SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report August 25, 1999
(Date of earliest event reported) (August 17, 1999)
HEARTLAND FINANCIAL, USA, INC.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-24724 42-1405748
(Commission File Number) (I.R.S. Employer
Identification Number)
1398 Central Avenue, Dubuque, Iowa 52001
(Address of principal executive offices) (Zip Code)
(319) 589-2100
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Information
On August 17, 1999, Heartland Financial USA, Inc., a
Delaware corporation ("Heartland"), entered into an Agreement and
Plan of Merger (the "Merger Agreement") with National Bancshares,
Inc., a New Mexico corporation ("National"), and NBI Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary
of Heartland ("NBI"), which provides for the merger of National
with and into NBI, with NBI as the surviving corporation (the
"Merger"). The Merger is conditioned upon, among other things,
approval by holders of a majority of National common stock and
the receipt of certain regulatory approvals. The Merger Agreement
is attached as Exhibit 2.1 and its terms are incorporated herein
by reference.
Heartland has also entered into a separate agreement with
the trustee of National's Employee Stock Ownership Plan (the
"Plan") to acquire 3,625 shares of National's common stock
immediately prior to the closing of the Merger in exchange for
approximately 300,000 shares of Heartland's common stock (the
"Exchange Transaction"). The actual number of shares to be issued
will depend upon the cash price per share paid by Heartland in
connection with the Merger and the average trading price of
Heartland's common stock at the time of this exchange. After the
closing of the Exchange Transaction but before the closing of the
Merger, the Plan will be terminated. After the closing of the
Merger, each participant in the Plan will have the option to
receive Heartland common stock or cash for the shares of stock
attributable to them under the Plan prior to its termination.
Except for the Plan, the stockholders of National will
receive cash for their shares of National common stock. The
aggregate cash purchase price to be paid by Heartland for all of
National's outstanding common stock in connection with the
Merger, and as a result of the subsequent termination of the
Plan, will be up to $23.25 million, as adjusted pursuant to the
Merger Agreement.
After the effective time of the Merger, Heartland intends to
merge or consolidate First National Bank of Clovis, the wholly-
owned subsidiary of National, with and into New Mexico Bank &
Trust, a New Mexico state bank and a subsidiary of Heartland,
resulting in a single New Mexico bank, which will be New Mexico
Bank & Trust.
A copy of a Press Release, dated August 24, 1999, issued by
Heartland relating to the merger is attached as Exhibit 99.1 and
is incorporated herein by reference.
A copy of a Joint Press Release issued by New Mexico Bank &
Trust and First National Bank of Clovis, released on August 23,
1999, relating to the merger is attached as Exhibit 99.2 and is
incorporated herein by reference.
Item 7. Financial Statements, pro Forma Financial Information and
Exhibits
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
None.
(b) PRO FORMA FINANCIAL INFORMATION.
None.
(c) EXHIBITS.
2.1 Agreement and Plan of Merger, dated as of
August 17, 1999, by and among Heartland Financial USA,
Inc., National Bancshares, Inc. and NBI Acquisition
Corporation.
99.1 Heartland Press Release dated August 24,
1999.
99.2 New Mexico Bank & Trust and First National
Bank of Clovis Joint Press Release issued on August 23,
1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
HEARTLAND FINANCIAL USA, INC.
Dated: August 26, 1999 By: /s/ John K. Schmidt
-----------------------
John K. Schmidt
Chief Financial Officer
Exhibit 99.1
PRESS RELEASE
August 24, 1999
TO:
News Editor
FR: Al Sampson
Heartland Financial USA, Inc.
Dubuque, IA
CONTACT: John K. Schmidt, CFO
Heartland Financial USA, Inc.
(319) 589-1994
RELEASE: IMMEDIATE
HEARTLAND PLANS EXPANSION IN NEW MEXICO
(Dubuque, IA) Heartland Financial USA, Inc. today announced it
has signed a definitive agreement which will result in the First
National Bank of Clovis, New Mexico merging into New Mexico Bank
and Trust, a Heartland community bank located in Albuquerque.
The transaction is subject to the approval of the appropriate
regulatory agencies as well as the shareholders of National
Bancshares, Inc., the holding company of First National. The
transaction is expected to be completed by the spring of next
year.
"I am very excited about this opportunity to further strengthen
the presence of community banking in the state of New Mexico,"
said Lynn B. Fuller, president and chief executive officer of
Heartland. The Clovis bank has $120-million in assets and
deposits totaling $98-million. Greg Leyendecker, president of
New Mexico Bank and Trust, added, "First National will be a solid
addition to our banking family and is a perfect fit in our
efforts to locally service the personal and commercial needs of
our customers."
"Heartland is a vibrant, forward-looking company dedicated to the
preservation of community banking, and I am delighted that First
National Bank will become a part of this growing financial
services company," said Daniel L. Hardisty, Chairman of the Board
of First National.
Heartland Financial USA, Inc. is a $1.1-billion company with six
banks and twenty-two offices in Iowa, Illinois, Wisconsin and New
Mexico. In addition, the company owns ULTEA, Inc., a fleet
leasing company with offices in Madison and Milwaukee, Wisconsin.
Heartland subsidiary, Citizens Finance Co., operates consumer
finance offices in Iowa, Wisconsin and Illinois.
Exhibit 99.2
JOINT
PRESS RELEASE
NEW MEXICO BANK & TRUST
FIRST NATIONAL BANK OF CLOVIS
Contacts:
James A. Clark Daniel L. Hardisty
Chairman Chairman
New Mexico Bank & Trust First National Bank of Clovis
6501 Americas Parkway NE 709 Pile Street
Suite 100 P.O. Box 730
Albuquerque, NM 87110 Clovis, New Mexico 88101
(505) 830-8102 (505) 762-4741
FOR IMMEDIATE RELEASE
FIRST NATIONAL BANK OF CLOVIS TO JOIN WITH
NEW MEXICO BANK & TRUST OF ALBUQUERQUE
James A. Clark, Chairman of the Board of New Mexico Bank &
Trust of Albuquerque, and Dan Hardisty, Chairman of the Board of
First National Bank of Clovis, announced today that a definitive
agreement had been signed which will result in First National
merging into New Mexico Bank & Trust. The transaction is subject
to the approval of the appropriate regulatory agencies as well as
the shareholders of National Bancshares, Inc., the holding
company of First National. The transaction is expected to be
completed by the spring of next year.
Jim Clark, a Clovis native, is one of the original
organizers of New Mexico Bank & Trust that opened in Albuquerque
in May of 1998. "A group of local bankers were involved in the
formation of New Mexico Bank & Trust to ensure a presence of
community banks in New Mexico," Clark stated. "We are very
excited to further strengthen the presence of community banks in
the State through this transaction." Greg Leyendecker, President
of New Mexico Bank & Trust, added "First National will be a solid
addition to our banking family and is a perfect fit in our
efforts to locally service the personal and commercial needs of
our customers."
Dan Hardisty has been President of First National Bank of
Clovis since 1981. In 1984, he, along with Stan Hardwick and a
group of local investors, purchased controlling interest of the
bank. "We are excited about joining our efforts with other like-
minded community bankers in New Mexico," Hardisty offered. "This
is the only type of transaction we, as a bank, were interested in
pursuing. We can only imagine that this will serve to strengthen
the community's banking options in New Mexico for the years to
come."
"Clovis area residents shouldn't think of this as another
takeover of a locally owned bank because New Mexico Bank & Trust
and First National Bank of Clovis both are committed to being
community banks. Customers should see no change in service, and
no layoffs of current employees are expected as a result of the
merger," Hardisty added. In addition, Mr. Hardisty and Mr. Clark
will continue as active board members of New Mexico Bank & Trust,
which is affiliated with a community banking organization with
community banks in four states, and Mr. Hardisty will continue
with his involvement in the Clovis bank.
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
HEARTLAND FINANCIAL USA, INC.,
NBI ACQUISITION CORPORATION
AND
NATIONAL BANCSHARES, INC.
August 17, 1999
<PAGE>
EXHIBIT INDEX
Exhibit A Form of Legal Opinion of
National's Counsel
Exhibit B Form of Non-Competition
Agreement
SCHEDULE INDEX
Schedule 4.1 Articles of Incorporation
and Bylaws of National
Schedule 4.2 Articles of Incorporation
and Bylaws of Bank
Schedule 4.5 National Capitalization
Schedule 4.6 Bank and Bank
Subsidiaries Capitalization
Schedule 4.7 Financial Statements
Schedule 4.9 Title to Properties
Schedule 4.11 Large Loans and Deposits
Schedule 4.12 Undisclosed Liabilities;
Adverse Changes
Schedule 4.14 Compliance with ERISA
Schedule 4.15 Compliance with Legal
Requirements
Schedule 4.16 Legal Proceedings; orders
Schedule 4.17 Absence of Certain
Changes and Events
Schedule 4.18 Properties, Contracts,
Employee Benefit Plans and Other
Agreements
Schedule 4.19 No Defaults
Schedule 4.20 Insurance
Schedule 4.21 Compliance with
Environmental Laws
Schedule 4.26 Brokerage Commissions
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is
entered into as of August 17, 1999, among NATIONAL BANCSHARES,
INC., a New Mexico corporation ("National"), HEARTLAND FINANCIAL
USA, INC., a Delaware corporation ("Acquiror"), and NBI
ACQUISITION CORPORATION, a Delaware corporation and a wholly-
owned subsidiary of Acquiror ("Acquisition Corp").
RECITALS
A. The parties to this Agreement desire to effect a
reorganization whereby Acquiror desires to acquire control of
National through the merger (the "Merger") of National with and
into Acquisition Corp with Acquisition Corp being the surviving
corporation (the "Surviving Corporation").
B. Pursuant to the terms of this Agreement, each outstanding
share of the capital stock of National, which is comprised of one
class of common stock, $10.00 par value per share ("National
Common Stock"), shall be converted into the right to receive the
amount of cash, as set forth below at the time of the closing of
the Merger (the "Closing"), and each outstanding share of common
stock of Acquisition Corp shall be converted into and thereafter
represent one share of common stock of the Surviving Corporation,
$0.01 par value per share.
C. The boards of directors of each of National and
Acquisition Corp have approved this Agreement and the Merger.
AGREEMENTS
In consideration of the foregoing premises and the following
mutual promises, covenants and agreements, the parties hereby
agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 DEFINITIONS. In addition to those terms
defined throughout this Agreement, the following terms, when used
herein, shall have the following meanings.
(a) "Affiliate" means with respect to:
(i) a particular individual: (A) each other
member of such individual's Family; (B) any Person that is
directly or indirectly controlled by such individual or one or
more members of such individual's Family; (C) any Person in which
such individual or members of such individual's Family hold
(individually or in the aggregate) a Material Interest; and (D)
any Person with respect to which such individual or one or more
members of such individual's Family serves as a director,
officer, partner, executor or trustee (or in a similar capacity);
and
(ii) a specified Person other than an individual:
(A) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly under
common control with such specified Person; (B) any Person that
holds a Material Interest in such specified Person; (C) each
Person that serves as a director, officer, partner, executor or
trustee of such specified Person (or in a similar capacity);
(D) any Person in which such specified Person holds a Material
Interest; (E) any Person with respect to which such specified
Person serves as a general partner or a trustee (or in a similar
capacity); and (F) any Affiliate of any individual described in
clause (B) or (C) of this subsection (ii).
