EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
MIDWEST BANC HOLDINGS, INC.
AND
BIG FOOT FINANCIAL CORP.
DATED AS OF JULY 19, 2002
TABLE OF CONTENTS
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PAGE
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I. THE MERGER...............................................................................................1
1.01 Effects of the Merger...........................................................................1
1.02 Midwest Common Stock............................................................................2
1.03 BFFC Common Stock...............................................................................2
1.04 Adjustments.....................................................................................3
1.05 Time and Place of Closing.......................................................................4
1.06 Midwest's Deliveries at Closing.................................................................4
1.07 BFFC's Deliveries at Closing....................................................................5
1.08 Exchange of BFFC Common Stock...................................................................6
1.09 Dissenting Shares...............................................................................8
1.10 Merger of the Bank..............................................................................8
II. REPRESENTATIONS AND WARRANTIES OF MIDWEST................................................................9
2.01 Organization....................................................................................9
2.02 Authorization...................................................................................9
2.03 Conflicts.......................................................................................9
2.04 Capitalization.................................................................................10
2.05 Litigation.....................................................................................11
2.06 Midwest Subsidiaries...........................................................................11
2.07 Midwest Financial Statements; Material Changes.................................................12
2.08 Midwest Filings................................................................................12
2.09 Midwest Reports................................................................................13
2.10 Compliance With Laws...........................................................................13
2.11 Defaults.......................................................................................14
2.12 Undisclosed Liabilities........................................................................14
2.13 Allowance for Possible Loan Losses.............................................................14
2.14 Midwest Benefit Plans..........................................................................14
2.15 Insurance......................................................................................14
2.16 Compliance with Environmental Laws.............................................................15
2.17 Assets.........................................................................................16
2.18 Fees...........................................................................................16
2.19 Governmental Approvals.........................................................................17
2.20 Disclosure.....................................................................................17
2.21 No Other Representation or Warranty............................................................17
III. REPRESENTATIONS AND WARRANTIES OF BFFC..................................................................17
3.01 Organization...................................................................................17
3.02 Authorization..................................................................................18
3.03 Conflicts......................................................................................18
3.04 Antitakeover Provisions Inapplicable...........................................................18
3.05 Capitalization and Stockholders................................................................19
3.06 BFFC Financial Statements; Material Changes....................................................19
3.07 Bank...........................................................................................20
3.08 BFFC Filings...................................................................................21
3.09 BFFC Reports...................................................................................21
3.10 Compliance With Laws...........................................................................21
3.11 Litigation.....................................................................................22
3.12 Licenses.......................................................................................22
3.13 Taxes..........................................................................................23
3.14 Insurance......................................................................................23
3.15 Loans; Investments.............................................................................24
3.16 Allowance for Loan Losses......................................................................25
3.17 BFFC Benefit Plans.............................................................................25
3.18 Compliance with Environmental Laws.............................................................28
3.19 Disclosure Schedule of BFFC....................................................................29
3.20 Defaults.......................................................................................31
3.21 Materiality....................................................................................31
3.22 Operations Since March 31, 2002................................................................31
3.23 Corporate Records..............................................................................33
3.24 Undisclosed Liabilities........................................................................33
3.25 Assets.........................................................................................33
3.26 Indemnification................................................................................34
3.27 Insider Interests..............................................................................34
3.28 Fees...........................................................................................34
3.29 Disclosure.....................................................................................34
3.30 No Other Representation or Warranty............................................................34
IV. COVENANTS...............................................................................................35
4.01 Conduct of Business by BFFC Until the Closing Date.............................................35
4.02 BFFC Stock Options.............................................................................37
4.03 Indemnification................................................................................38
4.04 Certain Actions................................................................................38
4.05 Title Matters..................................................................................39
4.06 Affiliate Agreement............................................................................40
4.07 Conduct of Business by Midwest Until the Closing Date..........................................40
V. ADDITIONAL AGREEMENTS...................................................................................41
5.01 Inspection of Records; Confidentiality.........................................................41
5.02 Cooperation....................................................................................42
5.03 Regulatory Applications........................................................................43
5.04 Registration Statement; Stockholder Approval...................................................43
5.05 Affiliate Letters..............................................................................44
5.06 Financial Statements and Reports...............................................................44
5.07 Notice.........................................................................................44
5.08 Press Releases.................................................................................44
5.09 Delivery of Supplements to Disclosure Schedules................................................45
5.10 Tax Opinion....................................................................................45
5.11 Resolution of BFFC Benefit Plans...............................................................45
5.12 Tax Treatment..................................................................................47
5.13 Stock Exchange Listing.........................................................................47
VI. CONDITIONS..............................................................................................48
6.01 Conditions to the Obligations of Midwest.......................................................48
6.02 Conditions to the Obligations of BFFC..........................................................49
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6.03 Conditions to the Obligations of the Parties...................................................49
VII. TERMINATION; AMENDMENT; WAIVER..........................................................................50
7.01 Termination....................................................................................50
7.02 Expenses.......................................................................................50
7.03 Payment in Lieu of Fees and Expenses and Opportunity Costs.....................................51
7.04 Survival of Agreements.........................................................................51
7.05 Amendment......................................................................................51
7.06 Waiver.........................................................................................52
VIII. GENERAL PROVISIONS......................................................................................52
8.01 Survival.......................................................................................52
8.02 Defined Terms; Principles of Construction......................................................52
8.03 Notices........................................................................................54
8.04 Specific Enforceability........................................................................55
8.05 Applicable Law; Jurisdiction...................................................................55
8.06 Headings, Etc..................................................................................56
8.07 Severability...................................................................................56
8.08 Entire Agreement; Binding Effect; Non-Assignment; Counterparts.................................56
8.09 Waiver of Jury Trial...........................................................................56
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LIST OF EXHIBITS
1.06(g) Attorney's Opinion for Midwest*
1.07(j) Attorney's Opinion for BFFC*
4.05 Affiliate Agreement*
5.05 Affiliates Letter*
*Intentionally omitted.
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AGREEMENT AND PLAN OF REORGANIZATION
____________________________
THIS AGREEMENT AND PLAN OF REORGANIZATION (THE "AGREEMENT") BEING MADE
AND ENTERED INTO AS OF THE 19TH DAY OF JULY, 2002, BY AND BETWEEN MIDWEST BANC
HOLDINGS, INC., A DELAWARE CORPORATION ("MIDWEST"), AND BIG FOOT FINANCIAL
CORP., AN ILLINOIS CORPORATION ("BFFC").
W I T N E S S E T H T H A T:
WHEREAS, Midwest is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended ("BHC") and BFFC is a registered savings
and loan holding company under the Home Owners' Loan Act, as amended ("HOLA");
and
WHEREAS, BFFC owns 100% of the issued and outstanding common stock of
Fairfield Savings Bank, F.S.B., a federal savings bank (hereinafter the "Bank");
and
WHEREAS, Midwest desires to acquire BFFC by causing BFFC to merge with
and into, and under the charter of, Midwest (the "Merger") with Midwest being
the surviving corporation and the stockholders of BFFC (the "Stockholders")
receiving shares of Midwest common stock, par value $ 0.01 per share (the
"Midwest Common Stock"), for their shares of BFFC Common Stock as provided
herein; and
WHEREAS, in connection with the Merger, Midwest and BFFC intend that
the Bank shall merge (the "Bank Merger") with and into Midwest Bank and Trust
Company, a wholly-owned subsidiary of Midwest; and
WHEREAS, Midwest and BFFC intend the Merger to qualify as a tax-free
reorganization under Section 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended (the "Code"); and
WHEREAS, Midwest and BFFC desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also
desire to set forth various conditions precedent to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties agree as follows:
I. THE MERGER
1.01 EFFECTS OF THE MERGER.
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(a) SURVIVING CORPORATION. Subject to the terms and conditions
of this Agreement, BFFC shall be merged with and into, and under the charter of,
Midwest at the Effective Time (as defined below) in accordance with the Delaware
General Corporation Law, as amended ("DGCL"), and the Illinois Business
Corporation Act of 1983, as amended ("IBCA"),
with Midwest being the continuing and surviving corporation (sometimes referred
to hereinafter as the "Surviving Corporation"), and the separate existence of
BFFC shall cease.
(b) EFFECTIVE TIME. The Merger shall become effective upon
the later to occur of (i) the acceptance of the Certificate of Merger for filing
by the Secretary of State of the State of Delaware and (ii) the issuance of a
Certificate of Merger by the Secretary of State of Illinois (the "Effective
Time"). The parties shall execute and, acknowledge, in accordance with Section
252 of the DGCL, and Section 11.05 of the IBCA, the Certificate of Merger to be
filed with the Secretary of State of the State of Delaware and the Articles of
Merger to be filed with the Secretary of State of the State of Illinois upon the
satisfaction of all conditions precedent to the consummation of the transactions
contemplated by this Agreement and shall file the Certificate of Merger and the
Articles of Merger, respectively, with the Secretary of State of the State of
Delaware and the Secretary of State of the State of Illinois, on the Closing
Date (as defined in SECTION 1.05(a) hereof).
(c) RIGHTS AND LIABILITIES. The Surviving Corporation shall
be called "Midwest Banc Holdings, Inc.," and shall possess all of the
properties, privileges, immunities, powers, franchises and rights of a public as
well as a private nature and be subject to all of the liabilities, restrictions
and duties of Midwest and BFFC and shall be governed by the laws of the State of
Delaware.
