Sheet.
5.8 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.
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 the outstanding shares
of FNB Common Stock, as required by the Colorado Act and the Articles of
Incorporation and Bylaws of FNB.
26
<PAGE>
(b) NASDAQ LISTING. The shares of CFB Common Stock issuable to
the FNB stockholders pursuant to this Agreement shall have been approved for
listing on the Nasdaq 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. 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) BLUE SKY. All Blue Sky registrations, permits or approvals or
exemptions required to carry out the transactions contemplated by this
Agreement shall have been obtained.
(f) 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.
(g) 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, or any of its 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 CFB, the consummation of the
Merger.
(h) CANCELLATION OF PRIOR AGREEMENTS. FNB shall have delivered a
fully-executed counterpart of an agreement signed by FNB and Clark that in
effect cancels and terminates without further liability to FNB the Stock
Redemption Agreement and the Salary Continuation Agreement.
(i) EXECUTION OF EMPLOYMENT AND NONCOMPETITION AGREEMENT. The
Employment and Noncompetition Agreement shall have been properly executed and
delivered by all parties thereto.
27
<PAGE>
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 FNB 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 FNB, and CFB
shall have received a certificate signed on behalf of FNB by the chief
executive officer and chief financial officer of FNB to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF FNB. FNB 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 FNB by the chief executive officer
and chief financial officer FNB to such effect.
(c) MINIMUM FNB VALUE. The FNB Value as of the Determination Date
shall not be less than $9,111,000.00. The confirmation of the minimum FNB
Value shall be made pursuant to the procedures set forth in Section 1.4.
(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 FNB's
accountants, in form and substance reasonably satisfying to Ernst & Young,
confirming certain facts on behalf of FNB.
(e) LEGAL OPINION. CFB shall have received the opinion of Dwyer,
Huddleson & Ray, P.C., counsel to FNB, 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.
(f) CANCELLATION OF PRIOR AGREEMENTS. FNB shall have delivered a
fully-executed counterpart of an agreement signed by FNB and Clark that in
effect cancels and terminates without further liability to FNB the Stock
Redemption Agreement and the Salary Continuation Agreement.
(g) EXECUTION OF EMPLOYMENT AGREEMENT AND NONCOMPETITION AGREEMENT.
The Employment Agreement and Noncompetition Agreement shall have been properly
executed and delivered by all parties thereto.
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<PAGE>
6.3 CONDITIONS TO OBLIGATIONS OF FNB. The obligation of FNB to effect
the Merger is also subject to the satisfaction or waiver by FNB 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 FNB shall have received a certificate
signed on behalf of CFB by the 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 FNB shall have received a certificate signed on
behalf of CFB and the Acquisition Subsidiary by the 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 FNB, individually or in the
aggregate, have a material adverse effect on CFB or upon the consummation of
the transactions contemplated hereby.
(d) TAX OPINION. FNB shall have received the opinion of Dwyer,
Huddleson & Ray, P.C., counsel to FNB, 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
FNB will each be a party to that reorganization within the meaning of Section
368(b) of the Code, (iii) shareholders of FNB who exchange their shares of
FNB 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) FNB will not recognize gain
or loss, for purposes of federal income tax, as a result of consummation of
the Merger.
(e) LEGAL OPINION. FNB shall have received the opinion of
Lindquist & 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.
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<PAGE>
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 FNB or CFB, only in the following circumstances:
(a) by mutual consent of CFB and FNB 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 FNB 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;
(c) by either CFB or FNB if the Merger shall not have been
consummated on or before June 30, 1998, 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 FNB 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; PROVIDED, HOWEVER, that such period of cure shall be
extended to a total of up to sixty (60) days from receipt of notice of
breach, if the breaching party is diligently pursuing a cure;
(e) by FNB if the CFB Trading Value shall be less than $45.00; or
(f) by CFB pursuant to the terms of Section 4.3(d) or 4.3(e) or
5.3, as applicable.
7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either CFB or FNB 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 FNB, provided, however, that after any such
approval, no amendment shall be made which by law requires
30
<PAGE>
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.
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 Sections 3.2, 4.2(d), 4.2(e),
4.2(f), 4.2(g), 4.2(h), 4.2(i), 5.5 and 8.5 shall survive the Merger, and
Sections 4.1(d) and 4.2(h), 5.6 and 7.2 shall survive 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
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<PAGE>
(b) if to FNB, to: FNB, Inc.
Attn: Royce B. Clark, Chairman & CEO
First National Bank of Greeley
4920 West 10th Street
Greeley, CO 80634
with copies to: David E. Dwyer, Esq.
Dwyer, Huddleson & Ray, P.C.
Tenth Floor - First National Tower
215 West Oak Street
Fort Collins, CO 80521
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.
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 FNB
shareholders; and Section 5.5 is intended for the benefit of employees of the
Banks. 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 FNB 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
32
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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.
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IN WITNESS WHEREOF, CFB and FNB 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
Attest: Title: Senior Vice President
/s/ Bruce A. Heysse
- -------------------------------------
Name: Bruce A. Heysse
Title: Senior Vice President FNB, INC.
By: /s/ Royce B. Clark
-------------------------------------
Name: Royce B. Clark
Title: Chairman and President
Attest:
/s/ Margaret Stanley
- -------------------------------------
Name: Margaret Stanley
Title: Secretary
34
<PAGE>
TABLE OF EXHIBITS
EXHIBIT 1.1A - Certificate of Merger
EXHIBIT 1.1B - Articles of Merger
EXHIBIT 3.1 - FNB Disclosure Schedule
EXHIBIT 3.2 - CFB Disclosure Schedule
EXHIBIT 5.4 - Affiliate Agreement
EXHIBIT 5.5 - Employment and Noncompetition Agreement
EXHIBIT 6.2 - Dwyer, Huddleson & Ray Opinion
EXHIBIT 6.3A - CFB Certificate (Representations)
EXHIBIT 6.3B - CFB Certificate (Covenants)
EXHIBIT 6.3E - Lindquist & Vennum Opinion
<PAGE>
EXHIBIT 2.17
AGREEMENT AND PLAN OF MERGER
dated as of April 2, 1998
between
COMMUNITY FIRST BANKSHARES, INC.
and
WESTERN BANCSHARES OF LAS CRUCES, INC.
<PAGE>
INDEX TO AGREEMENT AND PLAN OF MERGER
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1 THE MERGER1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effects of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Calculation of Western Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES3 . . . . . . . . . . . . . . . . . . . . 3
2.1 Effect on Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Exchange Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(g) Lost or Destroyed Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Representations and Warranties of Western. . . . . . . . . . . . . . . . . . . . . . . 6
(a) Subsidiary Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Insured Status of Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Western Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(e) Limitation of Bank's Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(f) Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(g) No Default; Creation of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(h) Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(i) Fidelity Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(j) Employment Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(k) Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(l) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(m) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(n) Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(o) Insurance Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(p) Bank Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(q) Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(r) Loan Allowance and Documentation. . . . . . . . . . . . . . . . . . . . . . . . . 11
(s) Leases and Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(t) Shareholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(u) Bank Principals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(v) Information Supplied. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(w) Agreements with Bank Regulators . . . . . . . . . . . . . . . . . . . . . . . . . 13
(x) Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Representations and Warranties of CFB. . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) CFB Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(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) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(h) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(i) Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(j) Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(k) Material Adverse Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(l) Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(m) Availability of CFB Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 4 COVENANTS OF WESTERN AND CFB . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1 Covenants of Western . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Shareholder Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(c) Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(d) Confidential Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(e) Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(f) No Solicitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(g) Management Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(h) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(i) Pooling Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(j) Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(k) Additional Covenants of Western . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 Covenants of CFB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
(e) Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
(f) Shares to be Issued. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
(g) Blue Sky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
(h) Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
</TABLE>
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(i) Director and Officer Indemnification . . . . . . . . . . . . . . . . . . . . . . .24
(j) Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
4.3 Covenants of Western and CFB. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
(a) Governing Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
(b) Other Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
(c) Advice of Changes; Government Filings. . . . . . . . . . . . . . . . . . . . . . .24
(d) Title to Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
(e) Environmental Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
(f) WDSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
ARTICLE 5 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.1 Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.2 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.3 Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.4 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
5.5 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
5.6 Additional Agreements; Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . .27
ARTICLE 6 CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
6.1 Conditions to Each Party's Obligation to Effect the Merger. . . . . . . . . . . . . . .27
(a) Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
(b) Nasdaq Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
(c) Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
(d) No Injunctions or Restraints; Illegality . . . . . . . . . . . . . . . . . . . . .28
(e) No Unduly Burdensome Condition . . . . . . . . . . . . . . . . . . . . . . . . . .28
6.2 Conditions to Obligations of CFB . . . . . . . . . . . . . . . . . . . . . . . . . . .28
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . .28
(b) Performance of Obligations of Western. . . . . . . . . . . . . . . . . . . . . . .29
(c) Minimum Western Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
(d) Pooling Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
(e) Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
6.3 Conditions to Obligations of Western. . . . . . . . . . . . . . . . . . . . . . . . . .29
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . .29
(b) Performance of Obligations of CFB. . . . . . . . . . . . . . . . . . . . . . . . .29
(c) Consents Under Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
(d) Tax Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
(e) Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
(f) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
(g) Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
</TABLE>
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ARTICLE 7 TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
7.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
ARTICLE 8 GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
8.1 Non-Survival of Representations and Warranties. . . . . . . . . . . . . . . . . . . . .32
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
8.3 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
8.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
8.5 Entire Agreement: Third Party Beneficiaries; Rights of Ownership. . . . . . . . . . . .33
8.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
8.7 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
8.8 Enforcement of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
TABLE OF EXHIBITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
</TABLE>
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 2, 1998 (the
"Agreement"), by and between Community First Bankshares, Inc., a Delaware
corporation ("CFB"), and Western Bancshares of Las Cruces, Inc., a New Mexico
corporation ("Western").
WHEREAS, the Boards of Directors of CFB and Western 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 Western will be merged with and into CFB (the
"Merger"); and
WHEREAS, CFB and Western 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, a certificate of merger (the "Certificate of Merger") in
substantially the form as attached hereto as EXHIBIT 1.1A shall be duly
prepared, executed and acknowledged by CFB and Western and thereafter
delivered for filing to the Secretary of State of the State of Delaware, as
provided in the Delaware Corporation Law (the "Delaware Law") and articles of
merger (the "Articles of Merger") in substantially the form attached hereto
as EXHIBIT 1.1B shall be duly prepared, executed and acknowledged by CFB and
Western and thereafter delivered for filing to the Secretary of State of the
State of New Mexico, as provided in the New Mexico Business Corporation Act
(the "New Mexico Act"), on the Closing Date (as defined in Section 1.2). The
Merger shall become effective upon the filing of the Certificate of Merger
with the Secretary of State of Delaware and upon the filing of the Articles
of Merger with the Secretary of State of New Mexico or at such other time as
CFB and Western may agree in writing to provide in the Certificate of Merger
and 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.
<PAGE>
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
Lindquist & Vennum, in Denver, Colorado, 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 completed within thirty (30)
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 Western
shall cease and Western shall be merged with and into CFB; (ii) the
Certificate of Incorporation of CFB, as in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation until duly amended in accordance with applicable law; (iii) the
By-laws of CFB, 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) the holders of the outstanding capital stock of CFB
shall continue as shareholders of the Surviving Corporation; and (v) the
holders of certificates representing shares of Western Common Stock (as
defined in Section 2.1(a) below) shall cease to have any rights as
shareholders of Western, except such rights, if any, as they may have
pursuant to Sections 53-15-3 and 53-15-4 of the New Mexico 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(a) below) into which their shares
of Western 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 Western Common Stock
have been converted as provided herein.
(b) As used in this Agreement, the term "Constituent Corporations"
shall mean Western and CFB. The term "Surviving Corporation" shall mean CFB,
after giving effect to the Merger.
(c) At and after the Effective Time, the Merger will have the
effects set forth in Section 252 of the Delaware Law and Section 53-14-6 of
the New Mexico Act.
1.4 CALCULATION OF WESTERN VALUE. As of the last day of the month
immediately preceding the Effective Time (the "Determination Date"), Western
shall prepare a consolidated balance sheet of Western in accordance with
generally accepted accounting principles, 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 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 "Western Value" shall be equal to the total consolidated
assets of Western minus the total consolidated liabilities of Western. Total
consolidated liabilities of Western shall include, without limitation,
provisions for (i) taxes, (ii)
2
<PAGE>
the expenses of preparation of final tax returns of Western, and (iii) the
expenses of settlement and release of the Western employee compensation
agreements and other contracts identified in Sections 4.1(e) and 4.1(g)
hereof. For purpose of section 6.2(c), Western Value shall be calculated as
of the Determination Date, based upon the Determination Date Financial
Statements.