(b) "Applicable Contract" means any Contract: (i)
under which National or the Bank has or may acquire any rights;
(ii) under which National or the Bank has or may become subject
to any obligation or liability; or (iii) by which National or the
Bank or any of the assets owned or used by either or them is or
may become bound.
(c) "Bank" means the First National Bank of Clovis, a
national banking association with its main office located in
Clovis, New Mexico, and a wholly-owned subsidiary of National.
(d) "Best Efforts" means the efforts that a prudent
Person desirous of achieving a result would use in similar
circumstances to ensure that such result is achieved as
expeditiously as possible, provided, however, that an obligation
to use Best Efforts under this Agreement does not require the
Person subject to that obligation to take actions that would
result in a materially adverse change in the benefits to such
Person of this Agreement and the Contemplated Transactions.
(e) "Breach" means with respect to a representation,
warranty, covenant, obligation or other provision of this
Agreement or any instrument delivered pursuant to this Agreement:
(i) any inaccuracy in or breach of, or any failure to perform or
comply with, such representation, warranty, covenant, obligation
or other provision; or (ii) any claim (by any Person) or other
occurrence or circumstance that is or was inconsistent with such
representation, warranty, covenant, obligation or other
provision, and the term "Breach" means any such inaccuracy,
breach, failure, claim, occurrence or circumstance.
(f) "Business Day" means any day except Saturday,
Sunday and any day on which the Bank is authorized or required by
law or other government action to close.
(g) "Call Reports" means the quarterly reports of
income and condition required to be filed with the Office of the
Comptroller of the Currency.
(h) "Contemplated Transactions" means all of the
transactions contemplated by this Agreement, including: (i) the
merger of National and Acquisition Corp; (ii) the performance by
Acquiror, Acquisition Corp and National of their respective
covenants and obligations under this Agreement; (iii) Acquiror's
acquisition of control of National and the Bank; and (iv) the
merger of the Bank into New Mexico Bank & Trust, a New Mexico
state bank and a Subsidiary of Acquiror.
(i) "Contract" means any agreement, contract,
obligation, promise or understanding (whether written or oral and
whether express or implied) that is legally binding.
(j) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
(k) "Family" means with respect to an individual: (i)
the individual; (ii) the individual's spouse and former spouses;
(iii) any other natural person who is related to the individual
or the individual's spouse within the second degree; and (iv) any
other natural person who resides with such individual.
(l) "Knowledge" with respect to:
(i) an individual means that such person will be
deemed to have "Knowledge" of a particular fact or other matter
if: (A) such individual is actually aware of such fact or other
matter; or (B) a prudent individual could be expected to discover
or otherwise become aware of such fact or other matter in the
course of conducting a reasonably comprehensive investigation
concerning the existence of such fact or other matter; and
(ii) a Person (other than an individual) means
that such Person will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving,
or who has at any time served, as a director, outside advisor,
officer, partner, executor or trustee of such Person (or in any
similar capacity) has, or at any time had, Knowledge of such fact
or other matter.
(m) "Legal Requirement" means any federal, state,
local, municipal, foreign, international, multinational, or other
administrative order, constitution, law, ordinance, regulation,
statute or treaty.
(n) "Material Adverse Effect" with respect to a Person
(other than an individual) means a material adverse effect on the
financial condition, assets or business of such Person.
(o) "Material Interest" means the direct or indirect
beneficial ownership (as currently defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) of voting
securities or other voting interests representing at least 33% of
the outstanding voting power of a Person or equity securities or
other equity interests representing at least 33% of the
outstanding equity securities or equity interests in a Person.
(p) "Merger" means the merger of National and
Acquisition Corp provided for in this Agreement.
(q) "Order" means any award, decision, injunction,
judgment, order, ruling, subpoena or verdict entered, issued,
made or rendered by any court, administrative or other
governmental agency, including any Regulatory Authority, or by
any arbitrator.
(r) "Ordinary Course of Business" shall include any
action taken by a Person only if such action:
(i) is consistent with the past practices of such
Persons and is taken in the ordinary course of the normal day-to-
day operations of such Person;
(ii) is not required to be authorized by the board
of directors of such Person (or by any Person or group of Persons
exercising similar authority), other than loan approvals for
customers of a financial institution; and
(iii) is similar in nature and magnitude to
actions customarily taken, without any authorization by the board
of directors (or by any Person or group of Persons exercising
similar authority), other than loan approvals for customers of a
financial institution, in the ordinary course of the normal day-
to-day operations of other Persons that are in the same line of
business as such Person.
(s) "Person" means any individual, corporation
(including any non-profit corporation), general or limited
partnership, limited liability company, joint venture, estate,
trust, association, organization, labor union or other entity or
Regulatory Authority.
(t) "Proceeding" means any action, arbitration, audit,
hearing, investigation, litigation or suit (whether civil,
criminal, administrative, investigative or informal) commenced,
brought, conducted or heard by or before, or otherwise involving,
any judicial or governmental authority, including a Regulatory
Authority, or arbitrator.
(u) "Regulatory Authorities" means any federal, state
or local governmental body, agency or authority which under
applicable statutes and regulations: (i) has supervisory,
judicial, administrative, police, taxing or other power or
authority over National, the Bank, Acquiror or Acquisition Corp;
(ii) is required to approve, or give its consent to the
Contemplated Transactions; or (iii) with which a filing must be
made in connection therewith, including in any case, the Board of
Governors of the Federal Reserve System.
(v) "Representative" means with respect to a
particular Person, any director, officer, employee, agent,
consultant, advisor or other representative of such Person,
including legal counsel, accountants and financial advisors.
(w) "Subsidiary" means with respect to any Person (the
"Owner"), any corporation or other Person of which securities or
other interests having the power to elect a majority of that
corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other
than securities or other interests having such power only upon
the happening of a contingency that has not occurred) are held by
the Owner or one or more of its Subsidiaries.
(x) "Tax" means any tax (including any income tax,
capital gains tax, value-added tax, sales tax, property tax, gift
tax or estate tax), levy, assessment, tariff, duty (including any
customs duty), deficiency or other fee, and any related charge or
amount (including any fine, penalty, interest or addition to
tax), imposed, assessed or collected by or under the authority of
any Regulatory Authority or payable pursuant to any tax-sharing
agreement or any other Contract relating to the sharing or
payment of any such tax, levy, assessment, tariff, duty,
deficiency or fee.
(y) "Tax Return" means any return (including any
information return), report, statement, schedule, notice, form or
other document or information filed with or submitted to, or
required to be filed with or submitted to, any Regulatory
Authority in connection with the determination, assessment,
collection or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance
with any Legal Requirement relating to any Tax.
(z) "Threatened" means a claim, Proceeding, dispute,
action or other matter for which any demand or statement has been
made (orally or in writing) or any notice has been given (orally
or in writing), or if any other event has occurred or any other
circumstances exist, that would lead a prudent Person to conclude
that such a claim, Proceeding, dispute, action or other matter is
likely to be asserted, commenced, taken or otherwise pursued in
the future.
Section 1.2 PRINCIPLES OF CONSTRUCTION. (a) In this
Agreement, unless otherwise stated or the context otherwise
requires, the following uses apply: (i) actions permitted under
this Agreement may be taken at any time and from time to time in
the actor's sole discretion; (ii) references to a statute shall
refer to the statute and any successor statute, and to all
regulations promulgated under or implementing the statute or its
successor, as in effect at the relevant time; (iii) in computing
periods from a specified date to a later specified date, the
words "from" and "commencing on" (and the like) mean "from and
including," and the words "to," "until" and "ending on" (and the
like) mean "to, but excluding"; (iv) references to a governmental
or quasi-governmental agency, authority or instrumentality shall
also refer to a regulatory body that succeeds to the functions of
the agency, authority or instrumentality; (v) indications of time
of day mean Dubuque, Iowa time; (vi) "including" means
"including, but not limited to"; (vii) all references to
sections, schedules and exhibits are to sections, schedules and
exhibits in or to this Agreement unless otherwise specified;
(viii) all words used in this Agreement will be construed to be
of such gender or number as the circumstances require; and
(ix) the captions and headings of articles, sections, schedules
and exhibits appearing in or attached to this Agreement have been
inserted solely for convenience of reference and shall not be
considered a part of this Agreement nor shall any of them affect
the meaning or interpretation of this Agreement or any of its
provisions.
(b) The Schedules of National referred to in this
Agreement consist of the agreements and other documentation
described and referred to in this Agreement with respect to
National or the Bank, which Schedules were delivered by National
to Acquiror not less than five Business Days before the date of
this Agreement. The disclosures in the Schedules, and those in
any supplement thereto, shall relate only to the representations
and warranties in the Section of the Agreement to which they
expressly relate and not to any other representation or warranty
in this Agreement. In the event of any inconsistency between the
statements in the body of this Agreement and those in the
Schedules (other than an exception expressly set forth as such in
the Schedules with respect to a specifically identified
representation or warranty), the statements in the body of this
Agreement will control.
(c) All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted
accounting principles in the United States, consistently applied
("GAAP").
ARTICLE 2
THE MERGER
Section 2.1 MANNER OF MERGER. Upon the terms and subject
to the conditions of this Agreement, at the Effective Time (as
defined below), National shall be merged with and into
Acquisition Corp pursuant to the provisions of, and with the
effect provided in, the Delaware General Corporation Law (the
"DGCL"), and Acquisition Corp shall be the corporation resulting
from such merger (the "Surviving Corporation"). As a result of
the Merger, each share of National Common Stock issued and
outstanding immediately prior to the Effective Time will be
converted into the right to receive the amount of cash, as is
calculated in accordance with Section 3.2.
Section 2.2 EFFECT OF MERGER. At the Effective Time,
National shall be merged with and into Acquisition Corp with the
effect provided in Section 259 of the DGCL and Acquisition Corp
shall be the Surviving Corporation.
Section 2.3 CERTIFICATE OF INCORPORATION. From and after
the Effective Time and until amended as provided by law, the
certificate of incorporation of the Surviving Corporation shall
be identical to the certificate of incorporation of Acquisition
Corp as in effect immediately prior to the Effective Time.
Section 2.4 BYLAWS. From and after the Effective Time and
until amended as provided by law, the bylaws of the Surviving
Corporation shall be identical to the bylaws of Acquisition Corp
as in effect immediately prior to the Effective Time.
Section 2.5 DIRECTORS AND OFFICERS. The directors and
officers of Acquisition Corp immediately prior to the Effective
Time shall serve as the directors and officers of the Surviving
Corporation until their successors shall have been elected or
appointed and shall have qualified in accordance with the DGCL
and the certificate of incorporation and bylaws of the Surviving
Corporation.
