EXECUTION COPY
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
MAIN STREET TRUST, INC.,
CITIZENS ACQUISITION LLC
AND
CITIZENS FIRST FINANCIAL CORP.
NOVEMBER 7, 2004
TABLE OF CONTENTS
ARTICLE 1
Definitions...................................................................................................... 1
1.1 Definitions.................................................................................... 1
1.2 Principles of Construction..................................................................... 7
ARTICLE 2
The Merger....................................................................................................... 8
2.1 The Merger..................................................................................... 8
2.2 Effective Time; Closing........................................................................ 9
2.3 Effects of Merger.............................................................................. 9
2.4 Certificate of Formation....................................................................... 9
2.5 Operating Agreement............................................................................ 9
2.6 Manager........................................................................................ 9
2.7 MSTI's Deliveries at Closing................................................................... 9
2.8 Citizens' Deliveries at Closing................................................................ 11
2.9 Alternative Structure.......................................................................... 13
2.10 Absence of Control............................................................................. 13
ARTICLE 3
Conversion of Securities in the Merger........................................................................... 13
3.1 Additional Definitions...... .................................................................. 13
3.2 Manner of Merger............................................................................... 14
3.3 Election Procedures............................................................................ 15
3.4 Rights as Stockholders; Stock Transfers........................................................ 17
3.5 Fractional Shares.............................................................................. 17
3.6 Exchange Procedures............................................................................ 17
3.7 Anti-Dilution Provisions....................................................................... 19
3.8 Tax Free Reorganization........................................................................ 19
3.9 Dissenting Shares.............................................................................. 19
ARTICLE 4
Representations and Warranties of Citizens....................................................................... 20
4.1 Citizens Organization.......................................................................... 20
4.2 Citizens Subsidiary Organization............................................................... 20
4.3 Authorization; Enforceability.................................................................. 20
4.4 No Conflict.................................................................................... 21
4.5 Citizens Capitalization........................................................................ 21
4.6 Citizens Subsidiary Capitalization............................................................. 22
4.7 Financial Statements and Reports............................................................... 23
4.8 Books and Records.............................................................................. 24
4.9 Title to Properties............................................................................ 24
4.10 Condition and Sufficiency of Assets............................................................ 24
4.11 Loans; Allowance for Loan and Lease Losses..................................................... 25
4.12 Undisclosed Liabilities; Adverse Changes....................................................... 25
4.13 Taxes.......................................................................................... 25
4.14 Compliance with ERISA.......................................................................... 26
4.15 Compliance with Legal Requirements............................................................. 26
4.16 Legal Proceedings; Orders...................................................................... 27
4.17 Absence of Certain Changes and Events.......................................................... 27
4.18 Properties, Contracts and Employee Benefit Plans............................................... 29
4.19 No Defaults.................................................................................... 32
4.20 Insurance...................................................................................... 32
4.21 Compliance with Environmental Laws............................................................. 32
4.22 Regulatory Filings............................................................................. 33
4.23 Fiduciary Accounts............................................................................. 33
4.24 Indemnification Claims......................................................................... 33
4.25 Insider Interests.............................................................................. 34
4.26 Brokerage Commissions.......................................................................... 34
4.27 Approval Delays................................................................................ 34
4.28 Code Sections 280G and 4999.................................................................... 34
4.29 Disclosure..................................................................................... 34
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MSTI AND ACQUISITION LLC....................................................... 35
5.1 MSTI Organization.............................................................................. 35
5.2 MSTI Subsidiary Organization................................................................... 35
5.3 Authorization; Enforceability.................................................................. 35
5.4 No Conflict.................................................................................... 36
5.5 MSTI Capitalization............................................................................ 36
5.6 MSTI Subsidiary Capitalization................................................................. 37
5.7 Financial Statements and Reports............................................................... 37
5.8 Books and Records.............................................................................. 37
5.9 Title to Properties............................................................................ 37
5.10 Condition and Sufficiency of Assets............................................................ 38
5.11 Loans; Allowance for Loan and Lease Losses..................................................... 38
5.12 Undisclosed Liabilities; Adverse Changes....................................................... 39
5.13 Taxes.......................................................................................... 39
5.14 Compliance with ERISA.......................................................................... 39
5.15 Compliance With Legal Requirements............................................................. 40
5.16 Legal Proceedings; Orders...................................................................... 40
5.17 Absence of Certain Changes and Events.......................................................... 41
5.18 Material Contracts............................................................................. 41
5.19 No Defaults.................................................................................... 41
5.20 Compliance with Environmental Laws............................................................. 42
5.21 Regulatory Filings............................................................................. 42
5.22 Indemnification Claims......................................................................... 42
5.23 Brokerage Commissions.......................................................................... 42
5.24 Approval Delays................................................................................ 42
ii
5.25 Disclosure..................................................................................... 42
5.26 Financial Resources............................................................................ 43
ARTICLE 6
Citizens' Covenants.............................................................................................. 43
6.1 Access and Investigation....................................................................... 43
6.2 Operation of Citizens and Citizens Subsidiaries................................................ 44
6.3 Negative Covenant.............................................................................. 45
6.4 Subsequent Citizens Financial Statements; Securities Reports................................... 45
6.5 Title to Real Estate........................................................................... 46
6.6 Surveys........................................................................................ 46
6.7 Environmental Investigation.................................................................... 46
6.8 Advice of Changes.............................................................................. 46
6.9 Other Offers................................................................................... 47
6.10 Voting Agreement............................................................................... 48
6.11 Stockholders' Meeting.......................................................................... 48
6.12 Information Provided to MSTI................................................................... 48
6.13 Treatment of Employee Benefit Plans............................................................ 49
6.14 Stock Options.................................................................................. 49
6.15 Data and Item Processing Agreements............................................................ 49
6.16 Tax Matters.................................................................................... 49
6.17 Officer and Other Agreements................................................................... 49
6.18 Accounting and Other Adjustments............................................................... 49
6.19 LaSalle Loan................................................................................... 50
ARTICLE 7
MSTI's Covenants................................................................................................. 50
7.1 Access and Investigation....................................................................... 50
7.2 Subsequent MSTI Financial Statements; Securities Reports....................................... 51
7.3 Advice of Changes.............................................................................. 51
7.4 Information Provided to Citizens............................................................... 51
7.5 Indemnification; Director and Officer Insurance................................................ 52
7.6 Employee Benefits.............................................................................. 52
7.7 Authorization and Reservation of MSTI Common Stock............................................. 52
7.8 Subsidiary Board Seat.......................................................................... 52
7.9 Negative Covenants............................................................................. 52
ARTICLE 8
COVENANTS OF ALL PARTIES......................................................................................... 53
8.1 Regulatory Approvals........................................................................... 53
8.2 SEC Registration............................................................................... 53
8.3 Necessary Approvals............................................................................ 54
8.4 Customer and Employee Relationships............................................................ 54
8.5 Publicity...................................................................................... 54
8.6 Best Efforts; Cooperation...................................................................... 54
iii
ARTICLE 9
Conditions Precedent to Obligations of MSTI...................................................................... 54
9.1 Accuracy of Representations and Warranties..................................................... 54
9.2 Citizens' Performance.......................................................................... 55
9.3 Documents Satisfactory......................................................................... 55
9.4 Corporate Approval............................................................................. 55
9.5 No Proceedings................................................................................. 55
9.6 Absence of Material Adverse Changes............................................................ 55
9.7 Consents and Approvals......................................................................... 55
9.8 No Prohibition................................................................................. 55
9.9 Registration Statement......................................................................... 55
9.10 Dissenting Shares.............................................................................. 56
9.11 Employment Agreements.......................................................................... 56
9.12 Tax Opinion.................................................................................... 56
9.13 Minimum Stockholders' Equity................................................................... 56
9.14 Allowance for Loan and Lease Losses............................................................ 56
9.15 Citizens Capitalization........................................................................ 56
9.16 Transactional Expenses......................................................................... 56
ARTICLE 10
Conditions Precedent to the Obligations of Citizens.............................................................. 56
10.1 Accuracy of Representations and Warranties..................................................... 56
10.2 MSTI's Performance............................................................................. 57
10.3 Documents Satisfactory......................................................................... 57
10.4 Corporate Approval............................................................................. 57
10.5 No Proceedings................................................................................. 57
10.6 Absence of Material Adverse Changes............................................................ 57
10.7 Consents and Approvals......................................................................... 57
10.8 No Prohibitions................................................................................ 57
10.9 Registration Statement......................................................................... 57
10.10 Tax Opinion.................................................................................... 57
10.11 Fairness Opinion............................................................................... 58
ARTICLE 11
Termination...................................................................................................... 58
11.1 Reasons for Termination and Abandonment........................................................ 58
11.2 Effect of Termination.......................................................................... 59
11.3 Expenses....................................................................................... 59
11.4 Citizens Termination Payments.................................................................. 59
11.5 MSTI Termination Payments...................................................................... 61
ARTICLE 12
Miscellaneous.................................................................................................... 62
12.1 Governing Law.................................................................................. 62
12.2 Assignments, Successors and No Third Party Rights.............................................. 62
12.3 Waiver......................................................................................... 62
iv
12.4 Notices........................................................................................ 62
12.5 Entire Agreement............................................................................... 64
12.6 Modification................................................................................... 64
12.7 Severability................................................................................... 64
12.8 Further Assurances............................................................................. 64
12.9 Survival....................................................................................... 64
12.10 Counterparts................................................................................... 64
v
EXHIBIT INDEX
A Form of Legal Opinion of Counsel to MSTI
B Form of Legal Opinion of Counsel to Citizens
C Form of Stock Option Cancellation Agreement
D Form of Voting Agreement
E-1 Form of Xxxxxxxxx Employment Agreement
E-2 Form of Smiley Employment Agreement
F Description of Tax Opinion
G Index Companies
SCHEDULE INDEX
Citizens Schedules
4.1 Citizens Organization
4.2 Citizens Subsidiary Organization
4.4 No Conflict
4.5 Citizens Capitalization
4.6 Citizens Subsidiary Capitalization
4.7 Financial Statements and Reports
4.9 Title to Properties
4.11 Loans; Allowance for Loan and Lease Losses
4.12 Undisclosed Liabilities; Adverse Changes
4.14 Compliance with ERISA
4.15 Compliance with Legal Requirements
4.16 Legal Proceedings; Orders
4.17 Absence of Certain Changes and Events
4.18 Properties, Contracts and Employee Benefit Plans
4.19 No Defaults
4.20 Insurance
4.21 Compliance with Environmental Laws
4.25 Insider Interests
4.26 Brokerage Commissions
4.28 Code Sections 280G and 4999
MSTI Schedules
5.4 No Conflict
5.5 MSTI Capitalization
5.9 Title to Properties
5.12 Undisclosed Liabilities; Adverse Changes
5.14 Compliance with ERISA
5.15 Compliance With Legal Requirements
5.16 Legal Proceedings; Orders
5.17 Absence of Certain Changes and Events
5.18 Material Contracts
5.19 No Defaults
5.20 Compliance with Environmental Laws
5.23 Brokerage Commissions
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is entered into as of
November 7, 2004 (the "AGREEMENT DATE"), among MAIN STREET TRUST, INC., an
Illinois corporation ("MSTI"), CITIZENS FIRST FINANCIAL CORP., a Delaware
corporation ("CITIZENS"), and CITIZENS ACQUISITION LLC, a Delaware limited
liability company ("ACQUISITION LLC").
RECITALS
A. The parties to this Agreement desire to effect a reorganization whereby
MSTI desires to acquire control of Citizens through the merger (the "MERGER") of
Citizens with and into Acquisition LLC, with Acquisition LLC being the surviving
entity as a wholly owned subsidiary of MSTI (the "SURVIVING ENTITY").
B. Pursuant to the terms of this Agreement, each outstanding share of the
common stock of Citizens, $0.01 par value per share ("CITIZENS COMMON STOCK"),
shall be converted at the effective time of the Merger into the right to
receive: (a) shares of common stock of MSTI, $0.01 par value per share ("MSTI
COMMON STOCK"); (b) cash; or (c) a combination of MSTI Common Stock and cash,
all in the amounts set forth in this Agreement.
C. The parties desire to make certain representations, warranties and
agreements in connection with the Merger and also agree to certain prescribed
conditions to 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
1.1 DEFINITIONS. In addition to those terms defined throughout this
Agreement, the following terms, when used herein, shall have the following
meanings.
(a) "ADJUSTED STOCKHOLDERS' EQUITY" means the consolidated tangible
stockholders' equity of Citizens, calculated in accordance with GAAP and
reflecting, among other things, the accrued income and expenses of Citizens for
all periods ending on or prior to the Determination Date, but adjusted to
exclude: (i) the recognition of or accrual for all expenses paid or incurred or
projected to be paid or incurred by Citizens or the Bank in connection with this
Agreement and the Contemplated Transactions, including Citizens Transactional
Expenses and any Remediation Cost (as defined in SECTION 6.7); (ii) changes in
stockholders' equity resulting from the exercise or cash-out of any Citizens
Stock Options from September 30, 2004, to the Closing Date (as defined below);
(iii) any realized gains or losses resulting from sales of investment securities
effected by Citizens or any Citizens Subsidiary between September 30, 2004, and
the Closing Date; (iv) any realized gains on the sale of any branch or on any
other
extraordinary sales; (v) any adjustments made in accordance with Statement of
Financial Accounting Standard No. 115; and (vi) any accounting or other
adjustments made pursuant to SECTION 6.18. Citizens' Adjusted Stockholders'
Equity shall be calculated by Citizens' independent auditors, in consultation
with MSTI's independent auditors, as of the close of business on the
Determination Date using reasonable estimates of revenues and expenses where
actual amounts are not available. For purposes of this calculation, Citizens
shall assume a tax rate of 34%. Such calculation shall be subject to
verification and approval prior to the Closing (as defined below) by MSTI's
independent auditors, which approval shall not be unreasonably withheld.
(b) "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).
(c) "BANK" means Citizens Savings Bank, an Illinois chartered
savings bank with its main office located in Bloomington, Illinois, and a
wholly-owned subsidiary of Citizens.
(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.
2
(f) "BUSINESS DAY" means any day on which the trading of stock
occurs on the OTCBB.
(g) "CALL REPORTS" means the quarterly reports of income and
condition filed by the Bank with Regulatory Authorities.
(h) "CITIZENS SEC DOCUMENTS" means the annual, quarterly and other
reports, schedules, forms, statements and other documents (including exhibits
and all other information incorporated therein) filed by Citizens with the SEC.
(i) "CITIZENS STOCKHOLDER" means a holder of record of Citizens
Common Stock.
(j) "CITIZENS STOCK OPTION" means each of the stock options granted
by Citizens prior to the Agreement Date to a person under the terms of the
Citizens Stock Option Plan or otherwise, and that is outstanding on the
Agreement Date.
(k) "CITIZENS STOCK OPTION PLAN" means the Citizens 1997 Stock Based
Incentive Plan.
(l) "CITIZENS SUBSIDIARY" means any Subsidiary of Citizens.
(m) "CITIZENS TRANSACTIONAL EXPENSES" means: (i) all transaction
costs of Citizens necessary to consummate the Contemplated Transactions; (ii)
the aggregate fees and expenses of attorneys, accountants, consultants,
financial advisors and other professional advisors incurred by Citizens in
connection with this Agreement and the Contemplated Transactions; (iii) the
costs of preparing, printing and mailing the Proxy Statement to Citizens
Stockholders and obtaining the approval of Citizens Stockholders of the
Contemplated Transactions; (iv) all amounts paid or payable to any director,
officer or employee of Citizens or any Citizens Subsidiary under any Contract or
plan as a result of the Contemplated Transactions; and (v) all other non-payroll
related costs and expenses in each case incurred or to be incurred by Citizens
through the Effective Time in connection with this Agreement and the
Contemplated Transactions.
(n) "CODE" means the Internal Revenue Code of 1986, as amended.
(o) "CONTEMPLATED TRANSACTIONS" means all of the transactions
contemplated by this Agreement, including: (i) the Merger; (ii) the performance
by MSTI, Acquisition LLC and Citizens of their respective covenants and
obligations under this Agreement; (iii) MSTI's acquisition of control of
Citizens and, indirectly, the Bank; and (iv) MSTI's issuance of registered
shares of MSTI Common Stock and payment of cash in exchange for shares of
Citizens Common Stock.
(p) "CONTRACT" means any agreement, contract, obligation, promise or
understanding (whether written or oral and whether express or implied) that is
legally binding: (i) under which a Person has or may acquire any rights; (ii)
under which such Person has or may
3
become subject to any obligation or liability; or (iii) by which such Person or
any of the assets owned or used by such Person is or may become bound.
(q) "CRA" means the Community Reinvestment Act, as amended.
(r) "DELAWARE ACT" means the Delaware Limited Liability Company Act,
as amended.
(s) "DETERMINATION DATE" means the close of business on the last
Business Day preceding the Closing Date.
(t) "DFPR" means all the Illinois Department of Professional and
Financial Regulation.
(u) "DGCL" means the Delaware General Corporation Law, as amended.
(v) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(w) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(x) "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.
(y) "FDIC" means the Federal Deposit Insurance Corporation.
(z) "FEDERAL RESERVE" means the Board of Governors of the Federal
Reserve System.
(aa) "GAAP" means generally accepted accounting principles in the
United States consistent with those used in the preparation of the most recent
audited consolidated financial statements of MSTI or Citizens, as the case may
be.
(bb) "INDEX VALUE" means, for a given date, the average of the
closing prices per share of each of the common stock of the companies listed on
Exhibit G as reported on the New York Stock Exchange, The Nasdaq Stock Market or
the American Stock Exchange, as applicable, as of such date.
(cc) "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
4
(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 served in the past twelve (12)
months as a director, outside advisor, officer, manager, partner, executor or
trustee of such Person (or in any similar capacity) has Knowledge of such fact
or other matter.
(dd) "LEGAL REQUIREMENT" means any federal, state, local, municipal,
foreign, international, multinational or other Order, constitution, law,
ordinance, regulation, rule, policy statement, directive, statute or treaty.
(ee) "MATERIAL ADVERSE EFFECT" with respect to a Person (other than
an individual) means, a material adverse effect (whether or not required to be
accrued or disclosed under Statement of Financial Accounting Standards No. 5):
(i) on the condition (financial or otherwise), properties, assets, liabilities,
businesses or results of operations of such Person; or (ii) on the ability of
such Person to perform its obligations under this Agreement on a timely basis,
but not including the effect of any change of any Legal Requirement or economic
event affecting financial institutions generally.
(ff) "MATERIAL INTEREST" means the direct or indirect beneficial
ownership (as currently defined in Rule 13d-3 under the Exchange Act) of voting
securities or other voting interests representing at least ten percent (10%) of
the outstanding voting power of a Person or equity securities or other equity
interests representing at least ten percent (10%) of the outstanding equity
securities or equity interests in a Person.
(gg) "MSTI SEC DOCUMENTS" means the annual, quarterly and other
reports, schedules, forms, statements and other documents (including exhibits
and all other information incorporated therein) filed by MSTI with the SEC.
(hh) "MSTI SUBSIDIARY" means any Subsidiary of MSTI.
(ii) "OLD CERTIFICATES" means certificates formerly representing
shares of Citizens Common Stock.
(jj) "ORDER" means any award, decision, injunction, judgment, order,
ruling, extraordinary supervisory letter, policy statement, memorandum of
understanding, resolution, agreement, directive, subpoena or verdict entered,
issued, made, rendered or required by any court, administrative or other
governmental agency, including any Regulatory Authority, or by any arbitrator.
