EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
MARCH 12, 1999
BY AND AMONG
STATE FINANCIAL SERVICES CORPORATION,
FWC ACQUISITION CORP.,
AND
FIRST WAUKEGAN CORPORATION
TABLE OF CONTENTS
1. THE MERGER............................................................1
1.1 The Merger...............................................1
1.2 Effective Time of the Merger.............................2
1.3 Closing..................................................2
2. EFFECT OF THE MERGER OF FWC COMMON STOCK..............................2
2.1 Effect on Common Stock...................................2
2.2 Treasury Shares..........................................3
2.3 Articles of Incorporation; Bylaws........................3
2.4 Board of Directors and Officers of Surviving
Corporation..............................................3
3. REPRESENTATIONS AND WARRANTIES OF FWC.................................3
3.1 Corporate................................................3
3.2 Authorization............................................5
1.3 No Violation.............................................5
3.4 Consents and Approvals...................................6
3.5 Reports..................................................6
3.6 Financial Statements.....................................6
3.7 Tax Matters..............................................7
3.8 Absence of Certain Changes...............................8
3.9 Absence of Undisclosed Liabilities.......................9
3.10 No Litigation............................................9
3.11 Compliance with Laws and Orders..........................9
3.12 Governmental Regulation.................................10
3.13 Title to and Condition of Properties....................10
3.14 Investment and Loan Portfolios..........................11
3.15 Insurance...............................................12
3.16 Loan Loss Reserves......................................12
3.17 Environmental Liability.................................13
3.18 Saleability of Mortgage Loans in Secondary Market.......13
3.19 Contracts and Commitments...............................13
3.20 Employees...............................................14
3.21 Employment Compensation.................................15
3.22 Affiliates'Relationships to FWC or the Bank.............15
3.23 Administration of Trust Accounts........................15
3.24 Year 2000 Warranty......................................16
3.25 Assets Necessary to Business............................16
3.26 No Brokers or Finders...................................16
3.27 Disclosure..............................................16
3.28 Vote Required...........................................16
4. REPRESENTATIONS AND WARRANTIES OF Sfsc And NEWCO.....................17
4.1 Corporate...............................................17
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1.2 Authorization...........................................17
4.3 No Brokers or Finders...................................17
4.4 Regulatory Approval.....................................17
4.5 Litigation..............................................18
4.6 Financing...............................................18
4.7 No Violation............................................18
4.8 Consents and Approvals..................................18
4.9 Disclosure..............................................18
5. COVENANTS............................................................19
5.1 Conduct of Businesses Prior to the Effective Date.......19
5.2 Forbearances............................................19
5.3 Access to Information and Records.......................21
5.4 No Negotiations.........................................21
5.5 Confidentiality.........................................21
5.6 Report to SFSC..........................................21
5.7 Breaches................................................22
5.8 Shareholder Meeting.....................................22
5.9 Appraisal Process.......................................22
5.10 Consents................................................22
5.11 Other Action............................................22
5.12 Disclosure Schedule.....................................22
5.13 Irrevocable Proxies.....................................23
5.14 Indemnification; Directors'and Officers'Insurance.......23
5.15 Employee Matters........................................24
5.16 Regulatory Approval.....................................25
5.17 Shareholder Proxies.....................................25
6. CONDITIONS PRECEDENT TO SFSC AND NEWCO'S OBLIGATIONS.................25
6.1 No Material Adverse Change..............................25
6.2 Representations and Warranties..........................26
6.3 Performance and Compliance..............................26
6.4 No Proceeding or Litigation.............................26
6.5 Consents Under Agreements...............................26
6.6 Dissenters..............................................26
6.7 Opinion of Counsel for FWC..............................27
6.8 Certificate of FWC......................................27
6.9 Good Standing Certificates..............................27
6.10 Financial Conditions....................................27
6.11 Closing Balance Sheet...................................27
7. CONDITIONS PRECEDENT TO FWC'S OBLIGATIONS............................28
7.1 No Material Adverse Change..............................28
7.2 Representations and Warranties..........................28
7.3 Performance and Compliance..............................28
7.4 No Proceeding or Litigation.............................28
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7.5 Opinion of Counsel for SFSC and Newco...................28
7.6 Certificate of Executive Officer........................28
7.7 Redemption of Preferred Stock and Assumption of
the ANB Debt............................................29
7.8 Fairness Opinion........................................29
8. CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES.........................29
8.1 Governmental Approvals..................................29
8.2 Shareholder Approval....................................29
9. TERMINATION, expenses and amendment..................................29
9.1 Termination.............................................29
9.2 Effect of Termination...................................31
9.3 Termination Fee; Expenses...............................31
9.4 Amendment...............................................33
9.5 Extension; Waiver.......................................33
10. MISCELLANEOUS........................................................33
10.1 Nonsurvival of Representations, Warranties and
Agreements..............................................33
10.2 Definitions.............................................34
10.3 Severability............................................34
10.4 Publicity...............................................34
10.5 Assignment; Parties in Interest.........................34
10.6 Law Governing Merger Agreement..........................35
10.7 Notice..................................................35
10.8 Entire Agreement........................................36
10.9 Counterparts............................................36
10.10 Headings................................................36
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger dated as of March 12, 1999 (the "Merger
Agreement"), is entered into by and among State Financial Services Corporation,
a Wisconsin corporation ("SFSC"), First Waukegan Corporation, an Illinois
corporation ("FWC"), and FWC Acquisition Corp., an Illinois corporation and a
wholly owned subsidiary of SFSC ("Newco").
WITNESSETH
WHEREAS, this Merger Agreement provides for the merger of Newco with and
into FWC (the "Merger") and for the conversion at the Effective Time, as such
term is defined herein, of all 650,603 issued and outstanding shares of common
stock of FWC, $1.00 par value per share ("FWC Common Stock") and all 64,500
options to purchase FWC Common Stock (the "FWC Options"), into the right to
receive the consideration defined in Section 2.1, all in accordance with the
terms and conditions hereof and of the Plan of Merger in substantially the form
attached as Exhibit A hereto (the "Plan of Merger") (together with this Merger
Agreement, the "Agreements"); and
WHEREAS, as a result of the Merger, SFSC will acquire and own,
indirectly, all the issued and outstanding capital stock of the Bank of Northern
Illinois, N.A. (the "Bank"); and
WHEREAS, the respective Boards of Directors of FWC, SFSC and Newco deem
the Merger desirable and in the best interests of their respective shareholders.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations, warranties, and agreements herein contained, and in
order to set forth the conditions upon which the foregoing reorganization will
be carried out, the parties agree as follows:
1. THE MERGER
1.1 The Merger.
Subject to the terms and conditions of this Merger Agreement, and in
accordance with the provisions of the Illinois Business Corporation Act of 1983,
as amended (the "IBCA"), at the Effective Time, Newco will merge with and into
FWC, and FWC will be the surviving corporation (referred to in the period
following the Effective Time as the "Surviving Corporation") and shall continue
its corporate existence under the laws of the State of Illinois. Upon the
consummation of the Merger, the separate corporate existence of Newco shall
terminate.
1.2 Effective Time of the Merger.
Subject to the provisions of the Agreements, articles of merger (the
"Articles of Merger") shall be duly prepared and executed by Newco and FWC and
thereafter delivered to the Secretary of State of the State of Illinois for
filing, as provided in the IBCA, as soon as practicable on the Closing Date (as
defined in Section 1.3). The Merger shall become effective upon the filing of
the Articles of Merger with the Secretary of State of the State of Illinois or
at such other time as may be specified therein (the "Effective Time"). The
parties shall each use reasonable efforts to cause the Articles of Merger to be
filed on the Closing Date (as defined in Section 1.3).
1.3 Closing.
Subject to the terms and conditions herein set forth, the closing of the
transactions contemplated by this Merger Agreement (the "Closing") will be
effected on a date specified by SFSC and FWC that shall be not later than ten
(10) business days after the latter to occur of the lapse of any applicable
waiting period following approval of the Merger by the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") or shareholder approval or
on such other date as shall be mutually agreed upon by the parties (the "Closing
Date"). It is anticipated that the Closing will take place on the Closing Date
at the offices of Xxxxx & Xxxxxxx, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxx 00000, or at such other place as shall be mutually agreeable to SFSC
and FWC. Notwithstanding the foregoing, if the Closing does not take place on
the date referred to above because any condition to the obligations of SFSC and
Newco, on the one hand, or FWC, on the other hand, under this Merger Agreement
is not met on that date, the other party may postpone the Closing from time to
time to any designated subsequent business day not more than ten (10) business
days after the original or postponed date on which the Closing was to occur by
delivering prompt notice of such postponement prior to the date the Closing was
to occur.
2. EFFECT OF THE MERGER OF FWC COMMON STOCK
2.1 Effect on Common Stock.
As of the Effective Time, by virtue of the Merger and without any action
on the part of the holder of any shares of FWC Common Stock, but subject to the
provisions of Sections 5/11.65 and 5/11.70 of the IBCA with respect to the
rights of dissenting shareholders of FWC, (i) each issued and outstanding share
of FWC Common Stock shall be converted into the right to receive approximately
$40.185958 (the "Common Stock Consideration"), (ii) each FWC Option shall be
converted into the right to receive approximately $21.185953 (the "Option
Consideration," together with the Common Stock Consideration collectively
referred to herein as the "Merger Consideration"), (iii) the Preferred Stock (as
defined in Section 3.1(b) shall be redeemed by SFSC; and (iv) the outstanding
indebtedness to American National Bank and Trust Company of Chicago ("ANB"), as
listed on Schedule 2.1(iv), shall be assumed or paid in full by SFSC (the "ANB
Bank Debt"). The Common Stock Consideration and the Option Consideration may be
adjusted in the event FWC Options are
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exercised or shares of FWC Common Stock are bought or sold by the FWC ESOP;
provided, however, that the total Merger Consideration shall not exceed
Twenty-Eight Million Dollars ($28,000,000) minus the bonuses to be paid to
Xxxxxx Xxxxx, Xx., Xxxx Xxxxx, Xxxxx Xxxxxx and Xxxxxx Xxxxx, Xx. in the amounts
listed on Exhibit B attached hereto in the aggregate amount of Seven Hundred
Forty Thousand Dollars ($740,000) net of taxes (the "Employee Bonuses"). All
shares of FWC Common Stock issued and outstanding and all FWC Options
outstanding immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of any such shares or options shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration to be issued in accordance with the Plan of Merger, without
interest.
2.2 Treasury Shares.
All shares of FWC Common Stock that are held in the treasury of FWC or by
any wholly owned subsidiary of FWC and any shares of FWC Common Stock owned by
SFSC or any other wholly-owned subsidiary of SFSC shall be canceled.
2.3 Articles of Incorporation; Bylaws.
The Articles of Incorporation and Bylaws of Newco in effect as of the
Effective Time shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation after the Effective Time until thereafter amended in
accordance with the terms of the Articles of Incorporation or Bylaws or
applicable law.
2.4 Board of Directors and Officers of Surviving Corporation.
The officers and directors of Newco immediately prior to the Effective
Time shall be the officers and directors of the Surviving Corporation at the
Effective Time, until their respective successors are duly elected or appointed
in accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation.
