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EXHIBIT 2.1
AGREEMENT OF MERGER AND REORGANIZATION
Agreement of Merger and Reorganization (hereinafter referred to as
"Agreement"), made as of the 21st day of July, 1998, by and between F&M
Bancorporation, Inc., a Wisconsin corporation, CBE, Inc., a Wisconsin
corporation and F&M Merger Corporation, a Wisconsin corporation.
1. Definitions.
The following definitions shall apply in this Agreement:
1.1 "Agreement" shall mean this Agreement of Merger and
Reorganization.
1.2 "BANK" shall mean Community Bank of Elkhorn, 00 Xxxxx Xxxxxxx
Xxxxxx, X.X. Xxx 000, Xxxxxxx, Xxxxxxxxx 00000-0000.
1.3 "BANK Stock" shall mean BANK's voting capital stock $650 par
value.
1.4 "Closing Date" shall mean the date set by mutual agreement of
CBE and F & M and will not occur prior to the satisfaction or the waiver of all
of the conditions to the transaction. The Closing Date is anticipated to be in
January, 1999.
1.5 "Effective Time" shall mean the date on which the Articles of
Merger are received for filing by the State of Wisconsin Department of Financial
Institutions. The Articles of Merger shall be filed as soon as possible after
the conditions precedent to this merger have been met or waived by F&M and CBE,
but not prior to the Closing Date.
1.6 "CBE" shall mean CBE, Inc., 00 Xxxxx Xxxxxxx Xxxxxx, X.X. Xxx
000, Xxxxxxx, Xxxxxxxxx 00000-0000.
1.7 "CBE Class A Common" shall mean CBE's Class A voting common
stock, $1.00 par value.
1.8 "CBE Class B Common" shall mean CBE's Class B voting common
stock, $1.00 par value.
1.9 "CBE Stock" shall mean CBE Class A Common and CBE Class B
Common, collectively.
1.10 "Exchange Ratio" shall mean the ratio determined as set forth in
paragraph 3.3(b).
1.11 "CBE Counsel" shall mean Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxx
Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxx 00000, Attn: Xxxxx X.
Xxxxxxx, Esq.
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1.12 "CBE Shareholders" shall mean the shareholders of CBE shown on
the list previously delivered to F&M as such list may be updated from time to
time; a copy of the current list is attached hereto as Exhibit 1.12.
1.13 "F&M" shall mean F&M Bancorporation, Inc., Xxx Xxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxxx 00000.
1.14 "F&M Common" shall mean F&M's voting common stock, $1.00 par
value.
1.15 "F&M Stock Price" shall mean the average closing price rounded
to the nearest whole cent, as quoted on the NASDAQ National Market System
("NASDAQ"), for F&M Common for the fifteen (15) trading days on which F&M Common
is actually traded, immediately preceding the five (5) calendar days prior to
the Closing Date of the transaction.
1.16 "F&M Counsel" shall mean McCarty, Curry, Xxxxxxx, Xxxxxxx &
Xxxx, LLP, 000 Xxxx Xxxxxx Xxxxxx, X.X. Xxx 000, Xxxxxxxx, Xxxxxxxxx 00000-0000,
Attn: Xxxxxxx X. Xxxx, Esq.
1.17 "Plan of Merger" shall mean the Plan of Merger to be attached
to, and filed with, the Articles of Merger.
1.18 "Securities Counsel" shall mean Xxxxxxx & Xxxxx, 000 Xxxx
Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000-0000, Attn: Xxxxxxx X. Xxxxxxx,
Esq.
1.19 "Subsidiary" shall mean F&M Merger Corporation, Xxx Xxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxxx 00000.
1.20 "Registration Statement" shall mean the Registration Statement
of F&M pursuant to which the shares of F&M Common to be issued in the merger
will be registered with the Securities and Exchange Commission ("SEC"), and
which shall include the prospectus of F&M relating to the F&M Common issuable in
the transaction and the proxy statement of CBE to its shareholders relating to
approval of the merger (the "Prospectus/Proxy Statement").
1.21 "F&M Proposed Price" is Twenty-one Million and 00/100 Dollars
($21,000,000).
2. Preamble.
F&M and Subsidiary are multi-bank holding companies. Subsidiary is a
wholly-owned subsidiary of F&M. CBE is a one-bank holding company which
presently owns 100% of the issued and outstanding stock of BANK. F&M, Subsidiary
and CBE, by their respective employees and agents have had the opportunity to
make such review and investigation of the other as they deem appropriate and to
negotiate the terms and conditions of this Agreement. F&M, Subsidiary and CBE
each believe that this transaction is in their best interests and in the
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best interests of their shareholders and desire to set forth their agreement and
understanding in this Agreement.
The parties have considered the proposed merger and believe that a merger
between CBE and Subsidiary will be in the best interest of their respective
corporations and shareholders. The merger of CBE into Subsidiary is intended to
constitute a reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(D) of the Internal Revenue Code of 1986, as amended.
In consideration of the foregoing and the terms, conditions and covenants
of this Agreement and in reliance on the warranties and representations
contained herein, the parties adopt this Plan and Agreement of Merger and
Reorganization and agree as follows:
3. Merger of CBE into Subsidiary.
3.1 Surviving Corporation. At the Effective Time of the merger, CBE shall
be merged into Subsidiary in accordance with the laws of the State of Wisconsin.
Subsidiary will be the surviving corporation and the separate corporate
existence, identity and organization of CBE, except as specifically provided by
law and this Agreement, shall cease. As the surviving corporation, Subsidiary
shall succeed to and possess all the assets, properties, powers, privileges,
rights and immunities of CBE and shall be subject to all liabilities,
obligations, limitations and duties of CBE as described in this Agreement.
3.2 Subsidiary Stock Subscription. Subject to fulfilling of the
conditions precedent to the closing of this transaction set forth below, F&M
will transfer to Subsidiary such shares of F&M Common and cash as may be
necessary to effect the merger, as described under paragraph 3.3 below.
3.3 Exchange of CBE Common. At the Effective Time, the shares of the CBE
Common shall be converted into shares of F&M Common as follows:
(a) All CBE Shareholders will receive shares of F&M Common based
upon the Exchange Ratio. The Exchange Ratio shall be calculated by dividing the
CBE Stock Price by the F&M Stock Price, rounded to three (3) decimal places. The
Exchange Ratio shall be multiplied by the number of shares of CBE Common held by
each CBE Shareholder on the Closing Date to determine the number of shares of
F&M Common to be issued to that CBE Shareholder. All treasury shares shall be
canceled as of the Effective Time.
(b) Subject to F&M's right to adjust the Exchange Ratio under
paragraph 3.4 below, the CBE Stock Price shall be calculated by dividing the F&M
Proposed Price [Twenty-one Million and 00/100 Dollars ($21,000,000)] by the
number of outstanding shares of CBE
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Common issued and outstanding at the Effective Time (excluding any treasury
shares) [currently Ten Thousand One Hundred (10,100)], rounded to the nearest
whole cent.
(c) No fractional shares of F&M Common shall be issued; all
fractional shares will be converted to cash in an amount equal to the fractional
share determined in accordance with the formula set forth above multiplied by
the F&M Stock Price.
3.4 Adjustment to F&M Proposed Price . The F&M Proposed Price is subject
to adjustment prior to the calculation of the Exchange Ratio by an amount equal
to two (2.0) times the sum of all amounts determined under subparagraphs (a)
through (g). This sum shall be subtracted from the F&M Proposed Price and the
adjusted F&M Proposed Price shall be used to calculate the Exchange Ratio. The
adjustment factors to be determined as of the Closing Date are as follows:
(a) The amount by which BANK's reserve for loan and lease losses
is less than one and one-tenth percent (1.10%) of total loans and leases.
(b) The amount by which the expenses of this transaction whether
incurred by BANK or CBE [as set forth in paragraph 4.4(e)] exceed the limit
established under paragraph 4.4(e).
(c) The amount by which the BANK's equity as of the Closing
Date, determined in accordance with generally accepted accounting principles
(except that no adjustment shall be made as required by FASB 115) is less than
Seven Million Four Hundred Nineteen Thousand and 00/100 Dollars ($7,419,000.00)
(the "Beginning Equity") plus the Cumulative Minimum Earnings as shown on the
attached Exhibit 3.4(c) for each full month prior to the Closing Date, less the
sum of (i) the expenses of this transaction [as defined in paragraph 4.4(e)],
and (ii) any increase to the BANK's reserve for loan and lease losses requested
by F&M in excess of one and one-tenth percent (1.10%) of loan and leases or
other accounting adjustments requested by F&M (the "BANK's Minimum Equity").