(kk) "ORDINARY COURSE OF BUSINESS" means any action taken by a
Person only if such action:
(i) is consistent with the past practices of such Person and
is taken in the ordinary course of the normal day-to-day operations of such
Person;
5
(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.
(ll) "OTCBB" means the over-the-counter bulletin board.
(mm) "OTS" means the office of Thrift Supervision.
(nn) "PER SHARE CASH CONSIDERATION" means an amount equal to
Thirty-Five Dollars ($35.00), in cash.
(oo) "PER SHARE STOCK CONSIDERATION" means 1.1051 shares of MSTI
Common Stock, calculated as the quotient of (i) Thirty-Five Dollars ($35.00),
divided by (ii) Thirty-One Dollars and Sixty-Seven Cents ($31.67).
(pp) "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.
(qq) "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.
(rr) "PROXY STATEMENT" means the proxy statement-prospectus to be
used by Citizens in connection with the solicitation by its board of directors
of proxies for use at the meeting of its stockholders to be convened for the
purpose of voting on this Agreement and the Merger, pursuant to SECTION 6.11.
(ss) "REGULATORY AUTHORITY" means any federal, state or local
governmental body, agency, court or authority that, under applicable Legal
Requirements: (i) has supervisory, judicial, administrative, police,
enforcement, taxing or other power or authority over Citizens, MSTI or any of
their respective Subsidiaries; (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 Federal Reserve, the DFPR, the
FDIC and the OTS.
(tt) "REPRESENTATIVE" means with respect to a particular Person, any
director, officer, manager, employee, agent, consultant, advisor or other
representative of such Person, including legal counsel, accountants and
financial advisors.
(uu) "SEC" means the Securities and Exchange Commission.
6
(vv) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(ww) "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.
(xx) "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.
(yy) "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.
(zz) "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.
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
reasonable 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 Champaign, Illinois 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 and context require; (ix) the
captions and
7
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; and
(x) any reference to a document or set of documents in this Agreement, and the
rights and obligations of the parties under any such documents, shall mean such
document or documents as amended from time to time, and any and all
modifications, extensions, renewals, substitutions or replacements thereof.
(b) The Schedules referred to in this Agreement consist of the
agreements and other documentation described and referred to in this Agreement,
which Schedules were delivered by Citizens to MSTI or by MSTI to Citizens, as
applicable, before the Agreement Date. The disclosures in the Schedules, and
those in any supplement thereto, shall relate only to the representations and
warranties in the section of this Agreement to which they reasonably 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 GAAP.
(d) With regard to each and every term and condition of this
Agreement and any and all agreements and instruments subject to the terms
hereof, the parties hereto understand and agree that the same have or has been
mutually negotiated, prepared and drafted, and that if at any time the parties
hereto desire or are required to interpret or construe any such term or
condition or any agreement or instrument subject hereto, no consideration shall
be given to the issue of which party hereto actually prepared, drafted or
requested any term or condition of this Agreement or any agreement or instrument
subject hereto.
ARTICLE 2
THE MERGER
2.1 THE MERGER. Provided that this Agreement shall not have been
terminated in accordance with its express terms, upon the terms and subject to
the conditions of this Agreement and in accordance with the applicable
provisions of the DGCL and the Delaware Act, at the Effective Time (as defined
below), Citizens shall be merged with and into Acquisition LLC pursuant to the
provisions of, and with the effects provided in, the DGCL and the Delaware Act,
the separate corporate existence of Citizens shall cease and Acquisition LLC
will be the Surviving Entity. As a result of the Merger, each share of Citizens
Common Stock issued and outstanding immediately prior to the Effective Time,
other than Dissenting Shares (as defined below), will be converted into the
right to receive the Merger Consideration as defined and provided in ARTICLE 3.
8
2.2 EFFECTIVE TIME; CLOSING.
(a) Provided that this Agreement shall not have been terminated in
accordance with its express terms, the closing of the Merger (the "CLOSING")
shall occur through the mail or at a place that is mutually acceptable to MSTI
and Citizens, or if they fail to agree, at the offices of Barack Xxxxxxxxxx
Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx LLP, located at 000 X. Xxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000, at 10:00 a.m. on the date that is ten (10) Business
Days after the end of the calendar month in which all of the following
conditions are satisfied: (i) the receipt of the last required regulatory
approval of the Merger and the expiration of the last requisite waiting period;
and (ii) the satisfaction or waiver in writing of all of the conditions provided
for in ARTICLES 9 AND 10; whichever is later, or at such other time as Citizens
and MSTI may agree in writing (the "CLOSING DATE"). Subject to the provisions of
ARTICLE 11, 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 an appropriate certificate of
merger as contemplated by Section 264 of the DGCL and Section 18-209 of the
Delaware Act, with the Secretary of State of the State of Delaware. The Merger
shall be effective on the Closing Date and at the time stated in the certificate
of merger filed with the Secretary of State of the State of Delaware (the
"EFFECTIVE TIME").
2.3 EFFECTS OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in Section 264 of the DGCL and Section 18-209 of the
Delaware Act. Without limiting the generality of the foregoing, at the Effective
Time, all the property, rights, privileges, powers and franchises of Acquisition
LLC and Citizens shall be vested in the Surviving Entity, and all debts,
liabilities and duties of Acquisition LLC and Citizens shall become the debts,
liabilities and duties of the Surviving Entity.
2.4 CERTIFICATE OF FORMATION. At the Effective Time, the certificate of
formation of Acquisition LLC, as in effect immediately prior to the Effective
Time, shall be the certificate of formation of the Surviving Entity until
thereafter amended in accordance with applicable law.
2.5 OPERATING AGREEMENT. At the Effective Time, the operating agreement of
Acquisition LLC, as in effect immediately prior to the Effective Time, shall be
the operating agreement of the Surviving Entity until thereafter amended in
accordance with applicable law.
2.6 MANAGER. From and after the Effective Time, until duly changed in
compliance with applicable law and the certificate of formation and operating
agreement of the Surviving Entity, the manager of the Surviving Entity shall be
the manager of Acquisition LLC immediately prior to the Effective Time.
2.7 MSTI'S DELIVERIES AT CLOSING. At the Closing, MSTI shall deliver or
cause to be delivered the following items to or on behalf of Citizens:
9
(a) a good standing certificate for MSTI issued by the Secretary of
State of the State of Illinois and dated not more than fifteen (15) Business
Days prior to the Closing Date;
(b) a copy of the articles of incorporation of MSTI certified not
more than fifteen (15) Business Days prior to the Closing Date by the Secretary
of State of the State of Illinois;
(c) a certificate of the Secretary or any Assistant Secretary of
MSTI dated the Closing Date certifying a copy of the bylaws of MSTI;
(d) copies of resolutions of the board of directors of MSTI
approving this Agreement and the consummation of the Contemplated Transactions,
certified as of the Closing Date by the Secretary or any Assistant Secretary of
MSTI;
(e) copies of resolutions of the manager and the sole member of
Acquisition LLC approving this Agreement and the consummation of the
Contemplated Transactions, certified as of the Closing Date by the manager of
Acquisition LLC;
(f) a good standing certificate for Acquisition LLC issued by the
Secretary of State of the State of Delaware, and dated not more than fifteen
(15) Business Days prior to the Closing Date;
(g) a copy of the certificate of formation of Acquisition LLC
certified not more than fifteen (15) Business Days prior to the Closing Date by
the Secretary of State of the State of Delaware;
(h) a certificate of the manager of Acquisition LLC dated the
Closing Date certifying a copy of the operating agreement of Acquisition LLC;
(i) a certificate executed by the manager of Acquisition LLC, dated
the Closing Date, stating that: (i) all of the representations and warranties of
Acquisition LLC set forth in this Agreement, as the same may have been updated
pursuant to SECTION 7.3, 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 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) Acquisition LLC 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,
Acquisition LLC shall have performed and complied in all respects with such
covenants and obligations;
(j) a certificate executed by the Chief Executive Officer or
Executive Vice President, and by the Secretary or any Assistant Secretary of
MSTI, dated the Closing Date, stating
10
that: (i) all of the representations and warranties of MSTI set forth in this
Agreement, as the same may have been updated pursuant to SECTION 7.3, 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 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) MSTI 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, MSTI shall have performed and
complied in all respects with such covenants and obligations;
(k) a legal opinion of MSTI's counsel dated the Closing Date in the
form attached as Exhibit A;
(l) the tax opinion described in SECTION 10.10; and
(m) such other documents as Citizens may reasonably request.
All of such items shall be reasonably satisfactory in form and substance to
Citizens and its counsel.
2.8 CITIZENS' DELIVERIES AT CLOSING. At the Closing, Citizens shall
deliver or cause to be delivered the following items to or on behalf of MSTI:
(a) a good standing certificate for Citizens issued by each of the
Secretary of State of the State of Delaware and the Secretary of State of the
State of Illinois and dated in each case not more than fifteen (15) Business
Days prior to the Closing Date;
(b) a copy of the certificate of incorporation of Citizens certified
not more than fifteen (15) Business Days prior to the Closing Date by the
Secretary of State of the State of Delaware;
(c) a certificate of the Secretary or any Assistant Secretary of
Citizens dated the Closing Date certifying a copy of the bylaws of Citizens;
(d) copies of resolutions of the board of directors and Citizens
Stockholders 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 Citizens;
(e) a good standing certificate for the Bank issued by the DFPR and
dated not more than fifteen (15) Business Days prior to the Closing Date;
11
(f) a copy of the charter of the Bank certified by the DFPR and
dated not more than fifteen (15) Business Days prior to the Closing Date;
(g) 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 charter of the Bank delivered pursuant to the
immediately preceding paragraph of this Section;
(h) a certificate executed by the Chief Executive Officer or
Executive Vice President, and by the Secretary or any Assistant Secretary of
Citizens, dated the Closing Date, stating that: (i) all of the representations
and warranties of Citizens set forth in this Agreement, as the same may have
been updated pursuant to SECTION 6.8, 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 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) Citizens 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, Citizens shall have performed and complied in all respects with
such covenants and obligations; and
(i) a list of all Citizens Stockholders as of the Determination Date
and a list of all Persons as of the Determination Date who have the right at any
time to acquire shares of Citizens Common Stock, certified in each case by the
Secretary or any Assistant Secretary of Citizens;
(j) owner's title insurance policies issued by Chicago Title
Insurance Company or such other title insurance company as is reasonably
acceptable to MSTI in accordance with the title commitments delivered by
Citizens to MSTI in accordance with SECTION 6.5, and in each case, in policy
amounts at least equal to the book value of the property covered by such
policies, as shown on the books and records of Citizens or the Bank;
(k) a legal opinion of Citizens' counsel dated the Closing Date in
the form attached as Exhibit B;
(l) a certificate of each of Citizens' legal counsel, accountants
and financial advisor or investment banker, if any, representing that all of
their respective fees and expenses relating to the Contemplated Transactions
incurred by Citizens prior to and including the Effective Time have been paid in
full;
(m) a resignation from each of the directors and executive officers
of Citizens and the Bank, all as the same may be identified in writing by MSTI,
from such individual's position as a director and/or an officer of Citizens
and/or the Bank, as the case may be;
12
(n) a Stock Option Cancellation Agreement between Citizens and any
holder of Citizens Stock Options, in the form attached as Exhibit C; and
(o) such other documents as MSTI may reasonably request.
All of such items shall be reasonably satisfactory in form and substance to MSTI
and its counsel.
2.9 ALTERNATIVE STRUCTURE. Notwithstanding anything contained herein to
the contrary, upon receipt of Citizens' prior written consent (which consent
shall not be unreasonably withheld), MSTI may specify, for any reasonable
business, tax or regulatory purpose, that, before the Effective Time, MSTI,
Acquisition LLC and Citizens shall enter into transactions other than those
described in this Agreement to effect the purposes of this Agreement, including
the merger of Citizens with any Affiliate of MSTI, and the parties to this
Agreement shall take all action necessary and appropriate to effect, or cause to
be effected, such transactions; provided, however, that no such proposed change
in the structure of the transactions contemplated in this Agreement shall delay
the Closing Date (if such a date has already been firmly established) by more
than thirty (30) Business Days or adversely affect the economic benefits, the
form of consideration or the tax effect of the Merger at the Effective Time to
the Citizens Stockholders.
2.10 ABSENCE OF CONTROL. Subject to any specific provisions of this
Agreement, it is the intent of the parties to this Agreement that neither MSTI
nor Citizens by reason of this Agreement shall be deemed (until consummation of
the Contemplated Transactions) to control, directly or indirectly, the other
party or any of its respective Subsidiaries and shall not exercise, or be deemed
to exercise, directly or indirectly, a controlling influence over the management
or policies of such other party or any of its respective Subsidiaries.
ARTICLE 3
CONVERSION OF SECURITIES IN THE MERGER
3.1 ADDITIONAL DEFINITIONS. In addition to those terms defined throughout
this Agreement, the following terms, when used herein, shall have the following
meanings:
(a) "AGGREGATE CASH ELECTION NUMBER" means the aggregate number of
Cash Election Shares, Non-Election Shares and Mandatory Election Shares (as each
such term is defined in SECTION 3.3(B)) held by all Citizens Stockholders.
(b) "AGGREGATE STOCK ELECTION NUMBER" means the aggregate number of
Stock Election Shares (as defined in SECTION 3.3(B)) held by all Election
Stockholders.
(c) "CASH ELECTION EXCESS AMOUNT" means the amount, if any, by which
the Aggregate Cash Election Number exceeds the Required Cash Election Number.
(d) "CASH ELECTION PERCENTAGE" means, for each Election Stockholder,
the quotient of: (i) such stockholder's Individual Cash Election Number; divided
by (ii) the Aggregate Cash Election Number.
13
(e) "ELECTION STOCKHOLDER" means a Citizens Stockholder that is not
a Mandatory Cash Stockholder.
(f) "INDIVIDUAL CASH ELECTION NUMBER" means the number of Cash
Election Shares and Non-Election Shares held by an Election Stockholder.
(g) "INDIVIDUAL STOCK ELECTION NUMBER" means the number of Stock
Election Shares held by an Election Stockholder.
(h) "MANDATORY CASH STOCKHOLDER" means a Citizens Stockholder that
holds fewer than one hundred (100) shares of Citizens Common Stock at the
Effective Time.
(i) "OUTSTANDING CITIZENS SHARES" means the number of shares of
Citizens Common Stock issued and outstanding immediately prior to the Effective
Time, excluding any shares held as treasury stock.
(j) "STOCK ELECTION EXCESS AMOUNT" means the amount, if any, by
which the Aggregate Stock Election Number exceeds the Required Stock Election
Number.
(k) "STOCK ELECTION PERCENTAGE" means, for each Election
Stockholder, the quotient of: (i) such stockholder's Individual Stock Election
Number; divided by (ii) the Aggregate Stock Election Number.
(l) "REQUIRED CASH ELECTION NUMBER" means the number equal to fifty
percent (50%) of the Outstanding Citizens Shares.
(m) "REQUIRED STOCK ELECTION NUMBER" means the number equal to fifty
percent (50%) of the Outstanding Citizens Shares.
3.2 MANNER OF MERGER. Subject to the provisions of this Agreement, at the
Effective Time, automatically by virtue of the Merger and without any action on
the part of any Person:
(a) Each membership interest of Acquisition LLC issued and
outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and non-assessable membership interest of the
Surviving Entity.
(b) Each share of Citizens Common Stock held by any Election
Stockholder (other than shares held by Citizens or any Citizens Subsidiary,
except for shares held by any of them in a fiduciary capacity, and Dissenting
Shares) shall be converted, subject to the election of the holder as provided
in, and subject to the limitations set forth in, this Article, into: (i) the Per
Share Stock Consideration, or (ii) the Per Share Cash Consideration. The Per
Share Cash Consideration that may be paid, on an aggregate basis, to Citizens
Stockholders is referred to herein as the "CASH CONSIDERATION," and the Per
Share Stock Consideration that may be paid, on an aggregate basis, to Citizens
Stockholders is referred to herein as the "STOCK CONSIDERATION." The Cash
Consideration and the Stock Consideration are referred to herein collectively as
the "MERGER CONSIDERATION." Each Outstanding Citizens Share held by any
Mandatory Cash Stockholder (other than shares held by Citizens or any Citizens
Subsidiary, except for shares held
14
by any of them in a fiduciary capacity, and Dissenting Shares) shall be
converted into the right to receive the Per Share Cash Consideration.
(c) Each share of Citizens Common Stock held as treasury stock
immediately prior to the Effective Time shall be cancelled and retired at the
Effective Time and no consideration shall be issued in exchange therefor.
(d) An Election Stockholder may, upon the making of a proper
election under SECTION 3.3, elect to receive all Stock Consideration, all Cash
Consideration or a combination of Stock Consideration and Cash Consideration in
exchange for their shares of Citizens Common Stock.
(e) Notwithstanding any other provision contained in this Agreement,
on an aggregate basis, fifty percent (50%) of the Outstanding Citizens Shares
shall be converted into the Stock Consideration and the remaining fifty percent
(50%) of the Outstanding Citizens Shares shall be converted into the Cash
Consideration.
3.3 ELECTION PROCEDURES.
(a) An election form in such form as MSTI and Citizens shall
mutually agree (an "ELECTION FORM") shall be mailed no later than the Mailing
Date (as defined below) to each Election Stockholder as of the Effective Time.
The "MAILING DATE" shall be the date that is ten (10) Business Days after the
Effective Time.
(b) Each Election Form shall entitle the Election Stockholder (or
the beneficial owner of Citizens Common Stock through appropriate and customary
documentation and instructions) to: (i) elect to receive the Stock Consideration
for all of such holder's shares (a "STOCK ELECTION"); (ii) elect to receive the
Cash Consideration for all of such holder's shares (a "CASH ELECTION"); (iii)
elect to receive the Stock Consideration with respect to some of such holder's
shares and the Cash Consideration with respect to such holder's remaining shares
(a "MIXED ELECTION"), provided that no Citizens Stockholder may make a Mixed
Election in which such Citizens Stockholder elects to receive the Stock
Consideration with respect to fewer than one hundred (100) of such holder's
shares; or (iv) make no valid election as to the receipt of the Cash
Consideration or the Stock Consideration (a "NON-ELECTION"). Holders of record
of shares of Citizens Common Stock who hold such shares as nominees, trustees or
in other representative capacities (a "SHARE REPRESENTATIVE") may submit
multiple Election Forms, provided that such Share Representative certifies that
each such Election Form covers all the shares of Citizens Common Stock held by
that Share Representative for a particular beneficial owner. Shares of Citizens
Common Stock as to which a Cash Election has been made (including pursuant to a
Mixed Election) are referred to herein as "CASH ELECTION SHARES." Shares of
Citizens Common Stock as to which a Stock Election has been made (including
pursuant to a Mixed Election) are referred to herein as "STOCK ELECTION SHARES."
Shares of Citizens Common Stock as to which no election has been made are
referred to as "NON-ELECTION SHARES." Shares of Citizens Common Stock held by
any Mandatory Cash Stockholder are referred to herein as "MANDATORY ELECTION
SHARES." For purposes of this Section, Dissenting Shares shall be deemed Cash
Election Shares.