3. REPRESENTATIONS AND WARRANTIES OF FWC
FWC makes the following representations and warranties to SFSC, each of
which is true and correct on the date hereof, shall remain true and correct to
and including the Closing Date, and shall be unaffected by any investigation
heretofore or hereafter made by SFSC, or any knowledge of SFSC other than as
specifically disclosed in the Disclosure Schedule delivered to SFSC at the time
of the execution of this Merger Agreement:
3.1 Corporate.
3.1(a) Corporate Organization. FWC is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Illinois
and has all requisite corporate power and authority to own, operate, and lease
its properties as presently owned, operated, or leased and to engage in the
activities and business now conducted by it.
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FWC is qualified to do business in each jurisdiction in which the nature of
business conducted or assets owned or leased make such qualification necessary
and where a failure to do so would have a Material Adverse Effect (as defined in
Section 10.2). FWC is registered with the Federal Reserve Board as a bank
holding company under the Bank Holding Company Act of 1956, as amended (the
"BHCA"). FWC's acquisition of the capital stock of the Bank was duly approved by
all necessary authorities. FWC has delivered to SFSC true, accurate, and
complete copies of the currently effective Articles of Incorporation and Bylaws
of FWC, including all amendments thereto. Except for shares of the Bank, neither
FWC nor the Bank owns beneficially, directly or indirectly, five percent (5%) or
more of any class of equity securities or similar interests of any other
corporation, bank, business trust, association, or similar organization. The
minute books of FWC and the Bank contain complete and accurate records in all
material respects of all meetings and other corporate actions of their
respective shareholders and Board of Directors.
3.1(b) Capitalization. As of the date hereof, the authorized capital
stock of FWC consists of (a) 1,500,000 shares of FWC Common Stock, of which
650,603 are issued and outstanding; 64,500 shares are reserved for issuance
pursuant to the First Waukegan Corporation 1995 Stock Option Plan, of which
64,500 options have been granted, and none are held in FWC's treasury; and (b)
2,500 shares of Adjustable Rate Cumulative Perpetual Preferred Stock (the
"Preferred Stock"), of which 2,350 shares are issued and outstanding. All of
such issued and outstanding shares of FWC's capital stock are validly issued,
fully paid, and are non-assessable and were not issued in violation of any
person's preemptive rights. Schedule 3.1(b) contains a complete and accurate
list of all the holders of FWC Common Stock and FWC Options, the number of
shares and options held by each holder and the amount of Merger Consideration to
be received by each holder pursuant to Section 2.1. Except for FWC's obligations
under the First Waukegan Corporation Employee Stock Ownership Plan (the "FWC
ESOP") and the First Waukegan Corporation 1995 Stock Purchase Plan ("FWC Stock
Purchase Plan"), FWC does not have any other arrangements or commitments
obligating FWC to issue or sell or otherwise dispose of or to purchase or redeem
shares of, its capital stock or any securities convertible into or having the
right to purchase shares of its capital stock.
3.1(c) Organization of the Bank. The Bank is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States. FWC has delivered to SFSC true, accurate and complete
copies of the currently effective Articles of Association and Bylaws of the
Bank, including all amendments thereto. The Bank (a) is duly authorized to
conduct a general banking business, subject to the supervision of the Office of
the OCC; (b) is an insured bank as defined in the Federal Deposit Insurance Act;
(c) has full power and authority to engage in the business and activities now
conducted by it; and (d) possesses and is in full compliance with all licenses,
franchises, permits, and other governmental authorizations that are legally
required where the failure to be in full compliance would be expected to have a
Material Adverse Effect.
3.1(d) Capitalization of the Bank. The authorized capital stock of the
Bank consists of 6,000 shares of Common Stock, $100 par value (the "Bank Common
Stock"), of which 6,000 are validly issued and outstanding. Except for the
interest of ANB in
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the Bank Common Stock, FWC owns beneficially and of record all of the issued and
outstanding shares of Bank Common Stock, free and clear of all liens, pledges,
assignments, and security interests. All of the shares of Bank Common Stock are
validly issued, fully paid, and are non-assessable and were not issued in
violation of any person's preemptive rights. The Bank is not a party to or bound
by any commitment or obligation to issue or sell or otherwise dispose of, or to
purchase or redeem, any capital stock or any other security convertible into or
having the right to purchase such shares of Bank Common Stock.
3.2 Authorization.
The Board of Directors of FWC has unanimously approved the Agreements and
the transactions contemplated hereby and thereby and has authorized the
execution, delivery and performance by FWC of the Agreements. No other corporate
proceeding on the part of FWC is necessary to authorize the Agreements or to
consummate the transactions contemplated hereby and thereby (other than the
approval and adoption of this Merger Agreement by shareholders holding a
majority of the issued and outstanding FWC Common Stock entitled to vote
thereon). FWC has full corporate power and authority to enter into the
Agreements and, upon approval of its shareholders in accordance with law and
subject to the conditions set forth in Article 7 and Article 8 of this Merger
Agreement, to consummate the transactions contemplated thereby. The Merger
Agreement has been duly and validly executed and delivered by FWC and the Merger
Agreement and the Plan of Merger, upon execution and delivery, will constitute
the valid and binding obligations of FWC, enforceable in accordance with their
terms, subject to (a) all applicable bankruptcy, insolvency, moratorium, or
other similar laws affecting the enforcement of creditors' rights generally, and
(b) the application of equitable principles if equitable remedies are sought.
3.3 No Violation.
Except as set forth on Schedule 3.3, neither the execution and delivery
of the Agreements nor the consummation of the transactions contemplated herein
or therein will, in any case, that would reasonably be expected to have a
Material Adverse Effect, (a) conflict with, result in the breach of, constitute
a default under, or accelerate the performance provided by the terms of any law,
or any rule or regulation of any governmental agency or authority, or any
judgment, order, or decree of any court or other governmental agency to which
FWC, or the Bank may be subject, or the Articles of Incorporation of FWC, the
Articles of Association of the Bank, or the Bylaws of FWC or the Bank; (b)
constitute an event that, with the lapse of time or action by a third party or
both, could result in a default under any of the foregoing; (c) result in the
creation of any material lien, charge, or encumbrance upon any of the assets,
properties, or stock of FWC or the Bank; (d) conflict with or result in a breach
of any terms of any material mortgage, deed of trust, license, indenture, or
other agreement or instrument to which FWC or the Bank is a party or by which it
or any of their respective assets may be bound; (e) give to others any right to
accelerate or terminate, or result in acceleration or termination of, any such
agreement or instrument; or (f) result in termination of any material provision
of any such agreement or instrument.
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3.4 Consents and Approvals.
Except as set forth on Schedule 3.4 and for the consents and approvals of
or filings or registrations with the Federal Reserve Board, applicable
requirements of the OCC and the filing of Articles of Merger in Illinois
pursuant to the IBCA, no filing or registration with, no notice to, and no
permit, authorization, consent, or approval of any third party or any public or
governmental body or authority is necessary for the consummation by FWC of the
transactions contemplated by these Agreements or to enable FWC and the Bank to
continue to conduct their respective businesses after the Effective Time in a
manner that is consistent with that in which it is presently conducted, except
where the failure to make such filing or obtain such permit, authorization,
consent or approval would not reasonably be expected to have in the aggregate a
Material Adverse Effect.
3.5 Reports.
FWC and the Bank have timely filed all reports, together with any
amendments required to be made with respect thereto, that they were required to
file since January 1, 1994, with (a) the OCC; (b) any state regulatory authority
(each a "State Regulator") and (c) any self-regulatory organization ("SRO") with
jurisdiction over any of the activities of FWC or the Bank (collectively, the
"Regulatory Agencies"), and all other reports and statements required to be
filed by them since January 1, 1994, including, without limitation, any report
or statement required to be filed pursuant to the laws, rules or regulations of
the United States, any state, or any Regulatory Agency, and have paid all fees
and assessments due and payable in connection therewith, except where the
failure to file such report or to pay such fees and assessments, either
individually or in the aggregate, will not have a Material Adverse Effect on
FWC. Except for normal examinations conducted by a Regulatory Agency in the
regular course of business of FWC and the Bank, no Regulatory Agency has
initiated any proceeding or investigation into the business or operations of FWC
or the Bank since January 1, 1994. There is no unresolved written violation,
written criticism, or written exception by any Regulatory Agency with respect to
any report or statement relating to any examinations of FWC or the Bank, that is
likely, either individually or in the aggregate, to have a Material Adverse
Effect on FWC.
3.6 Financial Statements.
Included as Schedule 3.6 are true and complete copies of the following
financial statements: (a) the Consolidated Balance Sheets of FWC as of December
31, 1996, and 1997, and the Consolidated Statements of Earnings, Stockholders'
Equity, and Cash Flows for each of the years in the three-year period ended
December 31, 1997, together with the notes thereto, and the unqualified opinion
of Xxxxxxx & Xxxxxxx, LLP, FWC's independent auditors, dated February 27, 1998;
(b) the Consolidated Balance Sheet of FWC as of December 31, 1998 (the "Recent
Balance Sheet"), and the Consolidated Statements of Earnings, Stockholder's
Equity and Cash Flows for each of the years in the three-year period ended
December 31, 1998, together with the notes thereto; and (c) the Report of
Condition of the Bank as of December 31, 1998, together with the related Report
of Income for the period then ended, as included in the call report of the Bank
as of said date as filed with the OCC
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(collectively, the "FWC Financial Statements"). The FWC Financial Statements are
true and correct in all material respects and fairly present the financial
position and results of operations of FWC and the Bank as of the dates and for
the periods then ended. Each of the financial statements referred to in clause
(a) of this Section 3.6 has been prepared in accordance with GAAP (applied on a
consistent basis except as disclosed in the footnotes thereto). The financial
statements referred to in clause 3.6(c) have been prepared in accordance with
the applicable regulations and standards of the OCC. The FWC Financial
Statements do not, as of the date thereof, include any material assets or omit
to state any material liability, absolute or contingent, or other facts, the
inclusion or omission of which renders such financial statements, in light of
the circumstances under which they were made, misleading in any material
respect. Since December 31, 1998, there has been no change in the financial
condition, results of operation, assets, or business of FWC or the Bank (other
than changes in the ordinary course of business, none of which, individually or
in the aggregate, would reasonably be expected to have a Material Adverse
Effect), nor has there been any other event or condition of any character that
has had a Material Adverse Effect, and no fact or condition exists that would
reasonably be expected to have such a Material Adverse Effect in the future. The
FWC Financial Statements reflect adequate provision for, or reserves against,
the possible credit losses of FWC and the Bank as of such dates. The books and
records of FWC and the Bank have been, and are being, maintained in all material
respects in accordance with applicable legal and accounting requirements and
reflect only actual transactions, except to the extent required by applicable
legal or accounting requirements.