(d) For any loans or leases which are considered as, or have the
probability of becoming, losses as a result of an adverse change in the
condition of such loans after June 24, 1998, as mutually agreed upon by F&M and
CBE.
(e) As the result of a material adverse change in the business
of CBE or BANK or an increase in their liabilities (exclusive of deposits) which
accrues after June 24, 1998, which is not otherwise reflected in either the
calculation of BANK's Adjusted Equity or CBE's stated liabilities as of the
Closing Date. The parties agreement as to the amount of any such adjustment
shall be a condition precedent to the parties' obligation to close.
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(f) The amount of any obligation to any employee, officer,
director or shareholder which may become payable after the Closing Date at the
option of the employee, officer, director or shareholder as a result of the
transaction contemplated by this Agreement except for the deferred compensation
obligations to Xxxx X. Xxxxxxx and Xxxxxx X. Xxxx, the current liability for
which is fully accrued by BANK.
(g) For the amount of any expenses incurred by CBE or BANK in
connection with this transaction which have not been accrued and accounted for
prior to the Closing Date.
3.5 Articles of Incorporation. The Articles of Incorporation of
Subsidiary in effect immediately prior to the Effective Time of the merger shall
continue in full force and effect as the Articles of Incorporation of the
surviving corporation.
3.6 Bylaws. The Bylaws of Subsidiary in effect immediately prior to the
Effective Time of the merger, shall continue in full force and effect as the
bylaws of the surviving corporation.
3.7 Officers, Directors and Employees. The present members of BANK's
Board of Directors will be retained by F&M as directors of the surviving
corporation provided that continued membership on the board is consistent with
safe and sound banking practices and is in the best interest of F&M and BANK.
Retirement from the Board of Directors will occur at age seventy (70), as
provided by F&M policy, provided that any director who is age seventy (70) at
the time of consummation of the acquisition of BANK by F&M may remain a director
until the annual shareholders' meeting of the BANK to be held in the year 2000.
F&M shall also enter into a Consulting Agreement with Xxxx X. Xxxxxxx and an
Employment Agreement with Xxxxxx X. Xxxx, in the forms attached as Exhibits 3.7A
and 3.7B, respectively, for the terms described in such agreements. F&M also
contemplates that BANK's current officers and employees will continue to be
responsible for the BANK's operations in general, subject to review and
supervision by F&M, as determined by F&M to be consistent with safe and sound
banking practices and the best interest of F&M and BANK. The salaries and
benefits to be offered will be consistent with those currently received by the
employees of F&M or its subsidiary banks holding similar positions. No employee
benefit plans or practices of BANK will be continued by F&M either on an
individual or group basis unless such plans or practices are expressly agreed to
in writing by F&M after the Effective Time. Years of service with BANK shall, to
the extent permitted by applicable law, be counted as years of service with F&M.
In the unlikely event positions with the BANK are eliminated as a result of the
transaction contemplated by this Agreement, the employees affected by such
action will be covered by F&M's severance plan,
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applicable to their position at the time the positions are eliminated, based
upon their years of service with BANK.
4. Representations and Warranties of CBE. CBE, by its duly authorized officers,
directors or other agents makes the following representations and warranties to
F&M each of which is true and correct as of the date hereof, and shall remain
true and correct to and including the Closing Date, and shall be unaffected by
any investigation heretofore or hereafter made by or any notice to F&M. These
representations and warranties shall not survive the closing.
4.1 Ownership and Authority. The current CBE Shareholders are listed on
the list referred in paragraph 1.10.
4.2 CBE Organization and Authority.
(a) CBE is a corporation duly organized and validly existing
under the laws of the State of Wisconsin with all requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as now being conducted and to enter into and perform its obligations under this
Agreement upon receiving the necessary shareholder and regulatory approval. CBE
is duly registered and authorized to operate as a bank holding company. CBE is
only qualified to do business in the State of Wisconsin.
(b) CBE has good and marketable title to One Thousand (1,000)
shares of BANK Stock, free and clear of any and all claims, mortgages, liens,
security interests, pledges or other encumbrances of any kind whatsoever.
(c) CBE is presently authorized to issue Thirty-six Thousand
(36,000) shares of Class A Common and Twenty Thousand (20,000) shares of Class B
Common. CBE presently has Six Thousand Seven Hundred Sixty-seven (6,767) shares
of CBE Class A Common issued and outstanding and Three Thousand Three Hundred
Thirty-three (3,333) shares of CBE Class B Common issued and outstanding. CBE
Class A Common and CBE Class B Common vote as a class. All shares of CBE Class A
Common and Class B Common are validly and legally issued and outstanding, all of
which are fully paid and nonassessable, except as provided by Wis. Stats.
Sections 180.0622(2)(b) and judicial interpretations thereof. CBE has not
issued, and does not have outstanding, any option, warrant or convertible
securities or other right to purchase or convert any obligation into such
corporation's securities and has not agreed to issue or sell any additional
securities of any type.
(d) The execution, delivery and performance of this Agreement
and the consummation of the transaction contemplated under it have been duly
authorized by appropriate
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corporate action and will not violate any provision of CBE's articles of
incorporation or bylaws or any provisions of, or result in the acceleration of
any obligation under any mortgage, lien, lease, agreement, instrument, court
order, arbitration award, judgment or decree to which CBE is a party, or by
which CBE is bound and will not require the consent, authorization or approval
of any other public or private person or entity other than the approval by CBE's
shareholders and the appropriate federal and state securities and banking
regulatory agencies and will not violate any other restriction of any kind or
character to which CBE is subject.
4.3 BANK Organization and Authority.
(a) BANK is duly organized and validly existing under the laws
of the State of Wisconsin and has all requisite banking and corporate power and
authority to own, operate and lease its properties and to carry on its business
as now being conducted. BANK operates a single office in Elkhorn, Wisconsin. All
necessary corporate action and regulatory approval for BANK's present operations
has been given and remains in full force and effect and in good standing.
(b) BANK is authorized to issue One Thousand (1,000) shares of
BANK Stock, BANK's only class of stock. BANK has One Thousand (1,000) shares of
BANK Stock issued and outstanding, all of which are legally and validly issued,
fully paid and nonassessable.
(c) BANK has not issued and does not have outstanding any
option, warrant or convertible securities or other right to purchase or convert
any obligation into BANK's securities and has not agreed to issue or sell any
additional securities of any type.
(d) The execution, delivery and performance of this Agreement
and the consummation of the transaction contemplated under it have been duly
authorized by appropriate corporate action and will not violate any provision of
BANK's articles of incorporation or bylaws or any provisions of, or result in
the acceleration of any obligation under any mortgage, lien, lease, agreement,
instrument, court order, arbitration award, judgment or decree to which BANK is
a party, or by which BANK is bound and will not require the consent,
authorization or approval of any other public or private person or entity other
than the appropriate federal and state bank regulatory agencies and will not
violate any other restriction of any kind or character to which BANK is subject.
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4.4 Financial Matters.
(a) True copies of CBE's consolidated financial statements,
consisting of consolidated balance sheets, consolidated statements of
operations, consolidated statements of cash flow and consolidated statements of
stockholders' equity as of the close of business on December 31, 1997, 1996 and
1995 have been delivered by CBE to F&M ("CBE's Financial Statements"). To the
best knowledge of CBE's officers and directors, after due and diligent inquiry
all of CBE's Financial Statements are true and correct in all material respects
and present an accurate and complete disclosure of the financial condition of
CBE as of their respective dates, and the earnings for the periods covered, all
determined in accordance with generally accepted accounting principles ("GAAP"),
applied on a consistent basis.
(b) To the best of BANK's knowledge, after due and diligent
inquiry, BANK does not have any loans presently outstanding (i) which are not in
compliance with the requirements of federal or state banking laws or
regulations, except as set forth in Exhibit 4.4(b), (ii) which present any
greater than normal risk of collection or (iii) which were not made in the
normal course of business. BANK's last examination by the FDIC was as of April
28, 1998, and by the State of Wisconsin Department of Financial Institutions,
Division of Banking ("Division") was as of April 27, 1998. Since the dates of
these examinations, BANK, after making due and diligent inquiry, is not aware of
any outstanding loans which are or may be subject to adverse classification
except as set forth in BANK's watch list date June 30, 1998, a copy of which is
included in Exhibit 4.4(b). CBE's last examination by the Federal Reserve Bank
of Chicago ("FRB") was as of March 31, 1994. Since the dates of these
examinations, neither BANK nor CBE is aware of any adverse change in the
business or operations of CBE or BANK, or of any adverse regulatory action or
proceeding against BANK, CBE or their respective officers, directors or
employees.