Section 2.6 CLOSING. (a) The closing of the Merger (the
"Closing") shall occur through the mail or at a place which is
mutually acceptable to Acquiror and National, or if they fail to
agree, at the offices of Barack Ferrazzano Kirschbaum Perlman &
Nagelberg, located at 333 W. Wacker Drive, Suite 2700, Chicago,
Illinois 60606, at 10:00 a.m. on a date mutually acceptable to
Acquiror and National, or if they fail to agree, on a date which
is ten Business Days after all required approvals or consents of
the Regulatory Authorities for the Contemplated Transactions have
been received and all statutory waiting periods relating to such
approvals have expired, provided, however, that Acquiror shall
have the right to extend such date to no later than April 30,
2000, if necessary, in Acquiror's reasonable discretion (the
"Closing Date"). Subject to the provisions of Article 10,
failure to consummate the Merger on the date and time and at the
place determined pursuant to this Section will not result in the
termination of this Agreement and will not relieve any party of
any obligation under this Agreement.
(b) The parties hereto agree to file on the Closing
Date an appropriate certificate of merger, as contemplated by
Section 103 of the DGCL, with the Secretary of State of the State
of Delaware. The Merger shall be effective upon the close of
business on the day the certificate of merger has been duly filed
with the Secretary of State of the State of Delaware (the
"Effective Time").
Section 2.7 ACQUIROR'S DELIVERIES AT CLOSING. At the
Closing, Acquiror shall deliver or cause to be delivered the
following items to or on behalf of National:
(a) certified or cashier's check payable to each
holder of National Common Stock as of the time immediately prior
to the Closing in an amount equal to the shareholder's Pro Rata
Portion, as defined below; the first installment of such Pro Rata
Portion, as defined below, with respect to any seller who has
made an effective Installment Election, as defined below;
(b) a certificate executed by the President or Vice
President and Secretary or any Assistant Secretary of Acquiror
dated the Closing Date stating that: (i) all of the
representations and warranties of Acquiror and Acquisition Corp
set forth in this Agreement are true and correct in all material
respects with the same force and effect as if all of such
representations and warranties were made at the Closing Date,
provided, however, that to the extent such representations and
warranties expressly relate to an earlier date, such
representations shall be true and correct in all material
respects on and as of such earlier date, and provided further,
that to the extent that such representations and warranties are
made in this Agreement subject to a standard of materiality or
Knowledge, such representations and warranties shall be true and
correct in all respects; and (ii) each of Acquiror and
Acquisition Corp has performed or complied in all material
respects with all of the covenants and obligations to be
performed or complied with by it under the terms of this
Agreement on or prior to the Closing Date, provided, however,
that to the extent performance and compliance with such covenants
and obligations are subject in this Agreement to a standard of
materiality, and also with respect to the performance by Acquiror
of the covenant in Section 2.7(a), Acquiror shall have performed
and complied in all respects with such covenants and obligations;
and
(c) such other documents as National may reasonably
request.
All of such items shall be reasonably satisfactory in form and
substance to National and its counsel.
Section 2.8 NATIONAL'S DELIVERIES AT CLOSING. At the
Closing, National shall deliver the following items to Acquiror:
(a) stock certificates representing all of the shares
of National Common Stock that are issued and outstanding
immediately prior to the Closing and owned of record by the
Persons to whom the payments described in Section 2.7(a) are to
be made except for shares owned by shareholders who dissent from
the Merger;
(b) a resignation from each of the directors of
National and its Subsidiaries (including the Bank) from such
individual's position as a director of National and each of its
Subsidiaries, and at the request of Acquiror, from such
individual's position as an officer of National or any of its
Subsidiaries;
(c) a good standing certificate for National issued by
the Public Regulation Commission of the State of New Mexico and
dated not more than ten Business Days prior to the Closing Date;
(d) a copy of the articles of incorporation of
National certified not more than ten Business Days prior to the
Closing Date by the Public Regulation Commission of the State of
New Mexico;
(e) a certificate of the Secretary or any Assistant
Secretary of National dated the Closing Date certifying a copy of
the bylaws of National;
(f) copies of resolutions of the shareholders and the
board of directors of National authorizing and approving this
Agreement and the consummation of the Contemplated Transactions,
certified as of the Closing Date by the Secretary or any
Assistant Secretary of National;
(g) a good standing certificate for the Bank issued by
the Office of the Comptroller of the Currency (the "OCC") and
dated not more than twenty Business Days prior to the Closing
Date;
(h) a copy of the most recently amended and restated
articles of association of the Bank certified by the OCC not more
than twenty Business Days prior to the Closing Date;
(i) a certificate of the Cashier of the Bank dated the
Closing Date certifying a copy of the bylaws of the Bank and
stating that there have been no further amendments to the
articles of association of the Bank delivered pursuant to the
immediately preceding paragraph of this Section;
(j) a certificate executed by the President or Vice
President and Secretary or any Assistant Secretary of National
dated the Closing Date stating that: (i) all of the
representations and warranties of National set forth in this
Agreement are true and correct in all material respects with the
same force and effect as if all of such representations and
warranties were made at the Closing Date, provided, however, that
to the extent such representations and warranties expressly
relate to an earlier date, such representations shall be true and
correct in all material respects on and as of such earlier date,
and provided further, that to the extent that such
representations and warranties are made in this Agreement subject
to a standard of materiality or Knowledge, such representations
and warranties shall be true and correct in all respects; and
(ii) National has performed or complied in all material respects
with all of the covenants and obligations to be performed or
complied with by it under the terms of this Agreement on or prior
to the Closing Date, provided, however, that to the extent
performance and compliance with such covenants and obligations
are subject in this Agreement to a standard of materiality,
National shall have performed and complied in all respects with
such covenants and obligations;
(k) a list of National's shareholders as of the
Closing Date certified by the Secretary or any Assistant
Secretary of National;
(l) a legal opinion of National's counsel dated the
Closing Date in the form attached as Exhibit A; and
(m) an executed Non-Competition Agreement from Dan
Hardisty, substantially in the form attached as Exhibit B;
(n) such other documents as Acquiror may reasonably
request.
All of such items shall be reasonably satisfactory in form and
substance to Acquiror and its counsel.
Section 2.9 BANK MERGER. After the Effective Time, Acquiror
intends to merge or consolidate the Bank with and into New Mexico
Bank & Trust, a New Mexico state bank and a Subsidiary of
Acquiror, resulting in a single New Mexico bank, which shall be
New Mexico Bank & Trust (the "Bank Merger"). The Bank Merger
will be effected pursuant to a merger or other similar agreement
(the "Bank Merger"), in the form required by applicable New
Mexico law, and by other applicable laws, containing terms and
conditions not inconsistent with this Agreement, as determined by
Acquiror. The Bank Merger shall only occur if the Merger is
consummated, and it shall become effective immediately after the
Effective Time or such later time as may be determined by
Acquiror. To obtain the necessary regulatory approval for the
Bank Merger to occur immediately after the Effective Time,
National agrees, and agrees to cause the Bank, to approve, adopt,
execute and deliver the Bank Merger Agreement and take other
reasonable steps prior to the Effective Time to effect the Bank
Merger; provided that National shall not be required to incur any
material cost or take any irrevocable action in connection with
its obligations under this Section.
ARTICLE 3
TREATMENT OF AND PAYMENT FOR SHARES
Section 3.1 TREATMENT OF ACQUIROR STOCK. Each share of
common stock, $0.01 par value per share, of Acquisition Corp
issued and outstanding immediately prior to the Effective Time
shall remain issued and outstanding at the Effective Time, shall
be unaffected by the Merger and shall thereafter represent all of
the issued and outstanding stock of the Surviving Corporation.
Section 3.2 TREATMENT OF NATIONAL COMMON STOCK.
(a) Subject to the provisions of this Article, by virtue of the
Merger and without any action on the part of the holder thereof,
at the Effective Time, each share of National Common Stock issued
and outstanding immediately prior to the Effective Time shall be
deemed surrendered and automatically converted into and shall
thereafter represent the right to receive an amount in cash equal
to the Cash Price Per Share. For purposes of this Agreement, the
Cash Price Per Share shall be equal to the Aggregate Price (as
defined below) divided by the number of shares of National Common
Stock issued and outstanding immediately prior to the Effective
Time.
(b) The Aggregate Price shall be equal to $23,250,000
less the amount, if any, by which the consolidated shareholders'
equity of National, computed in accordance with GAAP (but not
including for purposes of this Section any (i) intangibles,
including goodwill; (ii) realized gains or losses resulting from
sales after the date of this Agreement of investment securities;
or (iii) unrealized gains or losses prescribed by Financial
Accounting Standards Board No. 115), as of the last Business Day
of the month ending immediately prior to the Closing Date (the
"Closing Equity"), is less than $14,250,000. For example, if the
Closing Equity is $14,000,000, the Aggregate Price will be
$23,000,000.
(c) Notwithstanding anything contained herein to the
contrary, Acquiror agrees that any National shareholder entitled
to receive a pro rata share of the Aggregate Price (the "Pro Rata
Portion") at the Closing pursuant to the terms of this Agreement
may make an irrevocable election by written notice delivered to
Acquiror not later than 30 days prior to the Closing Date (the
"Installment Election"), to receive the Pro Rata Portion which
shall be payable, at such shareholder's election, in three, four
or five equal annual installments. The first such installment
shall be payable on the Closing Date and the remaining
installments shall be payable on each of the following succeeding
anniversaries of the Closing Date until the full amount of the
Pro Rata Portion has been paid to such shareholder. Acquiror
agrees to pay to any shareholder electing such installment option
interest on any outstanding balance due to such shareholder after
the Closing Date at an annual rate equal to 7.00%, payable with
and in addition to each installment payment. The holder of the
instrument representing the Installment Election may elect to
accelerate the balance due under the Installment Election at any
time after giving 30 days notice to Acquiror.
(d) After the Effective Time, no holder of National
Common Stock which is issued and outstanding immediately prior to
the Effective Time will have any rights in respect of such
National Common Stock except to receive cash for the shares of
National Common Stock as provided in this Section, or to receive
payment for such shares of National Common Stock in the manner
and to the extent provided in subsection 53-15-4 NMSA.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF NATIONAL
National hereby represents and warrants to Acquiror as
follows:
Section 4.1 NATIONAL ORGANIZATION. National: (a) is a
corporation duly organized, validly existing and in good standing
under the laws of the State of New Mexico and is also in good
standing in each other jurisdiction in which the nature of the
business conducted or the properties or assets owned or leased by
it makes such qualification necessary; (b) is registered with the
Board of Governors of the Federal Reserve System (the "Federal
Reserve") as a bank holding company under the federal Bank
Holding Company Act of 1956, as amended (the "BHCA"); and (c) has
full power and authority, corporate and otherwise, to operate as
a bank holding company and to own, operate and lease its
properties as presently owned, operated and leased, and to carry
on its business as it is now being conducted. Copies of the
articles of incorporation and bylaws of National and all
amendments thereto set forth on Schedule 4.1 are complete and
correct.