3.7 Tax Matters.
Each of FWC and the Bank has duly filed all federal, state, county,
foreign and local information returns and tax returns required to be filed by it
(all such returns being accurate and complete in all material respects) and has
duly paid or made provisions for the payment of all Taxes (as defined below) and
other governmental charges that have been incurred or are due or claimed to be
due from it by federal, state, county, foreign or local taxing authorities on or
prior to the date of this Agreement (including, without limitation, if and to
the extent applicable, those due in respect of its properties, income, business,
capital stock deposits, franchises, licenses, sales and payrolls) other than
Taxes or other charges that are not yet delinquent or are being contested in
good faith and have not been finally determined. The income tax returns of FWC
and the Bank remain open for the applicable statutory time periods and any
deficiencies, penalties or assessments have been paid or provided for in FWC's
consolidated financial statements. There are no material disputes pending with
respect to, or claims asserted for, Taxes or assessments upon FWC or the Bank
for which FWC does not have adequate reserves, nor has FWC or the Bank given any
currently effective waivers extending the statutory period of limitation
applicable to any federal, state, county, foreign or local income tax return for
any period. In addition, (a) proper and accurate amounts have been withheld by
FWC and the Bank from their employees for all prior periods in compliance in all
material respects with the tax withholding provisions of applicable federal,
state, foreign and local laws, except where failure to do so would not have a
Material Adverse Effect; (b) federal, state, foreign, county and local returns
that are accurate and complete in all material respects have been filed by FWC
and the Bank for all periods for which returns were due with respect to income
tax withholding, Social Security
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and unemployment taxes; (c) the amounts shown on such federal, state, foreign,
local or county returns to be due and payable have been paid in full or adequate
provision therefor has been included by FWC in the Recent Balance Sheet; and (d)
there are no Tax liens upon any property or assets of FWC or the Bank except
liens for current taxes not yet due. Except as set forth in Schedule 3.7,
neither FWC nor the Bank has been required to include in income any adjustment
pursuant to Section 481 of the Internal Revenue Code of 1986, as amended (the
"Code"), by reason of a voluntary change in accounting method initiated by FWC
or the Bank, and the Internal Revenue Service (the "IRS") has not initiated or
proposed any such adjustment or change in accounting method. Except as set forth
in the FWC Financial Statements, neither FWC nor the Bank has entered into a
transaction that is being accounted for as an installment obligation under
Section 453 of the Code. As used in this Agreement, the term "Tax" or "Taxes"
means all federal, state, county, local, and foreign income, excise, gross
receipts, gross income, ad valorem, profits, gains, property, capital, sales,
transfer, use, payroll, employment, severance, withholding, duties, intangibles,
franchise, backup withholding, and other taxes, charges, levies on like
assessments together with all penalties and additions to tax and interest
thereon.
3.8 Absence of Certain Changes.
Since December 31, 1998, neither FWC nor the Bank has, except as set
forth on Schedule 3.8, (a) issued or sold any corporate debt securities (except
documents and instruments issued in the ordinary course of the banking business
of the Bank); (b) granted any option for the purchase of its capital stock; (c)
declared or set aside or paid any dividend or other distribution in respect of
its capital stock; (d) incurred any material obligation or liability (absolute
or contingent) except obligations or liabilities incurred in the ordinary course
of business; (e) mortgaged, pledged, or subjected to lien or encumbrance (other
than statutory liens for Taxes not yet delinquent) any of its assets or
properties, except pledges to secure government deposits and in connection with
repurchase or reverse repurchase agreements; (f) discharged or satisfied any
lien or encumbrance or paid any obligation or liability (absolute or
contingent), other than current liabilities included in the Recent Balance
Sheet, and current liabilities incurred since the date thereof in the ordinary
course of business; (g) sold, exchanged, or otherwise disposed of any of its
capital assets other than in the ordinary course of business; (h) other than in
the ordinary course of business, made or modified any general wage or salary
increase, entered into or modified any employment contract with any officer or
salaried employee, or instituted any employee welfare, bonus, stock option,
profit sharing, retirement, or similar plan or arrangement; (i) suffered any
damage, destruction, or loss, whether or not covered by insurance, having a
Material Adverse Effect, or waived any rights, the waiver of which would have a
Material Adverse Effect; (j) except in the ordinary course of business, entered,
or agreed to enter, into any agreement or arrangement granting any preferential
right to purchase any of its assets, properties, or rights or requiring the
consent of any party to the transfer and assignment of any such assets,
properties, or rights; (k) entered into any transaction outside the ordinary
course of its business, except as expressly contemplated by this Merger
Agreement; (l) except in the ordinary course of business or as reflected in the
FWC Financial Statements, sold or otherwise disposed of any of its investment
securities; or (m) changed accounting principles utilized by FWC or the Bank.
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3.9 Absence of Undisclosed Liabilities.
Except as and to the extent specifically disclosed in the Recent Balance
Sheet, or in Schedule 3.9, neither FWC nor the Bank has any liabilities,
commitments or obligations (secured or unsecured, and whether accrued, absolute,
contingent, direct, indirect or otherwise), other than commercial liabilities
and obligations incurred since the date of the Recent Balance Sheet in the
ordinary course of business and consistent with past practice and none of which,
individually or in the aggregate, has or will have a Material Adverse Effect.
Except as and to the extent described in the Recent Balance Sheet or in Schedule
3.9, FWC does not have knowledge of any basis for the assertion against FWC or
the Bank of any material liability, and there are no circumstances, conditions,
happenings, events or arrangements, contractual or otherwise, that may give rise
to material liabilities, except commercial liabilities and obligations incurred
in the ordinary course of FWC's or the Bank's business and consistent with past
practice.
3.10 No Litigation.
No claims have been asserted and no relief has been sought in any pending
litigation or governmental proceedings or otherwise that would reasonably be
expected to have a Material Adverse Effect on FWC or the Bank. Except as set
forth in Schedule 3.10, to FWC's knowledge, there are no circumstances,
conditions, events or arrangements, contractual or otherwise, that may hereafter
give rise to any proceedings, claims, actions or government investigations
involving FWC or the Bank that would reasonably be expected to result in damages
of more than $20,000 or to have a Material Adverse Effect, nor, to FWC's
knowledge, are any such proceedings, claims, actions or government
investigations threatened. Except as set forth in Schedule 3.10, neither FWC nor
the Bank is a party to any order, judgment or decree that would reasonably be
expected to have a Material Adverse Effect, and neither FWC nor the Bank (a) is
the subject of any cease and desist order, or other formal or informal
enforcement action by any Regulatory Agency or (b) has made any commitment to or
entered into any agreement with any Regulatory Agency that restricts or
adversely affects its operations or financial condition. As permitted under
applicable law, FWC has delivered to SFSC in Schedule 3.10 copies of all
material correspondence with or memoranda of other communications with any
Regulatory Agency since January 1, 1994, relating to the operation or condition,
financial or otherwise, of FWC and the Bank.
3.11 Compliance with Laws and Orders.
FWC and the Bank have complied in all material respects with all laws,
regulations and orders (including zoning ordinances) applicable to it and to the
conduct of its respective businesses, including, without limitation, all
statutes, rules, and regulations pertaining to the conduct of the Bank's banking
activities, and neither FWC nor the Bank is in default under, and no event has
occurred that, with the lapse of time or action by a third party or both, could
result in the default under the terms of any judgment, decree, order, writ,
rule, or regulation of any governmental authority or court, whether federal,
state, or local and whether at law or in equity, where the failure to be in full
compliance would reasonably be
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expected to result in damages, costs, or expenses of more than $20,000 in the
aggregate or to have a Material Adverse Effect.
3.12 Governmental Regulation.
Each of FWC and the Bank holds all licenses, certificates, permits,
franchises, and rights from all appropriate federal, state, and other public
authorities necessary for the conduct of their respective businesses, the lack
of which, alone or in the aggregate, may result in damages, costs, or expenses
of more than $20,000 or have a Material Adverse Effect. All such licenses,
certificates, and permits are in full force and effect, and no suspension or
cancellation of any of them has been threatened or will result from the
consummation of the transactions contemplated hereby. Each of FWC and the Bank
satisfies all minimum regulatory capital requirements under applicable laws and
is well capitalized in accordance with applicable regulations as interpreted by
the Regulatory Agencies having authority over FWC and the Bank.
3.13 Title to and Condition of Properties.
3.13(a) Marketable Title. Each of FWC and the Bank has good and
marketable title to all assets, business and properties it purports to own,
including, without limitation, all such properties (tangible and intangible)
reflected in the Recent Balance Sheet free and clear of all mortgages, liens,
(statutory or otherwise) security interests, claims, pledges, licenses,
equities, options, conditional sales contracts, assessments, levies, easements,
covenants, reservations, restrictions, rights-of-way, exceptions, limitations,
charges or encumbrances of any nature whatsoever (collectively, "Liens") except
those described in Schedule 3.13 and, in the case of real property, Liens for
taxes not yet due or that are being contested in good faith by appropriate
proceedings (and that have been sufficiently accrued or reserved against in the
Recent Balance Sheet), municipal and zoning ordinances and easements for public
utilities, none of which interfere with the use of the property as currently
utilized. None of FWC's and the Bank's assets, business or properties is subject
to any restrictions with respect to the transferability thereof, and the FWC's
and the Bank's title thereto will not be affected in any way by the transactions
contemplated hereby.
3.13(b) Condition. All property and assets owned or utilized by FWC and
the Bank are in good operating condition and repair, except reasonable wear and
tear, free from any defects (except such minor defects as do not interfere with
the use thereof in the conduct of the normal business operations of FWC), have
been maintained consistent with the standards generally followed in the industry
and are sufficient to carry on the business of FWC and the Bank as conducted
during the preceding 12 months. All buildings, plants and other structures owned
or otherwise utilized by FWC and the Bank are in good condition and repair,
except reasonable wear and tear, and have no structural defects or defects
affecting the plumbing, electrical, sewerage, or heating, ventilating or air
conditioning systems.
3.13(c) Real Property. Schedule 3.13.(c) sets forth all real property
owned, used or occupied by FWC or the Bank (the "Real Property"), including a
description of all land, and all encumbrances, easements or rights of way of
record (or, if not of record,
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of which FWC or the Bank has notice or knowledge) granted on or appurtenant to
or otherwise affecting such Real Property, the zoning classification thereof,
and all plants, buildings or other structures located thereon. Schedule 3.13.(c)
also sets forth, with respect to each parcel of Real Property that is leased,
the material terms of such lease. There are now in full force and effect duly
issued certificates of occupancy permitting the Real Property and improvements
located thereon to be legally used and occupied as the same are now constituted.
All of the Real Property has permanent rights of access to dedicated public
roadways. No fact or condition exists that would prohibit or adversely affect
the ordinary rights of access to and from the Real Property from and to the
existing highways and roads, and there is no pending or threatened restriction
or denial, governmental or otherwise, upon such ingress and egress. There is not
(i) any claim of adverse possession or prescriptive rights involving any of the
Real Property, (ii) any structure located on any Real Property that encroaches
on or over the boundaries of neighboring or adjacent properties or (iii) any
structure of any other party that encroaches on or over the boundaries of any of
such Real Property. None of the Real Property is located in a flood plain, flood
hazard area, wetland or lakeshore erosion area within the meaning of any
applicable law, regulation or ordinance. No public improvements have been
commenced and none are planned that in either case may result in special
assessments against or otherwise materially adversely affect any Real Property.
No portion of any of the Real Property has been used as a landfill or for
storage or landfill of hazardous or toxic materials. FWC does not have notice or
knowledge of any (i) planned or proposed increase in assessed valuations of any
Real Property, (ii) order requiring repair, alteration, or correction of any
existing condition affecting any Real Property or the systems or improvements
thereat, (iii) condition or defect that could give rise to an order of the sort
referred to in clause (ii) above, (iv) underground storage tanks, or any
structural, mechanical, or other defects of material significance affecting any
Real Property or the systems or improvements thereat (including, without
limitation, inadequacy for normal use of mechanical systems or disposal or water
systems at or serving the Real Property), or (v) work that has been done or
labor or materials that has or have been furnished to any Real Property during
the period of six (6) months immediately preceding the date of this Agreement
for which liens could be filed against any of the Real Property.