(c) CBE and BANK have good marketable title to all of their
assets, business and properties including, without limitation, all such
properties reflected in CBE's Financial Statements as of December 31, 1997, free
and clear of any mortgage, lien, pledge, security interest, assessment, levy,
charge, claim or other encumbrance, except for real estate and personal property
taxes for 1998 which are not yet due. CBE and BANK do not have any notice of any
special assessment which will be levied or assessed against any real property
owned or leased by them. To the best knowledge of CBE's officers and directors,
after due and diligent inquiry all real property owned, operated and leased by
CBE and BANK except as set forth in Exhibit 4.4(c) is in full compliance in all
material respects with all applicable federal, state and local statutes
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and regulations including, but not limited to, any building codes, safety codes,
OSHA regulations, environmental laws and regulations, the Americans with
Disabilities Act, zoning ordinances and other similar codes, ordinances, and
regulations and neither CBE nor BANK has received any citations, notices,
charges or other complaints claiming a violation of the foregoing nor are CBE or
BANK aware of any investigation of any alleged violation.
(d) All property and assets owned or currently in use by CBE and
BANK, or in which they have an interest (excluding interests which arise in
collateral given to secure loans made by BANK or because of a security interest
granted to BANK) are in good operating condition and repair subject only to
normal wear and tear. A schedule of all real and depreciable personal property
owned by CBE and BANK is attached as Exhibit 4.4(d). If CBE or BANK lease any
real or personal property, a separate schedule clearly identifying such leased
property will be included as a part of Exhibit 4.4(d). As of the Closing Date,
all such property and assets will be in the condition represented above.
(e) For the period from January 1, 1998 to the Closing Date,
BANK has projected in good faith that its ordinary earnings determined in
accordance with GAAP, net of tax effect, shall be as set forth in the attached
Exhibit 3.4(c). The expenses of this transaction are those incurred by BANK for
legal, tax opinion, accounting and/or auditing or investment banking and/or
brokerage fees or expenses associated with the acquisition of BANK by F&M and
will be reasonable and customary and will not in any event exceed Sixty Thousand
and 00/100 Dollars ($60,000.00).
4.5 Changes Since Specific Dates. Since December 31, 1997, with
respect to CBE and BANK there have not been:
(a) Any loss, damage, destruction or failure to maintain the
tangible assets of CBE and BANK (whether or not covered by insurance), or
affecting their business or properties, which will materially adversely affect
the financial condition or operations CBE or BANK.
(b) Any lapse, revocation, failure to maintain in full force and
effect or other event which, through the passage of time or the giving of
notice, or both could render any insurance coverage previously maintained by CBE
and BANK ineffective in whole or in part.
(c) Any acquisition by CBE and BANK of a capital asset at a cost
in excess of Ten Thousand Dollars ($10,000.00) without prior approval of F&M,
except as shown on the attached Exhibit 4.5(c).
(d) Any amendment to their Articles of Incorporation or Bylaws.
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(e) Any change in accounting procedures, practices or methods
from those used by CBE and BANK in prior years.
(f) Any issuance, or agreement to issue, on or before the
Closing Date or thereafter, directly or indirectly, any additional shares of
stock of CBE and BANK.
(g) Any declaration, setting aside or payment of any dividend or
any distribution in respect to CBE's stock or any redemption, purchase or other
acquisition by CBE or BANK of any stock or any other repayments to the
shareholders of CBE or BANK for the 1998 fiscal year.
(h) Any sale, transfer, or other disposition, prior to maturity,
of any security or other earning asset (exclusive of loans and leases), except
as approved in writing by F&M.
(i) Any borrowings or other indebtedness (excluding deposit
liabilities) the balance of which currently exceeds the amounts disclosed by
CBE's December 31, 1997 Financial Statements.
(j) Any mortgage, lien, pledge, security interest, assessment,
levy, charge, claim or other encumbrance made with respect to any of the
properties or assets of CBE or BANK except as disclosed by CBE's December 31,
1997 Financial Statements.
(k) Any sale, transfer or other disposition of assets of CBE and
BANK except in the normal course of business and consistent with past practices,
provided, however, that CBE and BANK may not dispose of any securities prior to
maturity without the prior consent of F&M.
(l) Any material change in the manner in which business was
being conducted by CBE and BANK prior to December 31, 1997, or other material
failure by CBE and BANK to use their best efforts to maintain their present
business organization (subject to the terms of this Agreement), employees and
customers.
(m) Any loan or commitment to make a loan by BANK with an
interest rate, repayment term, collateral or security requirements or other
conditions which are materially different from those upon which BANK made loans
prior to December 31, 1997, except to the extent such difference is in response
to competitive conditions encountered by BANK.
(n) Any other material adverse change in the prospects,
financial condition, assets, liabilities, properties or business of CBE or BANK.
4.6 Liabilities.
(a) Neither CBE nor BANK have any liabilities, whether accrued,
absolute, contingent or otherwise, which arose or relate to any transaction or
occurrence involving CBE or BANK or their respective officers, directors,
employees, agents or servants prior to the date of
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this Agreement which are not disclosed in the CBE Financial Statements described
above. To the best of their knowledge, after due and diligent inquiry, as of the
date hereof, no known circumstances, conditions, happenings, events or
arrangements, contractual or otherwise, exist which may hereafter give rise to
any such liabilities of CBE and BANK.
(b) To the best of their knowledge, all parties with whom CBE
and BANK have contractual arrangements are in compliance therewith. Neither CBE
nor BANK has declared, and is not prepared to declare, any such parties in
default under any such contractual arrangements. Neither CBE nor BANK is in
default in any material respect under any contracts to which it is a party, nor
has any event occurred, which through the passage of time or the giving of
notice or both, would constitute a default under any such contract or obligation
or cause the acceleration of any obligation of CBE and BANK or result in the
creation of a lien, charge, assessment, encumbrance or other claim whatsoever
upon any asset of CBE and BANK. None of the contracts to which CBE and BANK is a
party will be adversely affected by the transaction contemplated by this
Agreement.
(c) To the best of their knowledge, CBE and BANK are in
compliance in all material respects with all applicable federal, state, county
and local statutes, ordinances, regulations, decrees, orders, or other laws.
Neither CBE nor BANK has received notice of any alleged violation of any such
statutes, ordinances, regulations, decrees, orders or other laws.
(d) No legal, administrative or other proceedings,
investigations or inquiries or other claims, judgments, consent decrees,
stipulations, injunctions or restrictions are either pending or outstanding, or
to the best of their knowledge, threatened, against or involving CBE and BANK or
affecting their assets, properties or business. CBE and BANK do not know, or
have any grounds to know of any basis for any such proceedings, investigations
or inquiries or other claims, judgments, consent decrees, stipulations,
injunctions or restrictions, except for normal foreclosure, repossession and
collection litigation involving BANK as described in the attached Exhibit
4.6(d).
(e) The assets and liabilities or potential liabilities of CBE
and BANK are fully insured (except for the deductible thereunder), except for
taxes, deposits, repurchase agreements or other similar deposit-type
instruments, and all policies of insurance carried by CBE and BANK are in full
force and all premiums thereon have been paid in a timely manner and are paid to
date and all bonds have been acquired and maintained on all employees, agents,
officers and directors of CBE and BANK required to be bonded. The limits of
coverage, deductibles and other material nonstandard provisions of such
insurance and bonds are disclosed in the attached
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Exhibit 4.6(e). Said insurance and bonds, including but not limited to, general
comprehensive (commercial) public liability insurance covering personal
injuries, death and property damage, fidelity bonds and worker's compensation
insurance have been acquired and maintained for at least the past five (5)
years.