Section 4.2 BANK ORGANIZATION. The Bank is a national
banking association duly organized, validly existing and in good
standing under the laws of the United States of America. The
Bank has full power and authority, corporate and otherwise, to
own, operate and lease its properties as presently owned,
operated and leased, and to carry on its business as it is now
being conducted, and is duly qualified to do business and is in
good standing in each jurisdiction in which the nature of the
business conducted or the properties or assets owned or leased by
it makes such qualification necessary. Copies of the articles of
association and bylaws of the Bank and all amendments thereto set
forth on Schedule 4.2 are complete and correct.
Section 4.3 AUTHORIZATION; ENFORCEABILITY. National has
the requisite corporate power and authority to enter into and
perform its obligations under this Agreement. The execution,
delivery and performance of this Agreement by National, and the
consummation by it of its obligations under this Agreement, have
been authorized by all necessary corporate action (except for the
requisite approval of its shareholders), and this Agreement
constitutes a legal, valid and binding obligation of National
enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization or other laws and subject to general principles of
equity.
Section 4.4 NO CONFLICT. Neither the execution nor
delivery of this Agreement nor the consummation or performance of
any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time): (a) contravene,
conflict with or result in a violation of any provision of the
certificate of incorporation or articles of association, and the
bylaws, of National or any of its Subsidiaries, or any resolution
adopted by the board of directors or shareholders of National or
any of its Subsidiaries; (b) contravene, conflict with or result
in a violation of, or give any Regulatory Authority or other
Person the valid and enforceable right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any
relief under, any Legal Requirement or any Order to which
National or any of its Subsidiaries, or any of their respective
assets that are owned or used by them, may be subject, other than
any of the foregoing that would be satisfied by compliance with
the provisions of the BHCA, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the
National Bank Act, as amended (the "National Bank Act"), and the
New Mexico Business Corporation Act; (c) contravene, conflict
with or result in a violation or breach of any provision of, or
give any Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate or modify any material Applicable Contract
to which National or any of its Subsidiaries is a party or by
which any of their respective assets is bound; or (d) result in
the creation of any lien, charge or encumbrance upon or with
respect to any of the assets owned or used by National or any of
its Subsidiaries. Neither National nor any of its Subsidiaries
is or will be required to give any notice to or obtain any
consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions except Regulatory
Authorities and National's shareholders..
Section 4.5 NATIONAL CAPITALIZATION. The authorized
capital stock of National currently consists, and immediately
prior to the Effective Time will consist, exclusively of 100,500
shares of National Common Stock, of which 14,504 shares are, and
will be, duly issued and outstanding, fully paid and non-
assessable. On the Closing Date, all of such shares of National
Common Stock will be subject to no claim of right except pursuant
to this Agreement. There are no unexpired or pending preemptive
rights with respect to any shares of capital stock of National.
There are no outstanding securities of National which are
convertible into or exchangeable for any shares of National's
capital stock, and except as provided in this Section and in
Schedule 4.26, National is not a party to any Contract relating
to the issuance, sale or transfer of any equity securities or
other securities of National. National does not own or have any
Contract to acquire any equity securities or other securities of
any Person or any direct or indirect equity or ownership interest
in any other business except for the capital stock of its
Subsidiaries and as set forth on Schedule 4.5.
Section 4.6 BANK CAPITALIZATION. The authorized capital
stock of the Bank consists, and immediately prior to the
Effective Time, will consist exclusively of 205,000 shares of
capital stock, $10.00 par value per share, all of which shares
are, and immediately prior to the Closing will be, duly
authorized, validly issued and outstanding, fully paid and
nonassessable (the "Bank Shares"). National is, and will be on
the Closing Date, the record and beneficial owner of 100% of the
Bank Shares, free and clear of any lien or encumbrance
whatsoever. The Bank Shares are, and will be on the Closing
Date, freely transferable and are, and will be on the Closing
Date, subject to no claim of right except pursuant to this
Agreement. There are no unexpired or pending preemptive rights
with respect to any shares of capital stock of the Bank. There
are no outstanding securities of the Bank which are convertible
into or exchangeable for any shares of the Bank's capital stock,
and the Bank is not a party to any Contract relating to the
issuance, sale or transfer of any equity securities or other
securities of the Bank. The Bank does not own or have any
Contract to acquire, any equity securities or other securities of
any Person or any direct or indirect equity or ownership interest
in any other business, except as set forth on Schedule 4.6.
Section 4.7 FINANCIAL STATEMENTS AND REPORTS. True,
correct and complete copies of the following financial statements
of National are included in Schedule 4.7:
(a) the Consolidated Balance Sheets as of December 31,
1998, 1997 and 1996 and the related Consolidated Statements of
Income and Statements of Changes in Stockholders' Equity for the
years ended December 31, 1998, 1997 and 1996; and
(b) the Consolidated Balance Sheets as of June 30,
1999 and the related Consolidated Statements of Income and
Statements of Changes in Stockholders' Equity for the six months
ended June 30, 1999.
The financial statements described in clause (a) above are
compiled statements and have been prepared in conformity with
GAAP. The financial statements described in clause (b) above
have been prepared on a basis consistent with past accounting
practices and as required by applicable rules or regulations and
fairly present the consolidated financial condition and results
of operations at the dates and for the periods presented, subject
to year-end adjustments (which changes in the aggregate would not
reasonably be expected to have a Material Adverse Effect on
National). Taken together, the financial statements described in
clauses (a) and (b) above (collectively, the "Financial
Statements") fairly and accurately present in all material
respects the respective financial position, assets, liabilities
and results of operations of National and its Subsidiaries as at
the respective dates of and for the periods referred to in the
Financial Statements.
Section 4.8 BOOKS AND RECORDS. The books of account,
minute books, stock record books and other records of National
and its Subsidiaries are complete and correct and have been
maintained in accordance with sound business practices and all
applicable Legal Requirements, including the maintenance of any
adequate system of internal controls. The minute books of
National and its Subsidiaries contain accurate and complete
records of all meetings held of, and corporate action taken by,
the shareholders, the board of directors and committees of the
board of directors of National and its Subsidiaries,
respectively. At the Closing, all of those books and records
will be in the possession of National and its Subsidiaries.
Section 4.9 TITLE TO PROPERTIES. Each of National and its
Subsidiaries has good and marketable title to all assets and
properties, whether real or personal, tangible or intangible,
which it purports to own, subject to no liens, mortgages,
security interests, encumbrances or charges of any kind except:
(a) as noted in the most recent Financial Statement or on
Schedule 4.9; (b) statutory liens for Taxes not yet delinquent or
being contested in good faith by appropriate Proceedings and for
which appropriate reserves have been established and reflected on
the Financial Statements; (c) pledges or liens required to be
granted in connection with the acceptance of government deposits,
granted in connection with repurchase or reverse repurchase
agreements or otherwise incurred in the Ordinary Course of
Business; and (d) minor defects and irregularities in title and
encumbrances which do not materially impair the use thereof for
the purposes for which they are held. Each of National and its
Subsidiaries as lessee has the right under valid and existing
leases to occupy, use, possess and control any and all of the
respective property leased by it. All buildings and structures
owned by each of National and its Subsidiaries lie wholly within
the boundaries of the real property owned or validly leased by
it, do not encroach upon the property of, or otherwise conflict
with the property rights of, any other Person
Section 4.10 CONDITION AND SUFFICIENCY OF ASSETS. The
material buildings, structures and equipment of National and its
Subsidiaries are structurally sound, are in good operating
condition and repair, and are adequate for the uses to which they
are being put, and none of such buildings, structures or
equipment is in need of maintenance or repairs except for
ordinary, routine maintenance and repairs that are not material
in the aggregate in nature or in cost. The real property,
buildings, structures and equipment owned or leased by National
and its Subsidiaries are in compliance with the Americans with
Disabilities Act of 1990, as amended ("ADA"), and the regulations
promulgated thereunder, and all other building and development
codes and other restrictions, including subdivision regulations,
building and construction regulations, drainage codes, health,
fire and safety laws and regulations, utility tariffs and
regulations, conservation laws and zoning laws and ordinances.
The assets and properties, whether real or personal, tangible or
intangible, which National or its Subsidiaries purport to own are
sufficient for the continued conduct of the business of National
and its Subsidiaries after the Closing in substantially the same
manner as conducted prior to the Closing.
Section 4.11 LOAN LOSS RESERVE. All loans and loan
commitments extended by the Bank and any extensions, renewals or
continuations of such loans and loan commitments (the "Loans")
were made in accordance with customary lending standards of the
Bank in the Ordinary Course of Business. The Loans are evidenced
by appropriate and sufficient documentation and constitute valid
and binding obligations to the Bank enforceable in accordance
with their terms. All such Loans are, and at the Closing will
be, free and clear of any encumbrance or other charge and the
Bank has complied, and at the Closing will have complied with all
laws and regulations relating to such Loans. The reserve for
possible loan and lease losses of the Bank is and will be on the
Closing Date adequate in all respects to provide for possible or
specific losses, net of recoveries relating to loans previously
charged off, and contains and will contain an additional amount
of unallocated reserves for unanticipated future losses at an
adequate level. On the Closing Date, the Bank's reserve for
possible loan and lease losses will equal the amount set forth in
Section 6.2 (e). None of the Loans is subject to any material
offset or claim of offset, and the aggregate loan balances in
excess of the Bank's reserve for loan and lease losses are, based
on past loan loss experience, collectible in accordance with
their terms and all uncollectible loans have been charged off.
Set forth on Schedule 4.11 is a list of the twenty largest loans
currently held by the Bank, identified by account number, type of
loan and borrower, and the twenty largest deposits, identified by
type of deposit, interest rate and name of account holder.
National has no Knowledge of any intent by any of those Persons
listed on Schedule 4.11 to change in any material respect its
current business relationship with the Bank after the Closing.
Section 4.12 UNDISCLOSED LIABILITIES; ADVERSE CHANGES.
Except as set forth in Schedule 4.12, neither National nor any of
its Subsidiaries has any material liabilities or obligations of
any nature (whether known or unknown and whether absolute,
accrued, contingent or otherwise) except for liabilities or
obligations reflected or reserved against in the Financial
Statements and current liabilities incurred in the Ordinary
Course of Business since the respective dates thereof. Since the
date of the latest Financial Statement, there has not been any
material adverse change in the business, operations, properties,
prospects, assets or condition of National or any of its
Subsidiaries, and no event has occurred or circumstance exists
that may result in such a material adverse change.
Section 4.13 TAXES. Each of National and its Subsidiaries
has duly filed or will duly file all Tax Returns required to be
filed by it for all periods prior to the Closing Date, and each
such Tax Return is or will be complete and accurate. Each of
National and its Subsidiaries has paid, or made adequate
provision for the payment of, all Taxes (whether or not reflected
in Tax Returns as filed or to be filed) due and payable by
National or its Subsidiaries, or claimed to be due and payable by
any Regulatory Authority, and is not delinquent in the payment of
any Tax, except such Taxes as are being contested in good faith
and as to which adequate reserves have been provided. There is
no claim or assessment pending or, to the Knowledge of National,
Threatened against National or its Subsidiaries for any Taxes
owed by any of them. No audit, examination or investigation
related to Taxes paid or payable by National or its Subsidiaries
is presently being conducted or, to the Knowledge of National,
Threatened by any Regulatory Authority. National has delivered
to Acquiror true, correct and complete copies of all Tax Returns
previously filed by each of National and its Subsidiaries and any
tax examination reports and statements of deficiencies assessed
or agreed to for any of National or its Subsidiaries with respect
to the last three fiscal years.