3.13(d) No Condemnation or Expropriation. Neither the whole nor any
portion of the property or any other assets of FWC or the Bank is subject to any
Order to be sold or is being condemned, expropriated or otherwise taken by any
government entity with or without payment of compensation therefor, nor to the
best knowledge of FWC has any such condemnation, expropriation or taking been
proposed.
3.14 Investment and Loan Portfolios.
All United States Treasury securities, obligations of other United States
Government agencies and corporations, obligations of states and political
subdivisions of the United States and other investment securities by FWC and the
Bank, as reflected in the Recent Balance Sheet, are carried in the aggregate at
not more than cost adjusted for amortization of premiums and accretion of
discounts reflecting GAAP. Amortization of premium and accretion of discounts on
mortgage-backed securities are accounted for using GAAP as specified in
Paragraphs 18 to 19 of FASB 91. All loans and discounts shown on the Recent
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Balance Sheet, or which were entered into after December 31, 1998, but before
the date hereof, were, to the knowledge of FWC, made in all material respects
for good, valuable and adequate consideration in the ordinary course of the
business of FWC and the Bank, in accordance in all material respects with sound
banking practices, and, to the knowledge of FWC, the notes or other evidences of
indebtedness evidencing them are and will be, in all material respects,
enforceable (subject to all applicable bankruptcy, insolvency, moratorium, or
other similar laws affecting the enforcement of creditors' rights generally and
the applicability of equitable principles) valid, true and genuine. FWC and the
Bank have complied and will prior to the Closing Date comply with all laws and
regulations relating to such loans, or to the extent there has not been such
compliance, such failure to comply would not reasonably be expected to
materially interfere with the collection of any such loan. Except as set forth
on Schedule 3.14, each of FWC and the Bank has good and marketable title to all
securities held by it (except securities sold under repurchase agreements or
held in any fiduciary or agency capacity), free and clear of any Lien, except to
the extent such securities are pledged in the ordinary course of business
consistent with prudent banking practices to secure obligations of FWC or the
Bank. Such securities are valued on the books of FWC and the Bank in accordance
with GAAP.
3.15 Insurance.
FWC and the Bank are presently insured, and during each of the past five
(5) calendar years have been insured, for reasonable amounts with financially
sound and reputable insurance companies against such risks as companies engaged
in a similar business would, in accordance with good business practice,
customarily be insured. FWC has delivered to SFSC as Schedule 3.15, true,
accurate and complete copies of all insurance policies and fidelity bonds of the
FWC and the Bank. Except as set forth on Schedule 3.15, since January 1, 1994,
there have been no claims in excess of $10,000 with respect to FWC or the Bank
under such bonds and insurance policies, and neither FWC nor the Bank is aware
of any acts of dishonesty or losses that would form the basis of a material
claim under such bonds or insurance coverage. Each such policy is in full force
and effect, with all premiums due thereon on or prior to the Closing Date having
been paid as and when due. FWC and the Bank have not been notified that their
fidelity or insurance coverage will not be renewed by their carrier on
substantially the same terms as their existing coverage.
3.16 Loan Loss Reserves.
To the best knowledge of FWC, the reserve for possible loan losses shown
on the December 31, 1998, call report filed for the Bank is adequate in all
material respects under the requirements of GAAP to provide for possible losses,
net of recoveries relating to loans previously charged off, on loans outstanding
as of December 31, 1998. To the best knowledge of FWC, the reserve for loan
losses as of the Closing Date will be adequate in all respects to provide for
all losses, net of recoveries relating to loans previously charged off, on loans
outstanding as of the Closing Date. To the best knowledge of FWC, the loan
portfolios of FWC and the Bank, as of the dates of the Recent Balance Sheet and
the Closing Date, are and will be collectible in excess of the allowance for
loan losses shown thereon.
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3.17 Environmental Liability.
3.17(a) Except as set forth in Schedule 3.17, there are no legal,
administrative, arbitration or other proceedings, claims, actions, causes of
action, to the best knowledge of FWC, private environmental investigations or
remediation activities or to the best knowledge of FWC, governmental
investigations of any nature pending or to the best knowledge of FWC, threatened
against FWC or the Bank seeking to impose, or that could reasonably result in
the imposition, on FWC or the Bank any liability or obligation arising under
common law or under any local, state, federal or foreign environmental statute,
regulation or ordinance including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") that, insofar as reasonably can be foreseen, could have a Material
Adverse Effect.
3.17(b) Except as set forth in Schedule 3.17, there is no reasonable
basis for any proceeding, claim, action or governmental investigation that would
impose any such liability or obligation which, insofar as reasonably can be
foreseen, could have a Material Adverse Effect. Neither FWC nor the Bank is
subject to any agreement, order, judgment, decree, letter or memorandum by or
with any court, governmental authority, Regulatory Agency or third party
imposing any such liability or obligation that, insofar as reasonably can be
foreseen, could have a Material Adverse Effect.
3.18 Saleability of Mortgage Loans in Secondary Market.
Except for the loans identified on Schedule 3.18, as a general matter, a
substantial portion of the loans in the Bank's portfolio of residential,
owner-occupied mortgage loans substantially conform to secondary market
underwriting standards and, accordingly, are saleable in the secondary market.
3.19 Contracts and Commitments.
Except as set forth in Schedule 3.19, neither FWC nor the Bank is a party
to or bound by any written or oral (a) lease or license with respect to any
property, real or personal, involving payments in excess of $25,000, whether as
lessor, lessee, licensor, or licensee; (b) contract or commitment for capital
expenditures in excess of $10,000 for any one project or $50,000 in the
aggregate; (c) contract or commitment for total expenses in excess of $25,000
made in the ordinary course of business for the purchase of materials, supplies,
or for the performance of services for a period of more than 60 days from the
date of this Merger Agreement; (d) contract or option for the purchase or sale
of any real or personal property other than in the ordinary course of business;
(e) contract, commitment or agreement made outside the ordinary course of
business; (f) employment or consulting contract, not terminable without penalty
by FWC or the Bank on 60 days' notice or less; (g) agreement, option or contract
relating to or involving the merger, consolidation or sale of assets or stock of
FWC or the Bank; or (h) union contract or collective bargaining agreement. Each
of FWC and the Bank has performed in all material respects all obligations
required to be performed by it to date and is not in default under, and no event
has occurred that, with the lapse of time or action by a third party or both,
could result in a default resulting in damages, costs or
-13-
expenses of more than $20,000 in the aggregate or a material default under any
outstanding mortgage, lease, contract, commitment or agreement to which FWC or
the Bank is a party or by which FWC or the Bank is bound or under any provision
of their respective charter documents or Bylaws. Each such outstanding mortgage,
lease, contract, commitment or agreement is a valid and legally binding
obligation of FWC or the Bank and, to the best knowledge of FWC, constitutes a
valid and legally binding obligation of the other party or parties thereto.
3.20 Employees.
3.20(a) Schedule 3.20 sets forth a true and complete list of each
employee benefit plan, arrangement, commitment, agreement or understanding that
is maintained as of the date of this Merger Agreement (the "Benefit Plans") (i)
by FWC or the Bank or (ii) by any trade or business, whether or not incorporated
that (A) is under "common control," as described in Section 414(c) of the Code,
with FWC, (B) is a member of a "controlled group," as defined in Section 414(b)
of the Code, or (C) is a member of an "affiliated service group," as defined in
Section 414(m) of the Code, which includes FWC (an "ERISA Affiliate"), all of
which together with FWC would be deemed a "single employer" within the meaning
of Section 4001 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
3.20(b) FWC has heretofore delivered to SFSC true and complete copies of
each of the Benefit Plans and certain related documents, including, without
limitation, (i) the Annual Report Form 5500 for such Benefit Plan (if
applicable) for each of the last two (2) years, and (ii) the most recent
determination letter from the IRS (if applicable) for such Benefit Plan.
3.20(c) (i) Each of the Benefit Plans has been operated and administered
in all material respects with applicable laws, including, without limitation,
ERISA and the Code; (ii) each of the Benefit Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code has been operated and
administered in all material respects with the requirements of Section 401(a) of
the Code; (iii) except as provided in Schedule 3.20, no Benefit Plan provides
benefits, including, without limitation, death or medical benefits (whether or
not insured), with respect to current or former employees of FWC, the Bank or
any ERISA Affiliate beyond their retirement or other termination of service,
other than (A) coverage mandated by applicable law, (B) death benefits,
disability benefits or retirement benefits under any "employee pension plan" (as
such term is defined in Section 3(2) of ERISA), (C) deferred compensation
benefits accrued as liabilities on the books of FWC, the Bank or the ERISA
Affiliates, or (D) benefits, the full cost of which is borne by the current or
former employee (or his beneficiary); (iv) except as set forth in Schedule 3.20,
neither FWC, the Bank nor any ERISA Affiliate maintains or has ever maintained a
plan subject to Title IV of ERISA; (v) neither FWC, the Bank nor any ERISA
Affiliate contributes to or has ever contributed to a "Multiemployer" pension
plan (as such term is defined in Section 3(37) of ERISA); (vi) all contributions
or other amounts payable by FWC or the Bank as of the Effective Time with
respect to each Benefit Plan in respect of current or prior plan years have been
paid or accrued in accordance with GAAP and Section 412 of the Code; (vii)
neither
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FWC, the Bank nor any ERISA Affiliate has engaged in a transaction in connection
with which FWC, the Bank or any ERISA Affiliate reasonably could be subject to
either a material civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a material tax imposed pursuant to Sections 4975 or 4976 of the Code;
and (viii) there are no pending or, to the best knowledge of FWC, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Benefit Plans or any trusts related thereto that are, in the
reasonable judgment of FWC, likely, either individually or in the aggregate, to
have a Material Adverse Effect.
3.21 Employment Compensation.
Schedule 3.21 contains a true and correct list of all salaried employees
to whom FWC or the Bank is paying compensation, including bonuses and
incentives, at an annual rate in excess of Fifty Thousand Dollars ($50,000) for
services rendered or otherwise, and in the case of salaried employees, such list
identifies the current annual rate of compensation for each employee and, in the
case of hourly or commission employees, identifies certain reasonable ranges of
rates and the number of employees falling within each such range.
3.22 Affiliates' Relationships to FWC or the Bank.
3.22(a) All leases, contracts, agreements or other arrangements between
FWC or the Bank and any Affiliate (as defined below) are described on Schedule
3.22(a).
3.22(b) No Affiliate has any direct or indirect interest in (i) any
entity that does business with FWC or the Bank or is competitive with the
business of FWC or the Bank, or (ii) any property, asset or right that is used
by FWC or the Bank in the conduct of its business.
3.22(c) All obligations of any Affiliate to FWC or the Bank, and all
obligations of FWC or the Bank to any Affiliate, are listed on Schedule 3.22(c).
3.22(d) "Affiliate" means a person that directly or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, another person.
3.23 Administration of Trust Accounts.
As of December 31, 1998, the Bank had $14.4 million in trust assets
representing 28 accounts and it administered 276 land trusts. Each of FWC and
the Bank has properly administered, in all material respects, all accounts for
which it acts as fiduciary, including, without limitation, accounts for which it
serves as a trustee, agent, custodian, personal representative, guardian, or
investment advisor, in accordance with the terms of the governing documents and
applicable state and federal law and regulations and common law. None of FWC,
the Bank, or any director, officer, or employee of FWC or the Bank 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 respects
and accurately reflect the assets of such fiduciary accounts.