4.7 Taxes. CBE and BANK have filed all federal, state and local tax
returns and reports covering income, sales, use, real or personal property or
other taxes of any type required to be filed and have paid all taxes including
any interest, penalties and assessments when due in a timely manner. The taxes
provided for in CBE's Financial Statements and which will be accrued prior to
the Closing Date will be adequate for the payment of any unpaid taxes as of the
Closing Date. None of the income tax returns of CBE or BANK have been audited in
the last seven (7) years. Neither CBE nor BANK has waived any restrictions on
the assessment or collection of taxes or consented to the extension of any
statute of limitations relating to any tax liability. Neither CBE nor BANK have
determined or been advised that they may be liable for a material deficiency or
other liability in respect to any state or federal income tax returns or other
tax returns previously filed by CBE and BANK.
4.8 Contracts and Commitments. Neither CBE and BANK have any contracts
or commitments, either oral or written, with any officer, director, shareholder,
employee, customer, depositor, supplier of goods or services or any other entity
or person which contain any terms or conditions which are not usual and
customary under the circumstances and which may have a material adverse effect
on the operations, profitability or net worth of CBE and BANK.
4.9 Reporting and Withholding on Payment of Interest. To the best of
their knowledge, after due and diligent inquiry, CBE and BANK have fully
complied with the Internal Revenue Code (the "Code"), and all rules and
regulations of the Internal Revenue Service ("IRS") issued thereunder, with
respect to the reporting of payments of interest and other payments by them, and
have complied with all provisions requiring the withholding for income taxes on
such amounts when required. CBE and BANK have instituted adequate procedures to
assure compliance with such provisions. To the best of their knowledge, all
reporting to the IRS required of CBE and BANK has been done in a timely manner
via proper medium. Neither CBE nor BANK have been advised of any violation or
potential violation with respect to such reporting requirements.
4.10 Employees and Employee Benefits.
(a) CBE and BANK are not parties to or bound by any written or
oral (i) employment or employment-related consulting contract which is not
terminable at will by CBE or BANK, as the case may be without penalty, (ii)
employee fringe benefit program or practice
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covering all employees as a group or any individual employees which is not
terminable at will by CBE or BANK, as the case may be without penalty, or (iii)
plan or agreement providing for any employee bonus, deferred compensation,
pension, profit sharing, retirement benefits, stock purchase, stock option,
employee pension benefit plan or employee welfare benefit plan except as set
forth in the attached Exhibits 4.10(b) and 4.10(c).
(b) All pension, profit sharing, or other employee pension
benefit plans of CBE and BANK("the Plans") are described in Exhibit 4.10(b) and
are now, and will continue until the Closing Date to be, qualified Plans under
Section 401(a) of the Code, in full compliance with the Employee Retirement
Income Security Act of 1974 as amended ("ERISA"). To CBE's and BANK's best
knowledge, after due and diligent inquiry, all premiums, notices, reports and
other filings required to be delivered or filed under applicable law with
respect to such Plans have been duly and timely delivered or filed. Neither CBE
nor BANK have knowledge of any fact or circumstance which would materially and
adversely affect such Plans' qualified status or compliance as above described,
or of any "reportable event" (as such term is defined in Section 4043(c) of
ERISA) or any "prohibited transaction" (as such term is defined in Section 406
of ERISA and Section 4975(c) of the Code) which has occurred since the date on
which said sections first became applicable to the Plans. The Plans satisfy the
minimum funding standards set forth in the Code and ERISA. As of the Closing
Date there will be no unfunded vested liability of the Plans, except for the
obligation of CBE and BANK for contributions for the current year which are not
yet due and payable but for which adequate amounts are being accrued on a
monthly basis.
(c) All employee welfare benefit plans of CBE and BANK (the
"Welfare Plans") are described in Exhibit 4.10(c) and are now, and will continue
until the Closing Date to be, in full compliance with the Code and the Employee
Retirement Income Security Act of 1974 as amended ("ERISA"). To CBE's and BANK's
best knowledge, all notices, reports and other filings required to be delivered
or filed under applicable law with respect to such Welfare Plans have been duly
and timely delivered or filed. Neither CBE nor BANK have knowledge of any fact
or circumstance which would adversely affect such Welfare Plans' compliance as
above described or any "prohibited transaction" (as such term is defined in
Section 406 of ERISA and Section 4975(c) of the Code) which has occurred since
the date on which said sections first became applicable to the Welfare Plans.
(d) No person or governmental agency has any pending or
threatened claim against CBE or BANK or their directors, officers, employees or
agents arising out of any statute,
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ordinance or regulation alleging that CBE or BANK (i) has discriminated against
applicants for employment, employees or the public, (ii) has any employment
practices, policies or procedures which are discriminatory or have been
breached, (iii) has failed to comply with federal and state wage and hour laws,
rules or regulations, (iv) has violated Occupational Safety and Health
Administration statutes, regulations or standards or (v) has committed an unfair
labor practice(s).
(e) Xxxx Salary Continuation Agreement. As of the Effective
Time, the Executive Employee Salary Continuation Agreement (the "Xxxx
Agreement") for Xxxxxx X. Xxxx dated October 29, 1996, between Xxxx and BANK
and/or CBE shall terminate and the liability of BANK and CBE, and F&M and
Subsidiary as the successors in interest, shall be liquidated at the amount
accrued by BANK and/or CBE on their books for the Xxxx Agreement as of December
31, 1998. This amount shall be paid to Xxxx on or before December 31, 1998.
4.11 Environmental Matters.
(a) To the knowledge of CBE and BANK, there has been no release
of any hazardous substance, as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA") nor any release of
oil or hazardous substance as provided under Wis. Stats. ss.144.76, on, upon or
into the real property owned by or leased to CBE or BANK or, to the best of
CBE's and BANK's knowledge, upon any real estate or property which secures any
loan made by CBE or BANK or which CBE or BANK have a right to acquire upon
foreclosure or otherwise .
(b) To the knowledge of CBE and BANK, there have been no such
releases on, upon or into any real property adjoining or in the vicinity of the
property described in paragraph 4.11(a) above, which through air, soil or
groundwater migration could have come to be located upon any property owned or
leased by CBE or BANK, or which secures a loan made by CBE or BANK or may be
acquired by CBE or BANK in foreclosure.
4.12 Accuracy of All Statements. No representation or warranty by CBE or
BANK in this Agreement or otherwise, in the CBE Financial Statements, or in any
other statement, certificate, schedule or exhibit hereto furnished or to be
furnished by or on behalf of CBE or BANK pursuant to this Agreement, nor any
document or certificate delivered to F&M pursuant to this Agreement or in
connection with actions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits or shall omit a material fact
necessary to make the statement contained therein not misleading.
4.13 Prospectus/Proxy Statement. The parts of the Prospectus/Proxy
Statement which were provided or reviewed by CBE and BANK with respect to CBE
and BANK will not, at the
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date it is first mailed or delivered to CBE's Shareholders, and will not, at the
date or dates of the meeting of CBE's Shareholders called to approve the Merger,
as then amended or supplemented, contain any statements that are, at the time
and in light of the circumstances under which they are made, false or misleading
with respect to any material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein not false
or misleading.
Notwithstanding the foregoing, CBE makes no representation or warranty
regarding and shall have no responsibility for the accuracy of any information
with respect to F&M or Subsidiary or any of their affiliates or subsidiaries
contained in the Prospectus/Proxy Statement.
4.14 Financial Adviser. CBE has not engaged, consented to engage, or
authorized any financial adviser, broker, investment banker, or similar third
party to act on its behalf, directly or indirectly, in connection with the
transaction contemplated by this Agreement.
5. Representations and Warranties of F&M.
F&M, by its duly authorized officers, employees or other agents makes the
following representations to CBE, each of which is true and correct as of the
date hereof and shall remain true and correct to and including the Closing Date,
shall be unaffected by any investigation heretofore or hereafter made by or any
notice to CBE except as set forth herein. These representations and warranties
shall not survive the closing.
5.1 Organization and Authority.
(a) F&M is a corporation duly organized and validly existing
under the laws of the State of Wisconsin with all requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as now being conducted and to enter into and perform its obligations under this
Agreement, upon receiving the necessary approval from the federal and state
regulatory authorities. F&M is only qualified to do business in the State of
Wisconsin and has received approval from the Federal Reserve Bank of Chicago to
engage in business as a bank holding company.
(b) Subsidiary is a corporation duly organized and validly
existing under the laws of the State of Wisconsin will all requisite corporate
power and authority to own, operate and lease its properties and to carry on its
business as now being conducted and to enter into and perform its obligations
under this Agreement, upon receiving the approval of its shareholders and the
federal and state regulatory authorities. Subsidiary is only qualified to do
business in the State of Wisconsin.