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. At the Effective Time, by virtue of the Merger
and without any action on the part of any holder of shares of common stock,
$5.00 par value, of Western ("Western Common Stock"), each issued and
outstanding share of Western Common Stock, other than shares of Western
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 Sections 53-15-3
and 53-15-4 of the New Mexico Act ("Dissenting Shareholders"), shall be
converted into validly issued, fully paid and nonassessable shares of common
stock of CFB, $.01 par value ("CFB Common Stock"). The number of shares of
CFB Common Stock exchanged for shares of Western Common Stock shall be
determined in accordance with Section 2.1(b). All such shares of Western
Common Stock shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist. Each Western shareholder's
certificate or certificates previously representing shares of Western Common
Stock (each a "Western Certificate") shall be aggregated (if a single
stockholder holds more than one Western 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 Western 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 Western Common Stock shall be converted
will equal the number of shares of CFB Common Stock that the holders of
shares of Western 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. Subject to the confirmation of the minimum
Western Value, as provided in Section 6.2(c) hereof, and subject to prior
exercise or termination of all options, warrants and rights for shares of
Western Common Stock in accordance with Section 3.1(b) hereof, the aggregate
number of shares of CFB Common Stock to be exchanged for all of the
3
<PAGE>
issued and outstanding shares of Western Common Stock (the "Merger
Consideration") shall be determined by dividing Forty-Eight Million Dollars
($48,000,000.00) by the CFB Trading Value.
For purposes of this Agreement, the "Exchange Rate" shall be determined
by dividing the Merger Consideration, as determined above, by the number of
shares of Western Common Stock outstanding or subject to option, warrant or
other right of issuance, whether or not vested or accrued as of the Effective
Time.
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 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, 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 stocks split, or other similar change in
CFB's capitalization.
Calculation of the Exchange Rate will be rounded to four decimal places.
Any fractional share of CFB Common Stock will be paid in cash in accordance
with Section 2.2(e).
(c) SHAREHOLDERS' RIGHT OF DISSENT. Any holder of shares of
Western Common Stock who does not vote in favor of the Merger at the meeting
of shareholders of Western called to vote on the Merger and has given notice
in writing to the presiding officer prior to or at the meeting of his or her
objection to the proposed corporate action shall be entitled to demand to
receive the fair value of the Western Common Stock so held by him or her, in
accordance with Sections 53-15-3 and 53-15-4 of the New Mexico 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 Western Common Stock, certificates dated the Closing Date
representing the shares of CFB Common Stock and the cash to be paid in lieu
of fractional shares (such cash and certificates for shares of CFB Common
Stock together with any dividends or distributions with respect thereto,
being hereinafter referred to as the "Exchange Fund") to be issued and paid
pursuant to Section 2.1 in exchange for the outstanding shares of Western
Common Stock.
(b) EXCHANGE PROCEDURES. Within five (5) business days after the
Closing Date, CFB shall cause the Exchange Agent to mail to each holder of
record of a Western Certificate or Western Certificates (i) a letter of
transmittal which shall specify that delivery shall be effective, and risk of
loss and title to the Western Certificate(s) shall pass, only upon delivery
of the Western Certificate(s) to the Exchange Agent and which shall be in
such form and have such
4
<PAGE>
other provisions as CFB and Western may reasonably specify not later than
five business days before the Closing Date and (ii) instructions for use in
effecting the surrender of the Western 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 Western
Certificate or Western Certificates for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, the holder of such
Western 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 Western
Certificate(s) surrendered, as provided in Section 2.2(c) below, and the
Western 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 Western
Certificates. In the event of a transfer of ownership of Western Common
Stock which is not registered in the transfer records of Western, a CFB
Certificate representing the proper number of shares of CFB Common Stock,
together with a check for the cash to be paid in lieu of a fractional share,
may be issued to such a transferee if the Western Certificate representing
such Western Common Stock is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer.
(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 Western 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 Western Certificates shall not be entitled to vote
after the Closing Date at any meeting of CFB shareholders until they have
exchanged their Western Certificates.
(d) TRANSFERS. After the Effective Time, there shall be no
transfers on the stock transfer books of Western of the shares of Western
Common Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Western Certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for the shares of
CFB Common Stock and cash, in an amount as determined in accordance with the
provisions of Section 2.1(a) and this Section 2.2, deliverable in respect
thereof pursuant to this Agreement. Western Certificates surrendered for
exchange by any person constituting an "affiliate" of Western 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 5.3.
(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 Western Common Stock with more than one
Western Certificate shall receive
5
<PAGE>
cash only for the fractional share remaining after aggregating all of its,
his or her Western 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 Western for twelve
months after the Closing Date shall be paid to CFB. Any shareholders of
Western who have not theretofore complied with this Article 2 shall
thereafter look only to CFB for payment of their shares of CFB Common Stock,
and cash in an amount as determined in accordance with the provisions of
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 Western 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 Western
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Western 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 Western
Certificate, the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Western Certificate the shares of CFB Common Stock, and cash in
an amount as determined in accordance with the provisions of Section 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 WESTERN. In order to induce CFB
to enter into this Agreement, Western 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
3.1 (the "Western Disclosure Schedule"), which Western Disclosure Schedule
has been provided to CFB for review not less than three (3) business days
prior to execution of this Agreement, and the schedules thereunder (which are
numbered to correspond to the representations set forth below):
(a) SUBSIDIARY ORGANIZATIONS. The Western Bank, Las Cruces
("Bank") is a New Mexico banking corporation duly organized and validly
existing and in good standing under the laws of the State of New Mexico. The
Bank has authorized capital of $1,125,000, consisting of 450 shares of one
class of common stock, par value $2,500 per share. All of the shares of
stock of the Bank which are presently issued and outstanding, have been
validly issued, fully paid and non-assessable, and there are no stock options
or other commitments outstanding pursuant to which the Bank is obligated to
issue additional shares of such stock or purchase or redeem any outstanding
shares of such stock.
6
<PAGE>
Western Data Services, Inc. ("WDSI") is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Mexico, with
authorized capital stock consisting of 500,000 shares of common stock, $1.00
par value per share, of which 237,753 shares are issued and outstanding.
WDSI 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, charter, license or franchise would not reasonably be expected to
have a material adverse effect on the business, operations, prospects or
financial condition of WDSI.
(b) 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 the
Bank exists that could reasonably be expected to have a material adverse
effect on its status as an insured bank thereunder. The Bank 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 Western or the
Bank.
(c) WESTERN ORGANIZATION. Western is a corporation duly
organized, validly existing and in good standing under the laws of the State
of New Mexico, with authorized capital stock consisting of 250,000 shares of
common stock (the "Western Common Stock"), $5.00 par value per share, of
which 185,322.759 shares are issued and outstanding. All of the shares of
Western Common Stock issued and outstanding have been validly issued, fully
paid and non-assessable. Except as set forth in Section 3.1(b) of the
Western Disclosure Schedule, there are no options, warrants or other
commitments outstanding pursuant to which Western is or could become
obligated to issue additional shares. On or before the Effective Time,
Western shall have provided for the acceleration and exercise of all such
options, warrants and rights or their termination and written release of
Western from further liability thereunder. Western 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, charter, license or franchise
would not reasonably be expected to have a material adverse effect on the
business, operations, prospects or financial condition of Western. Western
is registered as a company under Section 1841 of Title 12, United States
Code, as amended (the "Bank Holding Company Act"). Western has no direct or
indirect subsidiaries except the Bank and WDSI and is not a partner to any
partnership. Western owns all of the shares of stock of the Bank, and 66,571
shares of stock of WDSI, in each case free and clear of any liens or
encumbrances.
(d) ENFORCEABILITY. Subject only to the required approval of the
Merger by the shareholders of Western, Western 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
Western and the consummation of the transactions contemplated hereby have
been duly authorized by the Board of Directors of Western. Subject to
approval by the Western shareholders and of government agencies and other
governing bodies having regulatory
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authority over Western or the Bank as may be required by statute or
regulation, this Agreement constitutes a valid and binding obligation of
Western, enforceable against it in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally and general equitable
principles..
(e) LIMITATION OF BANK'S POWERS. 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 their powers, rights or privileges, to terminate
deposit insurance or to dissolve the Bank. The Bank has not received any
written protest, complaint or criticism in the last three (3) years by the
public or any regulatory agency relating to the Bank's performance under the
Community Reinvestment Act or any other consumer protection statute or
regulation.
(f) CORPORATE RECORDS. Western's Articles of Incorporation and
Bylaws, and the Bank's and WDSI's respective Articles of Incorporation 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 Western 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
(including committees of the Boards of Directors).
(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 Western or the Bank may be subject,
(B) any of the "Material Contracts," as hereinafter defined, or (C) the Articles
of Incorporation or Bylaws of Western 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 Western Common Stock or any of the Bank's capital stock.
(h) FINANCIAL STATEMENTS. The following financial statements of the
Bank and Western (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 1995, 1996 and 1997; and
(ii) The audited consolidated financial statements of
Western, prepared in the ordinary course of business for each of the
years ended December 31, 1995, 1996 and 1997.
Each of the aforementioned financial statements is, and the Determination Date
Financial Statements 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
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that the unaudited financial statements are subject to any adjustments which
might be required as a result of an examination by independent accountants)
the financial position and results of operation of each of the Bank and
Western as of the dates and for the periods therein set forth. To the
knowledge of Western, such financial statements did not, as of the date of
the preparation thereof, include 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 December 31,
1997, there has been no material adverse change in the financial condition,
results of operation or business of the Bank and Western, 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).
(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, or filed any claim thereunder during the
past five years. There are no unresolved claims.
(j) EMPLOYMENT CONTRACTS. Neither Western 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 Western 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 Western 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 Western maintain or to which the Bank or Western contribute on
behalf of current or former employees of the Bank or Western. All of the plans
and programs listed in Section 3.1(k) of the Western 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. Each of the Plans that is a defined benefit pension
plan has assets with an aggregate value that exceeds the present value of its
liability for accrued benefits, all as determined on a termination basis. 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.
Western has delivered to CFB copies of (i) each Plan or if no plan
document exists, a written summary of the material terms thereof, (ii) current
summary plan descriptions of each Plan for which they are required, (iii) each
trust agreement, insurance policy or other instrument relating to the funding of
any Plan, (iv) the most recent Annual Reports (Form 5500 series) and
accompanying schedules filed with the IRS or United States Department of Labor
with respect to each Plan for which they are required, (v) the most recent
determination letter issued by the IRS with respect to each Plan that is
intended to qualify under Section 401 of the Code, (vi) the most
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recent available financial statements for each Plan that has assets, and
(vii) the most recent audited financial statements for each Plan for which
audited financial statements are required by ERISA.
(l) LITIGATION. No claims have been asserted by written notice to
Western, the Bank or WDSI and no relief has been sought against Western, the
Bank, WDSI or any of the Plans in any pending litigation or governmental
proceedings or otherwise. Neither Western nor the Bank is a party to any
unsatisfied order, judgment or decree which is adverse to Western or the Bank,
and neither Western nor either of 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.
(m) TAXES. Western 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 or reserved for; no notice of any deficiency,
assessments or additions to tax have been received by Western or the Bank;
neither Western 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 Western Disclosure Schedule, there are no other taxes of any kind or
character for which either Western or the Bank is or may be liable which are now
past due, delinquent and/or unpaid. Neither Western nor the Bank has made any
payments, or been a party to an agreement that under any circumstances could
obligate it to make payments based upon the consummation of the transactions
contemplated hereby constituting a change of the nature described in Section
280G of the Code, that are or will not be deductible because of Section 280G of
the Code. Consummation of the transactions contemplated hereby will not result
in the loss or disqualification of net operating loss carry forwards of Western
or the Bank.
(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,
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 December 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
the Bank.
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(o) INSURANCE POLICIES. Western has delivered to CFB true, accurate
and complete copies of all insurance policies of Western 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 (the "Property") are in good
condition, subject to ordinary wear and tear. Except for the facts set forth in
the Assessment (as defined in Section 4.3(e) of this Agreement), Western 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.
There are no underground or above ground storage tanks (whether or not currently
in use) located on or under the Property, and no underground tank previously
located on the Property has been removed therefrom. To the best knowledge of
Western, there is no legal, administrative, or other proceeding, claim,
investigation (with respect to which Western 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 Western, the Bank or WDSI, 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
Western, threatened against Western, the Bank or WDSI; to the knowledge of
Western 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 Western nor the Bank nor WDSI 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 Western 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 Law.
(q) CONDUCT OF BUSINESS. Except for the facts set forth in the
Assessment, each of the Bank and Western 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' 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 Western.
(r) LOAN ALLOWANCE AND DOCUMENTATION. Western's consolidated
allowance for losses on loans included in the Financial Statements as of
December 31, 1997 was $1,529,000, representing 1.35% of its total consolidated
loans held in portfolio. The amount of such allowance for losses on loans was
adequate (in accordance with applicable regulatory guidelines and generally
accepted accounting principles in all material respects) to absorb reasonably
expectable losses in the loan portfolio of the Bank. To the knowledge of
Western, there are no facts which would cause it to make a material increase or
reduction in the level of such allowance for losses on loans as of December 31,
1997. The documentation relating to loans made by the
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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. Western has provided to CFB
true, correct and complete in all material respects such written information
concerning the loan portfolios of the Bank as CFB has requested.