15
(c) To be effective, a properly completed Election Form must be
received by BankIllinois, an Illinois state bank with its main office located in
Champaign, Illinois, and an MSTI Subsidiary (the "EXCHANGE Agent"), on or before
5:00 p.m. on the thirtieth (30th) Business Day following the Mailing Date (or
such other time and date as MSTI and Citizens may mutually agree) (the "ELECTION
DEADLINE"). An election shall have been properly made only if the Exchange Agent
shall have actually received a properly completed Election Form by the Election
Deadline. An Election Form shall be deemed properly completed only if
accompanied by one or more Old Certificates (or customary affidavits and, if
required by MSTI, indemnification and a surety bond, regarding the loss or
destruction of such Old Certificates or the guaranteed delivery of such Old
Certificates) representing all shares of Citizens Common Stock covered by such
Election Form, together with a duly executed Transmittal Letter included with
the Election Form. Subject to the terms of this Agreement and of the Election
Form, the Exchange Agent shall have reasonable discretion to determine whether
any election has been properly or timely made and to disregard immaterial
defects in any Election Form, and any good faith decisions of the Exchange Agent
regarding such matters shall be binding and conclusive.
(d) Within ten (10) Business Days after the Election Deadline, MSTI
shall cause the Exchange Agent to effect the allocation among Election
Stockholders of rights to receive the Cash Consideration and the Stock
Consideration as follows:
(i) If the Aggregate Stock Election Number exceeds the
Required Stock Election Number, then all Cash Election Shares and all
Non-Election Shares will be converted into the right to receive the Cash
Consideration, and, with respect to each holder of Stock Election Shares, then:
(A) that number of Stock Election Shares which is equal
to the product obtained by multiplying (1) the Stock Election Excess Amount by
(2) such stockholder's Stock Election Percentage (such amount being referred to
as such stockholder's "INDIVIDUAL STOCK EXCESS AMOUNT"), shall be converted into
the right to receive the Cash Consideration; and
(B) that number of Stock Election Shares equal to the
difference between (1) such stockholder's Individual Stock Election Number, less
(2) such stockholder's Individual Stock Excess Amount, shall be converted into
the right to receive the Stock Consideration.
(ii) If the Aggregate Cash Election Number exceeds the
Required Cash Election Number, then all Stock Election Shares will be converted
into the right to receive the Stock Consideration, and, with respect to each
holder of Cash Election Shares and Non-Election Shares, then:
(A) that number of Cash Election Shares and Non-Election
Shares which is equal to the product obtained by multiplying (1) the Cash
Election Excess Amount by (2) such stockholder's Cash Election Percentage (such
amount being referred to as such stockholder's "INDIVIDUAL CASH EXCESS AMOUNT"),
shall be converted into the right to receive the Stock Consideration; and
16
(B) that number of Cash Election Shares and Non-Election
Shares which is equal to the difference between (1) such stockholder's
Individual Cash Election Number, less (2) such stockholder's Individual Cash
Excess Amount, shall be converted into the right to receive the Cash
Consideration.
(iii) If the Aggregate Stock Election Number is equal to the
Required Stock Election Number, then all Stock Election Shares will be converted
into the right to receive the Stock Consideration, and all Cash Election Shares
and Non-Election Shares will be converted into the right to receive the Cash
Consideration.
(iv) If (A) all Election Stockholders make only a Stock
Election, and (B) there are no Mandatory Cash Stockholders, such that the
Aggregate Stock Election Number is equal to one hundred percent (100%) of the
Outstanding Citizens Shares, then the Outstanding Citizens Shares held by each
Election Stockholder shall be converted into the Merger Consideration in
accordance with the following formula, viz., fifty percent (50%) of the shares
of Citizens Common Stock held by each Election Stockholder shall be converted
into the right to receive the Stock Consideration, and fifty percent (50%) of
the shares of Citizens Common Stock held by each Election Stockholder shall be
converted into the right to receive the Cash Consideration.
(v) If all Election Stockholders make only a Cash Election,
such that the Aggregate Cash Election Number is equal to one hundred percent
(100%) of the Outstanding Citizens Shares, then the Exchange Agent shall
allocate the Cash Consideration and the Stock Consideration on a pro rata basis
among all Election Stockholders, such that, following such allocation and taking
into account the Cash Consideration to be paid to any Mandatory Cash
Stockholders, fifty percent (50%) of the Outstanding Citizens Shares are
converted into the right to receive the Stock Consideration, and fifty percent
(50%) of the Outstanding Citizens Shares are converted into the right to receive
the Cash Consideration.
3.4 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective Time,
Citizens Stockholders shall cease to be, and shall have no rights as, Citizens
Stockholders, other than to receive the Merger Consideration. After the
Effective Time, there shall be no transfers on the stock transfer books of
Citizens or the Surviving Entity of shares of Citizens Common Stock.
3.5 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of MSTI Common Stock and no certificates or scrip therefore,
or other evidence of ownership thereof, will be issued in the Merger; instead,
MSTI shall pay to each Citizens Stockholder who would otherwise be entitled to a
fractional share of MSTI Common Stock (after taking into account all Old
Certificates registered in the name of such holder) an amount in cash (without
interest) determined by multiplying such fraction by Thirty-One Dollars and
Sixty-Seven Cents ($31.67).
3.6 EXCHANGE PROCEDURES
(a) On the Mailing Date, and with the Election Form, if applicable,
the Exchange Agent shall mail to each Citizens Stockholder instructions for use
in effecting the
17
surrender of the Old Certificates in exchange for the Merger Consideration (the
"TRANSMITTAL LETTER"). Upon proper surrender to the Exchange Agent of an Old
Certificate for exchange and cancellation, together with such properly completed
and duly executed Transmittal Letter, the holder of such Old Certificates shall
be entitled to receive in exchange therefor: (i) a new certificate representing
that number of whole shares of MSTI Common Stock that such holder has the right
to receive pursuant to this Article; (ii) a check representing the amount of
Cash Consideration that such holder is entitled to receive pursuant to this
Article; and (iii) a check representing the amount of any cash in lieu of
fractional shares that such holder has the right to receive in respect of the
Old Certificates surrendered pursuant to the provisions of this Article, and the
Old Certificates so surrendered shall forthwith be cancelled.
(b) On the Closing Date, MSTI shall deposit with the Exchange Agent
for the benefit of holders of Old Certificates: (i) cash or immediately
available funds equal to the aggregate Cash Consideration; and (ii) certificates
representing the shares of MSTI Common Stock to be issued as Stock Consideration
(the "EXCHANGE FUND"). The Exchange Fund shall be held by the Exchange Agent for
the benefit of Citizens Stockholders pursuant to the terms of an Exchange Agent
Agreement in such form as MSTI and Citizens shall mutually agree. All fees,
costs and expenses of the Exchange Agent shall be borne solely by MSTI.
(c) Neither the Exchange Agent nor any party hereto shall be liable
to any former Citizens Stockholder for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(d) No dividends or other distributions with respect to MSTI Common
Stock with a record date occurring after the Effective Time shall be paid to the
holder of any unsurrendered Old Certificate representing shares of Citizens
Common Stock converted in the Merger into the right to receive shares of MSTI
Common Stock until the holder of such unsurrendered Old Certificate shall be
entitled to receive a new certificate representing shares of MSTI Common Stock
in exchange therefor in accordance with the procedures set forth in this
Section. After becoming so entitled in accordance with this Section, the record
holder thereof also shall be entitled to receive any such dividends or other
distributions by the Exchange Agent, without any interest thereon, which
theretofore had become payable with respect to shares of MSTI Common Stock such
holder had the right to receive upon surrender of the Old Certificates.
(e) Any portion of the Merger Consideration that remains unclaimed
by the Citizens Stockholders on the first anniversary of the Effective Time
shall be paid to MSTI to be held for the benefit of holders of unsurrendered Old
Certificates. Any Citizens Stockholders who have not theretofore complied with
this Article shall thereafter look only to MSTI for payment of the Merger
Consideration, cash in lieu of any fractional shares and unpaid dividends and
distributions on MSTI Common Stock deliverable in respect of each share of
Citizens Common Stock such stockholder holds as determined pursuant to this
Agreement, in each case without any interest thereon.
(f) If a certificate representing shares of MSTI Common Stock or a
check representing Cash Consideration is to be issued in a name other than that
in which the Old Certificate surrendered in exchange therefor is registered, it
shall be a condition of the issuance
18
thereof that the Old Certificate so surrendered shall be properly endorsed,
accompanied by all documents required to evidence and effect such transfer and
otherwise in proper form for transfer and that the Person requesting such
exchange shall pay to MSTI any transfer or other taxes required by reason of the
issuance of a certificate representing shares of MSTI Common Stock or a check
representing Cash Consideration in any name other than that of the registered
holder of the Old Certificate surrendered, or otherwise required, or shall
establish to the satisfaction of MSTI that such tax has been paid or is not
payable.
3.7 ANTI-DILUTION PROVISIONS.
(a) If MSTI issues additional shares of MSTI Common Stock (other
than as provided below) or declares a stock dividend, stock split, reverse split
or other general distribution, reclassification or recapitalization of MSTI
Common Stock and the record date for such stock dividend, stock split,
distribution, reclassification or recapitalization occurs at any time after the
Agreement Date and prior to the Effective Time, then the amount of Stock
Consideration shall be adjusted appropriately to give effect to the change in
MSTI capitalization. Notwithstanding the foregoing, no adjustment shall be made
to the amount of Stock Consideration: (i) in the event of the issuance of
additional shares of MSTI Common Stock pursuant to the grant or sale of shares
to, or for the account of, employees of MSTI pursuant to any stock incentive,
qualified or non-qualified retirement, or dividend reinvestment plans; or (ii)
in the event of the issuance of additional shares of MSTI Common Stock or other
securities pursuant to a public offering, private placement or an acquisition of
one or more banks, corporations or business assets for consideration which the
board of directors, or a duly authorized committee of the board of directors, of
MSTI in its reasonable business judgment determines to be fair and reasonable.
(b) Subject only to making any adjustment to the Stock Consideration
and related computations prescribed by this Section, nothing contained in this
Agreement is intended to preclude MSTI from amending its articles of
incorporation to change its capital structure or from issuing additional shares
of MSTI Common Stock, preferred stock, shares of other capital stock or
securities that are convertible into shares of capital stock.
3.8 TAX FREE REORGANIZATION. The parties to this Agreement intend for the
Merger to qualify as a nontaxable reorganization within the meaning of Section
368 and related sections of the Code and agree to cooperate and to take such
actions as may be reasonably necessary to ensure such result and no party shall
file any Tax Return or take any action or position inconsistent therewith,
except as required pursuant to any Legal Requirement.
3.9 DISSENTING SHARES. Notwithstanding anything to the contrary contained
in this Agreement, to the extent appraisal rights are available to Citizens
Stockholders pursuant to the provisions of any applicable Legal Requirements,
including Section 262 of the DGCL, any shares of Citizens Common Stock held by a
Person who objects to the Merger, whose shares were not voted in favor of the
Merger and who complies with and satisfies all of the provisions of the
applicable Legal Requirements concerning the rights of such Person to dissent
from the Merger and to require appraisal of such Person's shares and who has not
withdrawn such objection or waived such rights prior to the Effective Time
(collectively with respect to all such Citizens
19
Stockholders, the "DISSENTING SHARES"), shall not be converted pursuant to
SECTION 3.2, but shall become the right to receive such consideration as may be
determined to be due to the holder of such Dissenting Shares pursuant to the
applicable Legal Requirements, including, if applicable, any costs determined to
be payable by Citizens to the holders of Dissenting Shares pursuant to an order
of any court pursuant to any applicable Legal Requirements; provided, however,
that each Dissenting Share held by a Person at the Effective Time who shall,
after the Effective Time, withdraw the demand for appraisal or lose the right of
appraisal, in either case pursuant to applicable Legal Requirements shall be
deemed to have been converted, as of the Effective Time, into the right to
receive the Merger Consideration as is determined in accordance with this
ARTICLE 3.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CITIZENS
Citizens hereby represents and warrants to MSTI that the following are
true and correct as of the Agreement Date, and will be true and correct as of
the Effective Time:
4.1 CITIZENS ORGANIZATION. Citizens: (a) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
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 OTS as a savings and
loan holding company under the federal Home Owners' Loan Act, as amended (the
"HOLA"); and (c) has full power and authority, corporate and otherwise, to
operate as a savings and loan 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 certificate of incorporation and
bylaws of Citizens and all amendments thereto are set forth on SCHEDULE 4.1 and
are complete and correct. Citizens has no Subsidiaries other than the Bank and
as set forth on SCHEDULE 4.1.
4.2 CITIZENS SUBSIDIARY ORGANIZATION. The Bank is an Illinois chartered
savings bank duly organized, validly existing and in good standing under the
laws of the State of Illinois. Each other Citizens Subsidiary is duly organized,
validly existing and in good standing in its state or jurisdiction of
organization. Each Citizens Subsidiary 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
charter and bylaws (or similar organizational documents) of each Citizens
Subsidiary and all amendments thereto are set forth on SCHEDULE 4.2 and are
complete and correct.
4.3 AUTHORIZATION; ENFORCEABILITY.
(a) Citizens 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 Citizens, and the consummation by
it of its obligations under this Agreement, have
20
been authorized by all necessary corporate action, subject to stockholder
approval, and this Agreement constitutes a legal, valid and binding obligation
of Citizens enforceable in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and subject to general principles of equity.
(b) Except for ordinary corporate requirements, no "business
combination," "moratorium," "control share" or other state anti-takeover statute
or regulation or any provisions contained in the certificate of incorporation or
bylaws or similar organizational documents of Citizens or any Citizens
Subsidiary: (i) prohibits or restricts Citizens' ability to perform its
obligations under this Agreement, or its ability to consummate the Contemplated
Transactions; (ii) would have the effect of invalidating or voiding this
Agreement, or any provision hereof; or (iii) would subject MSTI to any material
impediment or condition in connection with the exercise of any of its rights
under this Agreement. The board of directors of Citizens has unanimously
approved the execution of, and performance by Citizens of its obligations under,
this Agreement.
4.4 NO CONFLICT. Except as set forth on SCHEDULE 4.4, 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 charter or
bylaws (or similar organizational documents), each as in effect on the Agreement
Date, or any currently effective resolution adopted by the board of directors or
stockholders of Citizens or any Citizens Subsidiary; (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 Citizens or any Citizens Subsidiary, or any of
their respective assets that are owned or used by them, may be subject, except
for any contravention, conflict or violation that is permissible by virtue of
obtaining the regulatory approvals necessitated by the Contemplated
Transactions, including any such approvals under the HOLA, the Federal Deposit
Insurance Act, as amended (the "FDIA"), the Securities Act, the Exchange Act,
the DGCL, the Delaware Act and the Illinois Savings Bank Act (the "ISBA"); (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 Contract to which Citizens or any Citizens Subsidiary 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 Citizens or any Citizens Subsidiary. Except for the
approvals referred to in SECTION 8.1 and the requisite approval of its
stockholders, neither Citizens nor any Citizens Subsidiary 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.
4.5 CITIZENS CAPITALIZATION.
(a) The authorized capital stock of Citizens currently consists
exclusively of: (i) 8,000,000 shares of Citizens Common Stock, of which, as of
the Agreement Date, 2,817,500
21
shares are duly issued, fully paid and non-assessable, including 1,298,289
shares that are held by Citizens as treasury shares; and (ii) 1,000,000 shares
of preferred stock, no par value per share, none of which are issued and
outstanding as of the Agreement Date. As of September 30, 2004, Citizens had
issued and outstanding Citizens Stock Options for the purchase of 242,100 shares
of Citizens Common Stock, with an average exercise price of $13.07. A complete
list of all Citizens Stock Options, including the exercise price, date of grant,
number granted and vesting schedule of all such options for each holder thereof
is set forth in SCHEDULE 4.5. The maximum number of shares of Citizens Common
Stock that would be outstanding immediately prior to the Effective Time,
excluding treasury shares, if all options, warrants, conversion rights and other
rights with respect thereto were exercised and the restrictions on any
restricted stock were no longer applicable is 1,761,311 shares. Citizens
acknowledges that the Per Share Cash Consideration and the Per Share Stock
Consideration have each been determined based on the accuracy of the
representations and warranties made in this SECTION 4.5 with respect to the
number of outstanding Citizens Shares and the number of Citizens Stock Options
and the exercise prices thereof (as set forth on SCHEDULE 4.5), and acknowledges
that any Breach of such representations and warranties shall be deemed to have a
Material Adverse Effect on Citizens for purposes of this Agreement.
(b) The shares of Citizens Common Stock to be issued upon exercise
of any Citizens Stock Options are validly authorized and, upon exercise of the
Citizens Stock Options in accordance with their terms, will be validly issued,
fully paid and non-assessable. None of the shares of Citizens Common Stock have
been issued in violation of any federal or state securities laws or any other
Legal Requirement. Since December 31, 2003, except as disclosed in or permitted
by this Agreement or as provided on SCHEDULE 4.5, no shares of Citizens capital
stock have been purchased, redeemed or otherwise acquired, directly or
indirectly, by Citizens or any Citizens Subsidiary and no dividends or other
distributions payable in any equity securities of Citizens or any Citizens
Subsidiary have been declared, set aside, made or paid to the Citizens
Stockholders. To the Knowledge of Citizens, none of the shares of authorized
capital stock of Citizens are, nor on the Closing Date will they be, subject to
any claim of right inconsistent with this Agreement. Except as contemplated in
this Agreement or as set forth in SCHEDULE 4.5, there are, as of the Agreement
Date, no outstanding subscriptions, contracts, conversion privileges, options,
warrants, calls or other rights obligating Citizens or any Citizens Subsidiary
to issue, sell or otherwise dispose of, or to purchase, redeem or otherwise
acquire, any shares of capital stock of Citizens or any Citizens Subsidiary, and
except as provided in this Section or otherwise disclosed in this Agreement,
Citizens is not a party to any Contract relating to the issuance, purchase, sale
or transfer of any equity securities or other securities of Citizens. Citizens
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 the Bank and as set forth
in SCHEDULE 4.5 or the Citizens SEC Documents.
4.6 CITIZENS SUBSIDIARY CAPITALIZATION. The authorized capital stock of
the Bank consists, and immediately prior to the Effective Time, will consist
exclusively of 8,000 shares of capital stock, $1.00 par value per share (the
"BANK SHARES"), 1,000 of which shares are, and immediately prior to the Closing
will be, duly authorized, validly issued and outstanding, fully paid and
nonassessable, except to the extent subject to assessment under the ISBA or the
FDIA.
22
Citizens is, and will be on the Closing Date, the record and beneficial owner of
one hundred percent (100%) of the Bank Shares and all of the issued and
outstanding shares of capital stock of each other Citizens Subsidiary, 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 except pursuant to this Agreement and as set forth on
SCHEDULE 4.6. There are no unexpired or pending preemptive rights with respect
to any shares of capital stock of any Citizens Subsidiary, except for such
rights held exclusively by Citizens. There are no outstanding securities of any
Citizens Subsidiary that are convertible into or exchangeable for any shares of
such Citizens Subsidiary's capital stock, except for such rights held
exclusively by Citizens, and no Citizens Subsidiary is a party to any Contract
relating to the issuance, sale or transfer of any equity securities or other
securities of such Citizens Subsidiary. Neither Citizens nor any Citizens
Subsidiary owns or has 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.
4.7 FINANCIAL STATEMENTS AND REPORTS. True, correct and complete copies of
the following financial statements are included in SCHEDULE 4.7:
(a) audited Consolidated Balance Sheets for Citizens as of December
31, 2001, 2002 and 2003, and the related audited Consolidated Statements of
Income, Statements of Cash Flows and Consolidated Statements of Changes in
Stockholders' Equity of Citizens for the years ended December 31, 2001, 2002 and
2003;
(b) unaudited Consolidated Balance Sheet for Citizens as of June 30,
2004, and the related unaudited Consolidated Statements of Income, Statements of
Cash Flows; and
(c) Call Reports for the Bank as of the close of business on
December 31, 2001, 2002 and 2003, and for the six months ended June 30, 2004.