(d) CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of Midwest shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with the provisions thereof
and the DGCL.
(e) BY-LAWS. The By-laws of Midwest in effect immediately
prior to the Effective Time shall be the By-laws of the Surviving Corporation
until altered, amended or repealed as provided therein, or in the Certificate of
Incorporation of the Surviving Corporation or the DGCL.
(f) DIRECTORS AND OFFICERS. The directors of the Surviving
Corporation shall be the persons who were directors of Midwest immediately prior
to the Effective Time. The officers of the Surviving Corporation shall be the
persons who were officers of Midwest immediately prior to the Effective Time.
1.02 MIDWEST COMMON STOCK. At the Effective Time, each share of
Midwest Common Stock which is issued immediately prior thereto (whether then
outstanding or held in the treasury of Midwest) shall continue to be issued
without any change therein and shall continue as one share of Common Stock of
the Surviving Corporation.
1.03 BFFC COMMON STOCK. The conversion of each issued and
outstanding share of BFFC Common Stock into the right to receive Midwest Common
Stock shall be governed by the provisions of this Section.
(a) EXCHANGE RATIO. Each share of BFFC Common Stock which is
issued and outstanding immediately prior to the Effective Time (other than
shares of BFFC Common Stock held in the treasury of BFFC or held by Midwest,
which shares shall be cancelled, and shares held by persons seeking appraisal
rights under the provisions of Sections 11.65 and 11.70 of the IBCA) shall be
converted into and represent the right to receive 1.104 shares of Midwest
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Common Stock (the "Exchange Ratio"). Notwithstanding anything provided herein,
for purposes of calculating the Exchange Ratio, except as provided below, if the
average (i.e., the arithmetic mean) per share closing price of Midwest Common
Stock on The Nasdaq Stock Market ("Nasdaq") for the twenty (20) consecutive
trading days ending five (5) trading days preceding but not including the
Closing Date (the "Midwest Reference Stock Price") as referenced in The Wall
Street Journal, Midwest Edition, is less than $17.12, then at any time prior to
the close of business on the second business day after establishment of the
Midwest Reference Stock Price, BFFC shall have the option of terminating this
Agreement pursuant to SECTION 7.01(e); provided, however, termination pursuant
to SECTION 7.01(e) shall not be given effect if within two (2) business days
after receipt of such notice Midwest has agreed either (i) to modify the
Exchange Ratio to equal $18.90 divided by the Midwest Reference Stock Price as
calculated pursuant to this SECTION 1.03(a) or (ii) to utilize an Exchange Ratio
of 1.104 and provide an additional amount of cash which, when added to the
dollar value of 1.104 shares of Midwest Common Stock based on the Midwest
Reference Stock Price as calculated pursuant to this SECTION 1.03(a) will equal
$18.90.
(b) After the Effective Time, no holder of BFFC Common Stock
which is issued and outstanding immediately prior to the Effective Time will
have any rights in respect of such BFFC Common Stock except to receive shares of
Midwest Common Stock (and the cash payment pursuant to SECTION 1.08(d)) for the
shares of BFFC Common Stock converted as provided in this Section, or to receive
payment for such shares of BFFC Common Stock in the manner and to the extent
provided in Sections 11.65 and 11.70 of the Illinois BCA.
1.04 ADJUSTMENTS. The Exchange Ratio and related amounts and
related computations described in SECTION 1.03 shall be adjusted in the manner
provided in this Section upon the occurrence of any of the following events.
(a) If Midwest declares a stock dividend, stock split or other
general distribution of Midwest Common Stock to holders of Midwest Common Stock
and the ex-dividend or ex-distribution date for such stock dividend, stock split
or distribution occurs at any time after the date of this Agreement and prior to
the Closing, then the Exchange Ratio shall be adjusted by multiplying it by that
ratio (i) the numerator of which shall be the total number of shares of Midwest
Common Stock outstanding immediately after such dividend, split or distribution,
and (ii) the denominator of which shall be the total number of shares of Midwest
Common Stock outstanding immediately prior to such dividend, split, or
distribution, and the Midwest Reference Stock Price shall be adjusted by
dividing it by the quotient achieved when (i) the total number of shares of
Midwest Common Stock outstanding immediately after such dividend, split or
distribution, is divided by (ii) the total number of shares of Midwest Common
Stock outstanding immediately prior to such dividend, split, or distribution.
(b) Notwithstanding the foregoing, no adjustment shall be made
to the Exchange Ratio in the event of the issuance of additional shares of
Midwest Common Stock pursuant to the grant or sale of shares to, or for the
account of, employees of Midwest pursuant to Midwest's stock option.
(c) Notwithstanding the other provisions of this SECTION 1.04,
no adjustment shall be made to the Exchange Ratio in the event of the issuance
of additional shares of Midwest Common Stock or other securities pursuant to a
public offering, private placement, or an
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acquisition of one or more banks, corporations, or business assets for
consideration which the Board of Directors, or a duly authorized committee of
the Board of Directors, of Midwest in its reasonable business judgment
determines to be fair and reasonable.
(d) Subject only to making any adjustment to the Exchange
Ratio prescribed by this SECTION 1.04, nothing contained in this Agreement is
intended to preclude Midwest from amending its Certificate of Incorporation to
change its capital structure or from issuing additional shares of Midwest Common
Stock, preferred stock, shares of other capital stock or securities which are
convertible into shares of capital stock.
(e) In the event that the number of shares of BFFC Common
Stock outstanding is greater than 1,498,802 for any reason whatsoever (whether
such increase constitutes a breach of this Agreement), then the Exchange Ratio
shall be adjusted to that ratio determined by multiplying the Exchange Ratio by
a fraction (i) the numerator of which shall be 1,498,802 (the total number of
shares of BFFC Common Stock outstanding as of the date of this Agreement after
the cancellation of 10,366 shares held by the BFFC Recognition and Retention
Plan and Trusts), and (ii) the denominator of which shall be the total number of
shares of BFFC Common Stock outstanding as of the Effective Time of the Merger.
1.05 TIME AND PLACE OF CLOSING.
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(a) CLOSING; CLOSING DATE. The closing of the transactions
contemplated by this Agreement (the "Closing") will be held on a date mutually
agreed upon by Midwest and BFFC (the "Closing Date"). In the absence of such
agreement, the Closing shall be held within ten (10) business days after the
last to occur of: (i) the receipt of all consents and approvals of government
regulatory authorities as legally required to consummate the Merger and the
expiration of all statutory waiting periods; and (ii) the requisite approval of
the Merger by the Stockholders of BFFC; provided, however, that the Closing
shall not occur prior to January 1, 2003.
(b) CLOSING LOCATION. The Closing shall take place at the
offices of Xxxxxxx & Xxxxxxxxxx, 000 X. XxXxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxx, or such other place as Midwest and BFFC may mutually agree prior to
the Closing Date.
1.06 MIDWEST'S DELIVERIES AT CLOSING. At the Closing, Midwest
shall deliver the following items to BFFC:
(a) evidence of the delivery by Midwest or its agents to the
Exchange Agent (as defined below) of:
(i) certificates representing the number of shares
of Midwest Common Stock to be issued in exchange for the shares of BFFC
Common Stock pursuant to the terms of this Agreement; and
(ii) an aggregate amount of cash equal to the value
of the total fractional shares of Midwest Common Stock which former
holders of BFFC Common Stock would be entitled to receive pursuant to
SECTION 1.08(d) and equal to the value of the BFFC Stock Options as
calculated pursuant to SECTION 4.02 hereof;
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(b) a good standing certificate for Midwest issued by each of
the Secretary of State of the States of Delaware and Illinois, and dated in each
case not more than ten (10) business days prior to the Closing Date;
(c) a copy of the Certificate of Incorporation of Midwest
certified not more than ten (10) business days prior to the Closing Date by the
Secretary of State of the State of Delaware;
(d) a certificate of the Secretary or any Assistant Secretary
of Midwest dated the Closing Date certifying a copy of the bylaws of Midwest;
(e) copies of resolutions of the board of directors of Midwest
authorizing and approving this Agreement and the consummation of the Merger,
certified as of the Closing Date by the Secretary or any Assistant Secretary of
Midwest;
(f) a certificate executed by the President and Chief
Executive Officer of Midwest dated the Closing Date stating that: (i) all of the
representations and warranties of Midwest set forth in this Agreement are true
and correct in all material respects with the same force and effect as if all of
such representations and warranties were made at the Closing Date, except to the
extent such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties shall be true and correct on
and as of such earlier date and giving full effect to any supplements that were
delivered by Midwest to BFFC prior to the Closing Date in accordance with
SECTION 5.09 hereof; and (ii) Midwest has performed or complied in all material
respects with all of the covenants and obligations to be performed or complied
with by Midwest under the terms of this Agreement on or prior to the Closing
Date;
(g) a legal opinion of Midwest's counsel dated the Closing
Date to the effect set forth in EXHIBIT 1.06(g) attached hereto; and
(h) such other documents as BFFC may reasonably request.
All of such items shall be reasonably satisfactory in form and substance to BFFC
and its counsel.