-15-
3.24 Year 2000 Warranty.
Except as set forth in Schedule 3.24, FWC warrants that to its best
knowledge the computer systems software of FWC and the Bank is Year 2000
compliant in that (a) it accurately processes, addresses, stores and calculates
date data from, into, and beyond the years 1999, 2000 and 2001, including leap
year calculations, (b) all of its date-related functionality and data fields
identify century and millennium, and (c) it is able accurately to perform
calculations that involve a four-digit year field.
3.25 Assets Necessary to Business.
FWC and the Bank presently have and at the Closing will have good, valid
and marketable title to all property and assets, tangible and intangible, and
all leases, licenses and other agreements, necessary to permit SFSC to carry on
the business of FWC and the Bank as presently conducted.
3.26 No Brokers or Finders.
Other than FWC's arrangement with Xxxxx Financial, Inc., to serve as
financial advisor to FWC in connection with this Merger Agreement and the
transactions contemplated herein, neither FWC nor the Bank nor any of their
respective directors, officers, employees, shareholders or agents has retained,
employed or used any financial advisor, broker or finder or incurred any
liability for any financial advisory fees, broker's fees, commissions or
finder's fees in connection with the transactions provided for herein or in
connection with the negotiation thereof.
3.27 Disclosure.
No representation or warranty by FWC in this Merger Agreement, nor any
statement, certificate, schedule, document or exhibit hereto furnished or to be
furnished by or on behalf of FWC or the Bank pursuant to this Merger Agreement
or in connection with transactions contemplated hereby, contains or shall
contain any untrue statement of material fact or omits or shall omit a material
fact necessary to make the statements contained therein not misleading. All
statements and information contained in any certificate, instrument, schedules
attached hereto or document delivered by or on behalf of FWC shall be deemed
representations and warranties by FWC.
3.28 Vote Required.
The affirmative vote of a majority of the votes that holders of the
issued and outstanding shares of FWC Common Stock are entitled to cast is the
only vote of the holders of any class or series of FWC capital stock necessary
to approve this Merger Agreement and the transactions contemplated hereby.
-16-
4. REPRESENTATIONS AND WARRANTIES OF Sfsc And NEWCO
SFSC and Newco make the following representations and warranties to FWC,
each of which is true and correct on the date hereof, shall remain true and
correct to and including the Closing Date and shall be unaffected by any
investigation heretofore or hereafter made by FWC:
4.1 Corporate.
SFSC is a corporation duly organized and validly existing under the laws
of the State of Wisconsin. SFSC is registered with the Federal Reserve Board as
a bank holding company under the BHCA. Newco is a corporation duly organized,
validly existing and in good standing under the laws of the State of Illinois.
Both SFSC and Newco have all requisite corporate power to enter into this Merger
Agreement and the other documents and instruments to be executed and delivered
by SFSC and Newco and to carry out the transactions contemplated hereby and
thereby.
4.2 Authorization.
The execution and delivery of the Agreements and the other documents and
instruments to be executed and delivered by SFSC and Newco pursuant hereto and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by the Boards of Directors of SFSC and Newco. SFSC and Newco
have full corporate power and authority to enter into the Agreements and,
subject to the conditions set forth in Article 6 and Article 8 of this Merger
Agreement, to consummate the transactions contemplated thereby. No other
corporate act or proceeding on the part of SFSC and Newco or their shareholders
is necessary to authorize the Agreements or the other documents and instruments
to be executed and delivered by SFSC and Newco pursuant hereto or the
consummation of the transactions contemplated hereby and thereby. This Merger
Agreement constitutes, and when executed and delivered, the other documents and
instruments to be executed and delivered by SFSC and Newco pursuant hereto will
constitute, valid and binding agreements of SFSC and Newco, enforceable in
accordance with their respective terms, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors' rights
generally, and by general equitable principles.
4.3 No Brokers or Finders.
Neither SFSC nor any of its directors, officers, employees or agents has
retained, employed or used any broker or finder in connection with the
transactions provided for herein or in connection with the negotiation thereof.
4.4 Regulatory Approval.
SFSC knows of no reason or condition that would prevent the Merger from
being approved by any Regulatory Agency.
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4.5 Litigation.
SFSC knows of no suit, act or proceeding pending or threatened against
SFSC that would reasonably be expected to affect the Merger.
4.6 Financing.
SFSC has sufficient financing or cash available to consummate the Merger
and the other transactions contemplated herein.
4.7 No Violation.
To SFSC's knowledge, neither the execution and delivery of the Agreements
nor the consummation of the transactions contemplated therein will, in any case
that will have a Material Adverse Effect, (a) conflict with, result in the
breach of, constitute a default under, or accelerate the performance provided by
the terms of any law, or any rule or regulation of any governmental agency or
authority, or any judgment, order, or decree of any court or other governmental
agency to which SFSC may be subject, or the Articles of Incorporation or Bylaws
of SFSC; (b) constitute an event that with the lapse of time or action by a
third party or both could result in a default under any of the foregoing; or (c)
result in the creation of any lien, charge, or encumbrance upon any of the
assets or properties of SFSC or the capital stock of SFSC.
4.8 Consents and Approvals.
Except for consents and approvals of or filings or registrations with the
Federal Reserve Board, applicable requirements of the OCC, and the filing of the
Articles of Merger in Illinois pursuant to the IBCA, to SFSC's knowledge, no
filing or registration with, no notice to, and no permit, authorization,
consent, or approval of any third-party or any public or governmental body or
authority is necessary for the consummation by SFSC or Newco of the transactions
contemplated by the Agreements.
4.9 Disclosure.
No representation or warranty by SFSC or Newco in this Merger Agreement,
nor any statement, certificate, schedule, document or exhibit hereto furnished
or to be furnished by or on behalf of SFSC or Newco pursuant to this Merger
Agreement or in connection with transactions contemplated hereby, contains or
shall contain any untrue statement of material fact or omits or shall omit a
material fact necessary to make the statements contained therein not misleading.
-18-
5. COVENANTS
5.1 Conduct of Businesses Prior to the Effective Date.
During the period from the date of this Merger Agreement to the Effective
Time, except as expressly contemplated or permitted by this Merger Agreement,
FWC shall, and shall cause the Bank to, (a) conduct its business only in
accordance with sound banking and business practices and in the usual, regular
and ordinary course consistent with past practice; (b) use reasonable efforts to
maintain and preserve intact its business organization, employees and
advantageous business relationships and retain the services of its key officers
and key employees; (c) maintain its corporate existence in good standing; (d)
maintain and keep its properties in good repair and condition as at present; (e)
keep in force and effect all insurance and bonds comparable in amount and scope
of coverage to that now maintained by it; (f) perform all obligations required
to be performed by it under all material contracts, leases and documents
relating to or affecting its assets, properties and business; and (g) take no
action that would adversely affect or delay the ability of either SFSC or FWC to
obtain any necessary approvals of any Regulatory Agency or other governmental
authority required for the transactions contemplated hereby or to perform its
covenants and agreements under this Merger Agreement.
5.2 Forbearances.
During the period from the date of this Merger Agreement to the Effective
Time, except as expressly contemplated or permitted by this Merger Agreement,
FWC shall not, nor shall FWC permit the Bank to, without the prior written
consent of SFSC:
5.2(a) Other than in the ordinary course of business consistent with past
practice, (i) except for the renewal or extension of the ANB Debt on
substantially similar terms, incur any indebtedness for borrowed money (other
than pursuant to existing lines of credit or short-term indebtedness incurred in
the ordinary course of business consistent with past practice and indebtedness
of the Bank to FWC, it being understood and agreed that incurrence of
indebtedness in the ordinary course of business shall include, without
limitation, the creation of deposit liabilities, purchases of Federal funds,
Federal Home Loan Bank borrowings, sales of certificates of deposit and entering
into repurchase agreements); (ii) assume, guarantee, endorse or otherwise as an
accommodation or become responsible for the obligations of any other individual,
corporation or other entity; or (iii) make any loan or advance.
5.2(b) (i) Adjust, split, combine or reclassify any capital stock; (ii)
except for normal quarterly dividends on the FWC Common Stock of up to $0.125
per share, including a pro rated dividend for the quarter in which the Closing
Date occurs, and dividends on the Preferred Stock that are in the ordinary
course of business, make, declare or pay any dividend or make any other
distribution on, any shares of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital
stock; (iii) except for FWC's obligation pursuant to the FWC ESOP and the FWC
Stock Purchase Plan, directly or indirectly redeem, purchase or otherwise
acquire any shares of capital stock or any securities
-19-
or obligations convertible into or exchangeable for any shares of its capital
stock; (iv) grant any stock appreciation rights or grant any individual,
corporation or other entity any right to acquire any shares of its capital
stock; or (v) issue any additional shares of capital stock (except pursuant to
the exercise of stock options outstanding as of the date of this Merger
Agreement).
5.2(c) Sell, transfer, mortgage, encumber or otherwise dispose of any of
its properties or assets to any individual, corporation or other entity, or
cancel, release or assign any indebtedness to any such person or any claims held
by any such person, except in the ordinary course of business consistent with
past practice or pursuant to contracts or agreements in force at the date of
this Merger Agreement.
5.2(d) Except for transactions in the ordinary course of business
consistent with past practice or pursuant to contracts or agreements in force at
the date of this Merger Agreement, make any material investment either by
purchase of stock or securities, contributions to capital, property transfers,
or purchase of any property or assets of any other individual, corporation or
other entity other than any existing joint venture to which FWC is a party.
5.2(e) Except for transactions in the ordinary course of business
consistent with past practice, enter into or terminate any material contract or
agreement, or make any change in any of its material leases or contracts, other
than renewals of contracts and leases without material adverse changes of terms.
5.2(f) Except for the Employee Bonuses and other than in the ordinary
course of business consistent with past practice, or as required by law,
increase in any manner the compensation or fringe benefits of any of its
employees, or pay any pension or retirement allowance not required by any
existing plan or agreement to any such employees or become a party to, amend or
commit itself to any pension, retirement, profit-sharing or welfare benefit plan
or agreement or employment agreement with or for the benefit of any employee.
5.2(g) Grant, amend or modify in any material respect any stock option,
stock awards or other stock based compensation.
5.2(h) Pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice (which includes the payment of
final and unappealable judgments) or in accordance with their terms, of
liabilities reflected or reserved against in, or contemplated by, the most
recent consolidated financial statements (or the notes thereto) of FWC or
incurred in the ordinary course of business consistent with past practice.
5.2(i) Amend the charter or Bylaws of FWC or the Bank.
5.2(j) Restructure or materially change its investment securities
portfolio or its gap position, through purchases, sales, or otherwise, or the
manner in which the portfolio is classified or reported.
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5.2(k) Agree to, or make any commitment to, take any of the actions
prohibited by this Section 5.2
5.3 Access to Information and Records.
During the period prior to the Closing, FWC shall give SFSC, its counsel,
accountants and other representatives (a) upon 24 hours advance notice, access
during normal business hours to all of the properties, books, records, contracts
and documents of FWC and the Bank for the purpose of such inspection,
investigation and testing as SFSC deems appropriate (and FWC shall furnish or
cause to be furnished to SFSC and its representatives all information with
respect to the business and affairs of FWC and the Bank as SFSC may request);
(b) access to employees, agents and representatives for the purposes of such
meetings and communications as SFSC reasonably desires; and (c) access to the
buildings in which FWC and the Bank operate their business.