(s) LEASES AND CONTRACTS. Neither the Bank nor Western 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; (iv) contract or option for the purchase or sale of any
real or personal property other than in the ordinary course of business; or (v)
any other contract, agreement or understanding which is not terminable by
Western or the Bank without additional payment or penalty within sixty (60) days
and obligates Western or the Bank for payments or other consideration with a
value in excess of $20,000 (all such agreements, contracts, and commitments
collectively are herein referred to as the "Material Contracts"). The Bank and
Western 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 Western is a party or by which the Bank or Western 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. Western 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 common stock of Western and
(ii) identifies each shareholder who is an officer or director of the Bank or
Western.
(u) BANK PRINCIPALS. No director or executive officer of Western or
the Bank, nor any holder of ten percent or more of the outstanding capital stock
of Western, 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,
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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. No Bank Principal holds any
position with any depository organization other than the Bank or with
Western. 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 Western or the Bank for inclusion or incorporation by reference in
the "Proxy Statement" (as hereinafter defined) or any amendment or supplement
thereto will, at the date of mailing to the Western stockholders and at the time
of the meeting of stockholders of Western 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 to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(w) AGREEMENTS WITH BANK REGULATORS. Neither Western 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 bank holding companies or engaged in the
insurance of bank deposits ("Bank Regulators"), nor has Western been advised by
any Bank Regulator 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.
(x) YEAR 2000. Section 3.1(x) of the Western Disclosure Schedule
contains a status report regarding year 2000 compliance for the systems of the
Bank, WDSI and Western, in accordance with the FFIEC Interagency Statements
dated June 1996 (SR 96-16) and May 5, 1997 (SR 97-16) and related releases.
Western shall use its reasonable best efforts and cooperate in all material
respects with CFB in the identification of "mission critical" systems and
necessary and appropriate efforts to assure year 2000 compliance.
3.2 REPRESENTATIONS AND WARRANTIES OF CFB. CFB represents and warrants to
Western, 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 3.2 the "CFB Disclosure Schedule"), which CFB Disclosure Schedule has
been provided to Western for review not less than three (3) business days prior
to execution of this agreement; 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
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of 30,000,000 shares of common stock, par value of $.01 per share, of which
20,323,046 shares were issued and outstanding as of December 31, 1997 and
2,000,000 shares of preferred stock, no shares of which were issued and
outstanding as of December 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, except where the
failure to have any such power, authority, charter, license or franchise
would not reasonably be expected to have a material adverse effect on CFB.
CFB is registered as a company under Section 1841 of Title 12, United States
Code, as amended (the "Bank Holding Company Act").
(b) REPORTS. CFB and its 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. CFB has the corporate power and authority to
enter into the Agreement and carry out its obligations thereunder. 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 (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 CFB or any of
its subsidiaries may be subject, (B) any contract, agreement or instrument to
which CFB or any of its subsidiaries is a party or by which CFB or any of its
subsidiaries is bound or committed, or (C) the Articles of Incorporation or
Bylaws of CFB, or (ii) 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 or the capital stock of any of its subsidiaries.
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(e) INFORMATION SUPPLIED. None of the information supplied or to
be supplied by CFB or its subsidiaries for inclusion or incorporation by
reference in the Prospectus (as hereinafter defined) or the Proxy Statement
and any amendment or supplement thereto will, at the date of mailing to
Western stockholders and at the time of the meeting of stockholders of
Western 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 issuance of CFB common stock in the Merger to Western
shareholders has been duly registered with the Securities Exchange Commission
and no stop order or suspension of effectiveness has been issued or
threatened to be issued by the SEC.
(f) NO PLAN TO TRANSFER ASSETS. CFB has no plan or intention to
sell or otherwise dispose of any of the assets of the Bank 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) LITIGATION. No claims have been asserted by written notice to
CFB and no relief has been sought against CFB in any pending litigation or
governmental proceedings or otherwise. CFB is not a party to any unsatisfied
order, judgment or decree which is adverse to CFB, and CFB (i) is not the
subject of any cease and desist order, or other formal or informal
enforcement action by any regulatory authority; or (ii) has not made any
commitment to or entered into any agreement with any regulatory authority
that restricts or adversely affects its operations or financial condition.
(h) TAXES. CFB has 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 or reserved for; no notice of any deficiency, assessments
or additions to tax have been received by CFB; CFB has not waived any statute
of limitations with respect to any taxes reflected on said returns; and
deferred taxes have been properly reflected on its financial statements.
There are no other taxes of any kind or character for which CFB is or may be
liable which are now past due, delinquent and/or unpaid, in any material
amount.
(i) PROPERTY. CFB is and has 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 CFB, there is no
legal, administrative, or other proceeding, claim, investigation (with
respect to which CFB 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 CFB, 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 CFB, threatened
against CFB.
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(j) EMPLOYEE BENEFITS. All of the plans and programs which CFB
maintains or to which CFB contributes on behalf of current or former
employees (hereinafter referred to as the "CFB Plans") are in compliance in
all material respects with all applicable requirements of ERISA and all other
applicable federal and state laws. Each of the CFB Plans that is a defined
benefit pension plan has assets with an aggregate value that exceeds the
present value of its liability for accrued benefits, all as determined on a
termination basis. None of the CFB Plans has engaged in a "prohibited
transaction," within the meaning of Section 4975 of the Code or Section 406
of ERISA, none of the CFB 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 CFB Plan and none of the CFB Plans has incurred an accumulated
funding deficiency within the meaning of Section 412(a) of the Code.
(k) MATERIAL ADVERSE CHANGES. Since December 31, 1997, there has
been no material adverse change in the financial condition, results of
operation or business of CFB and its subsidiaries, 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).
(l) REGULATORY APPROVALS. CFB has no reason to believe that it
will not be able to obtain all requisite regulatory approvals necessary to
consummate the transactions set forth in this Agreement.
(m) AVAILABILITY OF CFB COMMON STOCK. CFB has available a
sufficient number of authorized and unissued shares of CFB Common Stock to
pay the Merger Consideration, and CFB will take such action during the term
of this Agreement to ensure that it will have a sufficient number of
authorized and unissued shares of CFB Common Stock to pay the Merger
Consideration.
ARTICLE 4
COVENANTS OF WESTERN AND CFB
4.1 COVENANTS OF WESTERN. During the period from the date of this
Agreement and continuing until the Effective Time, Western agrees as follows:
(a) ORDINARY COURSE. Except as otherwise required under this
Agreement or by CFB, Western, the Bank and WDSI 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. Western shall not, nor shall it permit the Bank to (i) enter into
any new
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material line of business, (ii) increase or decrease the current number of
the directors of Western or 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 accordance with the current
capital budget of the Bank, a copy of which has been provided to CFB as of
the date hereof. Western and the Bank shall each continue to declare and pay
dividends to shareholder at times and rates consistent with recent past
practices.
(b) SHAREHOLDER MEETING. Western will cause to be duly called,
and will cause to be held not later than sixty (60) days from the date
hereof, a meeting of its shareholders and will direct that this Agreement be
submitted to a vote at such meeting. Western will (i) cause proper notice of
such meeting to be given to its shareholders in compliance with the New
Mexico 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) PROXY STATEMENT. Western shall promptly prepare a proxy
statement (the "Proxy Statement") (including financial statements, prepared
in accordance with generally accepted accounting principles, in form suitable
for inclusion in the Proxy Statement) in conformity with applicable law and
regulation and the Articles of Incorporation and Bylaws of Western, for
distribution to Western shareholders in connection with the meeting called to
consider and vote upon the proposal. Western shall also provide all
information requested by CFB in connection with any statement or application
made by CFB to any governmental body in connection with the Merger. Western
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 Western becomes
incorrect or incomplete in any material respect and to provide the
information needed to correct such inaccuracy or omission.
(d) CONFIDENTIAL INFORMATION. Western will hold in confidence all
documents and nonpublic information concerning CFB and its subsidiaries
furnished to Western 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 Western'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 Western, in the public
domain, or later acquired by Western 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. Western and the Bank shall terminate each of
the agreements and arrangements with directors and/or officers identified on
EXHIBIT 4.1(e), attached hereto, on a basis mutually agreeable to the parties
to the respective agreement or arrangement, and shall
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fully expense or accrue as of the Determination Date Financial Statements,
any resulting financial obligation or liability incurred. Western and the
Bank shall, to the extent legally permissible, take all action necessary or
required (i) to terminate or amend, if requested by CFB, all qualified
pension and welfare benefit plans and all non-qualified benefit plans and
compensation arrangements as of the Effective Time; and (ii) 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 otherwise required pursuant to this Section 4.1(e),
Western 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
Western or the Bank and one or more of its directors or officers; provided,
however, that Western 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 Western 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 Western in excess of 105% of
that in effect as of December 31, 1997, 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 Western 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. Western 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; provided,
however, that nothing contained in this provision shall prohibit the Board of
Directors of Western from taking any action or permitting any of its
representatives to take any action if the Board of Directors of Western is
complying with its fiduciary duties to shareholders and such Board based its
determination of such fiduciary duties on a written opinion of counsel.
Western 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
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involving Western or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets of
Western other than the transactions contemplated or permitted by this
Agreement.
(g) MANAGEMENT AGREEMENTS. As of the Effective Time, Western and
the Bank shall terminate their respective Management Consulting Services
Agreements, dated January 1, 1997, with Bank Consultants, Inc., as well as
the Consulting Services Agreement, dated October 18, 1995, between WDSI and
the Bank, and shall fully expense or accrue as of the Determination Date
Financial Statements, any resulting financial obligation or liability
incurred.
(h) INSURANCE. Western 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 Western nor the Bank shall take any action which, with
respect to Western, would disqualify the Merger as a "pooling of interests"
for accounting purposes.
(j) FINANCIAL STATEMENTS. Western 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.
(k) ADDITIONAL COVENANTS OF WESTERN. From the date of this
Agreement to the Closing Date or the earlier termination of this Agreement,
Western, EXCEPT WITH THE PRIOR WRITTEN CONSENT OF CFB, or as specifically
required under the Agreement, shall not, nor shall it allow the Bank to:
(i) Sell or commit to issue or sell any shares of capital stock
of Western or the Bank, securities convertible into or exchangeable
for capital stock of Western 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
Western;
(ii) Redeem, purchase or otherwise acquire (except for trust
account shares) directly or indirectly, any shares of capital stock of
Western or the Bank or any securities convertible or exercisable for
any shares of capital stock of Western or the Bank;
(iii) Split, combine or reclassify any of capital stock of
Western 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 Western 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, in any material amount;
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(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;
(ix) Amend the Bank's or Western's Articles of Association,
Certificate of Incorporation, Bylaws or other governing documents;
(x) Fail to maintain a reserve for loss and costs associated
with those litigation matters reflected in Section 3.1(1) of the
Western Disclosure Schedule to the extent required by generally
accepted accounting principles;
(xi) Cancel any material debt or claim or waive any right of
material value, except in the ordinary course of business;
(xii) 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 ;
(xiii) Originate any loan which is thereafter participated to
another financial institution providing for payment upon default on
any basis other than pro rata;
(xiv) Unless the Bank is under a legal obligation to do so, 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 the Bank's officers or
directors;
(xv) (A) make, or agree to make, any fully secured loan for an
amount in excess of $300,000 to any one borrower, or increase any
existing fully secured loan by an amount which, when aggregated with
all loans to such borrower, would exceed $300,000 unless said loan is
made pursuant to a properly documented and
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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 for an amount in excess of $50,000 to any one
borrower, or increase any existing unsecured loan by an amount
which, when aggregated with all loans to such borrower, would
exceed $50,000, 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 for
an amount below the applicable limit set forth in parts A and B);
PROVIDED, HOWEVER, for any loan requiring CFB's approval, CFB shall
provide its decision within two (2) business days of receipt of
request, accompanied by appropriate information for evaluation of
the loan request, and the loan shall be deemed approved if CFB
fails to disapprove within such two (2) business day period of
review.
(xvi) 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;
(xvii) Incur any obligation or liability with respect to capital
expenditures which is not provided for in the current capital budget
and which exceeds $10,000 for any single matter or $50,000 in the
aggregate;
(xviii) Fail to timely pay and discharge all federal and state
taxes and other accounts payable for which it is liable, provided,
that Western or 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;
(xix) Except as provided herein, pay or commit to pay any
additional salary or other compensation to any of the officers,
directors or employees of Western or the Bank;
(xx) 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);
(xxi) 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 36 months or less;
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(xxii) Fail to charge and pay interest rates on loans and
deposits, respectively, not generally consistent with the Bank's prior
practices and currently prevailing conditions in the Bank's
marketplace;
(xxiii) Fail to use its reasonable best efforts to comply with
any law, rule, regulation or order applicable to the Bank and/or
Western if such failure would have a material adverse effect upon
Western;
(xxiv) With respect to the Bank, 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 the greater of 1.35% of total loans or $1,529,000;
(xxv) 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;
(xxvi) Declare or pay any dividends or distributions with respect
to its stock which would have the effect of reducing the Western Value
as of the Closing Date to less than $16,000,000.00. Western may, in
its discretion, pay dividends in amounts which do not result in a
decrease in Western Value below $16,000,000.00 or which would
disqualify the Merger from pooling accounting treatment; or
(xxvii) 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 Western 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. 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 Western 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) PROXY STATEMENT. CFB will furnish to Western all the information
concerning CFB required for inclusion in, and will cooperate in the preparation
of, the Proxy Statement to be
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sent to the shareholders of Western. CFB agrees promptly to advise Western
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) PROSPECTUS. CFB will furnish to Western copies of a
prospectus relating to the CFB common stock to be issued to Western
shareholders in the Merger (the "Prospectus"), to be sent to the shareholders
of Western. CFB agrees promptly to advise Western if at any time prior to
the Effective Date of the Merger, any information provided by CFB in the
Prospectus becomes incorrect or incomplete in any material respect and to
provide the information needed to correct such inaccuracy or omission. At
the time of mailing thereof to the Western shareholders, at the time of the
Western shareholders' meeting referred to in Section 4.1(b) hereof and at the
Effective Time of the Merger, the Prospectus 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 Western shareholders' meeting.