1.07 BFFC'S DELIVERIES AT CLOSING. At the Closing, BFFC shall
deliver the following items to Midwest:
(a) a good standing certificate for BFFC issued by the
Secretary of State of the State of Illinois and dated not more than ten (10)
business days prior to the Closing Date;
(b) a copy of the Articles of Incorporation of BFFC
certified not more than ten (10) business days prior to the Closing Date by the
Secretary of State of the State of Illinois;
(c) a certificate of the Secretary or any Assistant Secretary
of BFFC dated the Closing Date certifying a copy of the bylaws of BFFC;
(d) copies of resolutions of the board of directors of BFFC
and the Stockholders authorizing and approving this Agreement and the
consummation of the Merger, certified as of the Closing Date by the Secretary or
any Assistant Secretary of BFFC;
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(e) a good standing certificate for the Bank issued by the
Office of Thrift Supervision (the "OTS") dated not more than ten (10) business
days prior to the Closing Date;
(f) a copy of the Charter of the Bank certified by the OTS
not more than ten (10) business days prior to the Closing Date;
(g) a certificate of the Secretary or Assistant Secretary of
the Bank dated the Closing Date certifying a copy of the bylaws of the Bank and
stating that there have been no further amendments to the Charter of the Bank
delivered pursuant to SUBSECTION (f) of this Section;
(h) a certificate executed by the President and Chief
Executive Officer of BFFC stating that: (i) all of the representations and
warranties of BFFC set forth in this Agreement are true and correct in all
material respects with the same force and effect as if all of such
representations and warranties were made at the Closing Date, except to the
extent such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties shall be true and correct and
as of such earlier date and giving full effect to any supplements that were
delivered by BFFC to Midwest prior to the Closing Date in accordance with
SECTION 5.09 hereof; and (ii) BFFC has performed and complied in all material
respects with all of the covenants and obligations to be performed or complied
with by it under the terms of this Agreement on or prior to the Closing Date;
(i) a list of the Stockholders as of three (3) business days
prior to the Closing Date certified by the Secretary or any Assistant Secretary
of BFFC;
(j) a legal opinion of BFFC's counsel dated the Closing Date
and to the effect set forth in EXHIBIT 1.07(j); and
(k) such other documents as Midwest may reasonably request.
All of such items shall be reasonably satisfactory in form and substance to
Midwest and its counsel.
1.08 EXCHANGE OF BFFC COMMON STOCK.
-----------------------------
(a) EXCHANGE PROCEDURES: At the Effective Time, the exchange
agent, who shall be appointed by Midwest (the "Exchange Agent"), shall, as soon
as practicable after the Effective Time but in no event later than three (3)
business days following the Effective Time, mail to each holder of record (other
than BFFC, any subsidiary of BFFC, or Midwest) of a certificate or certificates
which as of the Effective Time represented outstanding shares of BFFC Common
Stock (the "Certificates"), pursuant to documentation reasonably acceptable to
Midwest and BFFC: (i) a form letter or transmittal which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates (or a lost certificate affidavit
and bond in a form reasonably acceptable to the Exchange Agent); and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for Midwest Common Stock. Upon surrender of a Certificate for cancellation to
the Exchange Agent (or a lost certificate affidavit and bond in a form
reasonably acceptable to the Exchange Agent), together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive (as provided in SECTION 1.03(a) hereof) in exchange
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therefore Midwest Common Stock representing the number of shares of Midwest
Common Stock into which the shares of BFFC Common Stock, theretofore represented
by the Certificate so surrendered, shall have been converted pursuant to the
provisions of this ARTICLE I, plus an amount of cash for any fractional share of
Midwest Common Stock which such holder would be entitled to receive pursuant to
SECTION 1.08(d) hereof and the Certificate so surrendered shall forthwith be
delivered to Midwest for cancellation. Midwest shall direct the Exchange Agent
to make such deliveries within three (3) business days of receipt of all
required documentation. In the event of a transfer of ownership of BFFC Common
Stock which is not registered in the transfer records of BFFC, Midwest Common
Stock may be issued to a transferee if the Certificate representing such BFFC
Common Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by any applicable stock
transfer taxes.
(b) FAILURE TO EXCHANGE BFFC COMMON STOCK. No dividends or
other distributions declared after the Effective Time with respect to Midwest
Common Stock payable to the holders of record thereof after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to
Midwest Common Stock represented thereby until the holder of record shall
surrender such Certificate. Subject to the effect, if any, of applicable law,
after the subsequent surrender and exchange of a Certificate, the holder thereof
shall be entitled to receive any such dividends or distributions without
interest thereon, which theretofore became payable with respect to the Midwest
Common Stock represented by such Certificate. All dividends or other
distributions declared on or after the Effective Time with respect to the
Midwest Common Stock and payable to the holders of record thereof on or after
the Effective Time which are payable to the holder of a Certificate not
theretofore surrendered and exchanged for Midwest Common Stock pursuant to this
SECTION 1.08 shall be paid or delivered by Midwest to the Exchange Agent, in
trust, for the benefit of such holders. All such dividends and distributions
held by the Exchange Agent for payment or delivery to the holders of
unsurrendered Certificates unclaimed at the end of one (1) year from the
Effective Time shall be repaid or redelivered by the Exchange Agent to Midwest
after which time any holder of Certificates who has not theretofore surrendered
such Certificates to the Exchange Agent, subject to applicable law, shall look
as a general creditor only to Midwest for payment or delivery of such dividends
or distributions, as the case may be. Any shares of Midwest Common Stock
delivered or made available to the Exchange Agent pursuant to this SECTION 1.08
and not exchanged for Certificates within one (1) year after the Effective Time
pursuant to this SECTION 1.08 shall be returned by the Exchange Agent to Midwest
which shall thereafter act as Exchange Agent subject to the rights of holders of
unsurrendered Certificates under this ARTICLE I.
(c) FULL PAYMENT. All shares of Midwest Common Stock (or cash,
in the case of fractional shares) issued upon the surrender for exchange of BFFC
Common Stock in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of BFFC
Common Stock. The shares of Midwest Common Stock for which the shares of BFFC
Common Stock shall be exchanged shall thereupon be validly issued and
outstanding, fully paid and non-assessable, and shall not be liable to any
further call, nor shall the holder thereof be liable for any further payments
with respect thereto.
(d) FRACTIONAL SHARES. No certificates or scrip representing
fractional shares of Midwest Common Stock shall be issued upon the surrender for
exchange of Certificates, no dividend or distribution of Midwest shall relate to
any fractional share, and such fractional share
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interests will not entitle the owner thereof to vote or any rights of a
stockholder of Midwest. In lieu of any fractional share, the Exchange Agent or
Midwest as the case may be, shall pay to each holder of shares of BFFC Common
Stock who otherwise would be entitled to receive a fractional share of Midwest
Common Stock, an amount of cash (without interest) equal to the product achieved
when such fraction is multiplied by the price equal to the closing sale price of
Midwest Common Stock as quoted on Nasdaq at the close of business on the Closing
Date.
(e) LIST OF BFFC STOCKHOLDERS. At the Effective Time, BFFC
shall deliver a certified copy of a list of its stockholders to the Exchange
Agent (as of three (3) business days prior to the Effective Time), after which
there shall be no further registrations or transfers on the stock transfer books
of BFFC of the shares of BFFC Common Stock that were outstanding immediately
prior thereto. If, after the Effective Time, Certificates representing such
shares are presented to BFFC, they shall be canceled and exchanged as provided
in this ARTICLE I.
(f) ESCHEAT. Notwithstanding anything in this Agreement to the
contrary, neither the Exchange Agent nor any party hereto shall be liable to a
former holder of BFFC Common Stock for any cash or securities delivered to a
public official pursuant to applicable escheat or abandoned property laws.
1.09 DISSENTING SHARES. Notwithstanding anything to the contrary
contained in this Agreement, to the extent appraisal rights are available to the
Stockholders pursuant to the IBCA, any shares held by a person who objects to
the Merger, whose shares either were not entitled to vote or were not voted in
favor of the Merger and who complies with all of the provisions of the IBCA
concerning the rights of such person to dissent from the Merger and to require
appraisal of such person's shares and who has not withdrawn such objection or
waived such rights prior to the Closing Date ("Dissenting Shares") shall not be
converted pursuant to SECTION 1.03 hereof but shall become the right to receive
such consideration as may be determined to be due to the holder of such
Dissenting Shares pursuant to the IBCA; provided, however, that each Dissenting
Share held by a person at the Effective Time who shall, after the Effective
Time, withdraw the demand for appraisal or lose the right of appraisal, in
either case pursuant to the IBCA, shall be deemed to be converted, as of the
Effective Time, into the right to receive Midwest Common Stock as provided in
this ARTICLE I.
1.10 MERGER OF THE BANK. The parties understand that it is the
present intention of Midwest to merge the Bank, at or after the Effective Time
into Midwest Bank. BFFC shall take all such actions as are reasonably requested
by Midwest so that Midwest may accomplish the Bank Merger as aforesaid;
provided, however, that: (a) the Bank Merger will be effective no earlier than
the Effective Time; (b) none of Midwest's actions in connection with the Bank
Merger will unreasonably interfere with any of the operations of BFFC or the
Bank prior to the Effective Time; (c) neither BFFC nor the Bank will be required
to take any irrevocable action prior to the Closing in connection with the Bank
Merger; and (d) no action taken or caused to be taken by BFFC or the Bank
pursuant to this SECTION 1.10 will result in any unreimbursed cost or expense to
BFFC or the Bank. Nothing contained in this SECTION 1.10 is intended to impose
an obligation on BFFC or the Bank to alter the manner in which they conduct
their respective businesses; provided further, that nothing in this SECTION 1.10
shall result in any change to the Exchange Ratio.