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(c) F&M is authorized to issue Fifty Million (50,000,000) shares
of F&M Common and as of July 11, 1998, had Fourteen Million One Hundred
Seventy-four Thousand One Hundred Eighty-one (14,174,181) shares issued and
outstanding. F&M anticipates that additional shares of F&M Common may be issued
by it prior to the Closing Date. All outstanding shares are legally and validly
issued and fully paid and nonassessable except as provided by Wis. Stats.
ss.180.0622(2)(b) and judicial interpretations thereof.
5.2. Performance of this Agreement. The execution and performance of
this Agreement and the consummation of the transaction contemplated under it
have been duly authorized by appropriate corporate approval and will not violate
any provision of F&M's or Subsidiary's articles of incorporation or bylaws or
any provision of, or result in the acceleration of any obligation under any
mortgage, lien, lease, agreement, instrument, court order, arbitration award,
judgment or decree to which F&M or Subsidiary is a party, or by which F&M or
Subsidiary is bound and will not require the consent, authorization or approval
of any other public or private person or entity other than the approval by F&M
as the sole shareholder of Subsidiary and the appropriate federal and state
securities and banking regulatory agencies and will not violate any other
restriction of any kind or character to which F&M or Subsidiary are subject
except as set forth in this Agreement.
5.3 Legality of Shares to be Issued. The shares of F&M Common to be
delivered pursuant to this Agreement, when so delivered, will have been duly and
validly authorized and issued by F&M and will be fully paid and nonassessable,
except as provided by Wis. Stats.
ss.180.0622(2)(b) and judicial interpretations thereof.
5.4 Financial Statements. True copies of the audited consolidated
financial statements of F&M consisting of consolidated balance sheets,
consolidated statements of income, consolidated statements of stockholder's
equity and consolidated statements of cash flows as of the close of business on
December 31, 1997, 1996 and 1995, have been delivered by F&M to CBE ("F&M's
Financial Statements"). All of F&M's Financial Statements are true and correct
in all material respects and present an accurate and complete disclosure of the
financial condition of F&M as of their respective dates and of the earnings for
the periods covered, in accordance with generally accepted accounting principles
applied on a consistent basis.
5.5 Litigation. There are no legal, administrative or other
proceedings, investigations or inquiries or other claims, judgments, consent
decrees, stipulations, injunctions or restrictions which may have a material
adverse effect on F&M and F&M's subsidiaries and affiliates taken as a whole
either threatened, pending or outstanding against or involving F&M or
Subsidiary,
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nor do F&M or Subsidiary know, or have reasonable grounds to know, of any basis
for any such proceedings, investigations or inquiries, or other claims,
judgments, consent decrees, stipulations, injunctions or restrictions.
5.6 Directors, Officers and Employees of BANK. Neither F&M or its
directors, officers, employees, agents, attorneys or accountants have made or
will make any representations or warranties as to any further positions with
BANK or F&M following the consummation of the transaction contemplated by this
Agreement to any director, officer or employee of CBE or BANK, except as set
forth in written agreements between BANK and any of its employees as disclosed
to F&M and except as provided in paragraph 3.7.
5.7 Accuracy of All Statements. No representation or warranty by F&M
or Subsidiary in this Agreement or otherwise, nor any financial statements,
statement, certificate, schedule or exhibit hereto furnished or to be furnished
by or on behalf of F&M or Subsidiary pursuant to this Agreement, nor any
document or certificate delivered to CBE pursuant to this Agreement or in
connection with actions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits or shall omit a material fact
necessary to make the statement contained therein not misleading.
5.8 Prospectus/Proxy Statement. The Prospectus/Proxy Statement will
not, at the date it is first mailed or delivered to CBE's shareholders, and will
not, at the date or dates of the meeting of the CBE Shareholders called to
approve the Merger, as then amended or supplemented, contain any statements that
are at the time at which, and in light of the circumstances under which they are
made, false or misleading with respect to any material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not false or misleading. Notwithstanding the foregoing, F&M
and Subsidiary make no representation or warranty and shall have no
responsibility for the accuracy of any information contained in or omitted from
the Prospectus/Proxy Statement in so far as it describes CBE or BANK.
5.9 No Broker. All negotiations relative to this Agreement and the
transaction contemplated hereby have been carried on directly by F&M and
Subsidiary with CBE without the intervention of any broker or third party on
behalf of F&M and Subsidiary. F&M and Subsidiary have not engaged, consented to
engage, or authorized any broker, investment banker, or third party to act on
its behalf, directly or indirectly, in any capacity in connection with the
transaction contemplated by this Agreement.
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5.10 Paddock Agreement. F&M acknowledges the BANK's continuing
obligation to Paddock under the Executive Employee Salary Continuation Agreement
for Xxxx X. Xxxxxxx dated May 14, 1997, as amended (the "Paddock Agreement")
after the Effective Time. Paddock will be provided office space as assigned by
the BANK at BANK's expense during the term of the Paddock Consulting Agreement
set forth in Exhibit 3.7A.
6. Covenants of CBE.
CBE hereby covenants and agrees as follows:
6.1 Access to Information. F&M and its authorized representatives
shall have full access during normal business hours to all properties, books,
records, contracts and documents of CBE and BANK and CBE and BANK shall furnish
or cause to be furnished to F&M or its authorized representatives all
information with respect to the affairs and business of CBE as F&M may
reasonably request.
6.2 Actions Prior to Closing. From and after the date of this
Agreement and until the Closing Date, CBE and BANK:
(a) Shall carry on their business diligently and
substantially in the same manner as heretofore and CBE and BANK shall not engage
in or institute any unusual or novel methods of doing business and shall inform
F&M in advance before either introducing any new products or services or
modifying any existing products or services other than changes in interest rates
paid or charged in response to changes in competitive or market conditions.
(b) Shall not (i) grant any increase in the rates of pay,
salary, or compensation provided to its officers, directors or employees which
become effective on or after August 1, 1998, without the advance written consent
of F&M (ii) for the fiscal year ended December 31, 1998, increase the amount of
any bonus paid by BANK in excess of the amount paid by BANK for the year ended
December 31, 1997, (iii) pay any bonuses for the 1998 fiscal year, and (iv)
increase or decrease the benefits provided under, the contribution to, or the
cost sharing allocation of any employee fringe benefit or any of the benefit
plans described in Exhibits 4.10(b) and 4.10(c), except for normal adjustments
imposed by third party providers.
(c) Shall not enter into any contract or commitment or engage
in any transaction which is outside the normal course of business and which is
inconsistent with CBE's or BANK's past business practices.
(d) Shall not create any indebtedness without the prior
written consent of F&M other than (i) short term indebtedness incurred in the
normal course of business, (ii)
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indebtedness incurred pursuant to an existing contract previously disclosed to
F&M, or (iii) indebtedness incurred to do the acts and things contemplated by
this Agreement.
(e) Shall not declare or pay any cash dividend, stock
dividend or make any other distribution in respect of its stock, or directly or
indirectly redeem, purchase or otherwise acquire any of its own stock, or grant
any stock warrant, stock option or issue directly or indirectly any shares of
common or preferred stock or any other security.
(f) Shall not amend their Articles of Incorporation or Bylaws
or make any changes in authorized or issued stock.
(g) Shall maintain current insurance in effect and acquire
such additional insurance as may be reasonably required by increased business
and risks, and operate, maintain and repair all property in a normal business
manner.
(h) Shall make adequate provision for any income and property
(real and personal) taxes which will be due with respect to any 1998 earnings
and shall file all tax reports or returns and pay all income, franchise, real
estate, personal property, sales, use, excise or other taxes on or before the
date on which such reports, returns, or payments are due.
(i) Shall pay all liabilities in a timely manner on or before
their due dates and shall make adequate provision or accruals for all
liabilities of CBE and BANK.
(j) Shall use their best efforts (without making any
commitments on behalf of F&M) to preserve their business organization intact, to
keep available to F&M the present key officers and employees of CBE and BANK and
to preserve for F&M the present relationships of CBE and BANK with their
suppliers, customers and others having business relations with them.
(k) Shall not sell or dispose of any property or assets
except in the normal course of business, including but not limited to, selling
or disposing of any securities held by CBE or BANK prior to their normal
maturity dates.