Section 4.14 COMPLIANCE WITH ERISA. Except as set forth on
Schedule 4.14, all employee benefit plans (as defined in
Section 3(3) of ERISA) established or maintained by National or
any of its Subsidiaries or to which National or any of its
Subsidiaries contributes, are in compliance with all applicable
requirements of ERISA, and are in compliance with all applicable
requirements (including qualification and non-discrimination
requirements in effect as of the Closing) of the Internal Revenue
Code of 1986, as amended (the "Code"), for obtaining the tax
benefits the Code thereupon permits with respect to such employee
benefit plans. No such employee benefit plan has, or as of the
Closing will have, any amount of unfunded benefit liabilities (as
defined in Section 4001(a)(18) of ERISA) for which National or
any of its Subsidiaries would be liable to any Person under Title
IV of ERISA if any such employee benefit plan were terminated as
of the Closing. Such employee benefit plans are funded in
accordance with Section 412 of the Code (if applicable). There
would be no obligations of National or any of its Subsidiaries
under Title IV of ERISA relating to any such employee benefit
plan that is a multi-employer plan if any such plan were
terminated or if National or any of its Subsidiaries withdrew
from any such plan as of the Closing.
Section 4.15 COMPLIANCE WITH LEGAL REQUIREMENTS. Except as
set forth in Schedule 4.15, each of National and its Subsidiaries
is, and at all times since January 1, 1996, has been, in
compliance with each Legal Requirement that is or was applicable
to it or to the conduct or operation of its respective businesses
or the ownership or use of any of its respective assets. No
event has occurred or circumstance exists that (with or without
notice or lapse of time): (a) may constitute or result in a
violation by National or any of its Subsidiaries of, or a failure
on the part of National or any of its Subsidiaries to comply
with, any Legal Requirement; or (b) may give rise to any
obligation on the part of National or any of its Subsidiaries to
undertake, or to bear all or any portion of the cost of, any
remedial action of any nature in connection with a failure to
comply with any Legal Requirement. Except as set forth on
Schedule 4.15, neither National nor any of its Subsidiaries has
received, at any time since January 1, 1996, any notice or other
communication (whether oral or written) from any Regulatory
Authority or any other Person regarding: (x) any actual,
alleged, possible, or potential violation of, or failure to
comply with, any Legal Requirement; or (y) any actual, alleged,
possible, or potential obligation on the part of National or any
of its Subsidiaries to undertake, or to bear all or any portion
of the cost of, any remedial action of any nature in connection
with a failure to comply with any Legal Requirement.
Section 4.16 LEGAL PROCEEDINGS; ORDERS. Schedule 4.16 is a
true and correct list of all Proceedings and Orders pending,
entered into or, to the Knowledge of National, Threatened against
or affecting National or any of its Subsidiaries or any of their
respective assets or businesses, or the Contemplated
Transactions, since January 1, 1996, and there is no fact known
to National which would provide a basis for any Proceeding or
Order. To the Knowledge of National, no officer, director, agent
or employee of National or any of its Subsidiaries is subject to
any Order that prohibits such officer, director, agent or
employee from engaging in or continuing any conduct, activity or
practice relating to the businesses of National or any of its
Subsidiaries. Neither National nor any of its Subsidiaries has
received at any time since January 1, 1996, any notice or other
communication (whether oral or written) from any Regulatory
Authority or any other Person regarding any actual, alleged,
possible or potential violation of, or failure to comply with,
any material Legal Requirement to which National or any of its
Subsidiaries, or any of the assets owned or used by any of them,
is or has been subject.
Section 4.17 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except
as set forth in Schedule 4.17, since December 31, 1998, each of
National and its Subsidiaries has conducted its respective
businesses only in the Ordinary Course of Business and with
respect to each there has not been any:
(a) change in its authorized or issued capital stock;
grant of any stock option or right to purchase shares of its
capital stock; issuance of any security convertible into such
capital stock or evidences of indebtedness (except in connection
with customer deposits); grant of any registration rights;
purchase, redemption, retirement or other acquisition by it of
any shares of any such capital stock; or declaration or payment
of any dividend or other distribution or payment in respect of
shares of its capital stock;
(b) amendment to its articles of incorporation or
association or bylaws or any resolutions adopted by its board of
directors or shareholders with respect to the same;
(c) payment or increase of any bonuses, salaries or
other compensation to any of its shareholders, directors,
officers or employees, or entry by it into any employment,
severance or similar Contract with any director, officer or
employee;
(d) adoption, amendment (except for any amendment
necessary to comply with any Legal Requirement) or termination
of, or increase in the payments to or benefits under, any
Employee Benefit Plan (as defined below);
(e) damage to or destruction or loss of any of its
assets or property, whether or not covered by insurance;
(f) entry into, termination or extension of, or
receipt of notice of termination of any joint venture or similar
agreement pursuant to any Contract or any similar transaction;
(g) material change in any existing lease of real or
personal property to which it is a party;
(h) sale lease or other disposition of any of its
assets or properties (other than in the Ordinary Course of
Business), or mortgage, pledge or imposition of any lien or other
encumbrance upon any of its material assets or properties except
for tax and other liens which arise by operation of law and with
respect to which payment is not past due and except for pledges
or liens: (i) required to be granted in connection with the
acceptance by the Bank of government deposits; (ii) granted in
connection with repurchase or reverse repurchase agreements; or
(iii) otherwise incurred in the Ordinary Course of Business;
(i) incurrence by it of any obligation or liability
(fixed or contingent) other than in the Ordinary Course of
Business;
(j) cancellation or waiver by it of any claims or
rights with a value in excess of $5,000;
(k) any investment by it of a capital nature exceeding
$5,000 or aggregate investments of a capital nature exceeding
$15,000;
(l) except for the Contemplated Transactions, merger
or consolidation with or into any other Person, or acquisition of
any stock, equity interest or business of any other Person;
(m) transaction for the borrowing or loaning of
monies, other than in the Ordinary Course of Business;
(n) material change in its accounting methods used; or
(o) agreement, whether oral or written, by it to do
any of the foregoing.
Section 4.18 PROPERTIES, CONTRACTS, EMPLOYEE BENEFIT PLANS
AND OTHER AGREEMENTS. Except for loan agreements evidencing
loans made by the Bank in the Ordinary Course of Business,
Schedule 4.18 lists or describes the following with respect to
National and its Subsidiaries:
(a) All real property owned by each of National and
its Subsidiaries and the principal buildings and structures
located thereon, together with a legal description of such real
estate, and each lease of real property to which each of National
and its Subsidiaries is a party, identifying the parties thereto,
the annual rental payable, the expiration date thereof and a
brief description of the property covered, and in each case of
either owned or leased real property, the proper identification,
if applicable, of each such property as a branch or main office
or other office of National or its Subsidiaries;
(b) each Applicable Contract that involves performance
of services or delivery of goods or materials by National or any
of its Subsidiaries of an amount or value in excess of $10,000;
(c) each Applicable Contract that was not entered into
in the Ordinary Course of Business and that involves expenditures
or receipts of National or any of its Subsidiaries in excess of
$10,000;
(d) each lease, rental, license, installment and
conditional sale agreement and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or any
personal property (except personal property leases and
installment and conditional sales agreements having a value per
item or aggregate payments of less than $10,000 and with terms of
less than one year);
(e) each licensing agreement or other Applicable
Contract with respect to patents, trademarks, copyrights, or
other intellectual property (collectively, "Intellectual Property
Assets"), including agreements with current or former employees,
consultants or contractors regarding the appropriation or the non-
disclosure of any of the Intellectual Property Assets of National
or any of its Subsidiaries;
(f) each collective bargaining agreement and other
Applicable Contract to or with any labor union or other employee
representative of a group of employees;
(g) each joint venture, partnership, and other
Applicable Contract (however named) involving a sharing of
profits, losses, costs, or liabilities by National or any of its
Subsidiaries with any other Person;
(h) each Applicable Contract containing covenants that
in any way purport to restrict the business activity of National
or any of its Subsidiaries or any Affiliate of either, or limit
National or any of its Subsidiaries or any Affiliate of the
foregoing to engage in any line of business or to compete with
any Person;
(i) each Applicable Contract providing for payments to
or by any Person based on sales, purchases, or profits, other
than direct payments for goods;
(j) the name and annual salary of each director,
officer or employee of each of National and its Subsidiaries, and
the profit sharing, bonus or other form of compensation (other
than salary) paid or payable by National, its Subsidiaries or a
combination of any of them to or for the benefit of each such
person in question for the year ended December 31, 1998, and for
the current year and any employment agreement or arrangement with
respect to each such person;
(k) each profit sharing, group insurance,
hospitalization, stock option, pension, retirement, bonus,
deferred compensation, stock bonus, stock purchase or other
employee welfare or benefit agreements, plans or arrangements
established, maintained, sponsored or undertaken by National or
any of its Subsidiaries for the benefit of the officers,
directors or employees of National or any of its Subsidiaries,
including each trust or other agreement with any custodian or any
trustee for funds held under any such agreement, plan or
arrangement, and all other Contracts or arrangements under which
pensions, deferred compensation or other retirement benefits are
being paid or may become payable by National or any of its
Subsidiaries for the benefit of the employees of National or any
of its Subsidiaries (collectively, the "Employee Benefit Plans"),
and, in respect to any of them, the latest reports or forms, if
any, filed with the Department of Labor and Pension Benefit
Guaranty Corporation under the ERISA, any current financial or
actuarial reports and any currently effective Internal Revenue
Service private rulings or determination letters obtained by or
for the benefit of National or any of its Subsidiaries;
(l) each Applicable Contract entered into other than
in the Ordinary Course of Business that contains or provides for
an express undertaking by National or any of its Subsidiaries to
be responsible for consequential damages;
(m) each Applicable Contract for capital expenditures
in excess of $5,000;
(n) each written warranty, guaranty or other similar
undertaking with respect to contractual performance extended by
National or any of its Subsidiaries other than in the Ordinary
Course of Business; and
(o) each amendment, supplement and modification
(whether oral or written) in respect of any of the foregoing.
Copies of each document, plan or Contract listed and
described on Schedule 4.18 are appended to such Schedule.
Section 4.19 NO DEFAULTS. Except as set forth in
Schedule 4.19, each Contract identified or required to be
identified in Schedule 4.18 is in full force and effect and is
valid and enforceable in accordance with its terms. Each of
National and its Subsidiaries is, and at all times since
January 1, 1996, has been, in full compliance with all applicable
terms and requirements of each Contract under which either
National or any of its Subsidiaries has or had any obligation or
liability or by which National or any of its Subsidiaries or any
of their respective assets owned or used by them is or was bound.