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II. REPRESENTATIONS AND WARRANTIES OF MIDWEST
Midwest represents and warrants to BFFC that:
2.01 ORGANIZATION.
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(a) Midwest is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite power and authority, corporate and otherwise, to own, operate and
lease its assets, properties and businesses and to carry on its businesses
substantially as they have been and are now being conducted. Midwest is duly
qualified to do business and is in good standing in each jurisdiction where the
character of the properties owned or leased by it or the nature of the business
transacted by it requires that it be so qualified, except where the failure to
so qualify would not have a Material Adverse Effect (as herein defined) on
Midwest. Midwest has all requisite corporate power and authority to enter into
this Agreement and, upon the approval of all requisite state and federal
regulatory agencies, to consummate the transactions contemplated hereby and
thereby. Midwest is duly registered as a bank holding company under the BHC.
(b) As used in this Agreement, the term "Material Adverse
Effect" with respect to Midwest means any condition, event, change or occurrence
that has or may reasonably be expected to have a material adverse effect on the
(i) condition (financial or otherwise), properties, assets, liabilities,
business, operations or results of operations, of Midwest on a consolidated
basis; or (ii) an impairment in any material respect of the ability of Midwest
to timely perform its obligations under this Agreement; it being understood that
a Material Adverse Effect with respect to Midwest shall not include: (1) a
change with respect to, or effect on, Midwest and the Midwest Subsidiaries (as
defined in SECTION 2.06 hereof) resulting from a change in law, rule,
regulation, generally accepted accounting principles accepted in the United
States ("GAAP") or regulatory accounting principles, as such would apply to the
financial statements of Midwest on a consolidated basis; (2) a change with
respect to, or effect on, Midwest and the Midwest Subsidiaries resulting from
expenses (such as legal, accounting and investment bankers fees) incurred in
connection with the transactions contemplated by this Agreement; (3) a change
with respect to, or effect on, Midwest and the Midwest 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; and (4) actions or omissions
taken by Midwest as required hereunder.
2.02 AUTHORIZATION. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly approved and authorized by Midwest's Board of Directors, and all necessary
corporate action on the part of Midwest has been taken. This Agreement has been
duly executed and delivered by Midwest and, subject to the approval of all
requisite state and federal regulatory agencies, constitutes the valid and
binding obligation of Midwest (except to the extent that enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws or equitable principles and doctrines).
2.03 CONFLICTS. Subject to the second sentence of this SECTION
2.03, the execution and delivery of this Agreement do not, and the consummation
of the transactions contemplated hereby, will not, conflict with or result in
any violation, breach or termination of, or default or
9
loss of a material benefit under, or permit the acceleration of, any obligation
or result in the creation of any material lien, charge or encumbrance on any of
the property or assets under any provision of the Certificate of Incorporation
or By-laws of Midwest or similar documents of any Midwest Subsidiary or any
mortgage, indenture, lease, agreement or other instrument, permit, concession,
grant, franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Midwest or any Midwest Subsidiary or their
respective properties, other than any such conflicts, violations or defaults
which (i) individually or in the aggregate do not have a Material Adverse Effect
on Midwest, (ii) will be cured or waived prior to the Closing Date or (iii)
except as disclosed in SCHEDULE 2.03 OF THE DISCLOSURE SCHEDULE OF MIDWEST
(which was delivered by Midwest to BFFC prior to the execution of this
Agreement). No consent, approval, order or authorization of, or registration,
declaration or filing with, any federal or state governmental authority is
required by or with respect to Midwest in connection with the execution and
delivery of this Agreement or the consummation by Midwest of the transactions
contemplated hereby the absence of which would have a Material Adverse Effect
upon Midwest and except for: (a) the filing by Midwest of an application on Form
Y-4 with the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") under the BHC for prior approval of the transactions
contemplated by this Agreement; (b) the filing by Midwest of a notice with the
Office of Thrift Supervision ("OTS") regarding the transactions contemplated by
this Agreement; (c) the filing by Midwest of the Registration Statement relating
to the Midwest Common Stock to be issued pursuant to this Agreement (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "Securities Act") and
various blue sky authorities, which Registration Statement shall include the
proxy statement for use in connection with the meeting of the stockholders of
BFFC (the "Proxy Statement") to be called pursuant to SECTION 5.04 hereof; (d)
the filing of the Certificate of Merger with respect to the Merger with the
Secretary of State of the State of Delaware and the Articles of Merger with the
Secretary of the State of the State of Illinois; (e) the filing by Midwest of
applications with the appropriate bank regulatory authorities in order to
consummate the transactions described in SECTION 1.10 hereof; (f) any filings,
approvals or no-action letters with or from state securities authorities; and
(g) any anti-trust filings, consents, waivers or approvals.
2.04 CAPITALIZATION.
--------------
(a) As of the date hereof, the authorized capital stock of
Midwest consists of (i) 24,000,000 shares of Midwest Common Stock, $.01 par
value per share, of which no more than 17,069,063 shares are issued and
outstanding and 912,654 shares are held as treasury shares and (ii) 1,000,000
shares of preferred stock, $.01 par value, of which none are issued and
outstanding. All of the issued and outstanding shares of Midwest Common Stock
have been, and all of the shares of the Surviving Corporation common stock to be
issued in the Merger will be, at the Effective Time, duly and validly authorized
and issued, and are or will be, as the case may be, fully paid and
non-assessable. None of the outstanding shares of Midwest Common Stock has been
issued in violation of any preemptive rights of the current or past stockholders
of Midwest and none of the outstanding shares of Midwest Common Stock is or will
be entitled to any preemptive rights in respect of the Merger or any of the
other transactions contemplated by SCHEDULE 2.05 OF THE DISCLOSURE SCHEDULE OF
MIDWEST. All shares of Midwest Common Stock have been issued in compliance with
all federal and state securities laws.
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(b) As of June 30, 2002, Midwest had reserved 1,725,000 shares
of Midwest Common Stock for issuance under stock option plans for the benefit of
the employees of Midwest, pursuant to which options covering 763,895 shares of
Midwest Common Stock were outstanding as of June 30, 2002 (the "Midwest Stock
Option Plans"). Except as set forth in this SECTION 2.04(b), there are no shares
of capital stock or other equity securities of Midwest outstanding and no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock of Midwest, or
contracts, commitments, understandings, or arrangements by which Midwest is or
may be bound to issue additional shares of its capital stock or options,
warrants, or rights to purchase or acquire any additional shares of its capital
stock.
2.05 LITIGATION. Except as set forth in SCHEDULE 2.05 OF THE
DISCLOSURE SCHEDULE OF MIDWEST, there is no suit, action, investigation or
proceeding, legal, quasi-judicial, administrative or otherwise, pending or, to
the best of the knowledge of Midwest, threatened against or affecting Midwest or
any Midwest Subsidiary, or any of their respective officers, directors,
employees or agents, in their capacities as such, which, if adversely
determined, would materially affect the ability of Midwest to consummate the
transactions contemplated herein or which is seeking to enjoin consummation of
the transactions provided for herein or to obtain other relief in connection
with this Agreement or the transactions contemplated hereby, nor is there any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against Midwest or any Midwest Subsidiary or any of their respective officers,
directors, employees or agents, in their capacities as such, having, or which,
insofar as reasonably can be foreseen in the future, would have any such effect.
2.06 MIDWEST SUBSIDIARIES.
--------------------
(a) All of the Midwest Subsidiaries as of the date of this
Agreement are listed on SCHEDULE 2.06 OF THE DISCLOSURE SCHEDULE OF MIDWEST.
Midwest owns directly or indirectly all of the issued and outstanding shares of
capital stock of the Midwest Subsidiaries. SCHEDULE 2.06 OF THE DISCLOSURE
SCHEDULE OF MIDWEST accurately identifies the number of shares of authorized and
outstanding capital stock of the Midwest Subsidiaries. Except as set forth in
SCHEDULE 2.06 OF THE DISCLOSURE SCHEDULE OF MIDWEST, neither Midwest nor the
Midwest Subsidiaries owns directly or indirectly any debt or equity securities,
or other proprietary interest in any other corporation, joint venture,
partnership, entity, association or other business. No capital stock of any of
the Midwest Subsidiaries is or may become required to be issued (other than to
Midwest) by reason of any options, warrants, scrip, rights to subscribe to,
calls, or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of any
Midwest Subsidiary. There are no contracts commitments, understandings or
arrangements relating to the rights of Midwest to vote or to dispose of shares
of the capital stock of any Midwest Subsidiary. All of the shares of capital
stock of each Midwest Subsidiary held by Midwest or a Midwest Subsidiary are
fully paid and non-assessable and are owned by Midwest free and clear of any
claim, lien or encumbrance, except as disclosed on SCHEDULE 2.06 OF THE
DISCLOSURE SCHEDULE OF MIDWEST.