5.4 No Negotiations.
Except as contemplated in Section 9.1(f)(iii), FWC will not directly or
indirectly (through a representative or otherwise) solicit or furnish any
information to any prospective buyer, commence, or conduct presently ongoing,
negotiations with any other party or enter into any agreement with any other
party concerning the sale of FWC or the Bank, the assets or business or any part
thereof or any equity securities of FWC or the Bank (an "Acquisition Proposal"),
and FWC shall immediately advise SFSC of the receipt of any Acquisition
Proposal.
5.5 Confidentiality.
Each of SFSC and FWC shall hold all information furnished by or on behalf
of the other party or the Bank, as the case may be, or their representatives
pursuant to Section 5.3 in confidence and shall return all documents containing
any information concerning the properties, business and assets of each other
party that may have been obtained in the course of negotiations or examination
of the affairs of each other party prior or subsequent to the execution of this
Merger Agreement (other than such information as shall be in the public domain
or otherwise ascertainable from public or outside sources) and shall destroy any
information, analyses or the like derived from such confidential information.
Each of SFSC and FWC shall use such information solely for the purpose of
conducting business, legal and financial reviews of the other party and for such
other purposes as may be related to this Merger Agreement and the Plan of
Merger.
5.6 Report to SFSC.
FWC will promptly advise SFSC in writing of all actions taken by the
directors and shareholders of FWC at meetings or in connection with written
consents filed with FWC and furnish SFSC with copies of all monthly and other
interim financial statements of FWC and the Bank as they become available. FWC
will use its best efforts to keep SFSC fully informed concerning all trends and
developments of which it becomes aware that may have a
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material effect upon the business, any properties or condition (either financial
or otherwise) of FWC or the Bank.
5.7 Breaches.
FWC shall, in the event it becomes aware of the impending or threatened
occurrence of any event or condition that would cause or constitute a material
breach (or would have caused or constituted a breach had such event occurred or
been known prior to the date hereof) of any of its representations or agreements
contained or referred to herein, give prompt written notice thereof to SFSC and
use its best efforts to prevent or promptly remedy the same.
5.8 Shareholder Meeting.
FWC shall call a meeting of its shareholders to be held as promptly as
practicable for the purpose of voting upon this Merger Agreement and related
matters. FWC, through its Board of Directors, will unanimously recommend to FWC
shareholders approval of such matters, will not withdraw, modify or amend such
recommendations, and will use their best efforts to obtain such shareholder
approval. FWC shall coordinate and cooperate with SFSC with respect to the
timing of such meeting. FWC shall not, at its shareholders' meeting, submit any
other matter for approval of its shareholders (except with the prior written
consent of SFSC, which consent shall not be unreasonably withheld). The date on
which the shareholders vote upon this Merger Agreement and related matters shall
be referred to as the "Meeting Date."
5.9 Appraisal Process.
FWC will give to SFSC prompt notice of any written objections or
appraisal demands received by FWC. SFSC will have the right to participate in
all appraisal negotiations and proceedings. FWC will not make any payment with
respect to, or settle or offer to settle, any appraisal demands without SFSC's
prior written consent.
5.10 Consents.
Each of FWC and SFSC will use its best efforts prior to Closing to obtain
all consents necessary for the consummation of the transactions contemplated
hereby.
5.11 Other Action.
Each of SFSC and FWC will use its best efforts to cause the fulfillment
at the earliest practicable date of all of the conditions to its obligations to
consummate the transactions contemplated in this Merger Agreement.
5.12 Disclosure Schedule.
FWC shall have a continuing obligation to promptly notify SFSC in writing
with respect to any matter hereafter arising or discovered that, if existing or
known at the date
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of this Merger Agreement, would have been required to be set forth or described
in any Schedule attached hereto, but no such disclosure shall cure any breach of
any representation or warranty that is inaccurate.
5.13 Irrevocable Proxies.
Xxxxxxx X. Xxxxx, Xxxxxx X. Xxxxx, Xxxxx X. Xxxxxx, Xxxx X. Xxxxxxxx,
Xxxxxxx Xxxxxx, Xxxxx X. Xxxxx, D. Xxxx Xxxxxxxxx or such other shareholders as
necessary to constitute holders of at least 50.01% of the FWC Common Stock (on a
fully diluted basis) shall execute and deliver to SFSC on or immediately after
the date hereof irrevocable proxies to vote in favor of or consent to the Merger
(the "Irrevocable Proxies") in the form attached hereto as Exhibit C.
5.14 Indemnification; Directors' and Officers' Insurance.
5.14(a) Indemnification. In the event of any threatened or actual claim,
action, suit, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action, suit,
proceeding or investigation in which any individual who is now, or has been at
any time prior to the date of this Merger Agreement, or who becomes prior to the
Effective Time, a director or officer or employee of FWC or the Bank (the
"Indemnified Parties"), is, or is threatened to be, made a party based in whole
or in part on, or arising in whole or in part out of, or pertaining to (i) the
fact that he or she is or was a director, officer or employee of FWC or the Bank
or any of their respective predecessors, or (ii) this Merger Agreement or the
Plan of Merger or any of the transactions contemplated hereby or thereby,
whether in any case asserted or arising before or after the Effective Time, the
parties hereto agree to cooperate and use reasonable efforts to defend against
and respond thereto. It is understood and agreed that after the Effective Time,
SFSC shall indemnify and hold harmless, as and to the fullest extent permitted
by law, each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorney's fees and expenses
and in advance of the final disposition of any claim, suit, proceeding or
investigation incurred by each Indemnified Party to the fullest extent permitted
by law upon receipt of any undertaking required by applicable law), judgments,
fines and amounts paid in settlement in connection with any such threatened or
actual claim, action, suit, proceeding or investigation, and in the event of any
such threatened or actual claim, action, suit, proceeding or investigation
(whether asserted or arising before or after the Effective Time), the
Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with the Surviving Corporation; provided, however, that (A) the
Surviving Corporation shall have the right to assume the defense thereof and
upon such assumption the Surviving Corporation shall not be liable to any
Indemnified Party for any legal expenses of other counsel or any other expenses
subsequently incurred by any Indemnified Party in connection with the defense
thereof, except that if the Surviving Corporation elects not to assume such
defense or counsel for the Indemnified Parties reasonably advises the
Indemnified Parties that there are issues which raise conflicts of interest
between the Surviving Corporation and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to them after consultation
with the Surviving Corporation, and the Surviving Corporation shall pay the
reasonable fees and expenses of such counsel for the Indemnified Parties, (B)
the
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Surviving Corporation shall be obligated pursuant to this Section to pay for
only one firm of counsel for all Indemnified Parties, unless an Indemnified
Party shall have reasonably concluded, based on the advice of counsel, that
there is a material conflict of interest between the interests of such
Indemnified Party and the interests of one ore more other Indemnified Parties
and that the interests of such Indemnified Party will not be adequately
represented unless separate counsel is retained, in which case, the Surviving
Corporation shall be obligated to pay such separate counsel, (C) the Surviving
Corporation shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld) and (D) the
Surviving Corporation shall have no obligation hereunder to any Indemnified
Party when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law. Any Indemnified Party wishing to claim
indemnification under this Section 5.14, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Surviving
Corporation thereof, provided that the failure to so notify shall not affect the
obligations of the Surviving Corporation under this Section 5.14 except to the
extent such failure to notify materially prejudices the Surviving Corporation.
The Surviving Corporation's obligations under this Section 5.14 shall continue
in full force and effect for a period of three years from the Effective Time;
provided, however, that all rights to indemnification in respect of any claim (a
"Claim") asserted or made within such period shall continue until the final
disposition of such Claim.
5.14(b) Directors' and Officers' Insurance. The Surviving Corporation
shall use reasonable efforts (i) to obtain, after the Effective Time, directors'
and officers' liability insurance coverage for the officers and directors of FWC
and the Bank, to the extent that the same is economically practicable, and (ii)
either (A) to cause the individuals serving as officers and directors of FWC or
the Bank immediately prior to the Effective Time to be covered for a period of
three years from the Effective Time by the directors' and officers' liability
insurance policies maintained by the Surviving Corporation, or to (B) substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous than the policies previously
maintained by FWC with respect to acts or omissions prior to the Effective Time
which were committed by such officers and directors in their capacity as such;
provided, however, that in no event shall the Surviving Corporation be required
to expend per year an amount in excess of 150% of the premium for such insurance
paid by SFSC during its 1998 fiscal year (the "Insurance Amount") to maintain or
procure insurance coverage pursuant to this Section, and provided further that
if the Surviving Corporation is unable to maintain or obtain the insurance
called for by clause (ii) of this sentence, the Surviving Corporation shall use
reasonable efforts to obtain as much comparable insurance as available for the
Insurance Amount.
5.15 Employee Matters.
5.15(a) FWC ESOP. Effective as of the Effective Time, the FWC ESOP shall
be terminated and the FWC Common Stock held by the FWC ESOP shall be exchanged
for the Common Stock Consideration and distributed to the participants
thereunder. Effective as of the Effective Time, former participants in the FWC
ESOP shall be granted credit for
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prior service with FWC or the Bank for purposes of determining the former
participant's eligibility to participate in the State Financial Services
Corporation Employee Stock Ownership Plan, but shall be treated as new hires for
all other purposes (including vesting) under the State Financial Services
Corporation Employee Stock Ownership Plan.
5.15(b) Other Matters. At the Effective Time, SFSC shall assume and honor
Xxx Xxxxx'x retirement agreement. Except as provided in Section 5.15(a) above,
SFSC shall give FWC's and the Bank's employees credit for prior service with FWC
or the Bank with respect to benefits offered by SFSC that are offered by FWC as
of the Effective Time. For benefits offered by SFSC, but not offered by FWC as
of the Effective Time, FWC's and the Bank's employees must satisfy initial
qualification periods of employment with SFSC and vesting shall begin from the
date of service with SFSC. SFSC shall provide all non-executive FWC and Bank
employees who are involuntarily terminated without cause within one year of the
Effective Time, a severance package equal to one week's base salary for each
full year of service with FWC and Bank up to a maximum of twenty-six (26)
weeks), plus medical and other benefits for period of severance payments.
5.16 Regulatory Approval.
SFSC shall use its best efforts to obtain any necessary approval from the
Federal Reserve Board as soon as reasonably practicable after the execution of
this Merger Agreement.
5.17 Shareholder Proxies.
FWC shall promptly prepare and mail or deliver a Proxy Statement to each
of its shareholders. SFSC shall have the right to review in advance, and to the
extent practicable, FWC will consult SFSC on, subject to applicable laws
relating to the exchange of information, the information contained in the Proxy
Statement. FWC covenants and agrees that none of the information in the Proxy
Statement will, at the time such document is mailed or delivered to the FWC
shareholders, be false or misleading with respect to any material fact or shall
omit to state any material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.
Notwithstanding the foregoing, SFSC shall have no responsibility for the truth
or accuracy of any information contained in the Proxy Statement.
6. CONDITIONS PRECEDENT TO SFSC AND NEWCO'S OBLIGATIONS
Each and every obligation of SFSC and Newco to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the Closing of
each of the following conditions:
6.1 No Material Adverse Change.
There shall not have been any material adverse change, or discovery of a
condition or the occurrence of any event that has or is likely to result in such
a change, in the condition (financial or otherwise), assets, liabilities,
reserves, prospects, results of operation
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or business of FWC and the Bank, taken as a whole, from December 31, 1998, to
the Closing Date which will have a Material Adverse Effect.