Except as set forth in this Section and except for late payments
that arise in the Ordinary Course of Business from time to time,
each other Person that has or had any obligation or liability
under any Contract under which National or any of its
Subsidiaries has or had any rights is, and at all times since
January 1, 1996, has been, in full compliance with all applicable
terms and requirements of such Contract. No event has occurred
or circumstance exists that (with or without notice or lapse of
time) may contravene, conflict with or result in a violation or
breach of, or give National, any of its Subsidiaries or other
Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to
cancel, terminate or modify, any Applicable Contract. Except in
the Ordinary Course of Business with respect to loans made by the
Bank, neither National nor any of its Subsidiaries has given to
or received from any other Person, at any time since January 1,
1996, any notice or other communication (whether oral or written)
regarding any actual, alleged, possible or potential violation or
breach of, or default under, any Contract. Other than in the
Ordinary Course of Business in connection with workouts and
restructured loans, there are no renegotiations of, attempts to
renegotiate or outstanding rights to renegotiate any material
amounts paid or payable to National or any of its Subsidiaries
under current or completed Contracts with any Person and no such
Person has made written demand for such renegotiation.
Section 4.20 INSURANCE. Schedule 4.20 lists the policies
of insurance (including bankers blanket bond and insurance
providing benefits for employees) owned or held by National or
any of its Subsidiaries on the date hereof. Each such policy is,
and National will use its Best Efforts to keep each such policy,
in full force and effect (except for any expiring policy which is
replaced by coverage at least as extensive) until the Closing.
All premiums due on such policies have been, and will be through
Closing, paid in full.
Section 4.21 COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as
set forth on Schedule 4.21, there are no actions, suits,
investigations, liabilities, inquiries, Proceedings or Orders
involving National or any of its Subsidiaries or any of their
respective assets that are pending or, to the Knowledge of
National, Threatened, nor is there any factual basis for any of
the foregoing, as a result of any asserted failure of National or
any of its Subsidiaries, or any predecessor thereof, to comply
(or the assertion of liability even if in compliance) with any
Legal Requirements designed to minimize, prevent, punish or
remedy the consequences of actions that damage or threaten the
soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds,
drainage basins and wetlands), groundwaters, drinking water
supply, stream sediments, ambient air (including indoor air),
plant and animal life and any other environmental medium or
natural resource.
Section 4.22 REGULATORY FILINGS. Since January 1, 1996,
each of National and its Subsidiaries has filed in a timely
manner all required filings with all Regulatory Authorities. All
such filings were accurate and complete in all material respects
as of the dates of the filings, and no such filing has made any
untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not
misleading.
Section 4.23 FIDUCIARY POWERS. The Bank has properly
administered all accounts for which it acts as fiduciary,
including accounts for which it serves as trustee, agent,
custodian or investment advisor, in accordance with the terms of
the governing documents and applicable state and federal law and
regulations and common law. None of the Bank or any of its
directors, officers or employees has committed any breach of
trust with respect to any such fiduciary account, and the
accountings for each such fiduciary account are true and correct
in all material respects and accurately reflect the assets of
such fiduciary account.
Section 4.24 YEAR 2000. The computer hardware and software
and computer systems and chips and microprocessors used by
National and/or any of its Subsidiaries, and by any third party
which has a material business relationship with, or which
supplies material services to, National and/or any of its
Subsidiaries (collectively, "Computer Equipment"), has been
tested to ensure proper execution and accurate processing of all
date-related data, whether from years in the same century or in
different centuries. All Computer Equipment complies in all
respects with all rules, regulations, policy statements, and
orders promulgated by all Regulatory Authorities that are
applicable to National and its Subsidiaries.
Section 4.25 DISCLOSURE. No representation or warranty of
National in this Agreement omits to state a material fact
necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading. No
notice given pursuant to Section 6.5 will contain any untrue
statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the
circumstances in which they were made, not misleading.
Section 4.26 BROKERAGE COMMISSIONS. Except as set forth on
Schedule 4.26, none of National or any of its Subsidiaries or any
of their respective Representatives has incurred any obligation
or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in
connection with this Agreement.
Section 4.27 APPROVAL DELAYS. To the Knowledge of
National, there is no reason why the granting of any of the
regulatory approvals referred to in Section 7.1 would be denied
or unduly delayed.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to National as
follows:
Section 5.1 ACQUIROR ORGANIZATION. Acquiror: (a) is a
corporation validly existing and in good standing under the laws
of the State of Delaware, and in good standing under the laws of
the State of New Mexico; and (b) is registered with the Federal
Reserve as a bank holding company under the BHCA. Acquisition
Corp is a corporation validly existing and in good standing under
the laws of the State of Delaware. Each of Acquiror and
Acquisition Corp has full power and authority, corporate and
otherwise, to own, operate and lease its respective properties as
presently owned, operated and leased, and to carry on its
respective business as it is now being conducted.
Section 5.2 AUTHORIZATION; ENFORCEABILITY. Each of
Acquiror and Acquisition Corp has the requisite corporate power
and authority to enter into and perform its respective
obligations under this Agreement and the execution, delivery and
performance of this Agreement by Acquiror and Acquisition Corp,
and the consummation by them of their respective obligations
under this Agreement, have been authorized by all necessary
corporate action, including any necessary approval of their
respective stockholders, and this Agreement constitutes a legal,
valid and binding obligation of each of Acquiror and Acquisition
Corp enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization or other laws and subject to general principles of
equity.
Section 5.3 NO CONFLICT. Neither the execution nor
delivery of this Agreement nor the consummation or performance of
any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time): (a) contravene,
conflict with or result in a violation of any provision of the
certificate or articles of incorporation or charter, and the
bylaws, of Acquiror or any of its Subsidiaries, or any resolution
adopted by the board of directors or stockholders of Acquiror or
any of its Subsidiaries; (b) contravene, conflict with or result
in a violation of, or give any Regulatory Authority or other
Person the valid and enforceable right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any
relief under, any Legal Requirement or any Order to which
Acquiror or any of its Subsidiaries, or any of their respective
assets that are owned or used by them, may be subject, other than
any of the foregoing that would be satisfied by compliance with
the provisions of the BHCA, the Securities Act, the Exchange Act,
the National Bank Act and the DGCL; (c) contravene, conflict with
or result in a violation or breach of any provision of, or give
any Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to
cancel, terminate or modify any material Applicable Contract to
which Acquiror or any of its Subsidiaries is a party or by which
any of their respective assets is bound; or (d) result in the
creation of any lien, charge or encumbrance upon or with respect
to any of the assets owned or used by Acquiror or any of its
Subsidiaries. Except as otherwise stated herein, neither Acquiror
nor any of its Subsidiaries is or will be required to give any
notice to or obtain any consent from any Person in connection
with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated
Transactions.
Section 5.4 CERTAIN PROCEEDINGS. There is no pending
Proceeding that has been commenced against Acquiror or
Acquisition Corp that challenges, or may have the effect of
preventing, delaying, making illegal or otherwise interfering
with, any of the Contemplated Transactions. To Acquiror's
Knowledge, no such Proceeding has been Threatened.
Section 5.5 BROKERAGE COMMISSIONS. None of Acquiror or any
of its Subsidiaries or any of their respective Representatives
has incurred any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.
Section 5.6 APPROVAL DELAYS. Acquiror has no Knowledge of
any reason why the granting of any of the regulatory approvals
referred to in Section 7.1 would be denied or unduly delayed.
ARTICLE 6
NATIONAL'S COVENANTS
Section 6.1 ACCESS AND INVESTIGATION. Acquiror and its
Representatives shall, at all times during normal business hours
and with reasonable advance notice prior to the Closing Date,
have full and continuing access to the facilities, operations,
records and properties of National and its Subsidiaries in
accordance with the provisions of this Section. Acquiror and its
Representatives may, prior to the Closing Date, make or cause to
be made such reasonable investigation of the operations, records
and properties of each of National and its Subsidiaries and of
its respective financial and legal condition as Acquiror shall
deem necessary or advisable to familiarize itself with such
records, properties and other matters, provided, however, that
such access or investigation shall not interfere unnecessarily
with the normal operations of National or its Subsidiaries. Upon
request, each of National and its Subsidiaries will furnish
Acquiror or its Representatives attorneys' responses to auditors'
requests for information regarding National or its Subsidiaries,
as the case may be, and such financial and operating data and
other information reasonably requested by Acquiror (provided with
respect to attorneys, such disclosure would not result in the
waiver by National or any of its Subsidiaries of any claim of
attorney-client privilege), and will permit Acquiror and its
Representatives to discuss such information directly with any
individual or firm performing auditing or accounting functions
for National or any of its Subsidiaries, and such auditors and
accountants shall be directed to furnish copies of any reports or
financial information as developed to Acquiror or its
Representatives. National shall, and shall cause each of its
Subsidiaries to, give Acquiror prior notice of each meeting of
its respective board of directors and any committees thereof,
including specifically the Bank's loan committee, and Acquiror
shall be invited to have one of its Representatives in attendance
at each such meeting as an observer. No investigation by
Acquiror or any of its Representatives shall affect the
representations and warranties made by National. This
Section shall not require the disclosure of any information the
disclosure of which to Acquiror would be prohibited by law.
Section 6.2 OPERATION OF NATIONAL AND ITS SUBSIDIARIES.
Except with the prior written consent of Acquiror, between the
date of this Agreement and the Closing Date, National will, and
will cause each of its Subsidiaries, to
(a) conduct its business only in the Ordinary Course
of Business;
(b) use its Best Efforts to preserve intact its
current business organization, keep available the services of its
current officers, employees and agents, and maintain the
relations and goodwill with its suppliers, customers, landlords,
creditors, employees, agents and others having business
relationships with it;
(c) confer with Acquiror concerning operational
matters of a material nature;
(d) enter into loan transactions only in accordance
with sound credit practices and only on terms and conditions
which are not materially more favorable than those available to
the borrower from competitive sources in arm's-length
transactions, and in that connection, from the date hereof to the
Closing Date, shall not;
(i) enter into any new credit or new lending
relationships in excess of $100,000 (other than mortgage loans
secured by first liens on owner-occupied residences with a loan
to value ratio of not less than 80%) to any Person and such
Person's Affiliate; or
(ii) other than incident to a reasonable loan
restructuring, extend additional credit to any Person or that
Person's Affiliate if such Person or such Affiliate is the
obligor under any indebtedness to it which constitutes a non-
performing loan or against any part of such indebtedness it has
established loss reserves or any part of which has been
charged-off by it;
(e) consistent with past practice, maintain a reserve
for possible loan and lease losses which is adequate in all
material respects under the requirements of generally accepted
accounting principles to provide for possible losses, net of
recoveries relating to loans previously charged off, on loans
outstanding (including accrued interest receivable), provided,
however, that such reserve for possible loan and lease losses
shall in all events be maintained at a level that is no less than
the greater of (i) the loan loss reserve as of the date of this
Agreement, or (ii) 1.90% of the aggregate outstanding balance of
all loans and leases (including accrued interest receivable);
(f) maintain all of its assets necessary for the
conduct of its business in good operating condition and repair,
reasonable wear and tear and damage by fire or unavoidable
casualty excepted, and maintain policies of insurance upon its
assets and with respect to the conduct of its business in amounts
and kinds comparable to that in effect on the date hereof and pay
all premiums on such policies when due;
(g) file in a timely manner all required filings with
all Regulatory Authorities and cause such filings to be true and
correct in all material respects; and
(h) maintain its books, accounts and records in the
usual, regular and ordinary manner, on a basis consistent with
prior years and comply with all Legal Requirements.