(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 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 Western 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 Western
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 Western 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 Western (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
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sources) and, upon request, all such documents, copies thereof or extracts
therefrom shall immediately thereafter be returned to Western.
(i) DIRECTOR AND OFFICER INDEMNIFICATION. CFB agrees to permit
Western to obtain an extended reporting period (otherwise known as "tail
coverage") under Western's existing director and officer liability policy.
CFB shall ensure that all rights to indemnification and limitations of
liability that the directors and officers of Western and its subsidiaries
have pursuant to the Articles of Incorporation or Association (and their
respective Bylaws) of Western and its subsidiaries shall survive the Merger
for six (6) years from the Effective Time and shall continue in full force
and effect and be fully honored.
(j) RULE 144. From and for a period of two (2) years after the
Effective Time, CFB shall file all reports with the SEC necessary to permit
the shareholders of Western who may be deemed "underwriters" (within or
meaning to Rule 145 under the Securities Act) of the Western Common Stock to
sell CFB Common Stock received by them in connection with the Merger pursuant
to Rules 144 and 145(d) of the Securities Act if they would otherwise be so
entitled.
4.3 COVENANTS OF WESTERN AND CFB. During the period from the date of
this Agreement and continuing until the Effective Time, Western 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, no
party shall, nor 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 6 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 5.1(c)) without imposition of a
condition or restriction of the type referred to in Section 6.1(e) 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 and bank regulatory authorities
between the date of this Agreement and the Effective Time and shall deliver
to Western copies of all such reports promptly after the same are filed.
CFB, Western and each subsidiary of CFB or Western that is a bank shall file
all call reports with the appropriate bank regulators and all other
applications and other documents required to be filed with the appropriate
bank regulators between the date hereof
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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. Western agrees to deliver to CFB (at
Western's expense) within 30 days of the date hereof, a title insurance
commitment for all real property owned by Western or the Bank in the State of
New Mexico (other than property held as OREO) (the "Title Commitments"). CFB
shall have 30 days after receipt by CFB's counsel of said Title Commitments
within which to notify Western, 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 Commitments. In the
event of any such objection, then Western shall have 30 days from the date of
such objection within which to attempt to eliminate such objections 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.
(e) ENVIRONMENTAL ASSESSMENT. Western shall engage at its expense
an independent, a 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. CFB
shall review and approve the scope of engagement for the Assessment, which
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 30 days after
the date hereof. CFB shall have a period of 30 days from the date of receipt
of the written report of such Assessment to review such Assessment and give
written notice to Western 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 60 days after the date of such notice
unless during such 60 day period Western corrects or satisfies such
objections, or indemnifies CFB against loss, liability or expense, to the
reasonable satisfaction of CFB.
(f) WDSI. WDSI shall continue to provide data processing services
to the Bank for a period of up to 6 months after the Effective Time pursuant
to the terms of the Data Processing Services Agreement in substantially the
form attached hereto as Exhibit 4.3(f) (the "Data Processing Agreement");
provided, however, that the Bank may terminate the Data Processing Agreement
at any time, upon thirty (30) days' prior written notice to WDSI. Upon
termination of the Data Processing Agreement, Western Commerce Bancshares,
Inc. shall purchase all of the Bank's right, title and interest in and to
WDSI, including 66,571 shares of WDSI common stock, for a purchase price
equal to the value of the Bank's investment in WDSI shown on the
Determination Date Financial Statements. The purchase price shall be payable
in immediately available funds to the Bank on the date of termination of the
Data Processing Agreement. Notwithstanding termination of the Data
Processing Agreement, WDSI agrees to continue to provide additional services
to the Bank, including but not limited to imaging, on reasonable terms and
conditions, pursuant to mutual agreement.
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ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 REGULATORY MATTERS.
(a) 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").
Western 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
Western 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.
(b) Western and CFB shall promptly furnish each other with copies
of written communications received by Western 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 ACCESS TO INFORMATION.
Upon reasonable notice and subject to applicable laws relating to the
exchange of confidential information, Western and CFB shall each (and cause
each of its subsidiaries to) afford to the officers, employees, accountants,
counsel and other representatives of each, 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, Western 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 Western 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.
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5.3 AFFILIATES. Each of Western 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 Western 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 5.3.
5.4 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 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 quarter which begins at least 180
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.
5.5 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 broker's professional fees)
incurred or to be incurred by Western in connection with the Merger and not
paid as of the Determination Date shall be estimated and accrued as expenses
on the Determination Date Financial Statements.
5.6 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.
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:
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(a) STOCKHOLDER APPROVAL. This Agreement shall have been approved
and adopted by the affirmative vote of the holders of the outstanding shares
of Western Common Stock, as required by the New Mexico Act and the Articles
of Incorporation and Bylaws of Western.
(b) NASDAQ LISTING. The shares of CFB Common Stock issuable to
the Western stockholders pursuant to this Agreement shall have been approved
for listing on the Nasdaq Market System, upon notice of issuance.
(c) 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 which
are prescribed by law as necessary for the consummation of the Merger and the
other transactions contemplated hereby shall have been filed, occurred or
been obtained and all Requisite Regulatory Approvals shall be in full force
and effect.
(d) 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.
(e) 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, or any of its subsidiaries which would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement as to render the consummation of the Merger
inadvisable, in the reasonable business judgment of the Board of Directors of
CFB.
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 Western 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 Western, and CFB
shall have received a certificate signed on behalf of Western by the chief
executive officer and chief financial officer of Western to such effect.
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(b) PERFORMANCE OF OBLIGATIONS OF WESTERN. Western 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 Western by the chief
executive officer and chief financial officer Western to such effect.
(c) MINIMUM WESTERN VALUE. The Western Value as of the
Determination Date shall not be less than $16,000,000.00. The confirmation
of the minimum Western Value shall be made pursuant to the procedures set
forth in Section 1.4.
(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
Western's accountants, in form and substance reasonably satisfactory to Ernst
& Young, confirming certain facts on behalf of Western.
(e) LEGAL OPINION. CFB shall have received the opinion of
Bracewell & Patterson, L.L.P., counsel to Western, dated the Closing Date, in
substantially the form attached as EXHIBIT 6.2, and such opinion shall not
have been withdrawn prior to the Effective Time.
6.3 CONDITIONS TO OBLIGATIONS OF WESTERN. The obligation of Western to
effect the Merger is also subject to the satisfaction or waiver by Western
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 Western shall have received a certificate
signed on behalf of CFB by the chief executive officer and by the chief
financial officer of CFB to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF CFB. CFB shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and Western shall have
received a certificate signed on behalf of CFB by the 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
29
<PAGE>
Western, individually or in the aggregate, have a material adverse effect
on CFB or upon the consummation of the transactions contemplated hereby.
(d) TAX OPINION. Western shall have received the opinion of
Bracewell & Patterson, L.L.P., counsel to Western, dated the Closing Date,
with a copy provided to CFB, 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)(1)(A) of the Code, (ii) CFB and Western will each
be a party to that reorganization within the meaning of Section 368(b) of the
Code, (iii) shareholders of Western who exchange their shares of Western
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) Western will not recognize gain or
loss, for purposes of federal income tax, as a result of consummation of the
Merger.
(e) LEGAL OPINION. Western shall have received the opinion of
Lindquist & Vennum, P.L.L.P., counsel to CFB, dated the Closing Date, in
substantially the form attached as EXHIBIT 6.3, and such opinion shall not
have been withdrawn prior to the Effective Time.
(f) NO MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
no material adverse change in the financial condition, results of operations,
business or prospects of CFB and its subsidiaries, taken as a whole, shall
have occurred, and CFB and its subsidiaries shall not have suffered any
damage, destruction or loss (whether or not covered by insurance) materially
adversely affecting the properties or business of CFB and its subsidiaries,
taken as a whole.
(g) FAIRNESS OPINION. Western shall have received letters from
Hovde Financial dated the date of the mailing of the Proxy Statement to the
Western shareholders and dated the date of the meeting of shareholders to
consider the Merger, in each case in form and substance satisfactory to
Western, confirming such financial advisor's opinion that the consideration
to be paid in the Merger is fair to the Western shareholders from a financial
point of view.
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 Western, only in the following circumstances:
(a) by mutual consent of CFB and Western 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; or
(b) by either CFB or Western 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; or
30
<PAGE>
(c) by either CFB or Western if the Merger shall not have been
consummated on or before November 30, 1998, 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; or
(d) by either CFB or Western 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) or
5.3, as applicable.
7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either CFB or Western 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), 5.5, 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 Western, 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.
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<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 Sections 3.2, 4.2(d), 4.2(e), 4.2(f), 4.2(g),
4.2(h), 4.2(i), 5.4 and 8.5 shall survive the Merger, and Sections 4.1(d) and
4.2(h), 5.5 and 7.2 shall survive 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, 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 Western, to: Western Bancshares of Las Cruces, Inc.
Attn: Ruben Irizarry, CFO
212 North Canal
Carlsbad, NM 88220
with copies to: William T. Luedke, IV
Bracewell & Patterson, L.L.P.
South Tower Pennzoil Place
711 Louisiana Street, Suite 2900
Houston, TX 77002-2781
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".
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<PAGE>
8.4 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement.
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 Western
shareholders; and Section 5.4 is intended for the benefit of employees of the
Bank. 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 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 Western 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.
8.7 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.
8.8 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.
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<PAGE>
IN WITNESS WHEREOF, CFB and Western 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
---------------------------------------
Attest: Name: Donald R. Mengedoth
Title: Chairman and President
/S/ MARK A. ANDERSON
- --------------------------------
Name: Mark A. Anderson
Title: Executive Vice President WESTERN BANCSHARES OF
LAS CRUCES, INC.
By: /S/ DON KIDD
---------------------------------------
Attest: Name: DON KIDD
---------------------------------------
Title: PRESIDENT
---------------------------------------
/S/ KATHLEEN SLATE
- --------------------------------
Name: KATHLEEN SLATE
---------------------------
Title: SECRETARY/TREASURER
--------------------------
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<PAGE>
TABLE OF EXHIBITS
EXHIBIT 1.1A -- Certificate of Merger
EXHIBIT 1.1B -- Articles of Merger
EXHIBIT 3.1 -- Western Disclosure Schedule
EXHIBIT 3.2 -- CFB Disclosure Schedule
EXHIBIT 4.1(e) -- Officer/Director Agreements
EXHIBIT 4.1(f) -- WDSI Agreement
EXHIBIT 4.3(f) -- Data Processing Services Agreement
EXHIBIT 5.3 -- Affiliate Agreement
EXHIBIT 6.2 -- Bracewell & Patterson, L.L.P. Opinion
EXHIBIT 6.3 -- Lindquist & Vennum, P.L.L.P. Opinion
<PAGE>
EXHIBIT 2.18
AGREEMENT AND PLAN OF MERGER
dated as of May 18, 1998
between
COMMUNITY FIRST BANKSHARES, INC.