6.2 Representations and Warranties.
Each of the representations and warranties by FWC contained in this
Merger Agreement shall be true and correct (except where such inaccuracy would
not have a Material Adverse Effect) at, or as of, the date of this Merger
Agreement and (except to the extent such representation speaks as of an earlier
date) as of the Closing Date as though such representations and warranties were
made on and as of said date, except with respect to changes expressly
contemplated in this Merger Agreement.
6.3 Performance and Compliance. FWC shall have performed or complied in
all material respects with all covenants, agreements and conditions required by
the Agreements to be performed and satisfied by it on or prior to the Closing
Date.
6.4 No Proceeding or Litigation.
At the Closing Date, no suit, action or proceeding shall be pending or
overtly threatened and no liability or claim shall have been asserted against
FWC or the Bank that has not been disclosed in the schedules attached hereto (a)
involving any of the assets, properties, business or operations of FWC or the
Bank that would reasonably be expected to have a Material Adverse Effect, or (b)
before any court or other governmental agency by the federal or any state
government in which it is or will be sought to restrain or prohibit the
consummation of the Merger.
6.5 Consents Under Agreements.
FWC shall have obtained the consent or approval of each person whose
consent or approval shall be required in order to permit consummation of the
Merger under any loan or credit agreement, note, mortgage, indenture, lease or
other agreement or instrument, except those for which failure to obtain such
consents and approvals would not, in the reasonable opinion of SFSC,
individually or in the aggregate, have a Material Adverse Effect on SFSC whether
prior to or following the consummation of the transactions contemplated hereby.
6.6 Dissenters.
Holders of not more than ten percent (10%) of the FWC Common Stock
outstanding as of the record date for the meeting of FWC shareholders shall have
undertaken steps to perfect their right to object in accordance with Sections
5/11.65 and 5/11.70 of the IBCA and not lost or abandoned such right.
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6.7 Opinion of Counsel for FWC.
SFSC and Newco shall have received an opinion from Xxxxxxx & Xxxxxxxxxx,
counsel to FWC, dated the Closing Date, substantially to the effect set forth in
Exhibit D hereto.
6.8 Certificate of FWC.
FWC shall have furnished SFSC a certificate, signed by its Chief
Executive Officer, dated the Closing Date, to the effect that the conditions
described in Sections 6.1, 6.2, 6.3, 6.4, 6.5 and 6.6, of this Merger Agreement
have been fully satisfied.
6.9 Good Standing Certificates.
SFSC shall have received statements from the appropriate officials of the
State of Illinois, certifying that FWC is a corporation in good standing, and a
statement from the OCC stating that the Bank is in good standing under the laws
of the United States, each dated within 15 business days prior to the Closing
Date.
6.10 Financial Conditions.
6.10(a) The Bank shall have Equity Capital (as defined in Section
6.10(e)) of not less than Fourteen Million Dollars ($14,000,000) as shown on the
Closing Balance Sheet (as defined in Section 6.11) exclusive of reasonable
transaction costs associated with the Merger plus the Employee Bonuses.
6.10(b) The Bank shall have a loan loss reserve of not less than One
Million One Hundred Thousand Dollars ($1,100,000) as shown on the Closing
Balance Sheet excluding loans held for sale pursuant to a commitment to purchase
by a third-party.
6.10(c) FWC shall have sufficient cash to pay accrued dividends on the
Preferred Stock as of the Closing Date as shown on the Closing Balance Sheet.
6.10(d) The term Equity Capital shall mean the sum of (a) capital stock,
(b) surplus, and (c) undivided profits, and shall not include any amount of
unrealized gain or loss in any category of assets.
6.11 Closing Balance Sheet.
FWC shall have prepared and delivered to SFSC a balance sheet for the
Bank as of the month end preceding the Closing Date (the "Closing Balance
Sheet") in accordance with GAAP consistently applied.
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7. CONDITIONS PRECEDENT TO FWC'S OBLIGATIONS
The obligations of FWC under the Merger Agreement and Plan of Merger to
cause the transactions contemplated herein to be consummated shall be subject to
the satisfaction of the following conditions:
7.1 No Material Adverse Change.
There shall not have been any material adverse change, or discovery of a
condition or the occurrence of any event that has or is likely to result in such
a change, in the business of SFSC, other than any change resulting primarily by
reason of changes in banking laws or regulations (or interpretations thereof),
changes in the general level of interest rates or changes in economic, financial
or market conditions affecting the banking industry generally in the regions in
which SFSC operates.
7.2 Representations and Warranties.
All representations and warranties of SFSC and Newco contained in this
Merger Agreement shall be true and correct (except where such inaccuracy would
not have a Material Adverse Effect on SFSC) at, or as of, the date of this
Merger Agreement and (except to the extent such representation speaks as of an
earlier date) as of the Closing Date as though such representations were made on
and as of said date.
7.3 Performance and Compliance.
SFSC shall have performed or complied in all material respects with all
covenants, agreements and conditions required by the Agreements to be performed
and satisfied by it on or prior to the Closing Date.
7.4 No Proceeding or Litigation.
At the Closing Date, no suit, action or proceeding shall be pending or
overtly threatened before any court or other governmental agency by the federal
or any state government in which it is sought to restrain or prohibit the
consummation of the Merger.
7.5 Opinion of Counsel for SFSC and Newco.
SFSC and Newco shall have delivered to FWC an opinion of Xxxxx & Xxxxxxx,
counsel for SFSC, dated the Closing Date, substantially to the effect set forth
in Exhibit E hereto.
7.6 Certificate of Executive Officer.
SFSC shall have furnished to FWC a certificate, signed by any one of its
executive officers and dated the Closing Date, to the effect that the conditions
described in Sections 7.1, 7.2, 7.3 and 7.4 of this Merger Agreement have been
fully satisfied.
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7.7 Redemption of Preferred Stock and Assumption of the ANB Debt.
SFSC shall have furnished to FWC evidence reasonably satisfactory to
FWC's counsel that the Preferred Stock has been redeemed and that the ANB Debt
has been assumed or paid.
7.8 Fairness Opinion.
FWC shall have received a fairness opinion from Xxxxx Financial, Inc.
delivered simultaneously with the execution of the Merger Agreement and such
opinion shall not have been withdrawn or materially modified prior to closing.
8. CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES
In addition to the provisions of Articles 6 and 7, the obligations of
FWC, SFSC and Newco under the Agreements to cause the transactions contemplated
herein to be consummated, shall be subject to the satisfaction of the following
conditions:
8.1 Governmental Approvals. The parties hereto shall have received all
necessary approvals of governmental agencies and authorities, on conditions
satisfactory to SFSC, of the transactions contemplated by the Agreements, each
of such approvals shall remain in full force and effect and all statutory
waiting periods in connection therewith shall have expired prior to the Closing
Date, and such approvals and the transactions contemplated thereby shall not
have been contested by any federal or state governmental authority or by any
other third party by formal proceeding. If any contest as aforesaid is brought
by formal proceedings, any party may, but shall not be obligated to, answer and
defend such contest.
8.2 Shareholder Approval. The Agreements and the Merger shall have been
duly approved by written consent or the requisite affirmative vote of the
shareholders of FWC.
9. TERMINATION, expenses and amendment
9.1 Termination.
This Merger Agreement may be terminated prior to the Effective Time:
9.1(a) At any time, whether before or after approval of the matters
presented in connection with the Merger by the shareholders of FWC, by written
agreement between SFSC or FWC, if the Board of Directors of each so determines.
9.1(b) By SFSC, by written notice to FWC,
(i) within 15 business days of the date of this Merger Agreement (the
"Due Diligence Review Period"), if, based on the information discovered in the
course of its due diligence investigation of FWC and the Bank, SFSC reasonably
determines in good
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faith that the representations and warranties of FWC are incorrect as of the end
of the Due Diligence Review Period and such inaccuracy would have a Material
Adverse Affect; or
(ii) if after reviewing the Closing Balance Sheet, SFSC reasonably
determines in good faith that the representations and warranties of FWC are
incorrect as of the Closing Date and such inaccuracy would have a Material
Adverse Effect.
9.1(c) At any time, whether before or after approval of the matters
presented in connection with the Merger by the shareholders of FWC, by either
the Board of Directors of SFSC or the Board of Directors of FWC if (i) any
governmental entity that must grant a regulatory approval (A) has denied
approval of the Merger and such denial has become final and nonappealable, or
(B) has advised the parties of its unwillingness to grant such regulatory
approval on terms and conditions reasonably acceptable to the parties,
notwithstanding the parties' fulfillment of their obligations to take reasonable
efforts to obtain such regulatory approval; or (ii) any governmental entity of
competent jurisdiction shall have issued a final nonappealable order permanently
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Merger Agreement.
9.1(d) By either the Board of Directors of SFSC or the Board of Directors
of FWC if the Merger shall not have been consummated on or before September 30,
1999, unless the failure of the Closing to occur by such date shall be due to
the failure of the party seeking to terminate this Merger Agreement to perform
or observe the covenants and agreements of such party set forth herein.
9.1(e) By SFSC or FWC if approval of the shareholders of FWC required for
the consummation of the Merger shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of shareholders or at
any adjournment or postponement thereof.
9.1(f) By FWC, by written notice to SFSC; if
(i) there exists any breach or breaches of the representations and
warranties of SFSC made herein, which breaches, individually or in the aggregate
have or, insofar as reasonably can be foreseen, would have, a Material Adverse
Effect on SFSC, and such breaches shall not have been remedied within 30 days
after receipt by SFSC of notice in writing from FWC, specifying the nature of
such breaches and requesting that they be remedied; or
(ii) SFSC shall have failed to perform and comply with, in all
material respects, its agreements and covenants hereunder and such failure to
perform or comply shall not have been remedied within 30 days after receipt by
SFSC of notice in writing from FWC, specifying the nature of such failure and
requesting that it be remedied.
(iii) as a result of an Acquisition Proposal by a party other than
SFSC or its affiliates, the Board of Directors of FWC determines in good faith
that its fiduciary obligations under applicable law require that such
Acquisition Proposal be accepted; provided, however, that (a) the Board of
Directors of FWC shall have been advised in a written opinion
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of counsel that notwithstanding a binding commitment to consummate an agreement
of the nature of this Merger Agreement entered into in the proper exercise of
its applicable fiduciary duties, such fiduciary duties would require the
directors to reconsider such commitment as a result of such Acquisition
Proposal; and (b) prior to any such termination, the Board of Directors of FWC
reasonably believes that such Acquisition Proposal would be approved by a
majority of the holders of FWC Common Stock.
9.1(g) By SFSC, by written notice to FWC, if
(i) there exists any breach or breaches of the representations and
warranties of FWC made herein, which breaches, individually or in the aggregate
have, or insofar as reasonably can be foreseen, would have, a Material Adverse
Effect and such breaches shall not have been remedied within 30 days after
receipt by FWC of notice in writing from SFSC, specifying the nature of such
breaches and requesting that they be remedied; (ii) FWC shall have failed to
perform and comply with, in all material respects, its agreements and covenants
hereunder and such failure to perform or comply shall not have been remedied
within 30 days after receipt by FWC of notice in writing from SFSC, specifying
the nature of such failure and requesting that it be remedied; or
(iii) the Board of Directors of FWC or any committee thereof (A)
shall withdraw or modify in any manner adverse to SFSC its approval or
recommendation of this Merger Agreement or the Merger; (B) shall fail to
reaffirm such approval or recommendation upon SFSC's request; (C) shall approve
or recommend any Acquisition Proposal involving FWC other than the Merger or any
tender offer or share exchange for shares of capital stock of FWC, in each case,
by or involving a party other than SFSC or any of its affiliates; or (D) shall
resolve to take any of the actions specified in clause (A), (B) or (C).