Section 6.3 NEGATIVE COVENANT. Except as otherwise
expressly permitted by this Agreement, between the date of this
Agreement and the Closing Date, National will not, and will cause
each of its Subsidiaries not to, without the prior written
consent of Acquiror, take any affirmative action, or fail to take
any reasonable action within its control, as a result of which
any of the changes or events listed in Section 4.17 is likely to
occur, provided, however, that the Bank shall be permitted to pay
dividends to National and National shall be permitted to pay
dividends to its stockholders from time to time after the date of
this Agreement, but only if the aggregate amount of such
dividends is reflected in the calculation of the Closing Equity
and the payment of any such current dividend, after taking into
account the payment since the date of this Agreement and of any
other dividends and any expenses pursuant to Section 11.4, would
not reasonably be expected to decrease the Closing Equity below
$14,250,000.
Section 6.4 SUBSEQUENT FINANCIAL STATEMENTS. As soon as
available after the date hereof, National will furnish Acquiror
copies of the quarterly unaudited consolidated balance sheets and
income statements of National prepared for its internal use and
the Bank's Call Reports for each quarterly period completed after
March 31, 1999, and prior to the Closing, and all other financial
reports or statements submitted by National or any of its
Subsidiaries to Regulatory Authorities after the date hereof, to
the extent permitted by law (collectively, the "Subsequent
Financial Statements"). The Subsequent Financial Statements
shall be prepared on a basis consistent with past accounting
practices and shall fairly present in all material respects the
financial condition and results of operations for the dates and
periods presented. The Subsequent Financial Statements will not
include any material assets or omit to state any material
liabilities, absolute or contingent, or other facts, which
inclusion or omission would render such Financial Statements
misleading in any material respect.
Section 6.5 TITLE TO REAL ESTATE. As soon as practical
after the date hereof, but in any event no later than sixty (60)
days before the Closing, National shall obtain at its own expense
and deliver to Acquiror, with respect to all real estate owned by
National or any of its Subsidiaries (the "National Real Estate"),
an owner's preliminary report of title covering a date subsequent
to the date hereof, issued by Chicago Title Insurance Company or
such other title insurance company as is reasonably acceptable to
Acquiror, showing fee simple title in National or any of its
Subsidiaries in such real estate subject to no liens, mortgages,
security interests, encumbrances or charges of any kind except:
(a) as noted in the most recent Financial Statement or on
Schedule 4.9; (b) statutory liens for Taxes not yet delinquent or
being contested in good faith by appropriate Proceedings and for
which appropriate reserves have been established and reflected on
the Financial Statements; (c) pledges or liens required to be
granted in connection with the acceptance of government deposits,
granted in connection with repurchase or reverse repurchase
agreements or otherwise incurred in the Ordinary Course of
Business; and (d) minor defects and irregularities in title and
encumbrances which do not materially impair the use thereof for
the purposes for which they are held. National shall further
cause, at its own expense (which expense shall be taken into
account when calculating the Closing Equity), the issuance of a
title policy or policies to Acquiror pursuant to such title
commitment.
Section 6.6 SURVEY. As soon as practical after the date
hereof, but in any event no later than sixty (60) days before the
Closing, National shall obtain at its own expense and deliver to
Acquiror a current Class A ALTA survey of the National Real
Estate disclosing no survey defects that Acquiror shall deem
objectionable.
Section 6.7 ADVICE OF CHANGES. Between the date of this
Agreement and the Closing Date, National will promptly notify
Acquiror in writing if National or any of its Subsidiaries
becomes aware of any fact or condition that causes or constitutes
a Breach of any of National's representations and warranties as
of the date of this Agreement, or if National or any of its
Subsidiaries becomes aware of the occurrence after the date of
this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence
or discovery of such fact or condition. If any such fact or
condition would require any change in the Schedules if such
Schedules were dated the date of the occurrence or discovery of
any such fact or condition, National will promptly deliver to
Acquiror a supplement to the Schedules specifying such change.
During the same period, National will promptly notify Acquiror of
the occurrence of any Breach of any covenant of National in this
Article or of the occurrence of any event that might reasonably
be expected to make the satisfaction of the conditions in Article
8 impossible or unlikely.
Section 6.8 OTHER OFFERS. Until such time, if any, as this
Agreement is terminated pursuant to Article 10, National will
not, and will cause each of its Subsidiaries and their respective
Representatives not to, directly or indirectly solicit, initiate
or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or
consider the merits of any unsolicited inquiries or proposals
from, any Person (other than Acquiror) relating to any
transaction involving the sale of the business or assets of
National or any of its Subsidiaries, or any of the capital stock
of National or any of its Subsidiaries or any merger,
consolidation, business combination or similar transaction
involving National or any of its Subsidiaries.
Section 6.9 INFORMATION PROVIDED TO ACQUIROR. National
agrees that none of the information concerning National or any of
its Subsidiaries which is provided or to be provided by National
or any of its Subsidiaries or their respective Representatives to
Acquiror for inclusion or which is included in any documents to
be filed with any Regulatory Authority in connection with the
Contemplated Transactions will, at the respective times such
documents are filed, be false or misleading with respect to any
material fact or omit to state any material fact necessary in
order to make the statements therein not misleading.
Section 6.10 SHAREHOLDERS' MEETING. National shall cause a
meeting of its shareholders to be held at the earliest
practicable date, but in no event later than 60 days after the
date of this Agreement, for the purpose of acting upon this
Agreement. In connection with such shareholders' meeting and in
accordance with the New Mexico Business Corporation Act ("New
Mexico Act"), National shall send a notice of such meeting to its
shareholders at least twenty (20) days prior to such meeting.
Along with such notice, National shall include a copy of this
Agreement without its schedules and a copy of Section 53-15-4
NMSA governing the rights of dissenting shareholders. National
shall recommend to its shareholders the approval of this
Agreement and the Merger and shall solicit proxies voting in
favor thereof from its shareholders.
Section 6.11 TREATMENT OF EMPLOYEE BENEFIT PLANS. National
agrees to take, or cause to be taken, any action necessary to
terminate its Employee Stock Ownership Plan immediately prior to
the Effective Time.
Section 6.12 BEST EFFORTS; COOPERATION. National agrees to
use its Best Efforts in good faith to satisfy the various
covenants and conditions to Closing in this Article and
Article 8, respectively, and to consummate the transactions
contemplated hereby as promptly as possible. National will not
intentionally take or intentionally permit to be taken any action
that would be a Breach of the terms or provisions of this
Agreement. Between the date of this Agreement and the Closing
Date, National will, and will cause its Subsidiaries and each of
its and their Affiliates and Representatives to, cooperate with
Acquiror with respect to all filings that Acquiror is required by
Legal Requirements to make in connection with the Contemplated
Transactions.
ARTICLE 7
ACQUIROR'S COVENANTS
Section 7.1 REGULATORY APPROVALS. Except as otherwise
provided in this Agreement, as promptly as practicable after the
date of this Agreement, Acquiror will make all filings required
by Legal Requirements to be made by it to consummate the
Contemplated Transactions (including all filings under the BHCA
and the National Bank Act). Acquiror shall in good faith
vigorously pursue all necessary regulatory approvals.
Section 7.2 ADVICE OF CHANGES. Between the date of this
Agreement and the Closing Date, Acquiror will promptly notify
National in writing if Acquiror acquires Knowledge of any fact or
condition that causes or constitutes a Breach of any of
Acquiror's representations and warranties as of the date of this
Agreement, or if Acquiror acquires Knowledge of the occurrence
after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause
or constitute a Breach of any such representation or warranty had
such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. During the
same period, Acquiror will promptly notify National of the
occurrence of any Breach of any covenant of Acquiror in this
Agreement or of the occurrence of any event that would reasonably
be expected to make the satisfaction of the conditions in Article
9 impossible or unlikely.
Section 7.3 BEST EFFORTS. Acquiror agrees to use its Best
Efforts in good faith to satisfy the various covenants and
conditions to Closing in this Article and Article 9, and to
consummate the transactions contemplated hereby as promptly as
possible. Acquiror will not intentionally take or intentionally
permit to be taken any action that would be in breach of the
terms or provisions of this Agreement or that would cause any of
the representations or warranties contained herein to be or
become untrue.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIROR
The obligations of Acquiror to consummate the Merger and to
take the other actions required to be taken by Acquiror at the
Closing are subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be
waived by Acquiror, in whole or in part):
Section 8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
All of the representations and warranties of National set forth
in this Agreement shall be true and correct in all material
respects with the same force and effect as if all of such
representations and warranties were made at the Closing Date,
provided, however, that to the extent such representations and
warranties expressly relate to an earlier date, such
representations shall be true and correct in all material
respects on and as of such earlier date, and provided further,
that to the extent that such representations and warranties are
made in this Agreement subject to a standard of materiality or
Knowledge, such representations and warranties shall be true and
correct in all respects.
Section 8.2 NATIONAL'S PERFORMANCE. National shall have
performed or complied in all material respects with all of the
covenants and obligations to be performed or complied with by it
under the terms of this Agreement on or prior to the Closing
Date, provided, however, that to the extent performance and
compliance with such covenants and obligations are subject in
this Agreement to a standard of materiality, National shall have
performed and complied in all respects with such covenants and
obligations.
Section 8.3 DOCUMENTS SATISFACTORY. All proceedings,
corporate or other, to be taken by National in connection with
the Contemplated Transactions, and all documents incident
thereto, shall be reasonably satisfactory in form and substance
to counsel for Acquiror, and National shall have made available
to Acquiror for examination the originals or true and correct
copies of all records and documents relating to the business and
affairs of National and its Subsidiaries which Acquiror may
reasonably request in connection with said transactions.
Section 8.4 NO PROCEEDINGS. Since the date of this
Agreement, there must not have been commenced or Threatened
against National or any of its Subsidiaries any Proceeding:
(a) involving any challenge to, or seeking damages or other
relief in connection with, any of the Contemplated Transactions;
or (b) that may have the effect of preventing, delaying, making
illegal or otherwise interfering with any of the Contemplated
Transactions.
Section 8.5 ABSENCE OF MATERIAL ADVERSE CHANGES. From the
date hereof to the Closing, there shall be and have been no event
or occurrence that had or would reasonably be expected to have a
Material Adverse Effect on National or any of its Subsidiaries.
Section 8.6 CONSENTS AND APPROVALS. Any consents or
approvals required to be secured by either party by the terms of
this Agreement or otherwise reasonably necessary in the opinion
of Acquiror to consummate the Contemplated Transactions shall
have been obtained and shall be reasonably satisfactory to
Acquiror, and all applicable waiting periods shall have expired.
Section 8.7 NO PROHIBITION. Neither the consummation nor
the performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time),
contravene, or conflict with or result in a violation of:
(a) any applicable Legal Requirement or Order; or (b) any Legal
Requirement or Order that has been published, introduced, or
otherwise proposed by or before any Regulatory Authority.