(l) Shall promptly notify F&M of any lawsuits, claims,
proceedings, regulatory actions or investigations that may be threatened,
brought, asserted or commenced against it or its officers, directors, employees
or agents involving in any way the business, properties or assets of CBE or
BANK, except for routine collection litigation which is initiated by BANK and is
not expected to result in any loss to BANK, provided that if any counterclaim,
cross-claim or third-party claim is asserted in such litigation, F&M shall be
given notice thereof.
(m) Shall not make loans or grant credit to any customer on
terms materially more favorable than those which are available under BANK's
current underwriting guidelines. F&M, CBE and BANK understand that BANK, in
order to meet market conditions may need to
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offer terms more favorable than those currently offered but that BANK will not
be a market leader in this regard.
(n) Shall not allow BANK's primary capital to asset ratio (12
C.F.R. Part 325 method), determined in accordance with accepted accounting
standards applicable to preparation of Reports of Condition required to be filed
with the Federal Deposit Insurance Corporation, applied on a consistent basis,
to drop by more than 25 basis points unless BANK has disclosed the reason for
the decline to F&M in advance and F&M has consented in writing to the adjustment
causing such decline.
(o) Shall remain in compliance with all agreements,
commitments, understandings, undertakings or other obligations to the Division,
the FDIC, the FRB or any other regulatory agency having jurisdiction over CBE
and BANK.
(p) Shall cooperate fully and completely with F&M in the
preparation and filing of the Registration Statement, and shall provide to F&M
such information as may be required for use therein pertaining to CBE and BANK,
or their businesses or operations.
(q) Shall not take any action which would be reasonably
likely to make unavailable either the pooling of interest accounting treatment
of the merger or to cause the merger not to qualify as a tax-free
reorganization.
6.4 Stock Records. Prior to the special shareholders meeting to
approve the Merger, the Board of Directors of CBE, in accordance with its
bylaws, shall take such steps as are necessary to close its stock transfer books
and establish a record date for such meeting after the close of the transfer
books, furnish F&M with a current shareholder list as of such record date and
validly call a special shareholders' meeting or obtain unanimous consent of
shareholders as provided by statute and CBE's bylaws.
6.5 Audited Financial Statements. If audited financial statements of
CBE and/or BANK are required to permit the shares of F&M Common to be registered
with the SEC, CBE agrees to furnish such statements for the required years to
F&M. If required, the cost of such audited financial statements shall not be
deducted in determining the BANK's Minimum Equity under paragraph 3.4(c)
6.6 Reserves for Loan and Lease Losses. BANK shall take such action
as may be necessary to maintain its reserve for loan and lease losses at one and
one-tenth percent (1.10%) of loans and leases until the Closing Date, or shall
have the prior written consent of F&M to establish a lower reserve for loan and
lease losses.
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6.7 Affiliates. CBE shall have taken all reasonable steps to obtain
affiliate's undertakings pursuant to SEC Rule 145 from its directors, officers
and shareholders who own five percent (5%) or more of its outstanding stock.
6.8 Funding of Paddock Agreement. If BANK continues to fund the
obligations under the Paddock Agreement, in the amount currently being
contributed, BANK's obligation to Paddock under the Paddock Agreement will be
fully funded when Paddock reaches the age of sixty (60).
7. Covenants of F&M. F&M and Subsidiary hereby covenant and agree as
follows:
(a) As promptly as practicable after the execution of this
Agreement, F&M and Subsidiary, with the cooperation of CBE, shall prepare and
file with the SEC the Registration Statement. As promptly as practicable after
comments, if any, are received from the SEC on such preliminary Registration
Statement, F&M and Subsidiary, with the cooperation of CBE, shall file with the
SEC an amendment to the Registration Statement responding to such comments, and
shall seek to have such Registration Statement declared effective. F&M and
Subsidiary shall also use their best efforts to qualify under the blue sky laws
of the various states in which common shareholders of CBE are located [the
shares of F&M Common Stock to be issued pursuant to this transaction] and shall
file the NASD Listing Application in a timely manner. F&M and Subsidiary shall
pay the expenses of preparing and delivering the joint Prospectus/Proxy
Statement for CBE's Shareholders.
(b) As promptly as practicable after the execution of this
Agreement, F&M and Subsidiary shall take action to obtain regulatory approval of
this transaction.
(c) Shall not take any action which would be reasonably
likely to make unavailable either the pooling of interest accounting treatment
of the merger or to cause the merger not to qualify as a tax-free
reorganization.
(de) Within ten (10) days after its audited financial
statements are in final form and publicly announced, F&M shall deliver a copy
thereof to CBE.
(f) Upon execution of this Agreement, F&M will investigate
the availability of directors and officers' liability insurance coverage under
its policy covering the directors and officers of F&M and its Subsidiaries and
will promptly notify CBE of the availability and coverage under such insurance
for the directors and officers of CBE and BANK upon consummation of the
acquisition.
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8. Conditions Precedent to F&M's Obligation. Each and every obligation of
F&M and Subsidiary to be performed on the Closing Date shall be subject to the
satisfaction prior thereto of the following conditions:
8.1 Truth of Representations and Warranties. The representations and
warranties made in this Agreement or given on behalf of CBE and BANK hereunder,
shall have been continuously true and correct from the date of execution of this
Agreement to the Closing Date, and shall be true and correct on and as of the
Closing Date with the same effect as though such representations and warranties
had been made or given on and as of the Closing Date and CBE and BANK shall have
complied with all other terms, conditions and covenants of this Agreement.
8.2 Compliance with Covenants. Except as expressly set forth in
paragraph 8.7, CBE and BANK shall have performed all of their obligations, and
complied with all of the covenants under this Agreement which are to be
performed or complied with by them from the date of this Agreement through and
as of the Closing Date, including the delivery of the closing documents
specified in paragraph 10.3.
8.3 Absence of Suit. No action, suit or proceeding before any court
or any governmental or regulatory authority shall have been commenced or
threatened, and no investigation by any governmental or regulatory authority
shall have been commenced, against F&M, Subsidiary, CBE or BANK, or any of the
affiliates, associates, officers, directors or employees of any of them, seeking
to restrain, prevent or change the transaction contemplated hereby, or
questioning the validity or legality of any such transaction, or seeking damages
in connection with any of such transaction.
8.4 CBE's Director and Shareholder Authorization. The merger
contemplated by this Agreement shall have been duly and validly authorized by
CBE's directors and shareholders in accordance with the laws of the State of
Wisconsin.
8.5 Receipt of Approvals. All approvals, consents and/or waivers,
including any approvals required by any federal or state governmental regulatory
agency, that are necessary to effect the transactions contemplated hereby shall
have been received and all waiting periods thereunder shall have expired.
8.6 Accuracy of Financial Statements. F&M and Subsidiary and their
representatives shall be reasonably satisfied as to the accuracy of all year end
and interim period balance sheets, statements of income and other financial
statements of CBE or BANK furnished to F&M and Subsidiary for periods ended
after December 31, 1996.
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8.7 BANK Minimum Equity. BANK will have equity as of the Closing
Date, determined in accordance with GAAP at least equal to the "BANK's Minimum
Equity", provided that in making this determination, FASB 115 shall not be
considered.
8.8 BANK Earnings. The Actual Earnings of BANK from January 1, 1998
through the month end prior to the month in which closing occurs, determined in
accordance with GAAP applied on a consistent basis shall not be less than the
Cumulative Minimum Earnings [as set forth in Exhibit 3.4(c)] from January 1,
1998 through the month end prior to the month in which closing occurs.
8.9 Legal Opinion. F&M shall have received the opinion of CBE
Counsel referred to in subparagraph 10.3(e).
8.10 Time Limit on Closing. Closing shall have taken place by
January 31, 1999.
8.11 Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as F&M and Subsidiary may reasonably
request shall have been delivered to F&M and Subsidiary. CBE and BANK shall have
delivered certificates in such detail as F&M may reasonably request as to
compliance with the conditions set forth in this Article 8.
8.12 Securities Matters. The Registration Statement shall have been
declared effective under the Securities Act of 1933 by the SEC. No stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the SEC and no proceedings for that purpose shall, to the knowledge of
F&M or Subsidiary, on or prior to the Effective Time, have been initiated or
threatened by the SEC. F&M and Subsidiary shall have received all other federal
or state securities permits exemptions, registrations or other authorizations
necessary to issue the F&M Common in exchange for the CBE Stock to consummate
the merger.