The financial statements described in clauses (a) and (b) have been
prepared in conformity with GAAP and comply in all material respects with the
published rules and regulations of the SEC. The financial statements described
in clause (c) above have been prepared on a basis consistent with past
accounting practices and as required by applicable Legal Requirements and fairly
present the consolidated financial condition and results of operations at the
dates and for the periods presented. Taken together, the financial statements
described in clauses (a), (b) and (c) above (collectively, and including the
notes thereto, the "CITIZENS FINANCIAL STATEMENTS") are complete and correct in
all material respects and fairly and accurately present the respective financial
position, assets, liabilities and results of operations of Citizens and the Bank
as at the respective dates of, and for the periods referred to in, the Citizens
Financial Statements, subject to normal year-end non-material audit adjustments
in amounts consistent with past practice in the case of the unaudited Citizens
Financial Statements. The Citizens Financial Statements do not include any
material assets or omit to state any material liabilities, absolute or
contingent, or other facts, which inclusion or omission would render the
Citizens Financial Statements misleading in any material respect as of the
respective dates and for the periods referred to in the respective Citizens
Financial Statements.
23
4.8 BOOKS AND RECORDS. The books of account, minute books, stock record
books and other records of Citizens and each Citizens Subsidiary are complete
and correct in all material respects and have been maintained in accordance with
Citizens' business practices and all applicable Legal Requirements, including
the maintenance of any adequate system of internal controls required by the
Legal Requirements. The minute books of Citizens and each Citizens Subsidiary
contain accurate and complete records in all material respects of all meetings
held of, and corporate action taken by, its respective stockholders, board of
directors and committees of the board of directors. At the Closing, all of those
books and records will be in the possession of Citizens and the Citizens
Subsidiaries.
4.9 TITLE TO PROPERTIES. Citizens and each Citizens Subsidiary has good
and marketable title to all assets and properties, whether real or personal,
tangible or intangible, that it purports to own, subject to no valid liens,
mortgages, security interests, encumbrances or charges of any kind except: (a)
as noted in the most recent Citizens Financial Statement or on SCHEDULE 4.6 or
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 Citizens 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, pursuant to borrowings from Federal Home Loan
Banks or similar borrowings, or otherwise incurred in the Ordinary Course of
Business; and (d) minor defects and irregularities in title and encumbrances
that do not materially impair the use thereof for the purposes for which they
are held (all of such exceptions in clauses (a) through (d) are collectively
referred to as "PERMITTED EXCEPTIONS"). Except as set forth on SCHEDULE 4.9,
Citizens and each Citizens Subsidiary 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. Except where any failure would not reasonably
be expected to have a Material Adverse Effect on Citizens on a consolidated
basis, all buildings and structures owned by Citizens and each Citizens
Subsidiary lie wholly within the boundaries of the real property owned or
validly leased by it, and do not encroach upon the property of, or otherwise
conflict with the property rights of, any other Person.
4.10 CONDITION AND SUFFICIENCY OF ASSETS. The buildings, structures and
equipment of Citizens and each Citizens Subsidiary 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. Except
where any failure would not reasonably be expected to have a Material Adverse
Effect on Citizens on a consolidated basis, the real property, buildings,
structures and equipment owned or leased by Citizens and each Citizens
Subsidiary are in compliance with the Americans with Disabilities Act of 1990,
as amended, 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, that Citizens or any Citizens Subsidiary purport to own
are sufficient for the continued conduct of the business of Citizens and
24
each Citizens Subsidiary after the Closing in substantially the same manner as
conducted prior to the Closing.
4.11 LOANS; ALLOWANCE FOR LOAN AND LEASE LOSSES. Except as contemplated as
set forth in SCHEDULE 4.11, all loans and loan commitments extended by any
Citizens Subsidiary and any extensions, renewals or continuations of such loans
and loan commitments (the "CITIZENS LOANS") were made materially in accordance
with the lending policies of such Citizens Subsidiary in the Ordinary Course of
Business. The Citizens Loans are evidenced by appropriate and sufficient
documentation and constitute valid and binding obligations to such Citizens
Subsidiary enforceable in accordance with their terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and subject to general principles of equity. All
such Citizens Loans are, and at the Closing will be, free and clear of any
encumbrance or other charge (except for liens, if any, set forth on SCHEDULE
4.9) and each Citizens Subsidiary has complied, and at the Closing will have
complied with all Legal Requirements relating to such Citizens Loans, except
where any such failure to comply would not reasonably be expected to have a
Material Adverse Effect on Citizens on a consolidated basis. The allowance for
loan and lease losses of each Citizens Subsidiary is and will be on the Closing
Date adequate in all material 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. To the Knowledge of Citizens: (i) none of
the Citizens Loans is subject to any material offset or claim of offset; and
(ii) the aggregate loan balances in excess of the Bank's allowance for loan and
lease losses are, based on past loan loss experience, collectible in accordance
with their terms (except as limited above) and all uncollectible loans have been
charged off.
4.12 UNDISCLOSED LIABILITIES; ADVERSE CHANGES. Except as set forth on
SCHEDULE 4.12, neither Citizens nor any Citizens Subsidiary has any material
liabilities or obligations of any nature (whether absolute, accrued, contingent
or otherwise), except for liabilities or obligations reflected or reserved
against in the Citizens Financial Statements and current liabilities incurred in
the Ordinary Course of Business since the respective dates thereof. Except as
set forth on SCHEDULE 4.12, since the date of the latest Citizens Financial
Statement, there has not been any change in the business, operations,
properties, prospects, assets or condition of Citizens or any Citizens
Subsidiary, and, to Citizens' Knowledge, no event has occurred or circumstance
exists, that has had or would reasonably be expected to have a Material Adverse
Effect on Citizens on a consolidated basis.
4.13 TAXES. Citizens and each Citizens Subsidiary has duly filed all
material Tax Returns required to be filed by it, and each such Tax Return is
complete and accurate in all material respects. Citizens and each Citizens
Subsidiary 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 Citizens or any Citizens Subsidiary, 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 Citizens, Threatened against Citizens or any Citizens Subsidiary
for any Taxes owed by any of them. No audit, examination or investigation
related to Taxes paid or payable by Citizens or any Citizens Subsidiary is
presently
25
being conducted or, to the Knowledge of Citizens, Threatened by any Regulatory
Authority. Citizens has delivered or made available to MSTI true, correct and
complete copies of all Tax Returns filed with respect to the last three fiscal
years by Citizens and each Citizens Subsidiary and any tax examination reports
and statements of deficiencies assessed or agreed to for any of Citizens or any
Citizens Subsidiary for any such time period.
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) and all Citizens
Employee Benefit Plans established or maintained by Citizens or any Citizens
Subsidiary or to which Citizens or any Citizens Subsidiary 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 Code for obtaining the tax
benefits the Code thereupon permits with respect to such employee benefit plans.
No such employee benefit plan has any amount of unfunded benefit liabilities (as
defined in Section 4001(a)(18) of ERISA) for which Citizens or any Citizens
Subsidiary 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 Citizens or any Citizens Subsidiary 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 Citizens or such Citizens Subsidiary
withdrew from any such plan as of the Closing. All contributions and premium
payments that are due under any such benefit plans have been made.
4.15 COMPLIANCE WITH LEGAL REQUIREMENTS. Citizens and each Citizens
Subsidiary holds all licenses, certificates, permits, franchises and rights from
all appropriate Regulatory Authorities necessary for the conduct of its
respective business. Except as set forth on SCHEDULE 4.15, and except for the
Existing MOU (as defined in SECTION 4.16), each of Citizens and each Citizens
Subsidiary is, and at all times since January 1, 2001, 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, except where the failure to comply would not reasonably be
expected to have a Material Adverse Effect on Citizens on a consolidated basis.
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 Citizens or any
Citizens Subsidiary of, or a failure on the part of Citizens or any Citizens
Subsidiary to comply with, any Legal Requirement; or (b) may give rise to any
obligation on the part of Citizens or any Citizens Subsidiary 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, in
either case, where the failure to comply or the violation would not reasonably
be expected to have a Material Adverse Effect on Citizens on a consolidated
basis. Except as set forth on SCHEDULE 4.15, and except for the Existing MOU,
neither Citizens nor any Citizens Subsidiary has received, at any time since
January 1, 2001, any notice or other communication (whether oral or written)
from any Regulatory Authority or any other Person, nor does Citizens have any
Knowledge 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 Citizens or any
Citizens Subsidiary to undertake, or to bear all or any portion of the
26
cost of, any remedial action of any nature in connection with a failure to
comply with any Legal Requirement, except where any such violation, failure or
obligation would not reasonably be expected to have a Material Adverse Effect on
Citizens on a consolidated basis.
4.16 LEGAL PROCEEDINGS; ORDERS.
(a) SCHEDULE 4.16 is a true and correct list of all Proceedings and
Orders pending, entered into or, to the Knowledge of Citizens, Threatened
against, affecting or involving Citizens or any Citizens Subsidiary or any of
their respective assets or businesses, or the Contemplated Transactions, since
January 1, 2001, that has not been fully satisfied and terminated and that would
reasonably be expected to have, a Material Adverse Effect on Citizens on a
consolidated basis, and there is no fact to Citizens' Knowledge that would
provide a basis for any other Proceeding or Order. To the Knowledge of Citizens,
no officer, director, agent or employee of Citizens or any Citizens Subsidiary
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 Citizens or any Citizens Subsidiary as currently conducted.
(b) Except for the memorandum of understanding described on SCHEDULE
4.16 (the "EXISTING MOU"), neither Citizens nor any Citizens Subsidiary: (i) is
subject to any cease and desist or other Order or enforcement action issued by,
or (ii) is a party to any written agreement, consent agreement or memorandum of
understanding with, or (iii) is a party to any commitment letter or similar
undertaking to, or (iv) is subject to any order or directive by, or (v) is
subject to any supervisory letter from, or (vi) has been ordered to pay any
civil money penalty, which has not been paid, by, or (vii) has adopted any
policies, procedures or board resolutions at the request of, any Regulatory
Authority that currently (w) restricts in any material respect the conduct of
its business or (x) that in any material manner relates to its capital adequacy,
or (y) restricts its ability to pay dividends, or (z) limits in any material
manner its credit or risk management policies, its management or its business;
nor has Citizens or any Citizens Subsidiary been advised by any Regulatory
Authority that it is considering issuing, initiating, ordering or requesting any
of the foregoing. Citizens is in compliance with all of the material terms of
the Existing MOU.
4.17 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth on
SCHEDULE 4.17, since December 31, 2003, Citizens and each Citizens Subsidiary
has conducted its respective businesses only in the Ordinary Course of Business.
Without limiting the foregoing, with respect to each, since December 31, 2003,
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, except as
reflected on the Citizens Financial Statements or in the Citizens SEC Documents;
27
(b) amendment of its certificate of incorporation, charter or bylaws
(or similar organizational documents) or adoption of any resolutions by its
board of directors or stockholders with respect to the same;
(c) payment or increase of any bonus, salary or other compensation
to any of its stockholders, directors, officers or employees, except for normal
increases in the Ordinary Course of Business or in accordance with any then
existing Citizens Employee Benefit Plans (as defined below), or entry by it into
any employment, consulting, non-competition, change in control, severance or
similar Contract with any stockholder, director, officer or employee, except for
the Contemplated Transactions and except for any employment, consulting or
similar agreement or arrangement that is not terminable at will or upon thirty
(30) days' notice or less, without penalty or premium;
(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 Citizens Employee Benefit Plan;
(e) material 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) except for this Agreement, entry into any new, or modification,
amendment, renewal or extension (through action or inaction) of the terms of any
existing, lease, Contract or license that has a term of more than one year or
that involves the payment by Citizens or any Citizens Subsidiary of more than
$25,000 annually with respect to any such lease, Contract or license or more
than $100,000 in the aggregate with respect to all such leases, Contracts or
licenses;
(h) Citizens Loan or commitment to make any Citizens Loan other than
in the Ordinary Course of Business;
(i) Citizens Loan or commitment to make, renew, extend the term or
increase the amount of any Citizens Loan to any Person if such Citizens Loan or
any other Citizens Loans to such Person or an Affiliate of such Person is on the
"watch list" or similar internal report of Citizens or any Citizens Subsidiary,
or was classified as "substandard," "doubtful," "loss," or "other loans
specially mentioned" or listed as a "potential problem loan" prior to the
commitment, renewal, extension or increase; provided, however, that nothing in
this Agreement shall prohibit Citizens or any Citizens Subsidiary from honoring
any contractual obligation in existence on the Agreement Date;
(j) sale, lease or other disposition of any of its assets or
properties or mortgage, pledge or imposition of any lien or other encumbrance
upon any of its material assets or properties except for Permitted Exceptions;
28
(k) incurrence by it of any obligation or liability (fixed or
contingent) other than in the Ordinary Course of Business;
(l) cancellation or waiver by it of any claims or rights other than
in the Ordinary Course of Business;
(m) any investment by it of a capital nature exceeding $25,000 or
aggregate investments of a capital nature exceeding $100,000;
(n) 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;
(o) transaction for the borrowing or loaning of monies, or any
increase in any outstanding indebtedness, other than in the Ordinary Course of
Business;
(p) material change in any policies and practices with respect to
liquidity management and cash flow planning, marketing, deposit origination,
lending, budgeting, profit and tax planning, accounting or any other material
aspect of its business or operations, except for such changes as may be required
in the opinion of the management of Citizens to respond to then current market
or economic conditions or as may be required by any Regulatory Authorities;
(q) filing of any applications for additional branches, opening of
any new office or branch, closing of any current office or branch, or relocation
of operations from existing locations;
(r) discharge or satisfaction of any material lien or encumbrance on
its assets or repayment of any material indebtedness for borrowed money, except
for obligations incurred and repaid in the Ordinary Course of Business;
(s) entry into any Contract or agreement to buy, sell, exchange or
otherwise deal in any assets or series of assets in a single transaction, except
in the Ordinary Course of Business and except for sales by Citizens of "other
real estate owned" and other repossessed properties or the acceptance of a deed
in lieu of foreclosure;
(t) purchase or other acquisition of any investments, direct or
indirect, in any derivative securities, financial futures or commodities or
entry into any interest rate swap, floors and option agreements, or other
similar interest rate management agreements; or
(u) agreement, whether oral or written, by it to do any of the
foregoing.
4.18 PROPERTIES, CONTRACTS AND EMPLOYEE BENEFIT PLANS. Except for
Contracts evidencing Citizens Loans made by the Bank in the Ordinary Course of
Business, SCHEDULE 4.18 lists or describes the following with respect to
Citizens and each Citizens Subsidiary:
(a) all real property owned by Citizens and each Citizens Subsidiary
and each lease of real property to which Citizens and each Citizens Subsidiary
is a party, identifying the parties thereto, the annual rental payable, the
expiration date thereof and a brief description of the
29
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 Citizens or such Citizens Subsidiary;
(b) all borrowings by Citizens or any Citizens Subsidiary, exclusive
of deposit agreements with customers of the Bank entered into in the Ordinary
Course of Business, agreements for the purchase of federal funds and repurchase
agreements;
(c) each Contract that involves performance of services or delivery
of goods or materials by Citizens or any Citizens Subsidiary after the Agreement
Date of an amount or value in excess of $50,000 under each Contract;
(d) each Contract that was not entered into in the Ordinary Course
of Business and that involves expenditures or receipts of Citizens or any
Citizens Subsidiary after the Agreement Date in excess of $50,000;
(e) each Contract not referred to elsewhere in this Section that:
(i) relates to the future purchase of goods or services in
excess of the requirements of its respective business at current levels or for
normal operating purposes; or
(ii) materially affects the business or financial condition of
Citizens or any Citizens Subsidiary;
(f) each lease, rental, license, installment and conditional sale
agreement and other Contract affecting the ownership of, leasing of, title to or
use of, any personal property (except personal property leases and installment
and conditional sales agreements having a value per item or aggregate payments
of less than $20,000 and with terms, excluding any renewal terms, of less than
one year);
(g) each licensing agreement or other 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 Citizens or any
Citizens Subsidiary;
(h) each collective bargaining agreement and other Contract to or
with any labor union or other employee representative of a group of employees;
(i) each joint venture, partnership and other Contract (however
named) involving a sharing of profits, losses, costs or liabilities by Citizens
or any Citizens Subsidiary with any other Person;
(j) each Contract containing covenants that in any way purport to
restrict the business activity of Citizens or any Citizens Subsidiary or any
Affiliate of any of the foregoing, or limit the ability of Citizens or any
Citizens Subsidiary or any Affiliate of the foregoing to engage in any line of
business or to compete with any Person;
30
(k) each Contract providing for payments to or by any Person based
on sales, purchases or profits, other than direct payments for goods;
(l) the name and annual salary of each director and executive
officer (as defined for purposes of Regulation O of the Federal Reserve) of
Citizens and each Citizens Subsidiary, and the profit sharing, bonus or other
form of compensation (other than salary) paid or payable by Citizens, each
Citizens Subsidiary or a combination of any of them to or for the benefit of
each such person in question for the year ended December 31, 2003, and for the
current year, and any employment agreement, consulting agreement,
non-competition, severance or change in control agreement or similar arrangement
or plan with respect to each such person;
(m) each profit sharing, group insurance, hospitalization, stock
option, pension, retirement, bonus, severance, change of control, deferred
compensation, stock bonus, stock purchase, employee stock ownership or other
employee welfare or benefit agreements, plans or arrangements established,
maintained, sponsored or undertaken by Citizens or any Citizens Subsidiary for
the benefit of the officers, directors or employees of Citizens or any Citizens
Subsidiary, 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 Citizens or
any Citizens Subsidiary for the benefit of the employees of Citizens or any
Citizens Subsidiary (collectively, the "CITIZENS 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 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 Citizens or any Citizens Subsidiary;
(n) the name of each Person who is or would be entitled pursuant to
any Contract of Citizens or Citizens Subsidiaries or Citizens Employee Benefit
Plan to receive any payment from MSTI, any MSTI Subsidiary, Citizens or any
Citizens Subsidiary as a result of the consummation of the Contemplated
Transactions (including any payment that is or would be due as a result of any
actual or constructive termination of a Person's employment or position
following such consummation) and the maximum amount of such payment (except for
Contracts entered into as required by this Agreement);
(o) each Contract entered into other than in the Ordinary Course of
Business that contains or provides for an express undertaking by Citizens or any
Citizens Subsidiary to be responsible for consequential damages;
(p) each Contract for capital expenditures in excess of $50,000;
(q) each written warranty, guaranty or other similar undertaking
with respect to contractual performance extended by Citizens or any Citizens
Subsidiary other than in the Ordinary Course of Business; and
(r) each amendment, supplement and modification (whether oral or
written) in respect of any of the foregoing.
31
Copies of each document, plan or Contract listed and described on SCHEDULE
4.18 are appended to such Schedule.