and
GUARDIAN BANCORP
<PAGE>
INDEX TO AGREEMENT AND PLAN OF MERGER
<TABLE>
<CAPTION>
Page
-----
<S> <C> <C>
ARTICLE 1 THE MERGER1
1.1 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.3 Effects of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.4 Calculation of Guardian Value. . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES3
2.1 Effect on Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . .3
(a) Conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(b) Exchange Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
(c) Adjustments to Exchange Rate Based on CFB Trading Value . . . . . . .4
(d) Adjustments to Exchange Rate Based on Guardian Value. . . . . . . . .5
(e) 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. . . . . . . . . . . . . . . . . . . . .6
(g) Lost or Destroyed Shares. . . . . . . . . . . . . . . . . . . . . . .6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . .7
3.1 Representations and Warranties of Guardian . . . . . . . . . . . . . . . .7
(a) Subsidiary Organization . . . . . . . . . . . . . . . . . . . . . . .7
(b) Guardian Organization . . . . . . . . . . . . . . . . . . . . . . . .7
(c) Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
(d) Limitation of Bank's Powers . . . . . . . . . . . . . . . . . . . . .8
(e) Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . .8
(f) Insured Status of Bank. . . . . . . . . . . . . . . . . . . . . . . .8
(g) No Default; Creation of Liens . . . . . . . . . . . . . . . . . . . .8
(h) Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . .9
(i) Fidelity Insurance. . . . . . . . . . . . . . . . . . . . . . . . . .9
(j) Employment Contracts. . . . . . . . . . . . . . . . . . . . . . . . .9
(k) Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . .9
(l) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(m) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(n) Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . 11
(o) Insurance Policies. . . . . . . . . . . . . . . . . . . . . . . . . 11
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<PAGE>
(p) Bank Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(q) Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . 11
(r) Loan Allowance and Documentation. . . . . . . . . . . . . . . . . . 12
(s) Leases and Contracts. . . . . . . . . . . . . . . . . . . . . . . . 12
(t) Shareholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . 13
(u) Bank Principals . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(v) Information Supplied. . . . . . . . . . . . . . . . . . . . . . . . 13
(w) Agreements with Bank Regulators . . . . . . . . . . . . . . . . . . 13
(x) Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Representations and Warranties of CFB. . . . . . . . . . . . . . . . . . 14
(a) CFB Organization. . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(d) No Default; Creation of Liens . . . . . . . . . . . . . . . . . . . 15
(e) Information Supplied. . . . . . . . . . . . . . . . . . . . . . . . 15
(f) No Plan to Transfer Assets. . . . . . . . . . . . . . . . . . . . . 15
(g) Limitation of CFB Banks' Powers . . . . . . . . . . . . . . . . . . 15
(h) Insured Status of CFB Banks . . . . . . . . . . . . . . . . . . . . 15
(i) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(j) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(k) Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . 16
(l) Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 16
(m) Material Adverse Changes. . . . . . . . . . . . . . . . . . . . . . 16
(n) Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . 17
(o) Availability of CFB Common Stock. . . . . . . . . . . . . . . . . . 17
ARTICLE 4 COVENANTS OF GUARDIAN AND CFB . . . . . . . . . . . . . . . . . . . . . 17
4.1 Covenants of Guardian. . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Shareholder Meeting . . . . . . . . . . . . . . . . . . . . . . . . 17
(c) Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(d) Confidential Information. . . . . . . . . . . . . . . . . . . . . . 18
(e) Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(f) No Solicitations. . . . . . . . . . . . . . . . . . . . . . . . . . 19
(g) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(h) Pooling Restrictions. . . . . . . . . . . . . . . . . . . . . . . . 19
(i) Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 19
(j) Additional Covenants of Guardian. . . . . . . . . . . . . . . . . . 19
4.2 Covenants of CFB . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(a) Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(b) Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(c) Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(d) Prospectus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(e) Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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(f) Shares to be Issued . . . . . . . . . . . . . . . . . . . . . . . . 23
(g) Blue Sky. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(h) Confidential Information. . . . . . . . . . . . . . . . . . . . . . 24
(i) Pooling Restrictions. . . . . . . . . . . . . . . . . . . . . . . . 24
(j) Director and Officer Indemnification. . . . . . . . . . . . . . . . 24
(k) Rule 144. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.3 Covenants of Guardian and CFB. . . . . . . . . . . . . . . . . . . . . . 24
(a) Governing Documents . . . . . . . . . . . . . . . . . . . . . . . . 24
(b) Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(c) Advice of Changes; Government Filings . . . . . . . . . . . . . . . 25
(d) Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . 25
(e) Environmental Assessment. . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 5 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.1 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.2 Access to Information. . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.3 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.4 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.6 Additional Agreements; Best Efforts. . . . . . . . . . . . . . . . . . . 27
ARTICLE 6 CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . 27
(a) Stockholder Approval. . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Nasdaq Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(c) Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(d) No Injunctions or Restraints; Illegality. . . . . . . . . . . . . . 28
(e) No Unduly Burdensome Condition. . . . . . . . . . . . . . . . . . . 28
6.2 Conditions to Obligations of CFB . . . . . . . . . . . . . . . . . . . . 28
(a) Representations and Warranties. . . . . . . . . . . . . . . . . . . 28
(b) Performance of Obligations of Guardian. . . . . . . . . . . . . . . 28
(c) Minimum Guardian Value. . . . . . . . . . . . . . . . . . . . . . . 29
(d) Pooling Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(e) Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.3 Conditions to Obligations of Guardian. . . . . . . . . . . . . . . . . . 29
(a) Representations and Warranties. . . . . . . . . . . . . . . . . . . 29
(b) Performance of Obligations of CFB . . . . . . . . . . . . . . . . . 29
(c) Consents Under Agreements . . . . . . . . . . . . . . . . . . . . . 29
(d) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(e) Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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(f) No Material Adverse Change. . . . . . . . . . . . . . . . . . . . . 30
(e) Fairness Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 7 TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . 30
7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.4 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 8 GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.1 Non-Survival of Representations and Warranties . . . . . . . . . . . . . 31
8.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.5 Entire Agreement: Third Party Beneficiaries; Rights of Ownership.. . . . 32
8.6 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.8 Enforcement of Agreement . . . . . . . . . . . . . . . . . . . . . . . . 33
8.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
TABLE OF EXHIBITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
iv
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 18, 1998 (the
"Agreement"), by and between Community First Bankshares, Inc., a Delaware
corporation ("CFB"), and Guardian Bancorp, a Utah corporation ("Guardian").
WHEREAS, the Boards of Directors of CFB and Guardian 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 Guardian will be merged with and into CFB (the
"Merger"); and
WHEREAS, CFB and Guardian 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, a certificate of
merger (the "Certificate of Merger") in substantially the form as attached
hereto as EXHIBIT 1.1A shall be duly prepared, executed and acknowledged by
CFB and Guardian and thereafter delivered for filing to the Secretary of
State of the State of Delaware, as provided in the Delaware Corporation Law
(the "Delaware Law") and articles of merger (the "Articles of Merger") in
substantially the form attached hereto as EXHIBIT 1.1B shall be duly
prepared, executed and acknowledged by CFB and Guardian and thereafter
delivered for filing to the Secretary of State of the State of Utah, as
provided in the Utah Business Corporation Act (the "Utah Act"), on the
Closing Date (as defined in Section 1.2). The Merger shall become effective
upon the filing of the Certificate of Merger with the Secretary of State of
Delaware and upon the filing of the Articles of Merger with the Secretary of
State of Utah or at such other time as CFB and Guardian may agree in writing
to provide in the Certificate of Merger and 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.
<PAGE>
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
Lindquist & Vennum, in Denver, Colorado, 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 completed within thirty (30)
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 Guardian
shall cease and Guardian shall be merged with and into CFB; (ii) the
Certificate of Incorporation of CFB, as in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation until duly amended in accordance with applicable law; (iii) the
By-laws of CFB, 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) the holders of the outstanding capital stock of CFB
shall continue as shareholders of the Surviving Corporation; and (v) the
holders of certificates representing shares of Guardian Common Stock (as
defined in Section 2.1(a) below) shall cease to have any rights as
shareholders of Guardian, except such rights, if any, as they may have
pursuant to Sections 16-10a-1301 to 16-10a-1331 of the Utah 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(a) below) into which their shares
of Guardian 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 Guardian
Common Stock have been converted as provided herein.
(b) As used in this Agreement, the term "Constituent Corporations"
shall mean Guardian and CFB. The term "Surviving Corporation" shall mean CFB,
after giving effect to the Merger.
(c) At and after the Effective Time, the Merger will have the
effects set forth in Section 252 of the Delaware Law and Section 16-10a-1106
of the Utah Act.
1.4 CALCULATION OF GUARDIAN VALUE. As of the "Determination Date" (as
hereinafter defined), Guardian shall prepare a consolidated balance sheet of
Guardian in accordance with generally accepted accounting principles, 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 Financial Statements"). The
Determination Date Financial Statements shall be delivered to CFB as soon as
they are prepared (but not less than five (5) business days prior to the
Effective Time) so that CFB and its accountants may review and confirm their
accuracy. For purposes of this Agreement, the "Guardian Value" shall be
equal to the total consolidated assets of Guardian minus the total
consolidated liabilities of Guardian, as reflected on the Determination Date
Financial Statements, prepared in accordance
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with this Section 1.4. Total consolidated liabilities of Guardian shall
include, without limitation, provisions for (i) income and real property
taxes, (ii) the expenses of preparation of final tax returns of Guardian and
(iii) all anticipated transaction expenses.
As used herein, the "Determination Date" shall be the last day of the
month immediately preceding the Effective Time; provided, however, that in
the event the Effective Time shall be within the first ten (10) days of a
calendar month, the "Determination Date" shall be the last day of the month
next preceding the Effective Time, and income for the month immediately
preceding the Effective Time shall be determined by multiplying the number of
days in the month by the average daily net income (determined by dividing
year-to-date net income through the Determination Date by the number of days
from January 1, 1998 to the Determination Date).
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. 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, of Guardian ("Guardian Common Stock"), each issued and
outstanding share of Guardian Common Stock, other than shares of Guardian
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 Sections
16-10a-1301 to 16-10a-1331 of the Utah Act, shall be converted into validly
issued, fully paid and nonassessable shares of common stock of CFB, $.01 par
value ("CFB Common Stock"). The number of shares of CFB Common Stock
exchanged for shares of Guardian Common Stock shall be determined in
accordance with Section 2.1(b). All such shares of Guardian Common Stock
shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist. Each Guardian shareholder's certificate or
certificates previously representing shares of Guardian Common Stock (each a
"Guardian Certificate") shall be aggregated (if a single stockholder holds
more than one Guardian Certificate) and exchanged for a single 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
Guardian 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 Guardian Common Stock shall be converted will
equal the number of shares of CFB Common Stock that the holders of shares of
Guardian Common Stock would have received pursuant to such reorganization,
recapitalization,
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<PAGE>
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. Subject to (i) the confirmation of the
minimum Guardian Value, as provided in Section 6.2(c) hereof, (ii) prior
exercise or termination of all options, warrants and rights for shares of
Guardian Common Stock in accordance with Section 3.1(b) hereof, and (iii) the
limitations and conditions of Section 2.1(c) hereof, the aggregate number of
shares of CFB Common Stock to be exchanged for all of the issued and
outstanding shares of Guardian Common Stock (the "Merger Consideration")
shall be determined by dividing Thirty-Eight Million Dollars ($38,000,000.00)
by the CFB Trading Value.
For purposes of this Agreement, the "Exchange Rate" shall be determined
by dividing the Merger Consideration, as determined above, by the number of
shares of Guardian Common Stock outstanding or subject to option, warrant or
other right of issuance, whether or not vested or accrued as of the Effective
Time.
Calculation of the Exchange Rate will be rounded to four decimal places.
Any fractional share of CFB Common Stock will be paid in cash in accordance
with Section 2.2(e).
(c) 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 $24.00 per share, then
the number of shares of CFB common stock to be issued in exchange for all
of the issued and outstanding shares of Guardian common stock shall be
1,583,333;
(ii) If the CFB Trading Value is greater than $29.00 per share,
then the number of shares of CFB common stock to be issued for all of the
issued and outstanding shares of Guardian common stock shall be 1,310,345.
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 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 four decimal places. 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(c) hereto and incorporated herein by reference.
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<PAGE>
(d) ADJUSTMENTS TO EXCHANGE RATE BASED ON GUARDIAN VALUE.
Guardian shall use its best efforts to distribute all amounts in excess of
the minimum Guardian Value (as provided in Section 6.2(c) hereof) to its
shareholders on or before the Determination Date. In the event that the
Guardian Value, calculated in accordance with Section 1.4, above, shall be
greater than $8,300,000, then, at the election of Guardian and subject to the
requirements of Section 6.2(e) hereof, either (i) the difference shall be
paid by special dividend to Guardian shareholders immediately prior to the
Determination Date or (ii) the Merger Consideration determined in accordance
with Sections 2.1(b) and (c) shall be subject to increase. The amount of
increase shall be determined by (i) subtracting the difference between the
Guardian Value and $8,300,000, and then (ii) dividing such difference by the
CFB Trading Value.
(e) SHAREHOLDERS' RIGHT OF DISSENT. Any holder of shares of
Guardian Common Stock who does not vote in favor of the Merger at the meeting
of shareholders of Guardian called to vote on the Merger and has given notice
in writing to the presiding officer prior to or at the meeting of his or her
objection to the proposed corporate action shall be entitled to demand to
receive the fair value of the Guardian Common Stock so held by him or her, in
accordance with Sections 16-10a-1301 to 16-10a-1331 of the Utah 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 Guardian Common Stock, certificates dated the Closing Date
representing the shares of CFB Common Stock and the cash to be paid in lieu
of fractional shares (such cash and certificates for shares of CFB Common
Stock together with any dividends or distributions with respect thereto,
being hereinafter referred to as the "Exchange Fund") to be issued and paid
pursuant to Section 2.1 in exchange for the outstanding shares of Guardian
Common Stock.