8.13 Prospectus/Proxy Statement. The Prospectus/Proxy Statement will
not contain any untrue statement of a material fact or omit any material fact
regarding CBE or BANK required to be stated therein or necessary to make the
statements contained therein, in the light of the circumstances under which they
were made, not misleading.
8.14 Exchange of Stock Certificates. As a condition of delivery of
the consideration required by this Agreement, the CBE Shareholders shall have
executed and delivered documents assigning their shares of CBE Common Stock to
F&M and/or Subsidiary containing appropriate representations regarding tax
matters, ownership, authority to act, residency and such other matters as F&M
shall request.
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8.15 Affiliates of CBE. Each person who shall be deemed to be an
"affiliate" of CBE within the meaning of the Securities Act of 1933 and Rule 145
promulgated by the SEC thereunder shall have executed and delivered to F&M an
Affiliate's Undertaking, in the form attached hereto as Exhibit 8.15, dated as
of the Effective Time.
8.16 Pooling Accounting. The merger contemplated herein shall be
treated as and qualify for accounting treatment using the pooling of interests
method.
8.17 Tax Status. F&M shall have delivered to CBE an opinion of legal
counsel selected by F&M to the effect that the shares of F&M Common to be issued
in this transaction in exchange for shares of CBE Common Stock will be issued as
part of a tax-free reorganization. F&M covenants to proceed diligently and in
good faith to obtain such opinion as soon as practically possible.
8.18 Dissenters' Rights. That no more than ten percent (10%) of the
total consideration paid by F&M in this transaction, determined in accordance
with the accounting rules applicable to the pooling of interests accounting
treatment, shall be paid in cash, including amounts paid for fractional shares
and amounts paid to CBE Shareholders who exercise their dissenters rights under
Wis. Stats. ss.ss.180. 1301 et seq.
8.19 F&M Stock Price. The F&M Stock Price shall be less than or equal
to Forty-five Dollars ($45.00). This amount shall be adjusted by the amount of
any stock dividends, stock split or other recapitalization of F&M. For example,
if F&M declares a 10% stock dividend, this amount shall be adjusted to $40.50.
8.20 Xxxx Employment Contract. Xxxx and BANK, with F&M's prior
approval, will have entered into an employment agreement in the form attached as
Exhibit 3.7B which will provide, among other things, that Xxxx will become a
participant in the F&M Bancorporation, Inc. Employees' Retirement and Savings
Plan and Trust as soon as possible after the Effective Time.
8.21 Xxxx Agreement. At or prior to the Effective Time, the Xxxx
Agreement shall have been terminated upon terms and conditions acceptable to
F&M.
8.22 Paddock Retirement. As of the Effective Time, Paddock will
retire as an employee of BANK and shall become an independent contractor under
the Consulting Agreement described in paragraph 3.7A.
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9. Conditions Precedent to CBE's Obligations.
Each and every obligation of CBE to be performed on the Closing Date
shall be subject to the satisfaction prior thereto of the following conditions:
9.1 Truth of Representations and Warranties. The representations and
warranties made by F&M and Subsidiary in this Agreement or given on their behalf
hereunder, shall be true and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made or given on
and as of the Closing Date.
9.2 F&M's and Subsidiary's Compliance. F&M and Subsidiary shall have
performed and complied with all of its obligations under this Agreement which
are to be performed or complied with by them prior to or as of the Closing Date,
including delivery of the closing documents.
9.3 Absence of Suit. No action, suit or proceeding before any court
or any governmental or regulatory authority shall have been commenced or be
threatened and, no investigation by any governmental or regulatory authority
shall have been commenced, against F&M, Subsidiary, CBE or BANK, or any of the
affiliates, associates, officers, directors, or employees of any of them,
seeking to restrain, prevent, or change the transactions contemplated hereby, or
questioning the validity or legality of any such transactions, or seeking
damages in connection with any of such transactions.
9.4 Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken by F&M and Subsidiary in
connection with the transaction contemplated by this Agreement shall have
occurred and all appropriate documents incident thereto as CBE may reasonably
request shall have been delivered to CBE. F&M and Subsidiary shall have
delivered certificates in such detail as CBE may reasonably request to comply
with the conditions set forth in this Article 9.
9.5 Receipt of Approvals. All approvals, consents and or waivers,
including any approvals required by any federal or state governmental regulatory
agency and shareholder approval which CBE shall make a good faith, best effort
to obtain, that are necessary to effect the transactions contemplated hereby
shall have been received, and all waiting periods shall have expired provided
the failure to obtain the same was not the result of an act or omission by CBE
or BANK.
9.6 Time Limit on Closing. Closing shall have taken place by January
31, 1999.
9.7 Legal Opinion. CBE shall have received the opinion of F&M
Counsel referred to in subparagraph 10.4(d).
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9.8 Prospectus/Proxy Statement. The Prospectus/Proxy Statement will
not contain any untrue statement of material fact or omit any material fact
required to be stated therein or necessary to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading.
9.9 Tax Status. CBE shall have received an opinion of CBE Counsel to
the effect that the transaction contemplated by this Agreement will be tax-free
reorganization to those CBE Shareholders who receive F&M Common in exchange for
their CBE Common (excluding fractional or dissenting shares). In connection with
rendering this opinion CBE and BANK agree to execute certificates reasonably
requested by the issuer of the opinion.
9.10 Directors and Officers Liability Insurance. F&M shall furnish
evidence to CBE that the directors and officers of CBE and BANK are covered
under the directors and officers liability insurance provided to the directors
and officers of F&M and its subsidiaries, which coverage shall include coverage
in accordance with the standard terms and conditions of such policy for claims
based upon occurrences which occurred prior to F&M acquisition of CBE. In the
event such coverage is not available, F&M may satisfy this condition by offering
separate coverage to CBE's directors and officers which is substantially
equivalent to the coverage carried by CBE as of the date of this Agreement.
9.11 F&M Stock Price. The F&M Stock Price shall be greater to or
equal to Thirty-seven ($37.00). This amount shall be adjusted by the amount of
any stock dividends, stock split or other recapitalization of F&M. For example,
if F&M declares a 10% stock dividend, this amount shall be adjusted to $33.30.
10. Closing.
10.1 Time and Place. The closing of this transaction ("Closing")
shall take place at the offices of F&M (or such other place as the parties may
agree) on the Closing Date.
10.2 Rights of CBE Shareholders After the Effective Time. After the
Effective Time and until the surrender of a stock certificate representing
shares of CBE Common, each such outstanding certificate, which prior to the
Effective Time represented shares of CBE Common shall be deemed for all
purposes, subject to the further provisions of this Agreement, to evidence the
ownership of the number of full shares of F&M Common or cash into which such
shares have been converted as provided in this Agreement; provided, however,
that unless and until any such certificates representing CBE Common shall be so
surrendered, the cash or stock certificate representing the shares, any
interest, dividends or other distributions of any kind payable shall be
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withheld by F&M. Upon the subsequent surrender and exchange of such CBE Common
certificates, such holder of record of the certificates formerly representing
shares of CBE Common (or such holder's assignee) shall be paid the amount of any
such cash dividends or other distributions, without interest, which became
payable under this Agreement. Delivery of certificates representing shares of
F&M Common or cash payment to former CBE Shareholders who have tendered their
certificates for their shares of CBE Common at or before the Effective Time
shall be made as soon as reasonably possible after the Effective Time.
10.3 Documents to be Delivered by CBE. At the time of or prior to the
closing dated as of the Closing Date, CBE shall deliver the following documents:
(a) Certificates by the chairman, vice-chairman or president
of CBE and BANK (i) that the representations and warranties made by CBE or BANK
as the case may be in this Agreement are true and correct in all material
respects on as of the Closing Date with the same effect as though such
representations and warranties had been made on or given on and as of the
Closing Date, (ii) that CBE and BANK have performed and complied with all of
their covenants and obligations under this Agreement which are to be performed
or complied with by or prior to or on the Closing Date, (iii) that all
conditions of this transaction required to be met with respect to CBE have been
met or are waived by CBE, and (iv) that all Schedules and Exhibits delivered by
CBE to F&M prior or as of the Closing Date are true, correct and complete as of
the Closing Date.
(b) An Incumbency Certificate for the officers executing the
documents in connection with the transaction contemplated hereby.
(c) Copies of the Articles of Incorporation and Bylaws of CBE
and BANK, duly certified by their respective custodians as true, correct and
complete copies thereof, including any amendments as of the Closing Date.