4.19 NO DEFAULTS. Except as set forth on SCHEDULE 4.19, to the Knowledge
of Citizens, each Contract identified or required to be identified on SCHEDULE
4.18 is in full force and effect and is valid and enforceable in accordance with
its terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally and subject
to general principles of equity. Citizens and each Citizens Subsidiary is, and
at all times since January 1, 2001, has been, in full compliance with all
applicable terms and requirements of each Contract under which either Citizens
or any Citizens Subsidiary has or had any obligation or liability or by which
Citizens or any Citizens Subsidiary or any of their respective assets owned or
used by them is or was bound, except where the failure to be in full compliance
would not reasonably be expected to have a Material Adverse Effect on Citizens
on a consolidated basis. To the knowledge of Citizens, each other Person that
has or had any obligation or liability under any such Contract under which
Citizens or any Citizens Subsidiary has or had any rights is, and at all times
since January 1, 2001, has been, in full compliance with all applicable terms
and requirements of such Contract, except where the failure to be in full
compliance would not reasonably be expected to have a Material Adverse Effect on
Citizens on a consolidated basis. No event has occurred or circumstance exists
that (with or without notice or lapse of time) may contravene, conflict with or
result in a material violation or breach of, or give Citizens, any Citizens
Subsidiary 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 Contract. Except in the Ordinary Course of Business with respect
to any Citizens Loan, neither Citizens nor any Citizens Subsidiary has given to
or received from any other Person, at any time since January 1, 2001, 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,
that has not been terminated or satisfied prior to the Agreement Date. 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
Citizens or any Citizens Subsidiary under current or completed Contracts with
any Person and no such Person has made written demand for such renegotiation.
4.20 INSURANCE. SCHEDULE 4.20 lists the policies and material terms of
insurance (including bankers' blanket bond and insurance providing benefits for
employees) owned or held by Citizens or any Citizens Subsidiary on the Agreement
Date. Each policy is in full force and effect (except for any expiring policy
which is replaced by coverage at least as extensive). All premiums due on such
policies have been paid in full.
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 Citizens or any Citizens Subsidiary or any of
their respective assets that are pending or, to the Knowledge of Citizens,
Threatened, nor to the Knowledge of Citizens is there any factual basis for any
of the foregoing, as a result of any asserted failure of Citizens or any
Citizens Subsidiary, or any predecessor thereof, to comply with any federal,
state, county and municipal law, including any statute, regulation, rule,
ordinance, Order, restriction and requirement, relating to underground storage
tanks, petroleum products, air pollutants, water pollutants or process waste
32
water or otherwise relating to the environment or toxic or hazardous substances
or to the manufacture, processing, distribution, use, recycling, generation,
treatment, handling, storage, disposal or transport of any hazardous or toxic
substances or petroleum products (including polychlorinated biphenyls, whether
contained or uncontained, and asbestos-containing materials, whether friable or
not), including, the Federal Solid Waste Disposal Act, the Hazardous and Solid
Waste Amendments, the Federal Clean Air Act, the Federal Clean Water Act, the
Occupational Health and Safety Act, the Federal Resource Conservation and
Recovery Act, the Toxic Substances Control Act, the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and the Superfund
Amendments and Reauthorization Act of 1986, all as amended, and regulations of
the Environmental Protection Agency, the Nuclear Regulatory Agency and any state
department of natural resources or state environmental protection agency now or
at any time hereafter in effect (collectively, the "ENVIRONMENTAL LAWS"). No
environmental clearances or other governmental approvals are required for the
conduct of the business of Citizens or any Citizens Subsidiary or the
consummation of the Contemplated Transactions. To the Knowledge of Citizens,
neither Citizens nor any Citizens Subsidiary is the owner of any interest in
real estate on which any substances have been used, stored, deposited, treated,
recycled or disposed of, which substances if known to be present on, at or under
such property, would require clean-up, removal or some other remedial action
under any Environmental Law.
4.22 REGULATORY FILINGS. Citizens and each Citizens Subsidiary have filed
in a timely manner all required filings with all Regulatory Authorities,
including the Federal Reserve, the FDIC, the OTS, the DFPR, the Secretary of
State of the States of Illinois and Delaware and the SEC, together with any
amendment required to be made with respect thereto, including annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy
statements. All such filings, including the financial statements, exhibits and
schedules thereto 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. Each of such filings, including the financial statements, exhibits
and schedules thereto, complied in all material respects with all of the Legal
Requirements enforced or promulgated by the Regulatory Authority with which they
were filed.
4.23 FIDUCIARY ACCOUNTS. The Bank has properly administered in all
material respects 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 material terms of the governing documents and applicable
state and federal law and regulations and common law. To the Knowledge of
Citizens and the Bank, 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.
4.24 INDEMNIFICATION CLAIMS. To Citizens' Knowledge, no action or failure
to take action by any director, officer, employee or agent of Citizens or any
Citizens Subsidiary has occurred that may give rise to a claim or a potential
claim by any such Person for indemnification against Citizens or any Citizens
Subsidiary under any agreement with, or the corporate
33
indemnification provisions of, Citizens or any Citizens Subsidiary, or under any
Legal Requirements.
4.25 INSIDER INTERESTS. Except as set forth on SCHEDULE 4.25, no officer
or director of Citizens or any Citizens Subsidiary, any member of the Family of
any such Person, and no entity that any such Person "controls" within the
meaning of Regulation O of the Federal Reserve, has any loan, deposit account or
any other agreement with Citizens or any Citizens Subsidiary, any interest in
any material property, real, personal or mixed, tangible or intangible, used in
or pertaining to the business of Citizens or any Citizens Subsidiary.
4.26 BROKERAGE COMMISSIONS. None of Citizens, any Citizens Subsidiary 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 or the
Contemplated Transactions, except as disclosed in SCHEDULE 4.26.
4.27 APPROVAL DELAYS. To the Knowledge of Citizens, there is no reason why
the granting of any of the regulatory approvals referred to in SECTION 8.1 would
be denied or unduly delayed. The Bank's most recent CRA rating is "satisfactory"
or better.
4.28 CODE SECTIONS 280G AND 4999. Except as set forth on SCHEDULE 4.28, no
payment that is owed or may become due to any director, officer, employee or
agent of Citizens or any Citizens Subsidiary will be non-deductible to Citizens
or any Citizens Subsidiary (or, following the Merger, MSTI) or subject to tax
under Section 280G or Section 4999 of the Code, not will Citizens or any
Citizens Subsidiary (or, following the Merger, MSTI) be required to "gross up"
or otherwise compensate any such person because of the imposition of any excise
tax on a payment to such person. Except to the extent required under Section 601
et seq. of ERISA and Section 4980B of the Code, and except as set forth on
SCHEDULE 4.28, neither Citizens nor any Citizens Subsidiary provides health or
welfare benefits to any active employee following such employee's retirement or
other termination of service.
4.29 DISCLOSURE. Neither any representation nor warranty of Citizens in,
nor any schedule to, this Agreement contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading. No notice given pursuant to SECTION 6.8 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 under
which they were made, not misleading.
34
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MSTI AND ACQUISITION LLC
MSTI and Acquisition LLC hereby represent and warrant to Citizens that the
following are true and correct as of the Agreement Date, and will be true and
correct as of the Effective Date:
5.1 MSTI ORGANIZATION. MSTI: (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Illinois and is
also in good standing in each other jurisdiction in which the nature of business
conducted or the properties or assets owned or leased by it makes such
qualification necessary; (b) is registered with the Federal Reserve as a bank
holding company under the 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 MSTI
and all amendments thereto are set forth in the MSTI SEC Documents and are
complete and correct. MSTI has no Subsidiaries other than Acquisition LLC and as
set forth in the MSTI SEC Documents.
5.2 MSTI SUBSIDIARY ORGANIZATION. Each MSTI Subsidiary is duly organized,
validly existing, and in good standing in its state or jurisdiction of
organization. Each MSTI Subsidiary 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.
5.3 AUTHORIZATION; ENFORCEABILITY.
(a) Each of MSTI and Acquisition LLC has the requisite corporate and
limited liability company power and authority to enter into and perform its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by MSTI and Acquisition LLC, and the consummation by each of them
of its respective obligations under this Agreement, have been authorized by all
necessary corporate and limited liability company action, and this Agreement
constitutes a legal, valid and binding obligation of each of MSTI and
Acquisition LLC enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally and subject to general principles of
equity.
(b) Except for ordinary corporate requirements, no "business
combination," "moratorium," "control share" or other state anti-takeover statute
or regulation or any provisions contained in the articles of incorporation or
bylaws or similar organizational documents of any of MSTI or any MSTI
Subsidiary: (i) prohibits or restricts MSTI's ability to perform its obligations
under this Agreement, or its ability to consummate the Contemplated
Transactions; (ii) would have the effect of invalidating or voiding this
Agreement, or any provision hereof; or (iii) would subject Citizens to any
material impediment or condition in connection with the exercise of any
35
of its rights under this Agreement. The board of directors of MSTI has
unanimously approved the execution of, and performance by MSTI of its
obligations under, this Agreement, and the manager and the sole member of
Acquisition LLC have each approved the execution of, and performance by
Acquisition LLC of its obligations under, this Agreement.
5.4 NO CONFLICT. Except as set forth on SCHEDULE 5.4, 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 articles of incorporation or charter or bylaws
(or similar organization documents), each as in effect on the Agreement Date, or
any currently effective resolution adopted by the board of directors or
stockholders of, MSTI or any MSTI Subsidiary; or (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 MSTI or MSTI Subsidiary, or any of their
respective assets that are owned or used by them, may be subject, except for any
contravention, conflict or violation that is permissible by virtue of obtaining
the regulatory approvals necessitated by the Contemplated Transactions,
including any such approvals under the HOLA, the BHCA, the FDIA, the Securities
Act, the Exchange Act, the DGCL, the Delaware Act and the ISBA. Except for the
approvals referred to in SECTION 8.1, neither MSTI nor any MSTI Subsidiary 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.
5.5 MSTI CAPITALIZATION. The authorized capital stock of MSTI at September
30, 2004, consisted of: (a) 15,000,000 shares of MSTI Common Stock, of which, as
of such date, 11,219,319 shares were duly issued and outstanding, fully paid and
non-assessable, and 1,770,996 shares were held by MSTI as treasury shares; and
(b) 2,000,000 shares of preferred stock, no par value per share, none of which
are issued and outstanding as of such date. None of the shares of MSTI Common
Stock were issued in violation of any federal or state securities laws or any
other Legal Requirement. Since September 30, 2004, except as disclosed in or
permitted by this Agreement or as provided on SCHEDULE 5.5 or the MSTI SEC
Documents, no shares of MSTI capital stock have been purchased, redeemed or
otherwise acquired, directly or indirectly, by MSTI or any MSTI Subsidiary and
no dividends or other distributions payable in any equity securities of MSTI or
any MSTI Subsidiary have been declared, set aside, made or paid to the
stockholders of MSTI. To the Knowledge of MSTI, none of the shares of authorized
capital stock of MSTI are, nor on the Closing Date will they be, subject to any
claim of right inconsistent with this Agreement. Except as contemplated in this
Agreement or as set forth in SCHEDULE 5.5 or the MSTI SEC Documents, there are,
as of the Agreement Date, no outstanding subscriptions, contracts, conversion
privileges, options, warrants, calls or other rights obligating MSTI or any MSTI
Subsidiary to issue, sell or otherwise dispose of, or to purchase, redeem or
otherwise acquire, any shares of capital stock of MSTI or any MSTI Subsidiary,
and except as provided in this Section or otherwise disclosed in this Agreement,
MSTI is not a party to any Contract relating to the issuance, purchase, sale or
transfer of any equity securities or other securities of MSTI. MSTI does not
own or have any contract to acquire any equity securities or other
36
securities of any Person or any direct or indirect equity or ownership interest
in any other business except for the membership interests of Acquisition LLC and
as set forth in SCHEDULE 5.5 or the MSTI SEC Documents.
5.6 MSTI SUBSIDIARY CAPITALIZATION. MSTI is, and will be on the Closing
Date, the record and beneficial owner of one hundred percent (100%) of the
issued and outstanding shares of capital stock or other equity securities of
each MSTI Subsidiary, free and clear of any lien or encumbrance whatsoever.
Except as disclosed in any MSTI SEC Documents or for such rights held
exclusively by MSTI, there are no unexpired or pending preemptive rights with
respect to any shares of capital stock of any MSTI Subsidiary. Except as
disclosed in any MSTI SEC Documents, or for such rights held exclusively by
MSTI, there are no outstanding securities of any MSTI Subsidiary that are
convertible into, or exchangeable for, any shares of such MSTI Subsidiary's
capital stock or other equity securities, and no MSTI Subsidiary is a party to
any Contract relating to the issuance, sale or transfer of any equity securities
or other securities of such MSTI Subsidiary.
5.7 FINANCIAL STATEMENTS AND REPORTS. The financial statements and reports
of MSTI included with each of the Forms 10-K filed with the SEC for the years
ended December 31, 2001, 2002 and 2003, and the Form 10-Q filed with the SEC for
the quarterly period ended June 30, 2004 (collectively, the "MSTI FINANCIAL
STATEMENTS"), were prepared in conformity with GAAP, comply in all material
respects with the published rules and regulations of the SEC, have been prepared
on a basis consistent with past accounting practices and as required by
applicable Legal Requirements and fairly present the consolidated financial
condition and results of operations at the dates and for the periods presented.
Taken together, the MSTI Financial Statements are complete and correct in all
material respects and fairly and accurately present the respective financial
position, assets, liabilities and results of operations of MSTI and the MSTI
Subsidiaries at the respective dates of, and for the periods referred to in, the
MSTI Financial Statements, subject to normal year end non-material audit
adjustments in amounts consistent with past practice in the case of the
quarterly financial statements. The MSTI Financial Statements do not include any
material assets or omit to state any material liabilities, absolute or
contingent, or other facts, which inclusion or omission would render the MSTI
Financial Statements misleading in any material respect as of the respective
dates and for the periods referred to in the respective MSTI Financial
Statements.
5.8 BOOKS AND RECORDS. The books of account, minute books, stock record
books and other records of MSTI and each MSTI Subsidiary are complete and
correct in all material respects and have been maintained in accordance with
MSTI's business practices and all applicable Legal Requirements, including the
maintenance of any adequate system of internal controls required by the Legal
Requirements. The minute books of MSTI and each MSTI Subsidiary contain accurate
and complete records in all material respects of all meetings held of, and
corporate action taken by, its respective stockholders, board of directors and
committees of the board of directors.
5.9 TITLE TO PROPERTIES. MSTI and each MSTI Subsidiary has good and
marketable title to all assets and properties, whether real or personal,
tangible or intangible, that it purports to own, subject to no valid liens,
mortgages, security interests, encumbrances or charges of any kind
37
except: (a) as noted in the most recent MSTI Financial Statement, the MSTI SEC
Documents or SCHEDULE 5.9; (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 MSTI 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, pursuant to borrowings from Federal Home Loan
Banks or similar borrowings, or otherwise incurred in the Ordinary Course of
Business; and (d) minor defects and irregularities in title and encumbrances
that do not materially impair the use thereof for the purposes for which they
are held. Except as set forth on SCHEDULE 5.9, MSTI and each MSTI Subsidiary 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. Except where any
failure would not reasonably be expected to have a Material Adverse Effect on
MSTI on a consolidated basis, all buildings and structures owned by MSTI and
each MSTI Subsidiary 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.
5.10 CONDITION AND SUFFICIENCY OF ASSETS. The buildings, structures and
equipment of MSTI and each MSTI Subsidiary 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. Except where any failure
would not reasonably be expected to have a Material Adverse Effect on MSTI on a
consolidated basis, the real property, buildings, structures and equipment owned
or leased by MSTI and each MSTI Subsidiary are in compliance with the Americans
with Disabilities Act of 1990, as amended, 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, that MSTI or
any MSTI Subsidiary purport to own or lease are sufficient for the continued
conduct after the Closing of the business of MSTI and each MSTI Subsidiary in
substantially the same manner as conducted prior to the Closing.
5.11 LOANS; ALLOWANCE FOR LOAN AND LEASE LOSSES. All loans and loan
commitments extended by any MSTI Subsidiary and any extensions, renewals or
continuations of such loans and loan commitments (the "MSTI LOANS") were made
materially in accordance with the lending policies of such MSTI Subsidiary in
the Ordinary Course of Business. The MSTI Loans are evidenced by appropriate and
sufficient documentation and constitute valid and binding obligations to such
MSTI Subsidiary enforceable in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally and subject to general principles of
equity. All such MSTI Loans are, and at the Closing will be, free and clear of
any encumbrance or other charge and each MSTI Subsidiary has complied, and at
the Closing will have complied with, all Legal Requirements relating to such
MSTI Loans, except where any such failure to comply would not reasonably be
expected to have a Material Adverse Effect on MSTI on a consolidated basis. The
allowance for
38
loan and lease losses of each MSTI Subsidiary is, and will be on the Closing
Date, adequate in all material 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. To the Knowledge of MSTI: (i) none of the
MSTI Loans is subject to any material offset or claim of offset; and (ii) the
aggregate loan balances in excess of MSTI's consolidated allowance for loan and
lease losses are, based on past loan loss experience, collectible in accordance
with their terms (except as limited above) and all uncollectible loans have been
charged off.
5.12 UNDISCLOSED LIABILITIES; ADVERSE CHANGES. Except as set forth in
SCHEDULE 5.12 or the MSTI SEC Documents, neither MSTI nor any MSTI Subsidiary
has any material liabilities or obligations of any nature (whether absolute,
accrued, contingent or otherwise), except for liabilities or obligations
reflected or reserved against in the MSTI Financial Statements, and current
liabilities incurred in the Ordinary Course of Business since the respective
dates thereof. Since the date of the latest MSTI Financial Statement, there has
not been any change in the business, operations, properties, prospects, assets
or condition of MSTI or any MSTI Subsidiary, and, to MSTI's Knowledge, no event
has occurred or circumstance exists, that has had, or would reasonably be
expected to have, a Material Adverse Effect on MSTI on a consolidated basis.
5.13 TAXES. MSTI and each MSTI Subsidiary has duly filed all material Tax
Returns required to be filed by it, and each such Tax Return is complete and
accurate in all material respects. MSTI and each MSTI Subsidiary 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 MSTI or any MSTI
Subsidiary, 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 MSTI, Threatened
against MSTI or any MSTI Subsidiary for any Taxes owed by any of them. No audit,
examination or investigation related to Taxes paid or payable by MSTI or any
MSTI Subsidiary is presently being conducted or, to the Knowledge of MSTI,
Threatened by any Regulatory Authority.
5.14 COMPLIANCE WITH ERISA. Except as set forth on SCHEDULE 5.14, all
employee benefit plans (as defined in Section 3(3) of ERISA) established or
maintained by MSTI or any MSTI Subsidiary or to which MSTI or any MSTI
Subsidiary 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 Code for obtaining the tax benefits the Code thereupon permits with
respect to such employee benefit plans. No such employee benefit plan has any
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA) for which MSTI or any MSTI Subsidiary 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 MSTI or any MSTI
Subsidiary 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 MSTI or
such MSTI Subsidiary withdrew from any such plan as of the Closing. All
contributions and premium payments that are due under any such benefit plans
have been made.
39
5.15 COMPLIANCE WITH LEGAL REQUIREMENTS. MSTI and each MSTI Subsidiary
holds all licenses, certificates, permits, franchises and rights from all
appropriate Regulatory Authorities necessary for the conduct of its respective
business. Except as set forth in SCHEDULE 5.15 or the MSTI SEC Documents, MSTI
and each MSTI Subsidiary is, and at all times since January 1, 2001, 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, except where the failure to comply would not
reasonably be expected to have a Material Adverse Effect on MSTI on a
consolidated basis. 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
MSTI or any MSTI Subsidiary of, or a failure on the part of MSTI or any MSTI
Subsidiary to comply with, any Legal Requirement; or (b) may give rise to any
obligation on the part of MSTI or any MSTI Subsidiary 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, in
either case where the failure to comply would not reasonably be expected to have
a Material Adverse Effect on MSTI on a consolidated basis. Except as set forth
on SCHEDULE 5.15 or the MSTI SEC Documents, neither MSTI nor any MSTI Subsidiary
has received, at any time since January 1, 2001, any notice or other
communication (whether oral or written) from any Regulatory Authority or any
other Person, nor does MSTI have any Knowledge, 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 MSTI or any MSTI Subsidiary 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 where any such violation,
failure or obligation would not reasonably be expected to have a Material
Adverse Effect on MSTI on a consolidated basis.