(b) Each Midwest Subsidiary is either a state bank or a
corporation and is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is incorporated or organized, and is
duly qualified to do business and in good standing in each
11
jurisdiction where the character of the properties owned or leased by it or the
nature of the business transacted by it requires it to be so qualified, except
where the failure to so qualify, either individually or in the aggregate, would
not have a Material Adverse Effect on Midwest. Each Midwest Subsidiary has the
corporate power and authority necessary for it to own, operate or lease its
assets, properties and businesses and to carry on its business as they have been
and are now being conducted.
(c) For purposes of this Agreement, "Midwest Subsidiaries"
shall mean all those corporations, banks, associations, and other entities of
which Midwest owns or controls 5% or more of the outstanding equity securities
either directly or through an unbroken chain of entities as to each of which 5%
or more of the outstanding equity securities is owned directly or indirectly by
its parent; provided, however, there shall not be included any such entity
acquired in good faith through foreclosure, or any such entity to the extent
that the equity securities of such entity are owned or controlled in a bona fide
fiduciary capacity, through a small business investment corporation, or
otherwise as an investment by an entity that invests in unaffiliated companies
in the ordinary course of business.
(d) Each of the Midwest Subsidiaries that is a bank is an
"insured depository institution" as defined in the Federal Deposit Insurance Act
and applicable regulations thereunder, the deposits of which are insured by the
FDIC through the Bank Insurance Fund to the full extent permitted under
applicable law.
2.07 MIDWEST FINANCIAL STATEMENTS; MATERIAL CHANGES. Midwest has
heretofore delivered to BFFC its audited, consolidated financial statements for
the years ended December 31, 2001, December 31, 2000, and December 31, 1999 and
its unaudited, consolidated financial statements for the three (3) months ended
March 31, 2002 (the "Midwest Financial Statements"). The Midwest Financial
Statements (x) are true and complete in all material respects; (y) have been
prepared in accordance with GAAP and comply in all material respect with
applicable accounting requirements and with the published rules and regulations
of the SEC; and (z) fairly present the consolidated financial position of
Midwest as of the dates thereof and the consolidated results of its operations,
stockholders' equity and changes in financial position for the periods then
ended, except as may be indicated in the notes thereto and subject to normal
year-end non-material audit adjustments in amounts consistent with past
experience in the case of the unaudited Midwest Financial Statements. Since
March 31, 2002, to the date hereof, Midwest has not undergone or suffered any
changes in its respective condition (financial or otherwise), properties,
assets, liabilities, business or operations which have been, in any case or in
the aggregate, materially adverse to Midwest on a consolidated basis. No facts
or circumstances have been discovered from which it reasonably appears that
there is a significant risk and reasonable probability that Midwest will suffer
or experience a Material Adverse Effect.
2.08 MIDWEST FILINGS. Midwest has previously made
available, or will make available prior to the Effective Time, to BFFC true and
complete copies of its (i) proxy statements relating to all meetings of
stockholders (whether special or annual) during the calendar years 1999, 2000,
2001 and 2002 and (ii) all other reports, as amended, or filings, as amended,
required to be filed under the Securities and Exchange Act of 1934, as amended
(the "Securities Exchange Act"), by Midwest with the SEC since January 1, 1999,
including without limitation, on Forms 10-K, Forms 10-Q and Forms 8-K.
12
2.09 MIDWEST REPORTS. Since January 1, 1997, Midwest and the
Midwest Subsidiaries has each filed, and will continue to file through the
Closing Date, all reports and statements, together with any amendment required
to be made with respect thereto, that it was, or will be, required to file with
(i) the SEC, including, but not limited to, Forms 10-K, Forms 10-Q and Forms
8-K, and proxy statements, (ii) the Federal Reserve Board, (iii) the FDIC, (iv)
the Illinois Commissioner of Banks and Real Estate (the "Commissioner"), (v) the
National Association of Securities Dealers (the "NASD"), and (vi) any applicable
state banking, insurance, securities, or other regulatory authorities (except
filings which are not material). As of their respective dates (and without
giving effect to any amendments or modifications filed after the date of this
Agreement with respect to reports and documents filed before the date of this
Agreement), each of such reports and documents, including the financial
statements, exhibits, and schedules thereto, complied in all material respects
with all of the statutes, rules, and regulations enforced or promulgated by the
authority with which they were filed and did not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statement made therein, in light of the circumstances under which they were
made, not misleading. Except for normal examinations conducted by the Internal
Revenue Service, state and local taxing authorities, the Federal Reserve Board,
the Commissioner or the FDIC in the regular course of the business of Midwest or
any Midwest Subsidiary, no federal, state or local governmental agency,
commission or other entity has initiated any proceeding or, to the best
knowledge of Midwest, investigation into the business or operations of Midwest
or the Bank within the past five (5) years. There is no unresolved violation,
criticism or exception by the Federal Reserve Board, the Commissioner, the FDIC
or other agency, commission or entity with respect to any report or statement
referred to herein that has or is expected to have a Material Adverse Effect on
Midwest.
2.10 COMPLIANCE WITH LAWS.
--------------------
(a) Except as disclosed in SCHEDULE 2.10 OF THE DISCLOSURE
SCHEDULE OF MIDWEST, the businesses of Midwest and the Midwest Subsidiary are
not being conducted in violation of any law, ordinance or regulation of any
governmental entity, including, without limitation, any laws affecting financial
institutions (including those pertaining to the Bank Secrecy Act, the investment
of funds, the lending of money, the collection of interest and the extension of
credit), federal and state securities laws, laws and regulations relating to
financial statements and reports, truth-in-lending, truth-in-savings, usury,
fair credit reporting, consumer protection, occupational safety, fair employment
practices, fair labor standards and laws and regulations relating to employee
benefits, and any statutes or ordinances relating to the properties occupied or
used by Midwest or the Midwest Subsidiaries, except for possible violations
which either singly or in the aggregate do not and, insofar as reasonably can be
foreseen in the future, will not have a Material Adverse Effect on Midwest. The
business and affairs of the Midwest Subsidiaries have been managed in accordance
with prudent banking practices.
(b) No investigation or review by the Federal Reserve Board,
the FDIC or the Commissioner with respect to Midwest or the Midwest Subsidiaries
is pending or, to the best of the knowledge of Midwest, threatened, nor has any
governmental entity indicated to Midwest an intention to conduct the same, other
than normal bank regulatory examinations and those the outcome of which will not
have a Materially Adverse Effect on Midwest.
13
(c) Each of Midwest and the Midwest Subsidiaries, where
applicable, is in substantial compliance with the applicable provisions of the
Community Reinvestment Act of 1977 and the regulations promulgated thereunder.
As of the date of this Agreement, Midwest has not been advised of the existence
of any act or circumstance or set of facts or circumstances which, if true,
would cause Midwest or the Midwest Subsidiaries to fail to be in substantial
compliance with such provisions. The Midwest Subsidiaries, where applicable,
have not received a rating from the applicable regulatory authority which is
less than "satisfactory" since January 1, 1997.
2.11 DEFAULTS. There has not been any material default in any
obligation to be performed by Midwest or any Midwest Subsidiary under any
material contract or commitment, which would have a Material Adverse Effect on
Midwest and neither Midwest nor any such Subsidiary has waived, and will not
waive prior to the Closing Date, any material right under any material contract
or commitment which would have a Material Adverse Effect on Midwest. To the best
of the knowledge of Midwest, no other party to any material contract or
commitment is in material default in any material obligation to be performed by
such party which would have a Material Adverse Effect upon Midwest.
2.12 UNDISCLOSED LIABILITIES. All of the obligations or liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise, whether due
or to become due) arising out of transactions or events heretofore entered into,
or any action or inaction, including taxes with respect to or based upon
transactions or events heretofore occurring (individually a "Liability"
collectively the "Liabilities") have, in the case of Midwest and the Midwest
Subsidiaries, been reflected, disclosed or reserved against in the Midwest
Financial Statement (or the footnotes thereto), dated as of March 31, 2002, in
accordance with GAAP, and Midwest and the Midwest Subsidiaries have no other
Liabilities except (a) Liabilities incurred since March 31, 2002 in the ordinary
course of business or (b) as disclosed in SCHEDULE 2.12 OF THE DISCLOSURE
SCHEDULE OF MIDWEST.
2.13 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for possible
loan losses shown on the Midwest Financial Statement, dated as of March 31, 2002
(and as shown on any financial statements to be delivered by Midwest to BFFC
pursuant to SECTION 5.06 hereof), to the best of the knowledge of Midwest, as of
such date was (and will be as of such subsequent financial statement dates)
adequate based upon its past business practices to provide for possible or
specific losses, net of recoveries relating to loans previously charged off, on
loans outstanding, and contained (or will contain) an additional amount of
unallocated reserves for unanticipated future losses at a level considered
adequate under the standards applied by applicable federal and/or state
regulatory authorities to financial institutions.
2.14 MIDWEST BENEFIT PLANS. Set forth on SCHEDULE 2.14 OF THE
DISCLOSURE SCHEDULE OF MIDWEST are any retirement, stock option, stock purchase,
stock ownership, savings, stock appreciation right, profit sharing, deferred
compensation, bonus, group insurance, severance and other employee benefit plans
which Midwest has in effect as of the date hereof, and true and correct copies
(or detailed summaries) of each such plan are attached to and made a part of
SCHEDULE 2.14 OF THE DISCLOSURE SCHEDULE OF MIDWEST.