(b) EXCHANGE PROCEDURES. Within five (5) business days after the
Closing Date, CFB shall cause the Exchange Agent to mail to each holder of
record of a Guardian Certificate or Guardian Certificates (i) a letter of
transmittal which shall specify that delivery shall be effective, and risk of
loss and title to the Guardian Certificate(s) shall pass, only upon delivery
of the Guardian Certificate(s) to the Exchange Agent and which shall be in
such form and have such other provisions as CFB and Guardian may reasonably
specify not later than five business days before the Closing Date and (ii)
instructions for use in effecting the surrender of the Guardian
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 Guardian Certificate or Guardian Certificates
for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, the holder of such Guardian 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 Guardian Certificate(s) surrendered, as provided
in Section 2.2(c) below, and the Guardian 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,
5
<PAGE>
payable to holders of Guardian Certificates. In the event of a transfer of
ownership of Guardian Common Stock which is not registered in the transfer
records of Guardian, a CFB Certificate representing the proper number of
shares of CFB Common Stock, together with a check for the cash to be paid in
lieu of a fractional share, may be issued to such a transferee if the
Guardian Certificate representing such Guardian Common Stock is presented to
the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer.
(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 Guardian 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 Guardian Certificates shall not be entitled to vote
after the Closing Date at any meeting of CFB shareholders until they have
exchanged their Guardian Certificates.
(d) TRANSFERS. After the Effective Time, there shall be no
transfers on the stock transfer books of Guardian of the shares of Guardian
Common Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Guardian Certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for the shares of
CFB Common Stock and cash, in an amount as determined in accordance with the
provisions of Section 2.1(a) and this Section 2.2, deliverable in respect
thereof pursuant to this Agreement. Guardian Certificates surrendered for
exchange by any person constituting an "affiliate" of Guardian 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 5.3.
(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 Guardian Common Stock with more than one
Guardian Certificate shall receive cash only for the fractional share
remaining after aggregating all of its, his or her Guardian 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 Guardian for twelve
months after the Closing Date shall be paid to CFB. Any shareholders of
Guardian who have not theretofore complied with this Article 2 shall
thereafter look only to CFB for payment of their shares of CFB Common Stock,
and cash in an amount as determined in accordance with the provisions of
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 Guardian 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 Guardian
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Guardian
6
<PAGE>
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 Guardian Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Guardian Certificate the shares of CFB Common
Stock, and cash in an amount as determined in accordance with the provisions
of Section 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 GUARDIAN. In order to induce CFB
to enter into this Agreement, Guardian 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
3.1 (the "Guardian Disclosure Schedule"), which Guardian Disclosure Schedule
has been provided to CFB for review not less than three (3) business days
prior to execution of this Agreement, and the schedules thereunder (which are
numbered to correspond to the representations set forth below):
(a) SUBSIDIARY ORGANIZATIONS. The Guardian State Bank, Salt Lake
City, Utah ("Bank") is a banking corporation duly organized and validly
existing and in good standing under the laws of the State of Utah. The Bank
has authorized capital of $801,600, consisting of 200,400 shares of one class
of common stock, par value $4.00 per share. All of the shares of stock of
the Bank which are presently issued and outstanding, have been validly
issued, fully paid and non-assessable, and there are no stock options or
other commitments outstanding 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) GUARDIAN ORGANIZATION. Guardian is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Utah, with authorized capital stock consisting of (i) 1,000,000 shares of
common stock, no par value per share, (the "Guardian Common Stock"), of which
1,471.91 shares are issued and outstanding; (ii) 100,000 shares designated as
cumulative, convertible nonvoting Class A preferred stock, $10.00 par value,
(the "Guardian Class A Preferred Stock"), none of which shares are issued and
outstanding; and (iii) 500,000 shares designated as cumulative, voting Class
B preferred stock, no par value, (the "Guardian Class B Preferred Stock" and,
with the Guardian Class A Preferred Stock and the Guardian Common Stock the
"Guardian Stock"), none of which shares are issued and outstanding. All of
the shares of Guardian Stock issued and outstanding have been validly issued,
fully paid and non-assessable. Except as set forth in Section 3.1(b) of the
Guardian Disclosure Schedule, there are no options, warrants or other
commitments outstanding pursuant to which Guardian is or could become
obligated to issue additional shares. On or before the Effective Time,
Guardian shall have provided for the acceleration and exercise of all such
options, warrants and rights or their termination and written release of
Guardian from further liability thereunder. Guardian 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, charter, license
or franchise would not reasonably be expected to have a material
7
<PAGE>
adverse effect on the business, operations, prospects or financial condition
of Guardian. Guardian is registered as a company under Section 1841 of Title
12, United States Code, as amended (the "Bank Holding Company Act").
Guardian has no direct or indirect subsidiaries except the Bank and is not a
partner to any partnership. Guardian owns all of the shares of stock of the
Bank, free and clear of any liens or encumbrances.
(c) ENFORCEABILITY. Subject only to the required approval of the
Merger by the shareholders of Guardian, Guardian 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
Guardian and the consummation of the transactions contemplated hereby have
been duly authorized by the Board of Directors of Guardian. Subject to
approval by the Guardian shareholders and of government agencies and other
governing bodies having regulatory authority over Guardian or the Bank as may
be required by statute or regulation, this Agreement constitutes a valid and
binding obligation of Guardian, enforceable against it 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) LIMITATION OF BANK'S POWERS. 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 its powers, rights or privileges, to
terminate deposit insurance or to dissolve the Bank. The Bank has not
received any written protest, complaint or criticism in the last three (3)
years by the public or any regulatory agency relating to the Bank's
performance under the Community Reinvestment Act or any other consumer
protection statute or regulation.
(e) CORPORATE RECORDS. Guardian's Articles of Incorporation and
Bylaws, and the Bank's Articles of Incorporation 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 Guardian 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
(including committees of the 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 the
Bank exists that could reasonably be expected to have a material adverse
effect on its status as an insured bank thereunder. The Bank 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 Guardian or the
Bank.
(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 Guardian or the Bank may be subject,
(B) any of the
8
<PAGE>
"Material Contracts," as hereinafter defined, or (C) the Articles of
Incorporation or Bylaws of Guardian 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 Guardian Common Stock or any of the Bank's
capital stock, except for any of the foregoing that, individually or in the
aggregate, would not have a material adverse effect upon the financial
condition, results of operation or the business of Guardian or the Bank.
(h) FINANCIAL STATEMENTS. The following financial statements of
the Bank and Guardian (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 1995, 1996 and 1997 and March 31,
1998; and
(ii) The audited consolidated financial statements of
Guardian, prepared in the ordinary course of business for each of the
years ended December 31, 1995, 1996 and 1997.
Each of the aforementioned financial statements is, and the Determination
Date Financial Statements 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 by independent accountants) the
financial position and results of operation of each of the Bank and Guardian
as of the dates and for the periods therein set forth. To the knowledge of
Guardian, such financial statements did not, as of the date of the
preparation thereof, include 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 December 31,
1997, there has been no material adverse change in the financial condition,
results of operation or business of the Bank and Guardian, 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).
(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, or filed any claim thereunder
during the past five years. There are no unresolved claims.
(j) EMPLOYMENT CONTRACTS. Neither Guardian 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 Guardian 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 Guardian Disclosure
Schedule lists every employee benefit plan within the meaning of Section 3(3) of
the Employee Retirement Income Security
9
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Act of 1974, as amended ("ERISA"), which the Bank or Guardian maintain or to
which the Bank or Guardian contribute on behalf of current or former
employees of the Bank or Guardian. All of the plans and programs listed in
Section 3.1(k) of the Guardian 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. Each of the Plans that is a defined benefit pension plan has assets
with an aggregate value that exceeds the present value of its liability for
accrued benefits, all as determined on a termination basis. 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.
Guardian has delivered to CFB copies of (i) each Plan or if no plan
document exists, a written summary of the material terms thereof, (ii)
current summary plan descriptions of each Plan for which they are required,
(iii) each trust agreement, insurance policy or other instrument relating to
the funding of any Plan, (iv) the most recent Annual Reports (Form 5500
series) and accompanying schedules filed with the IRS or United States
Department of Labor with respect to each Plan for which they are required,
(v) the most recent determination letter issued by the IRS with respect to
each Plan that is intended to qualify under Section 401 of the Code, (vi) the
most recent available financial statements for each Plan that has assets, and
(vii) the most recent audited financial statements for each Plan for which
audited financial statements are required by ERISA.
(l) LITIGATION. No claims have been asserted by written notice to
Guardian or the Bank and no relief has been sought against Guardian, the
Bank, or any of the Plans in any pending litigation or governmental
proceedings or otherwise. Neither Guardian nor the Bank is a party to any
unsatisfied order, judgment or decree which is adverse to Guardian or the
Bank, and neither Guardian nor either of 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.
(m) TAXES. Guardian 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 or reserved for; no notice of any deficiency,
assessments or additions to tax have been received by Guardian or the Bank;
neither Guardian 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 Guardian Disclosure Schedule, there are no other taxes
of any kind or character for which either Guardian or the Bank is or may be
liable which are now past due, delinquent and/or unpaid. Neither Guardian
nor the Bank has made any payments, or been a party to an agreement that
under any circumstances could obligate it to make payments based upon the
consummation of the transactions contemplated hereby constituting a change of
the nature described in Section 280G of the Code, that are or will not be
deductible because
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of Section 280G of the Code. Consummation of the transactions contemplated
hereby will not result in the loss or disqualification of net operating loss
carry forwards of Guardian or the Bank.
(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, 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 December 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 the Bank.
(o) INSURANCE POLICIES. Guardian has delivered to CFB true,
accurate and complete copies of all insurance policies of Guardian 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 (the "Property") are in
good condition, subject to ordinary wear and tear. Except for the facts set
forth in the Assessment (as hereinafter defined), Guardian 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 Guardian, there are no underground or above ground
storage tanks (whether or not currently in use) located on or under the
Property, and no underground tank previously located on the Property has been
removed therefrom. To the best knowledge of Guardian, there is no legal,
administrative, or other proceeding, claim, investigation (with respect to
which Guardian 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 Guardian 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 Guardian,
threatened against Guardian or the Bank; to the knowledge of Guardian 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 Guardian 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 Guardian 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 Law.
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(q) CONDUCT OF BUSINESS. Except for the facts set forth in the
Assessment, each of the Bank and Guardian 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' 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 Guardian.
(r) LOAN ALLOWANCE AND DOCUMENTATION. Guardian's consolidated
allowance for losses on loans included in the Financial Statements as of
December 31, 1997 was $826,386, representing 1.42% of its total consolidated
loans held in portfolio. The amount of such allowance for losses on loans
was adequate (in accordance with applicable regulations and generally
accepted accounting principles in all material respects) to absorb reasonably
expected losses in the loan portfolio of the Bank. To the knowledge of
Guardian, as of December 31, 1997, there are no facts which would cause it to
increase the level of such allowance for losses on loans. The documentation
relating to loans made by the 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. Guardian has provided to CFB true, correct and complete in
all material respects such written information concerning the loan portfolios
of the Bank as CFB has requested.
(s) LEASES AND CONTRACTS. Neither the Bank nor Guardian 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; (iv) contract or option for
the purchase or sale of any real or personal property other than in the
ordinary course of business; or (v) any other contract, agreement or
understanding which is not terminable by Guardian or the Bank without
additional payment or penalty within sixty (60) days and obligates Guardian
or the Bank for payments or other consideration with a value in excess of
$20,000 (all such agreements, contracts, and commitments collectively are
herein referred to as the "Material Contracts"). The Bank and Guardian 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 Guardian is a party or by which the Bank or Guardian 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,
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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. Guardian 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 common stock of
Guardian and (ii) identifies each shareholder who is an officer or director
of the Bank or Guardian.
(u) BANK PRINCIPALS. No director or executive officer of Guardian
or the Bank, nor any holder of ten percent or more of the outstanding capital
stock of Guardian, 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. No Bank Principal holds any position with any depository
organization other than the Bank or with Guardian. 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 Guardian or the Bank for inclusion or incorporation by
reference in the "Proxy Statement" (as hereinafter defined) or any amendment
or supplement thereto will, at the date of mailing to the Guardian
stockholders and at the time of the meeting of stockholders of Guardian 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 to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(w) AGREEMENTS WITH BANK REGULATORS. Neither Guardian 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) except as set forth in Section
3.1(w) of the Guardian Disclosure Schedule, has adopted any Board resolutions
at the request of, federal or state governmental entities charged with the
supervision or regulation of Bank or bank holding companies or engaged in the
insurance of bank deposits ("Bank Regulators"), nor has Guardian been advised
by any Bank Regulator 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.
(x) YEAR 2000. Section 3.1(x) of the Guardian Disclosure Schedule
contains a true and complete summary of the status of all "mission critical"
systems of the Bank and Guardian with respect to "year 2000 compliance," in
accordance with the FFIEC Interagency Statements dated June 1996 (SR
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96-16) and May 5, 1997 (SR 97-16) and related releases (collectively, the
Year 2000 Releases"). Guardian and the Bank shall cooperate with CFB in
connection with any software conversion or further compliance efforts and
shall continue to use their reasonable best efforts to identify and implement
year 2000 compliance actions directed by the Year 2000 Releases.
3.2 REPRESENTATIONS AND WARRANTIES OF CFB. CFB represents and warrants
to Guardian, 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 3.2 the "CFB Disclosure Schedule"), which CFB Disclosure
Schedule has been provided to Guardian for review not less than three (3)
business days prior to execution of this agreement; 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 20,323,046 shares were
issued and outstanding as of December 31, 1997 and 2,000,000 shares of
preferred stock, no shares of which were issued and outstanding as of
December 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, except where the failure to have
any such power, authority, charter, license or franchise would not reasonably
be expected to have a material adverse effect on the business, operations,
prospects or financial condition of CFB. CFB is registered as a company under
Section 1841 of Title 12, United States Code, as amended (the "Bank Holding
Company Act").