5.16 LEGAL PROCEEDINGS; ORDERS.
(a) SCHEDULE 5.16 is a true and correct list of all Proceedings and
Orders pending, entered into or, to the Knowledge of MSTI, Threatened against,
affecting or involving MSTI or any MSTI Subsidiary or any of their respective
assets or businesses, or the Contemplated Transactions since January 1, 2001,
that has not been fully satisfied and terminated and that would reasonably be
expected to have, a Material Adverse Effect on MSTI on a consolidated basis, and
there is no fact to MSTI's Knowledge that would provide a basis for any such
Proceeding or Order. To the Knowledge of MSTI, no officer, director, agent or
employee of MSTI or any MSTI Subsidiary 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 MSTI or any MSTI
Subsidiary as currently conducted.
(b) Neither MSTI nor any MSTI Subsidiary (i) is subject to any cease
and desist or other Order or enforcement action issued by, or (ii) is a party to
any written agreement, consent agreement or memorandum of understanding with, or
(iii) is a party to any commitment letter or similar undertaking to, or (iv) is
subject to any order or directive by, or (v) is subject to any supervisory
letter from, or (vi) has been ordered to pay any civil money penalty, which has
not been paid, by, or (vii) has adopted any policies, procedures or board
resolutions at the request of any Regulatory Authority that currently restricts
in any material respect the conduct of its business or (x) that in any material
manner relates to its capital adequacy, or (y) restricts its
40
ability to pay dividends, or (z) limits in any material manner its credit or
risk management policies, its management or its business; nor has MSTI or any
MSTI Subsidiary been advised by any Regulatory Authority that it is considering
issuing, initiating, ordering or requesting any of the foregoing.
5.17 ABSENCE OF CERTAIN CHANGES AND EVENTS. Since December 31, 2003,
except as disclosed in SCHEDULE 5.17 and the MSTI SEC Documents (and except in
connection with the negotiation and execution and delivery of this Agreement and
the consummation of the Contemplated Transactions): (a) MSTI and each MSTI
Subsidiary has conducted its respective business only in the Ordinary Course of
Business; and (b) there has not been any event or events (whether or not covered
by insurance), individually or in the aggregate, that have had, or would
reasonably be expected to have, a Material Adverse Effect on MSTI, impair the
ability of MSTI to perform its obligations under this Agreement or otherwise
prevent the consummation of the Contemplated Transactions.
5.18 MATERIAL CONTRACTS. Except as disclosed in SCHEDULE 5.18 or the MSTI
SEC Documents, neither MSTI nor any MSTI Subsidiary is a party to, and none of
their respective properties or assets are bound by: (a) any "material contract,"
as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC; or (b)
any Contract containing covenants that in any way purport to restrict in any
material respect the business activity of MSTI or any MSTI Subsidiary or any
Affiliate of any of the foregoing, or limit in any material respect the ability
of MSTI or any MSTI Subsidiary or any Affiliate of any of the foregoing to
engage in any line of business or to compete with any Person. Copies of any such
document, plan or Contract listed and described in SCHEDULE 5.18 are appended to
such Schedule.
5.19 NO DEFAULTS. Except as set forth in SCHEDULE 5.19, to the Knowledge
of MSTI, each Contract identified or required to be identified in SCHEDULE 5.18
or in the MSTI SEC Documents is in full force and effect and is valid and
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and subject to general principles of equity. MSTI
and each MSTI Subsidiary is, and at all times since January 1, 2001, has been,
in full compliance with all applicable terms and requirements of each Contract
under which MSTI or any MSTI Subsidiary has or had any obligation or liability
or by which MSTI or any MSTI Subsidiary or any of their respective assets owned
or used by them is or was bound, except where the failure to be in full
compliance would not reasonably be expected to have a Material Adverse Effect on
MSTI on a consolidated basis. To the Knowledge of MSTI, each other Person that
has or had any obligation or liability under any such Contract under which MSTI
or any MSTI Subsidiary has or had any rights is, and at all times since January
1, 2001, has been in full compliance with all applicable terms and requirements
of such Contract, except where the failure to be in full compliance would not
reasonably be expected to have a Material Adverse Effect on MSTI on a
consolidated basis. No event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with or result in a
material violation or breach of, or give MSTI, any MSTI Subsidiary 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 Contract. Except in the Ordinary Course of Business with respect to any MSTI
Loan, neither MSTI nor any MSTI Subsidiary has given to or received from any
other Person, at any time since
41
January 1, 2001, any notice or other communication (whether oral or written)
regarding any actual, alleged, possible or potential material violation or
breach of, or default under, any Contract, that has not been terminated or
satisfied prior to the Agreement Date. 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 MSTI or any MSTI Subsidiary
under current or completed Contracts with any Person, and no such Person has
made written demand for such renegotiation.
5.20 COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as set forth on SCHEDULE
5.20, there are no actions, suits, investigations, liabilities, inquiries,
Proceedings or Orders involving MSTI or any MSTI Subsidiary or any of their
respective assets that are pending or to the Knowledge of MSTI, Threatened, nor
to the Knowledge of MSTI is there any factual basis for any of the foregoing, as
a result of any asserted failure of MSTI or any MSTI Subsidiary, or any
predecessor thereof, to comply with any Environmental Law.
5.21 REGULATORY FILINGS. MSTI and each MSTI Subsidiary have filed in a
timely manner all required filings with all Regulatory Authorities, including
the Federal Reserve, the FDIC, the DFPR, the Secretary of State of the State of
Illinois and the SEC, together with any amendment required to be made with
respect thereto, including annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and proxy statements. All such filings,
including the financial statements, exhibits and schedules thereto, 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 the
light of the circumstances under which they were made, not misleading. Each of
such filings, including the financial statements, exhibits and schedules
thereto, complied in all material respects with all of the Legal Requirements
enforced or promulgated by the Regulatory Authority with which they were filed.
5.22 INDEMNIFICATION CLAIMS. To MSTI's Knowledge, no action or failure to
take action by any director, officer, employee or agent of MSTI or any MSTI
Subsidiary has occurred that may give rise to a claim or a potential claim by
any such Person for indemnification against MSTI or any MSTI Subsidiary under
any agreement with, or the corporate indemnification provisions of, MSTI or any
MSTI Subsidiary, or under any Legal Requirements.
5.23 BROKERAGE COMMISSIONS. None of MSTI or any MSTI Subsidiary 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 or the Contemplated
Transactions, except as disclosed on SCHEDULE 5.23.
5.24 APPROVAL DELAYS. To the Knowledge of MSTI, there is no reason why the
granting of any of the regulatory approvals referred to in SECTION 8.1 would be
denied or unduly delayed. Each MSTI Subsidiary that is a "depository
institution" as defined in the FDIC has a recent CRA rating of "satisfactory" or
better.
5.25 DISCLOSURE. Neither any representation nor warranty of MSTI in, nor
any schedule to, this Agreement contains any untrue statement of a material
fact, or omits to state a
42
material fact necessary to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading. No notice
given pursuant to SECTION 7.3 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 under which they were made, not misleading.
5.26 FINANCIAL RESOURCES. MSTI will have sufficient cash available on the
Closing Date to enable it to comply with its obligation to fund the Cash
Consideration under SECTION 3.6(b) and to perform its other obligations under
this Agreement.
ARTICLE 6
CITIZENS' COVENANTS
6.1 ACCESS AND INVESTIGATION.
(a) MSTI 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 Citizens and each Citizens Subsidiary in accordance with the
provisions of this Section. MSTI 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 Citizens and each Citizens Subsidiary and
of their respective financial and legal condition as MSTI 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 Citizens or any Citizens
Subsidiary. Upon request, Citizens and each Citizens Subsidiary will furnish
MSTI or its Representatives, attorneys' responses to auditors' requests for
information regarding Citizens or such Citizens Subsidiary, as the case may be,
and such financial and operating data and other information reasonably requested
by MSTI (provided, with respect to attorneys, such disclosure would not result
in the waiver by Citizens or any Citizens Subsidiary of any claim of
attorney-client privilege), and will permit MSTI and its Representatives to
discuss such information directly with any individual or firm performing
auditing or accounting functions for Citizens or such Citizens Subsidiary, and
such auditors and accountants shall be directed to furnish copies of any reports
or financial information as developed to MSTI or its Representatives. No
investigation by MSTI or any of its Representatives shall affect the
representations and warranties made by Citizens. This Section shall not require
the disclosure of any information the disclosure of which to MSTI would be
prohibited by any Legal Requirement.
(b) Citizens shall allow a representative of MSTI to attend as an
observer all meetings of the board of directors and committees of the board of
directors of Citizens and any Citizens Subsidiary, including any meeting of the
loan committee and asset liability management committee of Citizens or any
Citizens Subsidiary. Citizens shall give reasonable notice to MSTI of any such
meeting and, if known, the agenda for or business to be discussed at such
meeting. Citizens shall provide to MSTI all information provided to the
directors on all such boards or members of such committees in connection with
all such meetings or otherwise provided to the directors or members, and shall
provide any other financial reports or other analysis prepared for
43
senior management of Citizens or any Citizens Subsidiary, in each case excluding
information which is privileged or is subject to any restriction on disclosure.
It is understood by the parties that MSTI's representative will not have any
voting rights with respect to matters discussed at these meetings and that MSTI
is not managing the business or affairs of Citizens or any Citizens Subsidiary.
All information obtained by MSTI at these meetings shall be treated in
confidence as provided in that certain Confidentiality Agreement dated July 6,
2004, between MSTI and Citizens (the "CONFIDENTIALITY AGREEMENT").
Notwithstanding the foregoing, MSTI shall not be permitted to attend any portion
of a meeting and Citizens shall not be required to provide MSTI with any
materials, in violation of applicable law or that relates to an Acquisition
Transaction (as defined below), except for information to be provided as
required by SECTION 6.9, or that involve matters protected by the
attorney-client privilege or matters arising out of or related to this
Agreement.
(c) Any confidential information or trade secrets of MSTI received
by Citizens, its employees or agents in the course of the consummation of the
Contemplated Transactions shall be treated confidentially in accordance with the
terms of the Confidentiality Agreement.
6.2 OPERATION OF CITIZENS AND CITIZENS SUBSIDIARIES. Except with the
prior written consent of MSTI, between the Agreement Date and the Closing Date,
Citizens will, and will cause each Citizens Subsidiary, 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 MSTI concerning operational matters of a material
nature;
(d) enter into loan and deposit transactions only in accordance with
sound credit practices and only on terms and conditions that are not materially
more favorable than those available to the borrower or depositor, as the case
may be, from competitive sources in arm's-length transactions in the Ordinary
Course of Business and consistent with sound banking practices and policies and
Legal Requirements, and Citizens shall obtain the prior consent of MSTI, which
consent shall not be unreasonably withheld or delayed, for all new extensions of
credit or lending relationships in excess of $1,000,000 to any Person, including
that Person's Affiliates;
(e) consistent with past practice, maintain an allowance for loan
and lease losses that is adequate in all material respects under applicable
Legal Requirements and the requirements of GAAP to provide for possible losses,
net of recoveries relating to loans previously charged off, on loans outstanding
(including accrued interest receivable);
44
(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 Agreement Date and pay all
premiums on such policies when due;
(g) not buy or sell any security held, or intended to be held, for
investment other than securities issued by the United States or any agency
thereof with maturities of less than two (2) years, but such restriction shall
not affect the buying and selling by the Bank of Federal Funds or the
reinvestment of dividends paid on any securities owned by the Bank as of the
Agreement Date;
(h) 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
(i) 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.
6.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by this
Agreement or the Employee Benefits Agreement referred to in SECTION 6.13, and
except as contemplated by SCHEDULE 4.17, between the Agreement Date and the
Closing Date, Citizens will not, and will cause each Citizens Subsidiary not to,
without the prior written consent of MSTI, take any affirmative action, or fail
to take any reasonable action within its control, as a result of which: (a) any
of the changes or events listed in SECTION 4.17 occurs; or (b) a Breach of
Citizens' representations or warranties occurs. Notwithstanding anything to the
contrary contained in this Agreement, Citizens shall be permitted to pay
dividends of $0.10 per quarter to its stockholders through the Closing in
accordance with its existing dividend policy.
6.4 SUBSEQUENT CITIZENS FINANCIAL STATEMENTS; SECURITIES REPORTS. As soon
as available after the Agreement Date, Citizens will furnish MSTI copies of the
quarterly unaudited (and when available, annual audited) consolidated balance
sheets, consolidated statements of income, consolidated statements of cash flow
and, if applicable, consolidated statements of changes in stockholders' equity,
of Citizens prepared for its internal use, and the Bank's Call Reports for each
quarterly or annual period completed after June 30, 2004, and all other
financial reports or statements submitted after the Agreement Date by Citizens
or the Bank to any Regulatory Authority, to the extent permitted by law
(collectively, the "SUBSEQUENT CITIZENS FINANCIAL STATEMENTS"). Without
limitation of the foregoing, Citizens shall deliver to MSTI complete copies of
any reports filed with the SEC after the Agreement Date (collectively, the
"CITIZENS SEC FILINGS"). Except as may be required by changes in GAAP effective
after the Agreement Date, the Subsequent Citizens Financial Statements shall be
prepared on a basis consistent with past accounting practices and shall fairly
present in all material respects the consolidated financial condition and
results of operations for the dates and periods presented. Neither the
Subsequent Citizens Financial Statements nor the Citizens SEC Filings shall
include any material assets or omit to state any material liabilities, absolute
or contingent, or other facts, which inclusion or omission would render such
Subsequent Citizens Financial Statements or Citizens SEC Filings misleading in
any material respect.
45
6.5 TITLE TO REAL ESTATE. As soon as practical, but in no event later than
sixty (60) days after the Agreement Date, Citizens shall obtain at its own
expense and deliver to MSTI, with respect to all real estate owned by Citizens
or the Bank (excluding any "Other Real Estate Owned," the "CITIZENS 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 MSTI, showing fee simple title
in Citizens or the Bank in such real estate with coverage over all standard
exceptions and subject to no liens, mortgages, security interests, encumbrances
or charges of any kind except for the Permitted Exceptions.
6.6 SURVEYS. If requested by MSTI, by no later than forty-five (45) days
after the date of this Agreement, Citizens shall obtain, at MSTI's expense, and
deliver to MSTI a current ALTA survey of each parcel of Citizens Real Estate
disclosing no survey defects that would materially impair the use thereof for
the purposes for which it is held or materially impair the value of such
property.
6.7 ENVIRONMENTAL INVESTIGATION.
(a) MSTI may, in its reasonable discretion, within forty-five (45)
Business Days of the Agreement Date, request Citizens to provide at Citizens'
expense a Phase 1 environmental site assessment (the "PHASE 1 REPORT") conducted
by an independent professional consultant reasonably acceptable to MSTI to
determine if any Citizens Real Estate contains or gives evidence that any
violations of Environmental Laws have occurred on any such property. If the
Phase 1 Report discloses any material adverse environmental conditions, or
reports a reasonable suspicion thereof, then Citizens shall promptly obtain, at
MSTI's expense, a Phase 2 environmental report with respect to any affected
property which report shall contain an estimate of the cost of any remediation
or other follow-up work that may be necessary to address those conditions in
accordance with applicable laws and regulations (the "PHASE 2 REPORT," and
collectively referred to with the Phase 1 Report, as the "ENVIRONMENTAL
REPORT"). MSTI shall have no duty to act for the benefit of Citizens, any
Citizens Subsidiary or any other Person upon any information produced by the
Environmental Report, but shall provide such information to Citizens as soon as
practicable after such information becomes available to MSTI.
(b) Upon receipt of the estimate of the costs of all follow-up work
to the Environmental Report, MSTI and Citizens shall attempt to agree upon a
course of action for remediation of any environmental condition suspected, found
to exist, or that would be indicated by the Environmental Report. The estimated
total cost for completing all necessary work plans or removal or remediation
actions is referred to collectively as the "REMEDIATION COST." If the
Remediation Cost exceeds Two Hundred Fifty Thousand Dollars ($250,000), MSTI
may, at its sole option, terminate this Agreement. If the Remediation Cost is
less than Two Hundred Fifty Thousand Dollars ($250,000), such cost shall be
taken into account when computing the Adjusted Stockholders' Equity.
6.8 ADVICE OF CHANGES. Between the Agreement Date and the Closing Date,
Citizens shall promptly notify MSTI in writing if Citizens or any Citizens
Subsidiary becomes aware of any fact or condition that causes or constitutes a
Breach of any of Citizens' representations and
46
warranties as of the Agreement Date, or if Citizens or any Citizens Subsidiary
becomes aware of the occurrence after the Agreement Date 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, Citizens will promptly deliver to
MSTI a supplement to the Schedules specifying such change. During the same
period, Citizens will promptly notify MSTI of the occurrence of any Breach of
any covenant of Citizens in this Agreement or of the occurrence of any event
that might reasonably be expected to make the satisfaction of the conditions in
ARTICLE 9 impossible or unlikely.
6.9 OTHER OFFERS.
(a) Until such time, if any, as this Agreement is terminated
pursuant to ARTICLE 11, Citizens will not, and will cause each Citizens
Subsidiary 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 MSTI)
relating to any Acquisition Transaction (as defined below) or a potential
Acquisition Transaction involving Citizens or any Citizens Subsidiary.
Notwithstanding such foregoing restriction, Citizens may provide information at
the request of, or enter into negotiations with, a third party with respect to
an Acquisition Transaction if the board of directors of Citizens determines, in
good faith, that the exercise of its fiduciary duties to Citizens' stockholders
under applicable law, as advised by its counsel, requires it to take such
action, and, provided further, that Citizens may not, in any event, provide to
such third party any information which it has not provided to MSTI. Citizens
shall promptly notify MSTI orally and in writing in the event it receives any
such inquiry or proposal and shall provide reasonable detail of all relevant
facts relating to such inquiries, along with a summary of the advice provided by
its counsel.
(b) "ACQUISITION TRANSACTION" shall, with respect to Citizens, mean
any of the following: (i) a merger or consolidation, or any similar transaction
(other than the Merger) of any company with either Citizens or any significant
subsidiary, as defined in Rule 1.2 of Regulation S-X of the SEC (a "SIGNIFICANT
SUBSIDIARY"), of Citizens; (ii) a purchase, lease or other acquisition of all or
substantially all the assets of either Citizens or any Significant Subsidiary of
Citizens; (iii) a purchase or other acquisition of "beneficial ownership" by any
"person" or "group" (as such terms are defined in Section 13(d)(3) of the
Exchange Act) (including by way of merger, consolidation, share exchange or
otherwise) that would cause such person or group to become the beneficial owner
of securities representing twenty percent (20%) or more of the voting power of
either Citizens or any Significant Subsidiary of Citizens; (iv) a tender or
exchange offer to acquire securities representing twenty percent (20%) or more
of the voting power of Citizens; (v) a public proxy or consent solicitation made
to Citizens Stockholders seeking proxies in opposition to any proposal relating
to any aspect of the Contemplated Transactions that has been recommended by the
board of directors of Citizens; (vi) the filing of an application or notice with
any Regulatory Authority (which application has been accepted for processing)
seeking approval to engage in one or more of the transactions
47
referenced in clauses (i) through (iv) above; or (vii) the making of a bona fide
proposal to Citizens or its stockholders, by public announcement or written
communication, that is or becomes the subject of public disclosure, to engage in
one or more of the transactions referenced in clauses (i) through (v) above.