2.15 INSURANCE. In the reasonable judgment of management of
Midwest, Midwest and each Midwest Subsidiary maintain insurance with an insurer
which is sound and reputable on
14
their respective assets, and upon their respective businesses and operations,
against loss or damage, risks, hazards and liabilities of the kinds customarily
insured by prudent corporations engaged in the same or similar businesses.
2.16 COMPLIANCE WITH ENVIRONMENTAL LAWS.
----------------------------------
(a) To the best knowledge of Midwest, and except as set
forth in SCHEDULE 2.16 OF THE DISCLOSURE SCHEDULE OF MIDWEST: (i) the operations
of Midwest and the Midwest Subsidiaries comply in all material respects with all
applicable Environmental Laws; (ii) none of the operations of Midwest or the
Midwest Subsidiaries, no assets presently or, formerly owned or leased by
Midwest or the Midwest Subsidiaries and, no Mortgaged Premises or Participating
Facility (as defined below) are subject to any judicial or administrative
proceedings alleging the violation of any past or present Environmental Law, nor
are they the subject of any claims alleging damages to health or property,
pursuant to which Midwest, the Midwest Subsidiaries or any owner of a Mortgaged
Premises or a Participating Facility would be liable in law or equity; (iii)
none of the operations of Midwest or the Midwest Subsidiaries, no assets
presently owned or formerly owned by Midwest or the Midwest Subsidiaries, and,
no Mortgaged Premises or a Participating Facility are the subject of any
federal, state or local investigation evaluating whether any remedial action is
needed to respond to a release or threatened release of any Hazardous Substance,
or any other substance into the environment, nor has Midwest or the Midwest
Subsidiaries, or any owner of a Mortgaged Premises or a Participating Facility
been directed to conduct such investigation, formally or informally, by any
governmental agency, nor have any of them agreed with any governmental agency or
private person to conduct any such investigation; and (iv) neither Midwest nor
the Midwest Subsidiaries, nor any owner of a Mortgaged Premises or a
Participating Facility has filed any notice under any Environmental Law
indicating past or present treatment, storage or disposal of a Hazardous
Substance or reporting a spill or release of a Hazardous Substance, or any other
substance into the environment.
(b) To the best knowledge of Midwest, and except as set forth
in SCHEDULE 2.16 OF THE DISCLOSURE SCHEDULE OF MIDWEST, with respect to (i) the
real estate owned (other than OREO) or leased by Midwest or the Midwest
Subsidiaries; (ii) OREO presently or formerly held by Midwest or the Midwest
Subsidiaries; and (iii) any real estate formerly owned (other than OREO) or
leased by Midwest or the Midwest Subsidiaries (the "Midwest Premises"): (x) no
part of the Midwest Premises has been used for the generation, manufacture,
handling, storage, or disposal of Hazardous Substances; (y) the Midwest Premises
do not contain, and have never contained, an underground storage tank; and (z)
the Midwest Premises do not contain and are not contaminated by any quantity of
a Hazardous Substance from any source.
(c) For purposes of this Agreement, "Hazardous Substance" has
the meaning set forth in Section 9601 of the Comprehensive Environmental
Response Compensation and Liability Act of 1980, 42 U.S.C.A., ss.9601 et seq.,
and also includes any substance now or hereafter regulated by or subject to any
Environmental Laws (as defined below) and any other pollutant, contaminant, or
waste, including, without limitation, petroleum, asbestos, fiberglass, radon,
and polychlorinated biphenyls. For purposes of this Agreement, "Environmental
Laws" means all laws (civil or common), ordinances, rules, regulations,
guidelines, and orders that: (i) regulate air, water, soil, and solid waste
management, including the generation, release, containment, storage, handling,
transportation, disposition, or management of any Hazardous
15
Substance; (ii) regulate or prescribe requirements for air, water, or soil
quality; (iii) are intended to protect public health or the environment; or (iv)
establish liability for the investigation, removal, or cleanup of, or damage
caused by, any Hazardous Substance. For purposes of this Section, "Mortgaged
Premises" shall mean each (i) real property interest (including without
limitation any fee or leasehold interest) which is encumbered or affected by any
mortgage, deed of trust, deed to secure debt or other similar document or
instrument granting to either Midwest or the Midwest Subsidiaries or BFFC or the
Bank (as applicable) a lien on or security interest in such real property
interest and (ii) any other real property interest upon which is situated assets
or other property affected or encumbered by any document or instrument granting
to either Midwest or the Midwest Subsidiaries or BFFC or the Bank (as
applicable) a lien thereon or security interest therein; provided, however, that
the term "Mortgaged Premises" shall not include one to four unit single family
residences. For purposes of this Section, "Participating Facility" means any
property in which either Midwest or the Midwest Subsidiaries or BFFC or the Bank
(as applicable) participates in the management of such property and, where the
context requires, includes the owner or operator of such property.
2.17 ASSETS.
------
(a) Midwest and the Midwest Subsidiaries have good, sufficient
and marketable title to their real properties, including any leaseholds and
ground leases, and their other assets and properties, all as reflected as owned
by Midwest or the Midwest Subsidiaries or in the Midwest Financial Statement,
dated as of March 31, 2002, except for (i) assets and properties disposed of
since such date in the ordinary course of business and (ii) Permitted Liens (as
defined in SECTION 3.22(c) hereof). Substantially all of the buildings,
structures, fixtures and appurtenances comprising part of the real properties of
Midwest and the Midwest Subsidiaries (whether owned or leased by Midwest or the
Midwest Subsidiaries) are in good operating condition and have been adequately
maintained, reasonable wear and tear excepted. Midwest and Midwest Subsidiaries
have title or other rights to all their other assets sufficient in all material
respects for the conduct of their respective businesses as presently conducted,
and, except for the Permitted Liens, free, clear and discharged of, and from any
and all liens, charges, encumbrances, security interests and/or equities which
are material to Midwest on a consolidated basis.
(b) All leases pursuant to which Midwest or the Midwest
Subsidiaries, as lessee, leases real or personal property which are material to
the business of Midwest on a consolidated basis are, to the best of the
knowledge of Midwest, valid, effective, and enforceable against the lessor in
accordance with their respective terms. There is not under any of such leases
any existing default, or any event which with notice or lapse of time or both
would constitute a default, with respect to either Midwest or the Midwest
Subsidiaries, or to the best knowledge of Midwest, the other party.
2.18 FEES. Other than the financial advisory services performed for
Midwest by Sandler X'Xxxxx, neither Midwest or any of the Midwest Subsidiaries,
nor any of their respective officers, directors, employees or agents, has
employed a broker or finder or incurred any liability for any financial advisory
fees, brokerage fees, commissions, or finder's fees, and no broker or finder has
acted directly or indirectly for Midwest or any Midwest Subsidiary in connection
with this Agreement or the transactions contemplated hereby.
16
2.19 GOVERNMENTAL APPROVALS. No fact or condition exists with
respect to Midwest or any Midwest Subsidiary which Midwest has reason to believe
may prevent it from obtaining timely approval of the Merger or any other
transaction contemplated by this Agreement by any governmental authority.
2.20 DISCLOSURE. None of the information supplied by Midwest for
inclusion in the Proxy Statement (as defined in SECTION 2.03 hereof) to be
delivered to the Stockholders as required by SECTION 5.04 hereof will at the
time of the meeting of the Stockholders to be held in connection with the Merger
as required by SECTION 5.04 hereof, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
2.21 NO OTHER REPRESENTATION OR WARRANTY. Except for the
representations and warranties expressly contained in this ARTICLE II, Midwest
has not made any other representation or warranty (express or implied, oral or
written).
III. REPRESENTATIONS AND WARRANTIES OF BFFC
BFFC represents and warrants to Midwest that:
3.01 ORGANIZATION.
-----------
(a) BFFC is a corporation duly organized, validly existing
and in good standing under the laws of the State of Illinois and has all
requisite power and authority, corporate, or otherwise, to own, operate and
lease its assets, properties and businesses and to carry on its businesses
substantially as they have been and are now being conducted. BFFC is duly
qualified to do business and is in good standing in each jurisdiction where the
character of the properties owned or leased by it or the nature of the business
transacted by it requires that it be so qualified, except where the failure to
so qualify would not have a Material Adverse Effect on BFFC (as defined below).
BFFC has all requisite corporate power and authority to enter into this
Agreement and, upon the receipt of the approval of the Stockholders of the
Merger and the approval of all requisite state and federal regulatory agencies,
to consummate the transactions contemplated hereby. BFFC is duly registered as a
savings and loan holding company under the HOLA.