(b) REPORTS. CFB and its 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. CFB has the corporate power and authority to
enter into this Agreement and carry out its obligations hereunder. 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.
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(d) NO DEFAULT; CREATION OF LIENS. Neither the execution and
delivery of this Agreement nor the consummation of the transaction
contemplated hereby will (i) conflict with, result in the breach of,
constitute a default under or accelerate the performance provided by the
terms of any (a) judgment, order or decree of any court or other governmental
agency to which CFB or any of its subsidiaries may be subject, or (b) any
material contract, agreement or instrument to which CFB or any of its
subsidiaries is a party or by which CFB or any of its subsidiaries is bound
or committed, or (c) the Articles of Incorporation or Bylaws of CFB, or (ii)
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, except
for any of the foregoing that, individually, or in the aggregate, would not
have a material adverse effect upon the financial conditions, results of
operation or the business of CFB.
(e) INFORMATION SUPPLIED. None of the information supplied or to
be supplied by CFB or its subsidiaries for inclusion or incorporation by
reference in the Prospectus (as hereinafter defined) or the Proxy Statement
and any amendment or supplement thereto will, at the date of mailing to
Guardian stockholders and at the time of the meeting of stockholders of
Guardian 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 issuance of CFB Common Stock in the Merger to Guardian
shareholders has been duly registered with the Securities and Exchange
Commission and no stop order or suspension of effectiveness has been issued
or threatened to be issued by the SEC.
(f) NO PLAN TO TRANSFER ASSETS. CFB has no plan or intention to
sell or otherwise dispose of any of the assets of the Bank 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) LIMITATION OF CFB BANKS' POWERS. There are no proceedings or
actions pending by any federal or state regulatory body having authority over
any CFB subsidiary bank (the "CFB Banks") to limit or impair any of their
powers, rights or privileges, to terminate deposit insurance or to dissolve a
CFB Bank. The CFB Banks have not received any written protest, complaint or
criticism in the last three (3) years by the public or any regulatory agency
relating to the CFB Bank's performance under the Community Reinvestment Act
or any other consumer protection statute or regulation which would reasonably
be anticipated to have a material adverse effect upon the ability of CFB to
obtain any Requisite Regulatory Approval.
(h) INSURED STATUS OF CFB BANKS. Each of the CFB Banks 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 CFB Banks exists that could reasonably be
expected to have a material adverse effect on its status as an insured bank
thereunder. The CFB Banks possess and are in full compliance with all
licenses, franchises, permits and other governmental authorizations that are
legally required to hold their respective properties or conduct their
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 CFB.
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(i) LITIGATION. No claims have been asserted by written notice to
CFB and no relief has been sought against CFB in any pending litigation or
governmental proceedings or otherwise. CFB is not a party to any unsatisfied
order, judgment or decree which is adverse to CFB, and CFB (i) is not the
subject of any cease and desist order, or other formal or informal
enforcement action by any regulatory authority; or (ii) has not made any
commitment to or entered into any agreement with any regulatory authority
that restricts or adversely affects its operations or financial condition.
(j) TAXES. CFB has 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 or reserved for; no notice of any deficiency, assessments
or additions to tax have been received by CFB; CFB has not waived any statute
of limitations with respect to any taxes reflected on said returns; and
deferred taxes have been properly reflected on its financial statements.
There are no other taxes of any kind or character for which CFB is or may be
liable which are now past due, delinquent and/or unpaid, in any material
amount.
(k) TITLE TO PROPERTY. Each of the CFB Banks 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, 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 December 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 CFB 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 CFB.
(l) EMPLOYEE BENEFITS. All of the plans and programs which CFB
maintains or to which CFB contributes on behalf of current or former
employees (hereinafter referred to as the "CFB Plans") are in compliance in
all material respects with all applicable requirements of ERISA and all other
applicable federal and state laws. Each of the CFB Plans that is a defined
benefit pension plan has assets with an aggregate value that exceeds the
present value of its liability for accrued benefits, all as determined on a
termination basis. None of the CFB Plans has engaged in a "prohibited
transaction," within the meaning of Section 4975 of the Code or Section 406
of ERISA, none of the CFB 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 CFB Plan and none of the CFB Plans has incurred an accumulated
funding deficiency within the meaning of Section 412(a) of the Code.
(m) MATERIAL ADVERSE CHANGES. Since March 31, 1998, there has been
no material adverse change in the financial condition, results of operation or
business of CFB and its subsidiaries, taken as a whole (other than changes in
banking laws or regulations, changes in generally accepted
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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).
(n) REGULATORY APPROVALS. CFB has no reason to believe that it
will not be able to obtain all Requisite Regulatory Approvals necessary to
consummate the transactions set forth in this Agreement.
(o) AVAILABILITY OF CFB COMMON STOCK. CFB has available a
sufficient number of authorized and unissued shares of CFB Common Stock to
pay the Merger Consideration, and CFB will take such action during the term
of this Agreement to ensure that it will have a sufficient number of
authorized and unissued shares of CFB Common Stock to pay the Merger
Consideration.
ARTICLE 4
COVENANTS OF GUARDIAN AND CFB
4.1 COVENANTS OF GUARDIAN. During the period from the date of this
Agreement and continuing until the Effective Time, Guardian agrees as follows:
(a) ORDINARY COURSE. Except as otherwise required under this
Agreement or by CFB, Guardian 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. Except
with the prior written consent of CFB, Guardian 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 Guardian or 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 accordance with the current capital budget of the
Bank, a copy of which has been provided to CFB as of the date hereof.
Notwithstanding the foregoing, Guardian shall continue to declare and pay
dividends and distributions with respect to its stock in a rate and manner
consistent with prior practices.
(b) SHAREHOLDER MEETING. Guardian will cause to be duly called,
and will cause to be held not later than sixty (60) days from the date
hereof, a meeting of its shareholders and will direct that this Agreement be
submitted to a vote at such meeting. Guardian will (i) cause proper notice
of such meeting to be given to its shareholders in compliance with the Utah
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.
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(c) PROXY STATEMENT. Guardian shall promptly prepare a proxy
statement (the "Proxy Statement") (including financial statements, prepared
in accordance with generally accepted accounting principles, in form suitable
for inclusion in the Proxy Statement) in conformity with applicable law and
regulation and the Articles of Incorporation and Bylaws of Guardian, for
distribution to Guardian shareholders in connection with the meeting called
to consider and vote upon the proposal. Guardian shall also provide all
information requested by CFB in connection with any statement or application
made by CFB to any governmental body in connection with the Merger. Guardian
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 Guardian becomes
incorrect or incomplete in any material respect and to provide the
information needed to correct such inaccuracy or omission.
(d) CONFIDENTIAL INFORMATION. Guardian will hold in confidence
all documents and nonpublic information concerning CFB and its subsidiaries
furnished to Guardian 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 Guardian'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 Guardian, in the public
domain, or later acquired by Guardian 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. Guardian and the Bank shall terminate each of
the agreements and arrangements with directors and/or officers identified on
EXHIBIT 4.1(e), attached hereto, on a basis mutually agreeable to the parties
to the respective agreement or arrangement, and shall fully expense or accrue
as of the Determination Date Financial Statements, any resulting financial
obligation or liability incurred. Guardian and the Bank shall, to the extent
legally permissible, take all action necessary or required (i) to terminate
or amend, if requested by CFB, all qualified pension and welfare benefit
plans and all non-qualified benefit plans and compensation arrangements as of
the Effective Time; and (ii) 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 otherwise required pursuant to this Section 4.1(e),
Guardian 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
Guardian or the Bank and one or more of its directors or officers; provided,
however, that Guardian 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 Guardian 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 Guardian in excess of 105%
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of that in effect as of March 31, 1998, 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 Guardian 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. Guardian 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; provided,
however, that nothing contained in this provision shall prohibit the Board of
Directors of Guardian from taking any action or permitting any of its
representatives from taking any action if the Board of Directors of Guardian
is complying with its fiduciary duties to shareholders and such Board based
its determination of such fiduciary duties on a written opinion of counsel.
Guardian 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 Guardian or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets of
Guardian other than the transactions contemplated or permitted by this
Agreement.
(g) INSURANCE. Guardian 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.
(h) POOLING RESTRICTIONS. Guardian and the Bank shall take any
and all action reasonably requested by CFB which is necessary, in the opinion
of CFB's accountants, to qualify the Merger as a "pooling of interests" for
accounting purposes. From and after the date of this Agreement, neither
Guardian nor the Bank shall take any action which CFB has advised, with
respect to Guardian, would disqualify the Merger as a "pooling of interests"
for accounting purposes.
(i) FINANCIAL STATEMENTS. Guardian 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.
(j) ADDITIONAL COVENANTS OF GUARDIAN. From the date of this
Agreement to the Closing Date or the earlier termination of this Agreement,
Guardian, EXCEPT WITH THE PRIOR WRITTEN CONSENT OF CFB, or as specifically
required under the Agreement, shall not, nor shall it allow the Bank to:
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(i) Sell or commit to issue or sell any shares of capital stock
of Guardian or the Bank, securities convertible into or exchangeable
for capital stock of Guardian 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
Guardian;
(ii) Redeem, purchase or otherwise acquire (except for trust
account shares) directly or indirectly, any shares of capital stock of
Guardian or the Bank or any securities convertible or exercisable for
any shares of capital stock of Guardian or the Bank;
(iii) Split, combine or reclassify any of capital stock of
Guardian 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 Guardian 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, in 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;
(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;
(ix) Amend the Bank's or Guardian's Articles of Incorporation,
Bylaws or other governing documents;
(x) Fail to maintain a reserve for loss and costs associated
with those litigation matters reflected in Section 3.1(1) of the
Guardian Disclosure Schedule to the extent required by generally
accepted accounting principles;
(xi) Cancel any material debt or claim or waive any right of
material value, except in the ordinary course of business;
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(xii) 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 ;
(xiii) Originate any loan which is thereafter participated to
another financial institution providing for payment upon default on
any basis other than pro rata;
(xiv) Unless the Bank is under a legal obligation to do so, 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 the Bank's officers or
directors;
(xv) (A) make, or agree to make, any 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 Agreement;
(B) make, or agree to make any additional loan or advance which, when
combined with existing loans, would result in a secured loan in excess
of $250,000 to any one borrower, unless said loan or advance 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
or is within the commitment of the Bank to the Borrower which has
previously been approved by CFB; (C) make, or agree to make, any
unsecured loan for an amount in excess of $50,000 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; (D) make, or agree to make any additional loan
or advance which, when combined with existing loans, would result in
an unsecured loan in excess of $50,000 to any one borrower, unless
said loan or advance 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 (E) 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 (F) 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 C 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 C); PROVIDED, HOWEVER, for any loan requiring CFB's
approval, CFB shall provide its decision within two (2) business days
of receipt of request, accompanied by appropriate information for
evaluation of the loan request, and the loan shall be deemed approved
if CFB fails to disapprove within such two (2) business day period of
review;
(xvi) 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;
(xvii) Incur any obligation or liability with respect to capital
expenditures which is not provided for in the current capital budget
and which exceeds $10,000 for any single matter or $50,000 in the
aggregate;
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(xviii) Fail to timely pay and discharge all federal and state
taxes and other accounts payable for which it is liable, provided,
that Guardian or 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;
(xix) Except as provided herein, pay or commit to pay salary or
other compensation to any of the officers, directors or employees of
Guardian or the Bank at a rate which exceeds 105% of aggregate
compensation at March 31, 1998;
(xx) 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);
(xxi) 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 36 months or less;
(xxii) Fail to charge and pay interest rates on loans and
deposits, respectively, not generally consistent with the Bank's prior
practices and currently prevailing conditions in the Bank's
marketplace;
(xxiii) Fail to use its reasonable best efforts to comply with
any law, rule, regulation or order applicable to the Bank and/or
Guardian if such failure would have a material adverse effect upon
Guardian;
(xxiv) With respect to the Bank, 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 $1,310,000;
(xxv) 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;
(xxvi) Declare or pay any dividends or distributions with
respect to its stock which would have the effect of reducing the
Guardian Value as of the Closing Date to less than $8,300,000, or,
subject to the foregoing, fail to declare and pay dividends and
distributions with respect to its stock in a rate and manner
consistent with recent prior practices; or
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(xxvii) 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 Guardian 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. 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 Guardian
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) PROXY STATEMENT. CFB will furnish to Guardian 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
Guardian. CFB agrees promptly to advise Guardian 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) PROSPECTUS. CFB will furnish to Guardian copies of a
prospectus relating to the CFB common stock to be issued to Guardian
shareholders in the Merger (the "Prospectus"), to be sent to the shareholders
of Guardian. CFB agrees promptly to advise Guardian if at any time prior to
the Effective Date of the Merger, any information provided by CFB in the
Prospectus becomes incorrect or incomplete in any material respect and to
provide the information needed to correct such inaccuracy or omission. At
the time of mailing thereof to the Guardian shareholders, at the time of the
Guardian shareholders' meeting referred to in Section 4.1(b) hereof and at
the Effective Time of the Merger, the Prospectus 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 Guardian shareholders' meeting.