6.10 VOTING AGREEMENT. Concurrently with the execution and delivery of
this Agreement, Citizens shall deliver to MSTI a voting agreement in the form of
Exhibit D, signed by all directors and executive officers of Citizens who are
Citizens Stockholders.
6.11 STOCKHOLDERS' MEETING. Citizens shall cause a meeting of its
stockholders for the purpose of acting upon this Agreement to be held at the
earliest practicable date after the Registration Statement (as defined below)
has been declared effective by the SEC. Citizens shall send to its stockholders,
at least thirty (30) days prior to such meeting, notice of such meeting together
with the Proxy Statement, which shall include a copy of this Agreement and a
copy of Section 262 of the DGCL governing the rights of dissenting stockholders.
Citizens and its board of directors shall recommend to stockholders the approval
of this Agreement and the Merger and shall solicit proxies voting only in favor
thereof from the Citizens Stockholders, and Citizens and its board of directors
shall not withdraw, modify or change, in any manner adverse to MSTI, or publicly
announce its intent to withdraw, modify or change, in any manner adverse to
MSTI, such recommendation of this Agreement and the Merger; provided, however,
that Citizens shall not be required to make the recommendation required by this
SECTION 6.11, and shall be permitted to withdraw, modify or change such
recommendation, if the board of directors of Citizens determines, in good faith,
that the exercise of its fiduciary duties to Citizens' stockholders under
applicable law, as advised by its counsel, so requires. For the avoidance of
doubt, the parties acknowledge that the failure of Citizens to comply with the
provisions of this SECTION 6.11 shall be deemed to have a Material Adverse
Effect on Citizens on a consolidated basis and on MSTI's rights under this
Agreement.
6.12 INFORMATION PROVIDED TO MSTI. Citizens agrees that none of the
information concerning Citizens or any Citizens Subsidiary that is provided or
to be provided by Citizens to MSTI for inclusion or that is included in the
Registration Statement or Proxy Statement and any other documents to be filed
with any Regulatory Authority in connection with the Contemplated Transactions
will, at the respective times such documents are filed and, in the case of the
Registration Statement, when it becomes effective and, with respect to the Proxy
Statement, when mailed, be false or misleading with respect to any material
fact, or omit to state any material fact necessary in order to make the
statements therein not misleading or, in the case of the Proxy Statement, or any
amendment thereof or supplement thereto, at the time of the meeting of Citizens'
stockholders referred to above, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the meeting in connection with which the Proxy Statement shall be
mailed. Notwithstanding the foregoing, Citizens shall have no responsibility for
the truth or accuracy of any information with respect to MSTI or any MSTI
Subsidiary or any of their Affiliates contained in the Registration Statement or
the Proxy Statement or in any document submitted to, or other communication
with, any Regulatory Authority.
48
6.13 TREATMENT OF EMPLOYEE BENEFIT PLANS. Citizens shall make such changes
to the Citizens Employee Benefit Plans and shall take such actions with respect
to the Citizens Employee Benefit Plans as are agreed to in the Employee Benefits
Agreement dated as of the Agreement Date between MSTI and Citizens.
6.14 STOCK OPTIONS. Citizens shall take all such action as may be
necessary to ensure that all Citizens Stock Options have been exercised for
shares of Citizens Common Stock or have been cashed out or extinguished prior to
the Closing, such that no Citizens Stock Options are outstanding at the
Effective Time; provided, however, that any Citizens Stock Option that is cashed
out shall be cashed out in exchange for an aggregate amount (net of any
applicable withholding tax) equal to the product of: (a) the difference between
(i) the Per Share Cash Consideration, less (ii) the per share exercise price of
such Citizens Stock Option, as set forth on SCHEDULE 4.5 (to the extent such
difference is a positive number); multiplied by (b) the number of shares of
Citizens Common Stock subject to such Citizens Stock Option.
6.15 DATA AND ITEM PROCESSING AGREEMENTS. Citizens agrees to consult with
MSTI prior to the entry by it or any Citizens Subsidiary by either action or
inaction into any new, or any extension of any existing, data or item processing
agreements. Citizens agrees to coordinate with MSTI the negotiation of any new
or extension of any existing data or item processing agreement, with the purpose
of achieving the best possible economic and business result in light of the
Merger.
6.16 TAX MATTERS. Neither Citizens nor any Citizens Subsidiary shall make
any election inconsistent with prior Tax Returns or elections or settle or
compromise any liability with respect to Taxes without prior written notice to
MSTI. Citizens and each Citizens Subsidiary shall timely file all Tax Returns
required to be filed prior to the Closing; provided, however, that each such Tax
Return shall be delivered to MSTI for its review at least fifteen (15) Business
Days prior to the anticipated date of filing of such Tax Return.
6.17 OFFICER AND OTHER AGREEMENTS. Concurrently with the execution and
delivery of this Agreement, and at MSTI's direction and request, Citizens shall
cause to be delivered to MSTI (a) an Employment Agreement in the form of Exhibit
E-1, signed by C. Xxxxxxx Xxxxxxxxx, and (b) an Employment Agreement in the form
of Exhibit E-2, signed by Xxxxxx Xxxxxx (collectively, the "EMPLOYMENT
AGREEMENTS"), each to be effective at the Effective Time.
6.18 ACCOUNTING AND OTHER ADJUSTMENTS. Subject to applicable Legal
Requirements, Citizens agrees that it shall, and shall cause each Citizens
Subsidiary, to: (a) make any accounting adjustments or entries to its books of
account and other financial records; (b) make additional provisions to any
allowance for loan and lease losses; (c) sell or transfer any investment
securities held by it; (d) charge-off any loan or lease; (e) create any new
reserve account or make additional provisions to any other existing reserve
account; (f) make changes in any accounting method; (g) accelerate, defer or
accrue any anticipated obligation, expense or income item; and (h) make any
other adjustments that would affect the financial reporting of MSTI, on a
consolidated basis after the Effective Time, in any case as MSTI shall
reasonably request, provided, however, that neither Citizens nor any Citizens
Subsidiary shall be obligated to
49
take any such requested action until immediately prior to the Closing and at
such time as Citizens shall have received reasonable assurances that all
conditions precedent to Citizens' obligations under this Agreement (except for
the completion of actions to be taken at the Closing) have been satisfied.
6.19 LASALLE LOAN. In connection with Citizens' Loan Agreement (the "LOAN
AGREEMENT"), dated December 30, 2003, with LaSalle Bank National Association, as
lender ("LASALLE"), Citizens shall, prior to Closing, take any and all action
necessary to obtain LaSalle's consent or approval to this Agreement and the
Contemplated Transactions, and/or to obtain a waiver from LaSalle, through the
Closing, of any and all defaults under the Loan Agreement that may be caused by
the execution of this Agreement or the consummation of the Contemplated
Transactions, as such consent, approval or waiver may be required by the Loan
Agreement.
ARTICLE 7
MSTI'S COVENANTS
7.1 ACCESS AND INVESTIGATION.
(a) Solely for the purpose of permitting Citizens to ascertain the
correctness of the representations and warranties made in this Agreement by MSTI
to Citizens, Citizens 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 MSTI and each MSTI Subsidiary in accordance with the provisions of
this Section. Citizens 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 MSTI and each MSTI Subsidiary and of their respective
financial and legal condition as Citizens 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 MSTI or any MSTI Subsidiary. Upon request, MSTI
and each MSTI Subsidiary will furnish Citizens or its Representatives,
attorneys' responses to auditors' requests for information regarding MSTI or
such MSTI Subsidiary, as the case may be, and such financial and operating data
and other information reasonably requested by Citizens (provided, with respect
to attorneys, such disclosure would not result in the waiver by MSTI or the Bank
of any claim of attorney-client privilege), and will permit Citizens and its
Representatives to discuss such information directly with any individual or firm
performing auditing or accounting functions for MSTI or such MSTI Subsidiary,
and such auditors and accountants shall be directed to furnish copies of any
reports or financial information as developed to Citizens or its
Representatives. No investigation by Citizens or any of its Representatives
shall affect the representations and warranties made by MSTI. This Section shall
not require the disclosure of any information the disclosure of which to
Citizens would be prohibited by any Legal Requirement.
(b) Any confidential information or trade secrets of Citizens
received by MSTI, its employees or agents in the course of the consummation of
the Contemplated
50
Transactions shall be treated confidentially in accordance with the terms of the
Confidentiality Agreement.
7.2 SUBSEQUENT MSTI FINANCIAL STATEMENTS; SECURITIES REPORTS. As soon as
available after the Agreement Date, MSTI will furnish Citizens copies of the
quarterly unaudited (and when available, annual audited) consolidated balance
sheets, consolidated statements of income, consolidated statements of cash flow
and consolidated statements of changes in stockholders' equity, of MSTI prepared
for its internal use, and all other financial reports or statements submitted
after the Agreement Date by MSTI to any Regulatory Authority, to the extent
permitted by law (collectively, the "SUBSEQUENT MSTI FINANCIAL STATEMENTS").
Without limitation of the foregoing, MSTI shall deliver to Citizens complete
copies of any reports filed with the SEC after the Agreement Date (collectively,
the "MSTI SEC FILINGS"). Except as may be required by changes in GAAP effective
after the Agreement Date, the Subsequent MSTI Financial Statements shall be
prepared on a basis consistent with past accounting practices and shall fairly
present in all material respects the consolidated financial condition and
results of operations for the dates and periods presented. Neither the
Subsequent MSTI Financial Statements nor the MSTI SEC Filings shall include any
material assets or omit to state any material liabilities, absolute or
contingent, or other facts, which inclusion or omission would render such
Subsequent MSTI Financial Statements or MSTI SEC Filings misleading in any
material respect.
7.3 ADVICE OF CHANGES. Between the Agreement Date and the Closing Date,
MSTI shall promptly notify Citizens in writing if MSTI or any MSTI Subsidiary
becomes aware of any fact or condition that causes or constitutes a Breach of
any of MSTI's representations and warranties as of the Agreement Date, or if
MSTI or any MSTI Subsidiary becomes aware of the occurrence after the Agreement
Date 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, MSTI
will promptly notify Citizens of the occurrence of any Breach of any covenant of
MSTI in this Agreement or of the occurrence of any event that might reasonably
be expected to make the satisfaction of the conditions in ARTICLE 10 impossible
or unlikely.
7.4 INFORMATION PROVIDED TO CITIZENS. MSTI agrees that none of the
information concerning MSTI or any MSTI Subsidiary that is provided or to be
provided by MSTI to Citizens for inclusion or that is included in the
Registration Statement or Proxy Statement and any other documents to be filed
with any Regulatory Authority in connection with the Contemplated Transactions
will, at the respective times such documents are filed and, in the case of the
Registration Statement, when it becomes effective and, with respect to the Proxy
Statement, when mailed, be false or misleading with respect to any material
fact, or omit to state any material fact necessary in order to make the
statements therein not misleading. Notwithstanding the foregoing, MSTI shall
have no responsibility for the truth or accuracy of any information with respect
to Citizens or any Citizens Subsidiary or any of their Affiliates contained in
the Registration Statement or the Proxy Statement or in any document submitted
to, or other communication with, any Regulatory Authority.
51
7.5 INDEMNIFICATION; DIRECTOR AND OFFICER INSURANCE. Except as may be
limited by applicable Legal Requirements, MSTI shall honor any of Citizens'
obligations in respect of indemnification and advancement of expenses provided
by Citizens as of the Agreement Date in its certificate of incorporation or
bylaws in favor of the current and former directors and officers of Citizens and
the Bank for not less than three years from the Effective Time with respect to
matters occurring prior to the Effective Time. MSTI shall acquire and maintain
for a period of two (2) years extended coverage of acts or omissions occurring
at or prior to the Effective Time with respect to those persons who are
currently covered by Citizens' director and officer liability policies of
insurance, commonly referred to as "tail coverage," on terms with respect to
such coverage and amount substantially similar to the terms and conditions of
Citizens' director and officer liability policies of insurance in effect on the
Agreement Date.
7.6 EMPLOYEE BENEFITS. For purposes of determining eligibility to
participate in and, where applicable, vesting under MSTI's and its Subsidiaries'
employee benefit plans, programs and arrangements generally accorded all to
employees of MSTI or its Subsidiaries (including tax-qualified retirement plans,
welfare benefit plans, vacation pay and Family and Medical Leave Act leave
rights), MSTI agrees that all former employees of Citizens or the Bank who
become employees of MSTI or any of its Subsidiaries shall receive credit for
their past service with Citizens or the Bank as if such employee had then been
employed by MSTI. To the extent that, after taking into account such service
with Citizens or the Bank, employees of the Citizens or the Bank satisfy the
minimum age and service requirements of MSTI's and its Subsidiaries employee
benefit plans, employees of the Company shall participate in such plans as of
the Effective Time.
7.7 AUTHORIZATION AND RESERVATION OF MSTI COMMON STOCK. The board of
directors of MSTI shall, prior to the Effective Time, authorize and reserve the
maximum number of shares of MSTI Common Stock to be issued pursuant to this
Agreement and take all other necessary corporate action to consummate the
Contemplated Transactions.
7.8 SUBSIDIARY BOARD SEAT. Immediately following the Effective Time, MSTI
shall cause its banking subsidiary to expand its board of directors by two
members, and such board shall take such action necessary to appoint as directors
two individuals nominated by Citizens, which nominees shall be acceptable to
MSTI in its sole discretion.
7.9 NEGATIVE COVENANTS. Except as otherwise expressly permitted by this
Agreement, between the Agreement Date and the Closing Date, MSTI will not, and
will cause each MSTI Subsidiary not to, without the prior written consent of
Citizens:
(a) take any affirmative action, or fail to take any reasonable
action within its control, as a result of which a Breach of MSTI's
representations or warranties occurs, if such Breach would have a Material
Adverse Effect on MSTI on a consolidated basis;
(b) take any action to amend MSTI's articles of incorporation or
bylaws, the effect of which would be to materially and adversely affect the
rights or powers of holders of MSTI Common Stock generally; or
52
(c) take any affirmative action, or fail to take any reasonable
action within its control, the effect of which would be to materially impair or
otherwise prevent the consummation of the Contemplated Transactions.
ARTICLE 8
COVENANTS OF ALL PARTIES
8.1 REGULATORY APPROVALS. By no later than thirty (30) days after the
Agreement Date, MSTI shall make all appropriate filings with Regulatory
Authorities for approval of the Contemplated Transactions, including the
preparation of an application or any amendment thereto or any other required
statements or documents filed or to be filed by any party with: (a) the Federal
Reserve pursuant to the BHCA; (b) the OTS pursuant to the HOLA; (c) the DFPR
pursuant to the ISBA; and (d) any other Person or Regulatory Authority pursuant
to any applicable Legal Requirement, for authority to consummate the
Contemplated Transactions. MSTI shall pursue in good faith the regulatory
approvals necessary to consummate the Contemplated Transactions. In advance of
any filing made under this Section, Citizens and its counsel shall be provided
with the opportunity to comment upon all non-confidential portions thereof, and
MSTI agrees promptly to advise Citizens and its counsel of, and share with them,
any material communication received by MSTI or its counsel from any Regulatory
Authorities with respect to the non-confidential portions of such filings.
8.2 SEC REGISTRATION. By no later than sixty (60) days after the Agreement
Date, MSTI shall prepare and file with the SEC a registration statement under
the Securities Act on an appropriate form reasonably acceptable to Citizens
covering the shares of MSTI Common Stock to be issued pursuant to this Agreement
and shall its Best Efforts to cause the same to become effective, and
thereafter, until the Effective Time or lawful termination of this Agreement, to
keep the same effective and, if necessary, amend and supplement the same (such
registration statement, and any amendments and supplements thereto, is referred
to as the "REGISTRATION STATEMENT"). The Registration Statement shall include
the Proxy Statement for use in connection with the meeting of the Citizens
Stockholders referred to in SECTION 6.11, all in accordance with the rules and
regulations of the SEC. MSTI shall, as soon as practicable after the execution
of this Agreement, make all filings required to obtain all permits,
authorizations, consents or approvals required under any applicable Legal
Requirements (including all state securities laws) for the issuance of the
shares of MSTI Common Stock to Citizens Stockholders. In advance of any filing
made under this Section, MSTI and Citizens and their respective counsel shall be
provided with the opportunity to comment thereon, and MSTI and Citizens each
agree promptly to advise each other and each other's counsel of any material
communication received by it or its counsel from the SEC or any other Regulatory
Authorities with respect to such filings. Preparation and filing of the
Registration Statement shall be at the sole cost and expense of MSTI, except
that Citizens shall be solely responsible for the costs and expenses, including
fees of Citizens' accountants and legal counsel, related to the preparation and
review of Citizens financial statements and Citizens information required to be
presented in the Registration Statement and the costs of printing and mailing
the Proxy Statement to Citizens Stockholders.
53
8.3 NECESSARY APPROVALS. MSTI and Citizens agree that MSTI's counsel will
have primary responsibility for preparation of the Registration Statement and
MSTI will have primary responsibility for the preparation of the necessary
applications for regulatory approval of the Contemplated Transactions. Each of
MSTI and Citizens and their respective Subsidiaries agree fully and promptly to
cooperate with each other and their respective counsels and accountants in
connection with any steps to be taken as part of their obligations under this
Agreement.
8.4 CUSTOMER AND EMPLOYEE RELATIONSHIPS. Each of MSTI and Citizens agrees
that its respective Representatives may jointly:
(a) participate in meetings or discussions with officers and
employees of Citizens and MSTI and their Subsidiaries in connection with
employment opportunities with MSTI after the Effective Time; and
(b) contact Persons having dealings with Citizens or MSTI or any of
its respective Subsidiaries for the purpose of informing such Persons of the
services to be offered by MSTI after the Effective Time.
8.5 PUBLICITY. Prior to the Effective Time, the parties to this Agreement
will consult with each other before issuing any press releases or otherwise
making any public statements to stockholders, customers, employees or others
with respect to this Agreement or the Contemplated Transactions and shall not
issue any such press release or make any such public statement without the prior
consent of the other parties, except as may be required by law.
8.6 BEST EFFORTS; COOPERATION. Each of MSTI and Citizens agrees to
exercise good faith and use its Best Efforts to satisfy the various covenants
and conditions to Closing in this Agreement, and to consummate the transactions
contemplated hereby as promptly as possible. Neither MSTI nor Citizens will
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 Agreement
Date and the Closing Date, each of MSTI and Citizens will, and will cause each
MSTI Subsidiary and Citizens Subsidiary, respectively, and all of their
respective Affiliates and Representatives to, cooperate with respect to all
filings that any party is required by Legal Requirements to make in connection
with the Contemplated Transactions.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF MSTI
The obligations of MSTI to consummate the Contemplated Transactions and to
take the other actions required to be taken by MSTI 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 MSTI, in whole or in part):
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All of the representations
and warranties of Citizens set forth in this Agreement shall be true and correct
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
54
earlier date, such representations shall be true and correct on and as of such
earlier date), except for any untrue or incorrect representations or warranties
that individually or in the aggregate do not have a Material Adverse Effect
either on Citizens on a consolidated basis or on MSTI's rights under this
Agreement.
9.2 CITIZENS' PERFORMANCE. Citizens shall have performed or complied 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, except where
any non-performance or noncompliance would not have a Material Adverse Effect
either on Citizens on a consolidated basis or on MSTI's rights under this
Agreement.