(b) As used in this Agreement, the term "Material Adverse
Effect" with respect to BFFC means any condition, event, change or occurrence
that has or may reasonably be expected to have a material adverse effect on the
(i) condition (financial or otherwise), properties, assets, liabilities,
business, operations or results of operations, of BFFC on a consolidated basis;
or (ii) the ability of BFFC to timely complete the transactions contemplated
hereby; it being understood that a Material Adverse Effect with respect to BFFC
shall not include: (1) a change with respect to, or effect on, BFFC and its
consolidated subsidiaries resulting from a change in law, rule, regulation, GAAP
or regulatory accounting principles, as such would apply to the financial
statements of BFFC on a consolidated basis; (2) a change with respect to, or
effect on, BFFC and its consolidated subsidiaries resulting from expenses (such
as legal, accounting and investment bankers fees) incurred in connection with
the transactions contemplated by this Agreement; (3) the payment of any amounts
due to, or the provision of any benefits to, any officer or employee under
employment contracts or employee benefit plans, severance agreements, consulting
agreements or other arrangements in existence as of the date
17
hereof; (4) a change with respect to, or effect on, BFFC 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; or (5) actions
or omissions by BFFC taken with the prior written consent of Midwest in
contemplation of the transactions contemplated hereby or as required hereunder.
3.02 AUTHORIZATION. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and unanimously approved and authorized by BFFC's Board of Directors, and
all necessary corporate action on the part of BFFC has been taken, other than
the receipt of the approval of the Stockholders of the Merger. This Agreement
has been duly executed and delivered by BFFC and, subject to the approval of the
Stockholders of the Merger and the approval of all requisite state and federal
regulatory agencies, constitutes the valid and binding obligation of BFFC
(except to the extent that enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles or doctrines).
3.03 CONFLICTS. Subject to the second sentence of this SECTION
3.03, the execution and delivery of this Agreement do not, and the consummation
of the transactions contemplated hereby, will not, conflict with or result in
any violation, breach or termination of, or default or loss of a material
benefit under, or permit the acceleration of, any obligation or result in the
creation of any material lien, charge or encumbrance on any property or assets
under any provision of the Articles of Incorporation or By-laws of BFFC or
similar documents of the Bank, or any mortgage, indenture, lease, agreement or
other instrument, permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to BFFC or
the Bank or their respective properties, other than any such conflicts,
violations or defaults which (i) individually or in the aggregate do not have a
Material Adverse Effect on BFFC, (ii) will be cured or waived prior to the
Closing Date or (iii) except as disclosed in SCHEDULE 3.03 OF THE DISCLOSURE
SCHEDULE OF BFFC (which was delivered by BFFC to Midwest prior to the execution
of this Agreement). No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal or state governmental
authority is required by or with respect to BFFC in connection with the
execution and delivery of this Agreement or the consummation by BFFC of the
transactions contemplated hereby the absence of which would not have a Material
Adverse Effect upon BFFC except for: (a) the filing by Midwest of an application
on Form Y-4 with the Federal Reserve Board under the BHC for prior approval of
the transactions contemplated by this Agreement; (b) the filing by Midwest of a
notice with the OTS regarding the transactions contemplated by this Agreement;
(c) the filing by Midwest of the Registration Statement with the SEC under the
Securities Act and various blue sky authorities, which Registration Statement
shall include the Proxy Statement; (d) the filing of the Certificate of Merger
with respect to the Merger with the Secretary of State of the State of Delaware
and the Articles of Merger with the Secretary of State of the State of Illinois;
(e) the filing by Midwest of applications with the appropriate bank regulatory
authorities in order to consummate the transactions described in SECTION 1.10
hereof; (f) any filings, approvals or no-action letters with or from state
securities authorities; and (g) any anti-trust filings, consents, waivers or
approvals.
3.04 ANTITAKEOVER PROVISIONS INAPPLICABLE. This Agreement has been
unanimously approved by the Board of Directors of BFFC. No "business
combination," "moratorium," "control share" or other state antitakeover statute
or regulation, (i) prohibits or restricts the ability
18
of BFFC to perform its obligations under this Agreement or its ability to
consummate the transactions contemplated hereby, (ii) would have the effect of
invalidating or voiding this Agreement, or any provision hereof, or (iii) would
subject Midwest to any material impediment or condition in connection with the
exercise of any of its rights under this Agreement. The provisions of Article
VIII of the Articles of Incorporation of BFFC are not applicable to the Merger
or any other transaction contemplated by this Agreement.
3.05 CAPITALIZATION AND STOCKHOLDERS.
-------------------------------
(a) As of the date hereof, the authorized capital stock of
BFFC consists of (i) 8,000,000 shares of BFFC Common Stock, $.01 par value per
share, of which 1,509,168 shares are issued and outstanding and 1,003,582 shares
are held as treasury shares; (ii) 7,200,000 shares of BFFC Excess Common Stock,
$.01 par value per share, none of which are issued and outstanding; and (iii)
2,000,000 shares of preferred stock, $.01 par value per share, none of which are
issued and outstanding. All of the issued and outstanding shares of BFFC Common
Stock have been duly and validly authorized and issued, and are fully paid and
non-assessable. None of the outstanding shares of BFFC Common Stock are subject
to any preemptive rights of the current or past stockholders of BFFC. All of the
shares of BFFC Common Stock have been issued in material compliance with all
federal and state securities laws.
(b) As of June 30, 2002, BFFC had reserved 258,143 shares of
BFFC Common Stock for issuance under a stock option plan for the benefit of the
employees, directors, former employees and former directors of BFFC (the "BFFC
Stock Option Plan") pursuant to which options covering 258,143 shares of BFFC
Common Stock (the "BFFC Stock Options") were outstanding as of June 30, 2002
(the "BFFC Stock Option Plan"). As of June 30, 2002, 20,423 shares of BFFC
Common Stock were outstanding under BFFC's Recognition and Retention Plan and
Trusts (10,366 shares of which will be cancelled prior to the Effective Time).
Except as set forth in this SECTION 3.05(b), there are no shares of capital
stock or other equity securities of BFFC outstanding and no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of BFFC, or contracts, commitments,
understandings, or arrangements by which BFFC is or may be bound to issue
additional shares of its capital stock or options, warrants, or rights to
purchase or acquire any additional shares of its capital stock.
3.06 BFFC FINANCIAL STATEMENTS; MATERIAL CHANGES. BFFC has
heretofore delivered to Midwest its audited, consolidated financial statements
for the years ended June 30, 2001, June 30, 2000 and June 30, 1999, and its
unaudited, consolidated financial statements for the nine (9) months ended March
31, 2002 (the "BFFC Financial Statements"), and the Reports of Income and
Reports of Condition for the Bank for the years ended December 31, 2001,
December 31, 2000, and December 31, 1999, and for the three months ended March
31, 2002 (the "Bank Reports"). The BFFC Financial Statements (x) are true and
complete in all material respects; (y) have been prepared in accordance with
GAAP and comply in all material respects with applicable accounting requirements
and with the published rules and regulations of the SEC; and (z) fairly present
the consolidated financial position of BFFC as of the dates thereof and the
consolidated results of its operations, stockholders' equity and changes in
financial position for the periods then ended, except as may be indicated in the
notes thereto and subject to normal year-end non-material adjustments in amounts
consistent with past experience in the case of the
19
unaudited BFFC Financial Statements. The Bank Reports (1) are true and complete
in all material respects; (2) have been prepared in accordance with GAAP as
modified by banking regulations; and (3) fairly represent the financial position
of the Bank as of the dates thereof and the results of its operations,
stockholder's equity and changes in financial position for the periods then
ended, subject to normal year-end adjustments in amounts consistent with past
experience in the case of the Bank Report dated March 31, 2002. Since March 31,
2002 to the date hereof, BFFC, on a consolidated basis, has not undergone or
suffered any changes in its condition (financial or otherwise), properties,
assets, liabilities, business or operations which have been, in any case or in
the aggregate, materially adverse to BFFC on a consolidated basis. No facts or
circumstances have been discovered from which it reasonably appears that there
is a significant risk and reasonable probability that BFFC will suffer or
experience a Material Adverse Effect.
3.07 BANK.
----
(a) BFFC owns all of the issued and outstanding capital stock
of the Bank, which is the only subsidiary of BFFC, and will own all of such
shares as of the Closing Date. The capitalization of the Bank is set forth in
SCHEDULE 3.07 OF THE DISCLOSURE SCHEDULE OF BFFC. Neither BFFC nor the Bank owns
directly or indirectly any debt or equity securities, or other proprietary
interest in any other corporation, joint venture, partnership, entity,
association or other business. All of the issued and outstanding shares of Bank
capital stock have been duly and validly authorized and issued, and are fully
paid and non-assessable. None of the outstanding shares of Bank Common Stock are
subject to any preemptive rights of the current or past stockholders of the
Bank. No capital stock of the Bank is or may become required to be issued (other
than to BFFC) by reason of any options, warrants, scrip, rights to subscribe to,
calls, or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of the
Bank. There are no contracts, commitments, understandings or arrangements
relating to the rights of BFFC to vote or to dispose of shares of the capital
stock of the Bank. All of the shares of capital stock of the Bank held by BFFC
are fully paid and non-assessable and are owned by BFFC free and clear of any
claim, lien or encumbrance.
(b) The Bank is a federal savings bank and is duly organized,
validly existing and in good standing under the laws of the United States, and
is duly qualified to do business and in good standing in each jurisdiction where
the character of the properties owned or leased by it or the nature of the
business transacted by it requires it to be so qualified, except where the
failure to so qualify, either individually or in the aggregate, would not have a
Material Adverse Effect on BFFC. The Bank has the corporate power and authority
necessary for it to own, operate or lease its assets, properties and business
and to carry on its business substantially as they have been and are now being
conducted.