(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 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 Guardian pursuant to this Agreement
will, upon such issuance and delivery to said
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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 Guardian 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 Guardian 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 Guardian (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 Guardian.
(i) POOLING RESTRICTIONS. From and after the date of this
Agreement, CFB shall not take any action which Ernst & Young LLP has advised,
with respect to CFB, would disqualify the Merger as a "pooling of interests"
for accounting purposes.
(j) DIRECTOR AND OFFICER INDEMNIFICATION. CFB agrees to permit
Guardian to obtain an extended reporting period (otherwise known as "tail
coverage") under Guardian's existing director and officer liability policy.
CFB shall ensure that all rights to indemnification and limitations of
liability that the directors and officers of Guardian and its subsidiaries
have pursuant to the Articles of Incorporation (and their respective Bylaws)
of Guardian and the Bank shall survive the Merger for six (6) years from the
Effective Time and shall continue in full force and effect and be fully
honored.
(k) RULE 144. From and for a period of two (2) years after the
Effective Time, CFB shall file all reports with the SEC necessary to permit
the shareholders of Guardian who may be deemed "underwriters" (within or
meaning to Rule 145 under the Securities Act) of the Guardian Common Stock to
sell CFB Common Stock received by them in connection with the Merger pursuant
to Rules 144 and 145(d) of the Securities Act if they would otherwise be so
entitled.
4.3 COVENANTS OF GUARDIAN AND CFB. During the period from the date of
this Agreement and continuing until the Effective Time, Guardian 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.
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(b) OTHER ACTIONS. Unless such action is required by law, no
party shall, nor 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 6 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 5.1(c)) without imposition of a
condition or restriction of the type referred to in Section 6.1(e) 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 Guardian copies of all such
reports promptly after the same are filed. CFB, Guardian and each subsidiary
of CFB or Guardian that is a bank shall file all call reports with the
appropriate bank regulators and all other 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.
(d) TITLE TO PROPERTY. Guardian agrees to deliver to CFB (at
Guardian's expense) within 30 days of the date hereof, a title insurance
commitment for all real property owned by Guardian or the Bank in the State
of Utah (other than property held as OREO) (the "Title Commitments"). CFB
shall have 30 days after receipt by CFB's counsel of said Title Commitments
within which to notify Guardian, 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 Commitments. In the event of
any such objection, then Guardian shall have 30 days from the date of such
objection within which to attempt to eliminate such objections 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.
(e) ENVIRONMENTAL ASSESSMENT. Guardian shall engage at its
expense an independent, a 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. CFB shall review and approve the scope of engagement for the
Assessment, which 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
30 days after the date hereof. CFB shall have a period of 30 days from the
date of receipt of the written report of such Assessment to review such
Assessment and give written notice to Guardian 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 thirty (30) days after the date of such
notice unless during such thirty (30) day period Guardian corrects or
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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) 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").
Guardian 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
Guardian 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.
(b) Guardian and CFB shall promptly furnish each other with copies
of written communications received by Guardian 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 ACCESS TO INFORMATION.
Upon reasonable notice and subject to applicable laws relating to the
exchange of confidential information, Guardian and CFB shall each (and cause
each of its subsidiaries to) afford to the officers, employees, accountants,
counsel and other representatives of each, 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, Guardian 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 contemplated that
CFB may conduct an examination of Guardian and the Bank prior to the Closing
Date in order to confirm compliance with the representations, warranties and
covenants set forth in this Agreement and verify the Determination Date
Financial Statements. No investigation by either party shall affect the
representations and warranties set forth herein.
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5.3 AFFILIATES. Guardian 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 Guardian to deliver to
CFB, as soon as practicable after the date hereof, a written agreement
substantially in the form of EXHIBIT 5.3.
5.4 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 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 quarter which begins at least
180 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.
5.5 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 accountants' and attorneys'
fees and fees payable to Hovde Financial) incurred or to be incurred by
Guardian in connection with the Merger and not paid as of the Determination
Date shall be estimated and accrued as expenses on the Determination Date
Financial Statements.
5.6 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.
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:
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(a) STOCKHOLDER APPROVAL. This Agreement shall have been approved
and adopted by the affirmative vote of the holders of the outstanding shares
of Guardian Common Stock, as required by the Utah Act and the Articles of
Incorporation and Bylaws of Guardian.
(b) NASDAQ LISTING. The shares of CFB Common Stock issuable to
the Guardian stockholders pursuant to this Agreement shall have been approved
for listing on the Nasdaq Market System, upon notice of issuance.
(c) 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 which
are prescribed by law as necessary for the consummation of the Merger and the
other transactions contemplated hereby shall have been filed, occurred or
been obtained and all Requisite Regulatory Approvals shall be in full force
and effect.
(d) 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.
(e) 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, or any of its subsidiaries which would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement as to render the consummation of the Merger
inadvisable, in the reasonable business judgment of the Board of Directors of
CFB.
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 Guardian 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 Guardian, and CFB
shall have received a certificate signed on behalf of Guardian by the chief
executive officer and chief financial officer of Guardian to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF GUARDIAN. Guardian 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 Guardian by the chief
executive officer and chief financial officer Guardian to such effect.
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(c) MINIMUM GUARDIAN VALUE. The Guardian Value as of the
Determination Date shall not be less than $8,300,000. The confirmation of
the minimum Guardian Value shall be made pursuant to the procedures set forth
in Section 1.4.
(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
Guardian's accountants, in form and substance reasonably satisfactory to
Ernst & Young, confirming certain facts on behalf of Guardian.
(e) LEGAL OPINION. CFB shall have received the opinion of Kruse,
Landa & Maycock, L.L.C., counsel to Guardian, dated the Closing Date, in
substantially the form attached as EXHIBIT 6.2, and such opinion shall not
have been withdrawn prior to the Effective Time.
6.3 CONDITIONS TO OBLIGATIONS OF GUARDIAN. The obligation of Guardian
to effect the Merger is also subject to the satisfaction or waiver by
Guardian 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 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 CFB, and Guardian
shall have received a certificate signed on behalf of CFB by duly authorized
senior executive officers CFB to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF CFB. CFB shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and Guardian shall have
received a certificate signed on behalf of CFB by duly authorized senior
executive officers 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 Guardian, individually or in the
aggregate, have a material adverse effect on CFB or upon the consummation of
the transactions contemplated hereby.
(d) TAX OPINION. Guardian shall have received the opinion of
Kruse, Landa & Maycock, L.L.C., counsel to Guardian, dated the Closing Date,
with a copy provided to CFB, to the effect that (i) the Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of
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Section 368(a)(1)(A) of the Code, (ii) CFB and Guardian will each be a party
to that reorganization within the meaning of Section 368(b) of the Code,
(iii) shareholders of Guardian who exchange their shares of Guardian 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) Guardian will not recognize gain or loss,
for purposes of federal income tax, as a result of consummation of the Merger.
(e) LEGAL OPINION. Guardian shall have received the opinion of
Lindquist & Vennum, P.L.L.P., counsel to CFB, dated the Closing Date, in
substantially the form attached as EXHIBIT 6.3, and such opinion shall not
have been withdrawn prior to the Effective Time.
(f) NO MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
no material adverse change in the financial condition, results of operations,
business or prospects of CFB and its subsidiaries, taken as a whole, shall
have occurred, and CFB and its subsidiaries shall not have suffered any
damage, destruction or loss (whether or not covered by insurance) materially
adversely affecting the properties or business of CFB and its subsidiaries,
taken as a whole.
(g) FAIRNESS OPINION. Guardian shall have received letters from
Hovde Financial dated the date of the mailing of the Proxy Statement to the
Guardian shareholders and dated the date of the meeting of shareholders to
consider the Merger, in each case in form and substance satisfactory to
Guardian, confirming such financial advisor's opinion that the consideration
to be paid in the Merger is fair to the Guardian shareholders from a
financial point of view.
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 Guardian, only in the following circumstances:
(a) by mutual consent of CFB and Guardian 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; or
(b) by either CFB or Guardian 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; or
(c) by either CFB or Guardian if the Merger shall not have been
consummated on or before December 31, 1998, 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; or
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(d) by either CFB or Guardian 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 either CFB or Guardian if the fairness opinion provided
pursuant to Section 6.3(g) hereof is withdrawn; or
(f) 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 Guardian 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), 5.5, 7.2 and 8.6 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 Guardian, 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.
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 Sections 3.2, 4.2(d), 4.2(e),
4.2(f), 4.2(g), 4.2(h), 4.2(j), 4.2(k), 5.4 and 8.5 shall survive the Merger,
and Sections 4.1(d) and 4.2(h), 5.5, 7.2 and 8.6 shall survive 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):
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(a) if to CFB, 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 Guardian, to: Guardian Bancorp
Attn: Dan P. Mercer, President
142 East 200 Street South
Salt Lake City, UT 84111
with copies to: Lyndon L. Ricks, Esq.
Kruse, Landa & Maycock, L.L.C.
Eighth Floor, Bank One Tower
50 West Broadway (300 South)
Salt Lake City, UT 84101-2034
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.
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(d) are intended for the benefit of the Guardian
shareholders; Section 4.2(j) is intended for the benefit of Guardian officers
and directors; Section 4.2(k) is intended for the benefit of Guardian
affiliates; and Section 5.4 is intended for the benefit of employees of the
Bank. 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.
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8.6 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 Guardian 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.
8.7 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.
8.8 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.
8.9 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Utah.
IN WITNESS WHEREOF, CFB and Guardian 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/ Mark A. Anderson
-----------------------------------------------
Name: Mark A. Anderson
Attest: Title: Executive Vice President-Finance, Chief
Financial Officer and Chief Information Officer
/s/ Bruce A. Heysse
- -----------------------------------------
Name: Bruce A. Heysse
Title: Senior Vice President-Acquisitions
GUARDIAN BANCORP
By: /s/ Dan P. Mercer
-----------------------------------------------
Attest: Name: Dan P. Mercer
----------------------------------------
Title: President
----------------------------------------
/s/ Kathleen Garcia
- ------------------------------------------------
Name: Kathleen Garcia
-----------------------------------------
Title: Senior Vice President/Corporate Secretary
-----------------------------------------
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TABLE OF EXHIBITS
EXHIBIT 1.1A -- Certificate of Merger
EXHIBIT 1.1B -- Articles of Merger
EXHIBIT 2.1(c) -- Illustrations of Calculation of Exchange Rate
EXHIBIT 3.1 -- Guardian Disclosure Schedule
EXHIBIT 3.2 -- CFB Disclosure Schedule
EXHIBIT 4.1(e) -- Officer/Director Agreements
EXHIBIT 4.1(f) -- Other Agreements
EXHIBIT 5.3 -- Affiliate Agreement
EXHIBIT 6.2 -- Kruse, Landa & Maycock, L.L.C. Opinion
EXHIBIT 6.3 -- Lindquist & Vennum, P.L.L.P. Opinion
<PAGE>
EXHIBIT 5.1
[Lindquist & Vennum P.L.L.P. Letterhead]
June 9, 1998
Community First Bankshares, Inc.
520 Main Avenue
Fargo, North Dakota 58124-0001
Re: Registration Statement on Form S-4, as Amended
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-4 (the
"Registration Statement") filed by Community First Bankshares, Inc., a
Delaware corporation (the "Company"), with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the proposed offer and sale from time to time of up to
7,000,000 shares of common stock, $.01 par value, of the Company (the "Common
Stock"), please be advised that as counsel to the Company, upon examination
of such corporate documents and records as we have deemed necessary or
advisable for the purposes of this opinion, it is our opinion that:
1. The Company is a validly existing corporation in good standing under
the laws of the State of Delaware.
2. The shares of Common Stock being offered by the Company are duly
authorized and, when issued and when paid for as contemplated by the
Registration Statement, will be validly issued, fully paid and nonassessable
Common Stock of the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus comprising a
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part of the Registration Statement.
Very truly yours,
/s/ LINDQUIST & VENNUM P.L.L.P.
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EXHIBIT 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement (Form S-4) and related
Prospectus of Community First Bankshares, Inc. for the registration of
7,000,000 shares of its common stock (the "Registration Statement") and to
the incorporation by reference therein of our report dated January 22, 1998,
with respect to the consolidated financial statements of Community First
Bankshares, Inc. incorporated by reference in its Annual Report, as amended,
on Form 10-K/A No. 1 (the "Annual Report") for the year ended December 31,
1997, filed with the Securities and Exchange Commission.
We also consent to the reference to our firm under the caption "Experts" in the
Registration Statement and to the use of our report dated September 19, 1997,
with respect to the financial statements of KeyBank National Association
(Wyoming), included in the Annual Report.
/s/ ERNST & YOUNG LLP
Minneapolis, Minnesota
June 9, 1998
<PAGE>
EXHIBIT 23.3
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.
/s/ ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
June 9, 1998