Section 8.8 STOCK EXCHANGE. All of the transactions
contemplated under that certain Stock Exchange Agreement of even
date herewith between Acquiror and the Employee Stock Ownership
Plan and Trust for the Employees of the First National Bank of
Clovis shall have been consummated.
ARTICLE 9
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF NATIONAL
National's obligation to consummate the Merger and to take
the other actions required to be taken by National at the Closing
is subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by
National, in whole or in part):
Section 9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
All of the representations and warranties of Acquiror set forth
in this Agreement shall be true and correct in all material
respects with the same force and effect as if all of such
representations and warranties were made at the Closing Date,
provided, however, that to the extent such representations and
warranties expressly relate to an earlier date, such
representations shall be true and correct in all material
respects on and as of such earlier date, and provided further,
that to the extent that such representations and warranties are
made in this Agreement subject to a standard of materiality or
Knowledge, such representations and warranties shall be true and
correct in all respects.
Section 9.2 ACQUIROR'S PERFORMANCE. Each of Acquiror and
Acquisition Corp has performed or complied in all material
respects with all of the covenants and obligations to be
performed or complied with by it under the terms of this
Agreement on or prior to the Closing Date, provided, however,
that to the extent performance and compliance with such covenants
and obligations are subject in this Agreement to a standard of
materiality, and also with respect to the performance by Acquiror
of its covenant in Section 2.7(a), Acquiror and Acquisition Corp
shall have performed and complied in all respects with such
covenants and obligations.
Section 9.3 DOCUMENTS SATISFACTORY. All proceedings,
corporate or other, to be taken by Acquiror and Acquisition Corp
in connection with the Contemplated Transactions, and all
documents incident thereto, shall be reasonably satisfactory in
form and substance to counsel for National.
Section 9.4 NO PROCEEDINGS. Since the date of this
Agreement, there must not have been commenced or Threatened
against Acquiror or Acquisition Corp any Proceeding:
(a) involving any challenge to, or seeking damages or other
relief in connection with, any of the Contemplated Transactions;
or (b) that may have the effect of preventing, delaying, making
illegal or otherwise interfering with any of the Contemplated
Transactions, in either case that would reasonably be expected to
have a Material Adverse Effect on National or such Affiliate.
Section 9.5 REGULATORY APPROVALS. Acquiror shall have
received all of the regulatory approvals referred to in
Section 7.1
Section 9.6 NO PROHIBITIONS. Neither the consummation nor
the performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time),
contravene, or conflict with or result in a violation of:
(a) any applicable Legal Requirement or Order; or (b) any Legal
Requirement or Order that has been published, introduced, or
otherwise proposed by or before any Regulatory Authority.
ARTICLE 10
TERMINATION
Section 10.1 REASONS FOR TERMINATION AND ABANDONMENT. This
Agreement may, by prompt written notice given to the other
parties prior to or at the Closing, be terminated:
(a) by mutual consent of the boards of directors of
National and Acquiror;
(b) by Acquiror if: (i) any of the conditions in
Article 8 has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other
than through the failure of Acquiror to comply with its
obligations under this Agreement); and (ii) Acquiror has not
waived such condition on or before the Closing Date;
(c) by National if: (i) any of the conditions in
Article 9 has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other
than through the failure of National to comply with its
obligations under this Agreement); (ii) the failure to satisfy
such condition would reasonably be expected to have a Material
Adverse Effect upon National or its shareholders if the Closing
were to occur; and (iii) National has not waived such condition
on or before the Closing Date, provided, however, that the
condition set forth in clause (ii) of this paragraph need not be
satisfied to terminate this Agreement if such Breach was the
result of any intentional or grossly negligent: (A) action,
(B) failure to act or (C) misrepresentation, of or by Acquiror;
(d) by either Acquiror or National if the Closing has
not occurred (other than through the failure of any party seeking
to terminate this Agreement to comply fully with its obligations
under this Agreement) by April 30, 2000, or such later date as
the parties may agree upon (the "Termination Date").
ARTICLE 11
MISCELLANEOUS
Section 11.1 GOVERNING LAW. All questions concerning the
construction, validity and interpretation of this Agreement and
the performance of the obligations imposed by this Agreement
shall be governed by the internal laws of the State of Iowa
applicable to Contracts made and wholly to be performed in such
state without regard to conflicts of laws.
Section 11.2 ASSIGNMENTS, SUCCESSORS AND NO THIRD PARTY
RIGHTS. None of the parties to this Agreement may assign any of
its rights under this Agreement without the prior consent of the
other parties. Subject to the preceding sentence, this Agreement
and every representation, warranty, covenant, agreement and
provision hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
permitted assigns. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the
parties to this Agreement any legal or equitable right, remedy or
claim under or with respect to this Agreement or any provision of
this Agreement.
Section 11.3 WAIVER. The rights and remedies of the parties
to this Agreement are cumulative and not alternative. Neither
the failure nor any delay by any party in exercising any right,
power or privilege under this Agreement or the documents referred
to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such
right, power or privilege will preclude any other or further
exercise of such right, power or privilege or the exercise of any
other right, power or privilege. To the maximum extent permitted
by applicable law: (a) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by
the other party; (b) no waiver that may be given by a party will
be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one party will be deemed
to be a waiver of any obligation of such party or of the right of
the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
Section 11.4 EXPENSES. Except as otherwise expressly
provided in this Agreement, each party to this Agreement will
bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the
Contemplated Transactions (the "Transaction Expenses"). In the
event of termination of this Agreement, the obligation of each
party to pay its own expenses will be subject to any rights of
such party arising from a breach of this Agreement by the other
party. Notwithstanding the foregoing, National agrees that it
will not pay any Transaction Expenses if the payment of such
expenses, after taking into account the payment since the date of
this Agreement of any dividends pursuant to Section 6.3, would
reasonably be expected to decrease the Closing Equity below
$14,250,000. National further agrees, however, to ensure that
all Transaction Expenses will be fully paid on or prior to
Closing.
Section 11.5 PUBLICITY. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated
Transactions will be issued, if at all, at such time and in such
manner as Acquiror and National shall jointly determine. Unless
consented to by the other in advance or required by Legal
Requirements, prior to the Closing neither Acquiror nor National
shall, and shall cause each of its respective Subsidiaries and
Representatives to, keep this Agreement strictly confidential and
may not make any disclosure of this Agreement to any Person.
National and Acquiror will consult with each other concerning the
means by which their respective employees, customers and
suppliers and others having dealings with either of them and
National's Subsidiaries will be informed of the Contemplated
Transactions.
Section 11.6 CONFIDENTIALITY. Between the date of this
Agreement and the Closing Date, each of Acquiror and National
will maintain in confidence, and will cause each of its
respective Representatives to maintain in confidence, and not use
to the detriment of the other or its Subsidiaries any written,
oral, or other information obtained in confidence from the other
of any of its Subsidiaries in connection with this Agreement or
the Contemplated Transactions, unless: (a) such information is
already known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available
through no fault of such party; (b) the use of such information
is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the
Contemplated Transactions; or (c) the furnishing or use of such
information is required by or necessary or appropriate in
connection with any legal proceedings. If the Contemplated
Transactions are not consummated, each party will return or
destroy as much of such written information as the other party
may reasonably request.
Section 11.7 NOTICES. All notices, consents, waivers and
other communications under this Agreement must be in writing
(which shall include telecopier communication) and will be deemed
to have been duly given if delivered by hand or by nationally
recognized overnight delivery service (receipt requested), mailed
by registered or certified U.S. mail (return receipt requested)
postage prepaid or telecopied if confirmed immediately thereafter
by also mailing a copy of any notice, request or other
communication by U.S. mail as provided in this Section:
(a) If to Acquiror or Acquisition Corp, to:
Heartland Financial USA, Inc.
1398 Central Avenue
P.O. Box 778
Dubuque, Iowa 52004-0778
Telephone: (800) 397-2000
Telecopier: (319) 589-1951
Attention: Mr. John K. Schmidt
Executive Vice President and Chief
Financial Officer
with copies to:
Barack Ferrazzano Kirschbaum Perlman & Nagelberg
333 West Wacker
Suite 2700
Chicago, Illinois 60606
Attention: John E. Freechack, Esq.
Telephone: (312) 984-3100
Telecopier: (312) 984-3193
(b) if to National, to:
National Bancshares, Inc.
709 Pile Street
PO Box 730
Clovis, New Mexico 88101
Attention: Mr. Dan Hardisty
President
Telephone: (505) 762-4741
Telecopier: (505) 763-5739
with copies to:
Peter J. Broullire, Esq.
8210 La Mirada Dr., N.E.
Suite 600
Albuquerque, New Mexico 87109-1665
Telephone: (505) 275-7738
Telecopier: (505) 275-6156
or to such other Person or place as National shall furnish to
Acquiror or Acquiror shall furnish to National in writing.
Except as otherwise provided herein, all such notices, consents,
waivers and other communications shall be effective: (a) if
delivered by hand, when delivered; (b) if mailed in the manner
provided in this Section, five Business Days after deposit with
the United States Postal Service; (c) if delivered by overnight
express delivery service, on the next Business Day after deposit
with such service; and (d) if by telecopier, on the next Business
Day if also confirmed by mail in the manner provided in this
Section.
Section 11.8 ENTIRE AGREEMENT. This Agreement and any
documents executed by the parties pursuant to this Agreement and
referred to herein constitute the entire understanding and
agreement of the parties hereto and supersede all other prior
agreements and understandings, written or oral, relating to such
subject matter between the parties.
Section 11.9 MODIFICATION. This Agreement may not be
amended except by a written agreement signed by each of National
and Acquiror.
Section 11.10 SEVERABILITY. Whenever possible, each
provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective
only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement unless the consummation of the
Contemplated Transactions is adversely affected thereby.
Section 11.11 FURTHER ASSURANCES. The parties agree:
(a) to furnish upon request to each other such further
information; (b) to execute and deliver to each other such other
documents; and (c) to do such other acts and things, all as the
other party may reasonably request for the purpose of carrying
out the intent of this Agreement and the documents referred to in
this Agreement.
Section 11.12 JURISDICTION AND SERVICE OF PROCESS. Any
action or proceeding seeking to enforce any provision of, or
based on any right arising out of, this Agreement may be brought
against any of the parties in the courts of the State of Iowa,
County of Dubuque or, if it has or can acquire jurisdiction, in
the United States District Court serving the County of Dubuque,
and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such
action or proceeding and waives any objection to venue laid
therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the
world.
Section 11.13 SURVIVAL. The representations, warranties
and covenants contained herein shall not survive beyond the
Closing.
Section 11.14 COUNTERPARTS. This Agreement and any
amendments thereto may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers on the day
and year first written above.
HEARTLAND FINANCIAL USA, INC. NATIONAL BANCSHARES, INC.
By: /s/ Lynn B. Fuller By: /s/ Dan Hardisty
----------------------- ------------------------
Lynn B. Fuller Dan Hardisty
President President
NBI ACQUISITION CORPORATION
By: /s/ Lynn B. Fuller
-----------------------
Lynn B. Fuller
President