9.3 DOCUMENTS SATISFACTORY. All proceedings, corporate or other, to be
taken by Citizens in connection with the Contemplated Transactions, and all
documents incident thereto, shall be reasonably satisfactory in form and
substance to counsel for MSTI.
9.4 CORPORATE APPROVAL. This Agreement and the Contemplated Transactions
shall have been duly and validly approved as necessary under applicable Legal
Requirements by the Citizens Stockholders.
9.5 NO PROCEEDINGS. Since the Agreement Date, there must not have been
commenced or Threatened against Citizens or any Citizens Subsidiary 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 Citizens or its stockholders or
MSTI's rights under this Agreement.
9.6 ABSENCE OF MATERIAL ADVERSE CHANGES. From the Agreement Date 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 either on Citizens or
any Citizens Subsidiary.
9.7 CONSENTS AND APPROVALS. Any consents or approvals required to be
secured by either party by the terms of this Agreement shall have been obtained
and shall be reasonably satisfactory to MSTI, and all applicable waiting periods
shall have expired.
9.8 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.
9.9 REGISTRATION STATEMENT. The Registration Statement shall have become
effective and no stop order suspending such effectiveness shall have been issued
or threatened by the SEC that suspends the effectiveness of the Registration
Statement and no Proceeding shall have been commenced or be pending or
Threatened for such purpose.
55
9.10 DISSENTING SHARES. The total number of Dissenting Shares shall be no
greater than five percent (5%) of the number of Outstanding Citizens Shares.
9.11 EMPLOYMENT AGREEMENTS. The Employment Agreements shall be in full
force and effect, and each of C. Xxxxxxx Xxxxxxxxx and Xxxxxx Xxxxxx shall be an
active employee of Citizens.
9.12 TAX OPINION. MSTI and Citizens shall have received the opinion
described in SECTION 10.10.
9.13 MINIMUM STOCKHOLDERS' EQUITY. Citizens' Adjusted Stockholders' Equity
(as calculated immediately prior to the Closing Date) shall not be less than
$34,625,000.
9.14 ALLOWANCE FOR LOAN AND LEASE LOSSES. Consistent with the methodology
utilized by Citizens in the Ordinary Course of Business, Citizens shall have a
consolidated allowance for loan and lease losses that is adequate in all
material respects to provide for possible losses, net of recoveries relating to
loans previously charged off, on loans outstanding (including accrued interest
receivable).
9.15 CITIZENS CAPITALIZATION. No Citizens Stock Options shall have been
issued since the Agreement Date, and there shall be no Citizens Stock Options
outstanding at the Effective Time. Further, at the Effective Time, the issued
and outstanding capital stock of Citizens shall consist exclusively of no more
than 1,761,311 Outstanding Citizens Shares.
9.16 TRANSACTIONAL EXPENSES. MSTI shall have received proof satisfactory
to it that Citizens has paid or fully accrued for as of the Determination Date
all of the Citizens Transactional Expenses.
ARTICLE 10
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CITIZENS
Citizens' obligation to consummate the Contemplated Transactions and to
take the other actions required to be taken by Citizens 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 Citizens, in whole or in
part):
10.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of MSTI and Acquisition LLC set forth in this
Agreement shall be true and correct 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 on and as of
such earlier date), except for any untrue or incorrect representations or
warranties that individually or in the aggregate do not have a Material Adverse
Effect either on MSTI on a consolidated basis or on Citizens' rights under this
Agreement.
56
10.2 MSTI'S PERFORMANCE. MSTI and Acquisition LLC shall have performed or
complied with all covenants and obligations to be performed or complied with by
them under the terms of this Agreement on or prior to the Closing Date, except
where any non-performance or noncompliance would not have a Material Adverse
Effect either on MSTI on a consolidated basis or on Citizens' rights under this
Agreement.
10.3 DOCUMENTS SATISFACTORY. All proceedings, corporate or other, to be
taken by MSTI in connection with the Contemplated Transactions, and all
documents incident thereto, shall be reasonably satisfactory in form and
substance to counsel for Citizens.
10.4 CORPORATE APPROVAL. This Agreement and the Contemplated Transactions
shall have been duly and validly approved as necessary under applicable Legal
Requirements by the Citizens Stockholders.
10.5 NO PROCEEDINGS. Since the Agreement Date, there must not have been
commenced or Threatened against MSTI or any MSTI Subsidiary 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 either on MSTI or its stockholders or Citizens'
rights under this Agreement.
10.6 ABSENCE OF MATERIAL ADVERSE CHANGES. From the Agreement Date 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 MSTI on a
consolidated basis.
10.7 CONSENTS AND APPROVALS. Any consents or approvals required to be
secured by either party by the terms of this Agreement shall have been obtained
and shall be reasonably satisfactory to Citizens, and all applicable waiting
periods shall have expired.
10.8 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.
10.9 REGISTRATION STATEMENT. The Registration Statement shall have become
effective and no stop order suspending such effectiveness shall have been issued
or threatened by the SEC that suspends the effectiveness of the Registration
Statement and no Proceeding shall have been commenced or be pending or
Threatened for such purpose.
10.10 TAX OPINION. At MSTI's expense, MSTI and Citizens shall have
received the written opinion of Barack Xxxxxxxxxx Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx
LLP ("BFKPN") (subject to BFKPN's receipt of representation letters from each of
MSTI and Citizens, which representation letters shall be in form and substance
satisfactory to BFKPN in its sole discretion, and which representation letters
shall be true and correct in all respects as of the date of such
57
opinion), in form and substance reasonably satisfactory to MSTI and Citizens and
substantially as described on Exhibit F, dated as of the date of the
Registration Statement and updated through the Closing Date, substantially to
the effect that the Merger will constitute a tax free reorganization under
Section 368 of the Code.
10.11 FAIRNESS OPINION. Citizens shall have received an opinion from
Sandler X'Xxxxx & Partners, L.P. (the "FAIRNESS OPINION"), dated as of the
Agreement Date, to the effect that the terms of the Merger are fair to the
Citizens Stockholders from a financial point of view as of that date and such
Fairness Opinion shall not have been subsequently withdrawn.
ARTICLE 11
TERMINATION
11.1 REASONS FOR TERMINATION AND ABANDONMENT. This Agreement, by prompt
written notice given to the other parties prior to or at the Closing, may be
terminated:
(a) by mutual consent of the boards of directors of MSTI and
Citizens;
(b) by MSTI 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 MSTI to comply with its
obligations under this Agreement); and (ii) MSTI has not waived such condition
on or before the Closing Date;
(c) by Citizens if: (i) any of the conditions in ARTICLE 10 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 Citizens to comply with
its obligations under this Agreement); and (ii) Citizens has not waived such
condition on or before the Closing Date;
(d) by MSTI in accordance with the provisions of SECTION 6.7;
(e) by Citizens, if both (i) the average daily closing price of MSTI
Common Stock as reported on the OTCBB for the twenty (20) consecutive full
trading days ending on the Determination Date (the "AVERAGE MSTI STOCK PRICE")
is less than $26.92, and (ii) the quotient obtained by dividing the Average MSTI
Stock Price by $31.67 is less than the number obtained by subtracting 0.15 from
the quotient obtained by dividing (A) the Index Value on the Determination Date
by (B) the Index Value as of the close of business on November 9, 2004;
provided, however, that Citizens may not terminate the Agreement pursuant to
this SECTION 11.1(e) unless and until five (5) Business Days have elapsed
following the delivery to MSTI of written notice of such termination, and prior
to the end of such five (5) Business Day period MSTI fails to notify Citizens
that MSTI elects to increase the value of the cash, the MSTI Common Stock or a
combination thereof being offered to Citizens Stockholders such that the per
share value of the Merger Consideration (valued at the Average MSTI Stock Price
in the case of the Stock Consideration) is equal to at least $29.75 per share
(provided that the Merger shall qualify as a reorganization within Section 368
of the Code); or
58
(f) by either MSTI or Citizens 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 the date which is
ten (10) months after the Agreement Date, or such later date as the parties may
agree (the "TERMINATION DATE").
11.2 EFFECT OF TERMINATION. Except as provided in SECTIONS 11.3, 11.4 and
11.5, if this Agreement is terminated pursuant to SECTION 11.1, this Agreement
shall forthwith become void, there shall be no liability under this Agreement on
the part of MSTI, Citizens or any of their respective Representatives, and all
rights and obligations of each party hereto shall cease; provided, however,
that, subject to SECTIONS 11.3, 11.4 and 11.5, nothing herein shall relieve any
party from liability for the Breach of any of its covenants or agreements set
forth in this Agreement.
11.3 EXPENSES. Except as provided below, all Expenses (as defined below)
incurred in connection with this Agreement and the Contemplated Transactions
shall be paid by the party incurring such expenses, whether or not the Merger is
consummated. "EXPENSES" as used in this Agreement shall consist of all
out-of-pocket expenses (including all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its
Affiliates) incurred by a party or on its behalf in connection with or related
to the authorization, preparation, negotiation, execution and performance of
this Agreement, the solicitation of stockholder approvals and all other matters
related to the consummation of the Merger.
11.4 CITIZENS TERMINATION PAYMENTS.
(a) If this Agreement is terminated by:
(i) MSTI because there is a Breach of Citizens'
representations or warranties (but not including any such Breach in existence on
the Agreement Date), unless (A) such Breach is a result of the failure by MSTI
to perform and comply in all material respects with any of its material
obligations under this Agreement that are to be performed or complied with by it
prior to or on the date required hereunder, or (B) such Breach or Breaches would
not individually or in the aggregate be reasonably expected to have a Material
Adverse Effect on either MSTI or Citizens on a consolidated basis; or
(ii) MSTI or Citizens because both (A) any of (x) any Person
shall have commenced (as such term is used in Rule 14d-2(b) under the Securities
Exchange Act) a bona fide tender offer or exchange offer to acquire at least 20%
of the then-outstanding shares of Citizens Common Stock, shall have otherwise
made a bona fide proposal to Citizens or the Citizens Stockholders by public
announcement or other written communication that is or becomes the subject of
public disclosure to engage in a transaction that will result in an acquisition
of control of Citizens or the Bank (as defined below), or shall have filed an
application or notice with any Regulatory Authority for approval to engage in a
transaction that will result in an acquisition of control of Citizens or the
Bank; (y) the board of directors of Citizens shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or propose
any transaction that will result in an acquisition of control of Citizens or the
Bank by a Person other than MSTI (or resolved to take any such action), whether
59
or not permitted by the terms of this Agreement or (z) the board of directors of
Citizens, in the exercise of its fiduciary duties as permitted by this
Agreement, shall have failed to recommend in the Proxy Statement-Prospectus the
approval of this Agreement and the Merger, shall have withdrawn, modified or
changed, in any manner adverse to MSTI, or publicly announced its intent to
withdraw, modify or change, in any manner adverse to MSTI, such recommendation
of this Agreement and the Merger, or shall have failed to call or convene the
meeting of the Citizens Stockholders referred to in SECTION 6.11; and (B)
Citizens' stockholders fail to approve the Contemplated Transactions and this
Agreement on or before the Termination Date (in each case described in clauses
(i) and (ii) a "CITIZENS TERMINATION");
and provided in the case of both clauses (i) and (ii), MSTI is in material
compliance with all of its material obligations under this Agreement, then
Citizens shall pay to MSTI, upon its written demand, an amount equal to One
Million Dollars ($1,000,000).
(b) In addition to any payments described in SECTION 11.4(a), if
there is a Citizens Termination and within twelve (12) months after such
termination Citizens enters into a Contract with any party other than MSTI
providing for the acquisition of control of Citizens or the Bank by such other
party, then Citizens shall pay to MSTI, upon its written demand, the additional
sum of One Million Three Hundred Thousand Dollars ($1,300,000), except to the
extent MSTI's Expenses have been paid pursuant to SECTION 11.4(a); provided,
however, that the provisions of this Section shall in no way limit MSTI's rights
against any such third party.
(c) For purposes of this Section, the phrase "CONTROL OF CITIZENS OR
THE BANK" means the acquisition by any such third party of: (x) legal or
beneficial ownership (as defined by Rule 13d-3 promulgated under the Exchange
Act) of greater than twenty percent (20%) of the then issued and outstanding
voting stock of Citizens or the Bank through any transaction to which Citizens,
the Bank or any Affiliate of Citizens or the Bank is a party (other than by
transfers among or between members of a Family, caused by redemptions or
repurchases of Citizens capital stock by Citizens or by issuance of shares of
Citizens Common Stock or other securities to Citizens Stockholders as of the
Agreement Date); or (y) all or substantially all of the assets of Citizens or
the Bank (except transfers to an Affiliate of Citizens or Bank).
(d) If this Agreement is terminated by MSTI because: (i) Citizens
committed a Breach of its covenants or agreements under this Agreement (but not
a Breach of its representations or warranties); or (ii) there is a Breach in
existence as of the Agreement Date of Citizens' representations or warranties;
unless (x) in the case of clause (i), such Breach is a result of the failure by
MSTI to perform and comply in all material respects with any of its material
obligations under this Agreement that are to be performed or complied with by it
prior to or on the date required hereunder, or (y) in the case of either clause
(i) or (ii), such Breach or Breaches would not individually or in the aggregate
be reasonably expected to have a Material Adverse Effect on either MSTI or
Citizens on a consolidated basis, then Citizens shall pay to MSTI, upon its
written demand, an amount equal to Two Million Three Hundred Thousand Dollars
($2,300,000).
60
(e) The sums payable by Citizens under this SECTION 11.4 shall
constitute liquidated damages and MSTI's receipt thereof shall be MSTI's sole
and exclusive remedy under this Agreement for all Breaches of this Agreement by
Citizens or failure by its stockholders to approve this Agreement. The parties
acknowledge that the termination payments payable by Citizens under clauses (a)
and (b) of this SECTION 11.4 and the termination payment payable by Citizens
under clause (d) of this SECTION 11.4 are mutually exclusive, and, to that end,
acknowledge that (i) if MSTI has received a termination payment under clause (a)
(and, if applicable, clause (b)) of this SECTION 11.4, MSTI shall not be
entitled to a termination payment under clause (d), and (ii) if MSTI has
received a termination payment under clause (d) of this SECTION 11.4, MSTI shall
not be entitled to a termination payment under clause (a) (or, if applicable,
clause (b)).
11.5 MSTI TERMINATION PAYMENTS.
(a) If this Agreement is terminated by Citizens because there is a
Breach of MSTI's representations or warranties (but not including any such
Breach in existence on the Agreement Date), unless (i) such Breach is a result
of the failure by Citizens to perform and comply in all material respects with
any of its material obligations under this Agreement that are to be performed or
complied with by it prior to or on the date required hereunder, or (ii) such
Breach or Breaches would not individually or in the aggregate be reasonably
expected to have a Material Adverse Effect on either Citizens or MSTI on a
consolidated basis, then provided Citizens is in material compliance with all of
its material obligations under this Agreement, then MSTI shall pay to Citizens,
upon its written demand, an amount equal to One Million Dollars ($1,000,000).
(b) If this Agreement is terminated by Citizens because: (i) MSTI
committed a Breach of its covenants or agreements under this Agreement (but not
a Breach of its representations or warranties); or (ii) there is a Breach in
existence as of the Agreement Date of MSTI's representations or warranties;
unless (x) in the case of clause (i), such Breach is a result of the failure by
Citizens to perform and comply in all material respects with any of its material
obligations under this Agreement which are to be performed or complied with by
it prior to or on the date required hereunder, or (y) in the case of either
clause (i) or (ii), such Breach or Breaches would not individually or in the
aggregate be reasonably expected to have a Material Adverse Effect on either
MSTI or Citizens on a consolidated basis, then MSTI shall pay to Citizens, upon
its written demand, an amount equal to Two Million Three Hundred Thousand
Dollars ($2,300,000).
(c) The sums payable by MSTI under this SECTION 11.5 shall
constitute liquidated damages and Citizens' receipt thereof shall be Citizens'
sole and exclusive remedy under this Agreement for all Breaches of this
Agreement by MSTI. The parties acknowledge that the termination payment payable
by MSTI under clause (a) of this SECTION 11.5 and the termination payment
payable by MSTI under clause (b) of this SECTION 11.5 are mutually exclusive,
and, to that end, acknowledge that (i) if Citizens has received a termination
payment under clause (a) of this SECTION 11.5, Citizens shall not be entitled to
a termination payment under clause (b), and (ii) if Citizens has received a
termination payment under clause (b) of this SECTION 11.5, Citizens shall not be
entitled to a termination payment under clause (a).
61
ARTICLE 12
MISCELLANEOUS
12.1 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
Illinois applicable to Contracts made and wholly to be performed in such state
without regard to conflicts of laws.
12.2 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.
12.3 WAIVER. Except as provided in ARTICLE 11, 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.
12.4 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:
62
If to MSTI, to:
Main Street Trust, Inc.
000 X. Xxxxxxxxxx Xxxxxx
P. O. Box 4028
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Mr. Van X. Xxxxxxx
President and Chief Executive Officer
with copies to:
Barack Xxxxxxxxxx Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx LLP
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
If to Citizens, to:
Citizens First Financial Corp.
0000 Xxxxx Xxxxxxxx Xxxxxxx
X.X. Xxx 0000
Xxxxxxxxxxx, Xxxxxxxx 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: C. Xxxxxxx Xxxxxxxxx
with copies to:
Xxxxxx & Xxxxxx Attorneys PC
Comerica Building
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
or to such other Person or place as Citizens shall furnish to MSTI or MSTI shall
furnish to Citizens 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 (5) Business Days after deposit with the United States Postal
Service; (c) if delivered by overnight express delivery service, on the next
Business
63
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.
12.5 ENTIRE AGREEMENT. This Agreement and any documents executed by the
parties pursuant to this Agreement and referred to herein, including the
Confidentiality Agreement, 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.
12.6 MODIFICATION. This Agreement may not be amended except by a written
agreement signed by each of Citizens and MSTI. Without limiting the foregoing,
Citizens and MSTI may by written agreement signed by each of them: (a) extend
the time for the performance of any of the obligations or other acts of the
parties hereto; (b) waive any inaccuracies in the representations or warranties
contained in this Agreement or in any document delivered pursuant to this
Agreement; and (c) waive compliance with or modify, amend or supplement any of
the conditions, covenants, agreements, representations or warranties contained
in this Agreement or waive or modify performance of any of the obligations of
any of the parties hereto, which are for the benefit of the waiving party;
provided, however, that no such modification, amendment or supplement agreed to
after authorization of this Agreement by the Citizens Stockholders shall affect
the rights of Citizens' stockholders in any manner that is materially adverse to
such Persons.
12.7 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.
12.8 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.
12.9 SURVIVAL. The representations, warranties and covenants contained
herein shall not survive beyond the Closing.
12.10 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.
[THIS SPACE LEFT INTENTIONALLY BLANK]
64
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.
CITIZENS FIRST FINANCIAL CORP. MAIN STREET TRUST, INC.
By: /s/ C. Xxxxxxx Xxxxxxxxx By: /s/ Van X. Xxxxxxx
------------------------------------ ---------------------------
Name: C. Xxxxxxx Xxxxxxxxx Name: Van X. Xxxxxxx
Title: President and Chief Executive Title: President and Chief Executive
Officer Officer
CITIZENS ACQUISITION LLC
By: Main Street Trust, Inc., its sole member
By: /s/ Van X. Xxxxxxx
------------------------------
Name: Van X. Xxxxxxx
Title: President
Signature page to Merger Agreement