9.2 Effect of Termination.
Subject to Section 9.3, in the event of termination of this Merger
Agreement by SFSC or FWC pursuant to Section 9.1 there shall be no liability on
the part of either SFSC or FWC or their respective officers or directors
hereunder, except that Sections 5.5, 9.2 and 9.3 shall survive the termination.
9.3 Termination Fee; Expenses.
9.3(a) If this Merger Agreement is terminated at such time that this
Merger Agreement is terminable pursuant to one (but not both) of (i) Section
9.1(f)(i) or (ii), or (ii) Section 9.1(g)(i) or (ii), then the breaching party
shall promptly (but no later than five (5) business days after receipt of notice
from the non-breaching party) pay to the non-breaching party in cash an amount
equal to all documented out-of-pocket expenses and fees incurred by the
non-breaching party (including, without limitation, fees and expenses payable to
all legal, accounting, financial, public relations and other professional
advisors arising out of, in connection with or related to the merger or the
transactions contemplated by this Merger
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Agreement) not in excess of $200,000; provided, however, that, if this Merger
Agreement is terminated by a party as a result of a willful breach by other
party, the non-breaching party may pursue any remedies available to it at law or
in equity and shall, in addition to its documented out-of-pocket expenses and
fees (which shall be paid as specified above and shall not be limited to
$200,000), be entitled to recover such additional amounts as such non-breaching
party may be entitled to receive at law or in equity.
9.3(b) If (i) this Merger Agreement (A) is terminated by SFSC pursuant to
Section 9.1(g)(iii), (B) is terminated pursuant to Section 9.1(e) following a
failure of shareholders of FWC to grant the necessary approvals described in
Section 3.28 ("Shareholder Disapproval") or (C) is terminated by FWC pursuant to
this Section 9.1(f)(iii) ; and
(ii) with respect to any termination referred to in clause (i)(A),
(B) or (C) above, at the time of such termination (or prior to the meeting at
which such Shareholder Disapproval occurred), there shall have been a
third-party tender offer for shares of, or a third-party Acquisition Proposal
involving FWC or any affiliates thereof, that at the time of such termination or
of the meeting of FWC's shareholders, as the case may be, shall not have been
withdrawn by the third-party, then FWC, at the time of the termination of this
Merger Agreement, will pay to SFSC in cash an aggregate termination fee equal to
Seven Hundred Thousand Dollars ($700,000), plus the documented out-of-pocket
fees and expenses incurred by SFSC up to Two Hundred Thousand Dollars ($200,000)
(including, without limitation, fees and expenses payable to all legal,
accounting, financial, public relations and other professional advisors arising
out of, in connection with or related to the Merger or the transactions
contemplated by this Merger Agreement).
9.3(c) If this Merger Agreement is terminated by SFSC or FWC pursuant to
Section 9.1(c) and it is determined that SFSC did not make a good faith effort
to obtain regulatory approval of the Merger, then SFSC, at the time of
termination of this Merger Agreement, will pay FWC in cash an aggregate
termination fee equal to Seven Hundred Thousand Dollars ($700,000), plus the
documented out-of-pocket fees and expenses incurred by FWC up to Two Hundred
Thousand Dollars ($200,000) (including, without limitation, fees and expenses
payable to all legal, accounting, financial, public relations and other
professional advisors arising out of, in connection with or related to the
Merger or the transactions contemplated by this Merger Agreement).
9.3(d) The parties agree that the agreements contained in this Section
9.3 are an integral part of the transactions contemplated by this Merger
Agreement and constitute liquidated damages and not a penalty. If one party
fails to promptly pay to any other party any fee due hereunder, the defaulting
party shall pay the costs and expenses (including legal fees and expenses) in
connection with any action, including the filing of any lawsuit or other legal
action, taken to collect payment, together with interest on the amount of any
unpaid fee at the publicly announced prime rate at published in The Wall Street
Journal (Midwest Edition) from the date such fee was required to be paid.
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9.3(e) Notwithstanding anything herein to the contrary, except for a
willful breach of this Agreement, the aggregate amount payable by FWC to SFSC
pursuant to Section 9.3(a) or Section 9.3(b) shall not exceed Nine Hundred
Thousand Dollars ($900,000), and the aggregate amount payable by SFSC and its
affiliates to FWC pursuant to Sections 9.3(a) and (c) shall not exceed Nine
Hundred Thousand Dollars ($900,000).
9.4 Amendment.
Subject to compliance with applicable law, this Merger Agreement may be
amended by the parties hereto, by action taken or authorized by their respective
Boards of Directors, at any time before or after approval of the matters
presented in connection with the Merger by the shareholders of FWC; provided,
however, that after any approval of the transactions contemplated by this Merger
Agreement by the shareholders of FWC, there may not be, without further approval
of such shareholders, any amendment of this Merger Agreement that changes the
form of the Merger Consideration, or adjusts the amount of the Merger
Consideration by an amount that exceeds ten percent of the Merger Consideration
as described Section 2.1 hereunder. This Merger Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
9.5 Extension; Waiver.
At any time prior to the Effective Time, SFSC and FWC, by action taken or
authorized by their respective Board of Directors, may, to the extent legally
allowed (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein; provided, however, that after any approval of the
transactions contemplated by this Merger Agreement by the shareholders of FWC,
there may not be, without further approval of such shareholders, any extension
or waiver of this Merger Agreement or any portion thereof that changes the form
of the Merger Consideration, or adjusts the amount of the Merger Consideration
by an amount that exceeds ten percent of the Merger Consideration as described
in Section 2.1. Any agreement of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
10. MISCELLANEOUS
10.1 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties and agreements in this Merger
Agreement or in any instrument delivered pursuant to this Merger Agreement shall
survive the Effective Time, except for the agreements contained in Sections 2.1,
5.5, 5.14 and 5.15 and the Plan of Merger.
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10.2 Definitions.
As used in this Agreement, the term "Material Adverse Effect" with
respect to FWC means any condition, event, change or occurrence that has or may
reasonably be expected to have a material adverse affect on the condition
(financial or otherwise), properties, assets, liabilities, business, operations
or results of operations, of FWC on a consolidated basis, it being understood
that a Material Adverse Effect shall not include: (i) a change with respect to,
or effect on, FWC and its consolidated subsidiaries resulting from a change in
law, rule, regulation, generally accepted accounting principles or regulatory
accounting principles, as such would apply to the financial statements of FWC on
a consolidated basis; (ii) a change with respect to, or effect on, FWC and its
consolidated subsidiaries, resulting from reasonable expenses (such as legal,
accounting and investment bankers' fees) incurred in connection with this
Agreement or reasonable expenses (such as legal, accounting and investment
bankers' fees) incurred in connection with the transactions contemplated by this
Agreement, or (iii) a change with respect to, or effect on, FWC and its
consolidated subsidiaries resulting from any other matter affecting depository
institutions generally (including, without limitation, financial institutions
and their holding companies) including, without limitation, changes in general
economic conditions and changes in prevailing interest and deposit rates.
10.3 Severability.
Any term or provision of this Merger Agreement that is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Merger Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Merger Agreement in any other jurisdiction. If any provision of this Merger
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.4 Publicity.
Except as otherwise required by applicable law, neither SFSC nor FWC
shall, nor shall FWC permit the Bank to, issue or cause the publication of any
press release or other public announcement with respect to, or otherwise make
any public statement concerning, the transactions contemplated by this Merger
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld.
10.5 Assignment; Parties in Interest.
10.5(a) Except as expressly provided herein, the rights and obligations
of a party hereunder may not be assigned, transferred or encumbered without the
prior written consent of the other parties. Notwithstanding the foregoing, SFSC
may, without consent of any other party, cause one or more subsidiaries of SFSC
to carry out all or part of the transactions contemplated hereby; provided,
however, that SFSC shall, nevertheless, remain liable for all of its
obligations, and those of any such subsidiary, to FWC hereunder.
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10.5(b) This Merger Agreement shall be binding upon, inure to the benefit
of, and be enforceable by the respective successors and permitted assigns of the
parties hereto. Nothing contained herein shall be deemed to confer upon any
other person any right or remedy under or by reason of this Merger Agreement.
10.6 Law Governing Merger Agreement.
This Merger Agreement may not be modified or terminated orally, and shall
be construed and interpreted according to the internal laws of the State of
Wisconsin, excluding any choice of law rules that may direct the application of
the laws of another jurisdiction.
10.7 Notice.
All notices, requests, demands and other communications hereunder shall
be given in writing and shall be: (a) personally delivered; (b) sent by
telecopier, facsimile transmission or other electronic means of transmitting
written documents; or (c) sent to the parties at their respective addresses
indicated herein by registered or certified U.S. mail, return receipt requested
and postage prepaid, or by private overnight mail courier service. The
respective addresses to be used for all such notices, demands or requests are as
follows:
(a) If to SFSC, to:
State Financial Services Corporation
00000 X. Xxxxxxxxxx Xxxx
Xxxxx Xxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
(with a copy to)
Xxxxxx X. Xxx
Xxxxx & Lardner
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
or to such other person or address as SFSC shall furnish to FWC in writing.
(b) If to FWC, to:
First Waukegan Corporation
Xxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Facsimile: 000-000-0000
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(with a copy to)
Xxxxxxx X. Xxxxxxxx
Xxxxxxx & Xxxxxxxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Facsimile: 000-000-0000
or to such other person or address as FWC shall furnish to SFSC in writing.
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this paragraph,
such communication shall be deemed delivered the next business day after
transmission (and sender shall bear the burden of proof of delivery); if sent by
overnight courier pursuant to this paragraph, such communication shall be deemed
delivered upon receipt; and if sent by U.S. mail pursuant to this paragraph,
such communication shall be deemed delivered as of the date of delivery
indicated on the receipt issued by the relevant postal service, or, if the
addressee fails or refuses to accept delivery, as of the date of such failure or
refusal. Any party to this Merger Agreement may change its address for the
purposes of this Merger Agreement by giving notice thereof in accordance with
this Section 10.7.
10.8 Entire Agreement.
This Merger Agreement and the Plan of Merger embody the entire agreement
between the parties hereto with respect to the transactions contemplated herein
and therein, and there have been and are no agreements, representations or
warranties between the parties other than those set forth or provided for
herein.
10.9 Counterparts.
This Merger Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
10.10 Headings.
The headings in this Merger Agreement are inserted for convenience only
and shall not constitute a part hereof.
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IN WITNESS WHEREOF, the parties have executed this Merger Agreement as of
the date and year first above written.
STATE FINANCIAL SERVICES
CORPORATION
By:/s/Xxxxxxx X. Xxxxx
Its:President and Chief Executive
Officer
FWC ACQUISITION CORP.
By:/s/Xxxxxxx X. Xxxxx
Its:President and Chief Executive
Officer
FIRST WAUKEGAN CORPORATION
By:/s/Xxxxxx X. Xxxxx
Its:President
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