(d) A written opinion from CBE Counsel dated as of the
Closing Date addressed to F&M and F&M Counsel, that the matters set forth in
paragraphs 4.2, 4.3, 4.4(c), 4.5(d), 4.5(f), 4.5(j) and 4.6(d) are true and
correct as represented in the form attached hereto as Exhibit 10.3(d).
(e) Certified copies of resolutions adopted by CBE's board of
directors to the effect that the execution, delivery and performance of this
Agreement and the transactions contemplated by it have been duly and validly
authorized in accordance with the laws of the State of Wisconsin.
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(f) Such other documents of transfer, certificates or
authority and other documents as F&M may reasonably request.
10.4 Documents to be Delivered by F&M and Subsidiary. As of the
Closing Date, F&M and Subsidiary shall deliver the following documents:
(a) Certificates for shares of F&M Common and cash payments
as determined under Article 3 of this Agreement. Such checks or certificates
will be in the name of CBE Shareholders entitled to the same in accordance with
their interest in CBE as of the Effective Time provided, however, that such cash
and any certificates need not be delivered until such time as the provisions of
paragraph 10.2 have been complied with by such Shareholders.
(b) An Incumbency Certificate relating to all parties
executing documents relating to any of the transactions contemplated hereby on
behalf of F&M and Subsidiary.
(c) Certificates by an officer of F&M and Subsidiary that, to
the best of such officer's knowledge, (i) the representations and warranties
made by F&M and Subsidiary in this Agreement are true and correct as of the
Closing Date, (ii) that F&M and Subsidiary have performed and complied with all
of their covenants and obligations which are to be performed or complied with by
or prior to or as of the Closing Date, (iii) that all conditions of this
transaction required to be met with respect to CBE and Subsidiary have been met
or are waived by F&M and Subsidiary, and (iv) that all Schedules and Exhibits
delivered by F&M to CBE are true, correct and complete as of the Closing Date.
(d) A written opinion from counsel for F&M and Subsidiary
dated as of the Closing Date addressed to CBE and CBE Counsel that the matters
set forth in paragraphs 5.1, 5.2, and 5.3 are true and correct as represented in
the form attached hereto as Exhibit 10.4(d).
(e) Certified copies of the resolutions adopted by F&M's and
Subsidiary's boards of directors to the effect that the execution, delivery and
performance of this Agreement and the transactions contemplated by it have been
duly and validly authorized in accordance with the laws of the State of
Wisconsin.
11. Law Governing.
This Agreement shall be construed and interpreted according to the laws
of the State of Wisconsin.
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12. Assignment.
This Agreement may not be assigned in whole or in part without the
written consent of all parties, provided, however, that Subsidiary's
participation in this transaction shall not require any further consent or
authorization.
13. Amendment and Modification.
This Agreement may only be amended or modified by a written agreement
signed by the duly authorized representatives of F&M, Subsidiary and CBE.
14. Abandonment.
This Agreement may be terminated and the transaction provided for by this
Agreement may be abandoned at any time before the Closing Date:
(a) By mutual consent of F&M, Subsidiary and CBE;
(b) By F&M and Subsidiary, or if any of the conditions
provided for in Article
8 of this Agreement have not been met and have not been waived in writing by F&M
or Subsidiary. If the condition set by paragraph 8.19 is not met, F&M may waive
this condition and the F&M Stock Price determined under paragraph 1.13 shall be
used notwithstanding the provisions of paragraph 8.19.
(c) By CBE if any of the conditions provided for in Article
9 of this Agreement have not been met and have not been waived in writing by
CBE. If the condition set by paragraph 9.11 is not met, CBE may waive this
condition and the F&M Stock Price determined under paragraph 1.13 shall be used
notwithstanding the provisions of paragraph 9.11.
(d) In the event of a breach of this Agreement, by notice
from the non-breaching party to the breaching party as set forth below.
In the event of termination and abandonment by any party as provided in
this Article, written notice shall be given to the other party setting forth the
breach of this Agreement or the default in performance which has occurred, or
the condition which has not been met. The party to whom the notice is directed
shall, if such party is able to effect a satisfaction or cure, have ten (10)
days after such notice is given to satisfy such condition or cure such breach or
default, provided that if such ten (10) day period is not sufficient and the
party is making a diligent effort to satisfy such condition or cure such breach
or default, the time to do so may be extended for such period as the parties may
agree, not to exceed thirty (30) days, provided however, that the F&M Stock
Price shall be the higher of the price as of the date of the notice or as of the
date on
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which the default is satisfied or cured. The termination and/or abandonment of
this Agreement shall not alter or diminish the liability of the party that
failed to comply with the conditions of this Agreement. Each party shall pay its
own expenses incident to preparation for the consummation of this Agreement and
the transactions contemplated hereunder.
15. Notices.
All notices, requests, demands, and other communications hereunder shall
be deemed to have been duly given, upon actual delivery, if delivered by hand;
or upon receipt by the addressee, if given by mail (certified mail - return
receipt requested with postage prepaid is required for notice by mail); or upon
receipt by the addressee, if by private courier; or upon receipt of the
transmission by the addressee if by telecopy (with a copy sent by first class
mail):
(a) If to CBE, to CBE, Inc., 00 Xxxxx Xxxxxxx Xxxxxx,
X.X. Xxx 000, Xxxxxxx, Xxxxxxxxx 00000-0000, Attn: Xxxx Xxxxxxx, President and
Chairman of the Board, FAX: 000- 000-0000, with a copy to Xxxxxxx Xxxx &
Friedrich, Attn: Xxxxx X. Xxxxxxx, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxx, Xxxxxxxxx 00000, FAX: 000-000-0000.
(b) If to F&M or Subsidiary, to Xx. Xxxx X. Xxxxxxx, Xxx
Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxx 00000, FAX: 000-000-0000, with a copy to
Xxxxxxx X. Xxxx, Esq., McCarty, Curry, Xxxxxxx, Peeters & Xxxx, LLP, X.X. Xxx
000, Xxxxxxxx Xxxxxxxxx 00000, FAX: 000-000-0000.
The place to which notice is to be given may be changed by notice given
in accordance with this Article.
16. Entire Agreement.
This Agreement with Exhibits embodies the entire agreement between the
parties hereto with respect to the transaction contemplated herein and
supersedes all prior agreements, written or oral, express or implied and all
negotiations, discussions or other matters between the parties and there have
been and are no agreements representations or warranties between the parties
other than those set forth or provided for herein.
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17. Counterparts.
This Agreement may be executed in two (2) or more partially or fully
executed counterparts, each of which shall be deemed an original and shall bind
the signatory, but all of which together shall constitute but one and the same
instrument.
18. Binding Effect.
This Agreement shall inure to the benefit of and bind the parties and
their respective heirs, beneficiaries, transferees, successors, and assigns.
19. Headings.
The headings of this Agreement are inserted for convenience only and
shall not constitute a part hereof.
20. Confidentiality.
Except as necessary to take action pursuant to this Agreement, each party
agrees that all information and documents received from the other party
regarding the proposed transaction shall be held in confidence and that all
documents containing such information will be returned upon request if the
parties abandon the transaction. The parties further agree to use such
information only in connection with the proposed transaction contemplated by
this Agreement. This paragraph shall not apply to information or documents which
are, or by law must be made, publicly available. The parties agree to not
publicly disclose this Agreement or its Exhibits or any of the provisions
hereof, except as a part of regulatory filings or pursuant to press releases and
other public statements approved by F&M and CBE.
21. Further Documents.
F&M, Subsidiary and CBE agree to execute any and all other documents and
to take such other action or corporate proceedings as may be reasonably
necessary or desirable to carry out the terms hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
F&M BANCORPORATION, INC. ("F&M")
By:__/s/_______________________________
Xxxx X. Xxxxxxx, Chairman of the Board
ATTEST:
By:__/s/____________________________
Xxxxx X. Xxxxx Secretary
F&M MERGER CORPORATION ("SUBSIDIARY")
By:__/s/_______________________________
Xxxx X. Xxxxxxx, President
ATTEST:
By:__/s/_______________________________
Xxxxxx X. Xxxxx, Vice President
CBE, INC. ("CBE")
By:__/s/_______________________________
Xxxx X. Xxxxxxx, President and
Chairman of the Board
ATTEST:
By:__/s/_______________________________
Xxxxxx Xxxxxxxx, Secretary
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