(c) The conversion of the Bank from mutual to stock form of
organization and the concurrent holding company formation (the "Conversion") was
conducted and effectuated in accordance with all applicable laws, rules and
regulations, and pursuant to all terms and conditions of regulatory approvals,
except for possible violations which either singly or in the aggregate do not
and, insofar as reasonably can be foreseen in the future, will not have a
Material Adverse Effect on BFFC. Neither BFFC nor the Bank incurred any federal
or state tax liability as a result of the Conversion. Set forth on SCHEDULE 3.07
OF THE DISCLOSURE SCHEDULE OF BFFC is a true and correct copy of the tax opinion
issued in connection with the Conversion. The Bank
20
is a member in good standing of the Federal Home Loan Bank System. All eligible
deposit accounts issued by the Bank are insured by the FDIC through the Savings
Association Insurance Fund to the full extent permitted under applicable laws.
The Bank is, and at all times since June 1, 1999 has been a "qualified thrift
lender" (as that term is used in Section 10(m) of HOLA). The records of the Bank
with respect to the liquidation account of the Bank are complete and accurate in
all material respects, and such records permit the calculation of the
liquidation account. None of the transactions contemplated by this Agreement
would constitute a complete liquidation of the Bank so as to require the
distribution of such liquidation account of the Bank to any existing or former
savings or demand account holders of the Bank.
3.08 BFFC FILINGS. BFFC has previously made available, or will
make available prior to the Effective Time, to Midwest true and complete copies
of its (i) proxy statements relating to all meetings of stockholders (whether
special or annual) during the calendar years 1999, 2000, 2001 and 2002 and (ii)
all other reports, as amended, or filings, as amended, required to be filed
under the Securities Exchange Act, by BFFC with the SEC since January 1, 1999,
including without limitation, on Forms 10-K, Forms 10-Q and Forms 8-K.
3.09 BFFC REPORTS. Since January 1, 1997, each of BFFC and the
Bank has filed, and will continue to file through the Closing Date, all reports
and statements, together with any amendment required to be made with respect
thereto, that it was, or will be, required to file with (i) the SEC, including,
but not limited to, Forms 10-K, Forms 10-Q and Forms 8-K, and proxy statements,
(ii) the OTS, (iii) the NASD and (iv) any applicable state banking, insurance,
securities, or other regulatory authorities (except filings which are not
material). As of their respective dates (and without giving effect to any
amendments or modifications filed after the date of this Agreement with respect
to reports and documents filed before the date of this Agreement), each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all of the statutes,
rules, and regulations enforced or promulgated by the authority with which they
were filed and did not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statement made therein,
in light of the circumstances under which they were made, not misleading. Except
for normal examinations conducted by the Internal Revenue Service, state and
local taxing authorities, the OTS or the FDIC in the regular course of the
business of BFFC or the Bank, no federal, state or local governmental agency,
commission or other entity has initiated any proceeding or, to the best
knowledge of BFFC, investigation into the business or operations of BFFC or the
Bank within the past five (5) years. There is no unresolved violation, criticism
or exception by the OTS, the FDIC or other agency, commission or entity with
respect to any report or statement referred to herein that has or is expected to
have a Material Adverse Effect on BFFC.
3.10 COMPLIANCE WITH LAWS.
--------------------
(a) Except as disclosed in the SCHEDULE 3.10 OF THE DISCLOSURE
SCHEDULE OF BFFC, the businesses of BFFC and the Bank are not being conducted in
violation of any law, ordinance or regulation of any governmental entity,
including, without limitation, any laws affecting financial institutions
(including those pertaining to the Bank Secrecy Act, the investment of funds,
the lending of money, the collection of interest and the extension of credit),
federal and state securities laws, laws and regulations relating to financial
statements and reports, truth-in-lending, truth-in-savings, usury, fair credit
reporting, consumer protection, occupational
21
safety, fair employment practices, fair labor standards and laws and regulations
relating to employee benefits, and any statutes or ordinances relating to the
properties occupied or used by BFFC or the Bank, except for possible violations
which either singly or in the aggregate do not and, insofar as reasonably can be
foreseen in the future, will not have a Material Adverse Effect on BFFC.
(b) The policies, programs and practices of BFFC and the Bank
relating to wages, hours of work, and other terms and conditions of employment
are in compliance in all material respects with applicable material laws,
orders, regulations, public policies and ordinances governing employment and
terms and conditions of employment. There are no disputes, claims, or charges,
pending or, to the best of the knowledge of BFFC, threatened, against BFFC or
the Bank alleging breach of any express or implied employment contract or
commitment, or material breach of any applicable law, order, regulation, public
policy or ordinance relating to employment or terms and conditions of
employment, and, to the best of the knowledge of BFFC, there is no basis for any
valid claim or charge with regard to such matters.
(c) Except as disclosed in SCHEDULE 3.10 OF THE DISCLOSURE
SCHEDULE OF BFFC, no investigation or review by the FDIC or the OTS with respect
to BFFC or the Bank is pending or, to the best of the knowledge of BFFC,
threatened, nor has any governmental entity indicated to BFFC an intention to
conduct the same, other than normal bank regulatory examinations and those the
outcome of which will not have a Materially Adverse Effect on BFFC.
(d) Each of BFFC and the Bank, where applicable, is in
substantial compliance with the applicable provisions of the Community
Reinvestment Act of 1977 and the regulations promulgated thereunder. As of the
date of this Agreement, BFFC has not been advised of the existence of any act or
circumstance or set of facts or circumstances which, if true, would cause BFFC
or the Bank to fail to be in substantial compliance with such provisions. The
Bank has not received a rating from the applicable regulatory authority which is
less than "satisfactory" since January 1, 1997.
3.11 LITIGATION. Except as disclosed in SCHEDULE 3.11 OF THE
DISCLOSURE SCHEDULE OF BFFC, there is no suit, action, investigation or
proceeding, legal, quasi-judicial, administrative or otherwise, pending or, to
the best of the knowledge of BFFC, threatened against BFFC or the Bank, or any
of their respective officers, directors or employees, in their capacities as
such, which is seeking damages against BFFC, the Bank, or any of their
respective officers, directors or employees, in their capacities as such, or
which would materially affect the ability of BFFC to consummate the transactions
contemplated herein or which is seeking to enjoin consummation of the
transactions provided for herein or to obtain other relief in connection with
this Agreement or the transactions contemplated hereby, nor is there any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against BFFC or the Bank or any of their respective officers, directors,
employees or agents, in their capacities as such, having, or which, insofar as
reasonably can be foreseen in the future, would have any such effect.
3.12 LICENSES. BFFC and the Bank hold all licenses, certificates,
permits, franchises and all patents, trademarks, service marks, trade names,
copyrights or rights thereto, and adequate authorizations, approvals, consents,
licenses, clearances and orders or registrations with
22
all appropriate federal, state or other authorities that are material to the
conduct of their respective businesses as now conducted and as presently
proposed to be conducted (the "BFFC Licenses"), except for such BFFC Licenses
the failure of which to hold will not have a Material Adverse Effect on BFFC.
3.13 TAXES.
-----
(a) Except as disclosed in SCHEDULE 3.13 OF THE DISCLOSURE
SCHEDULE OF BFFC, BFFC and the Bank have each timely filed all tax and
information returns required to be filed (all such returns being true and
complete in all material respects) and have paid (or BFFC has paid on behalf of
the Bank), or have accrued on their respective books and set up an adequate
reserve for the payment of, all taxes reflected on such returns in respect of
the periods covered by such returns and have accrued on their respective books
and set up an adequate reserve for the payment of all income and other taxes
anticipated to be payable in respect of periods through the end of the calendar
month next preceding the date hereof. Neither BFFC nor the Bank is delinquent in
the payment of any tax, assessment or governmental charge. No deficiencies for
any taxes have been proposed, asserted or assessed against BFFC or the Bank that
have not been resolved or settled and no requests for waivers of the time to
assess any such tax are pending or have been agreed to. The income tax returns
of BFFC and the Bank have not been audited by either the Internal Revenue
Service or the Illinois Department of Revenue for any of the last three (3)
years. Neither BFFC nor the Bank is a party to any action or proceeding by any
governmental authority for the assessment or the collection of taxes. Deferred
taxes of BFFC and the Bank have been accounted for in accordance with past
practices. BFFC and the Bank have properly accrued for all real estate taxes.
(b) BFFC has not filed any consolidated federal income tax
return with an "affiliated group" (within the meaning of Section 1504 of the
Internal Revenue Code of 1986, as amended (the "Code")), where BFFC was not the
common parent of the group. Neither BFFC nor the Bank is, or has been, a party
to any tax allocation agreement or arrangement pursuant to which it has any
contingent or outstanding liability to anyone other than BFFC or the Bank.
(c) BFFC and the Bank have each withheld amounts from its
employees, Stockholders or holders of public deposit accounts in compliance with
the tax withholding provisions of applicable federal, state and local laws,
filed all federal, state and local returns and reports for all years for which
any such return or report would be due with respect to employee income tax
withholding, social security and unemployment taxes, income and other taxes and
all payments or deposits with respect to such taxes have been timely made and
notified all employees, stockholders and holders of public deposit accounts of
their obligations to file all forms, statements or reports with it in accordance
with applicable federal, state and local tax laws and has taken reasonable steps
to insure that such employees, Stockholders and holders of public deposit
accounts have filed all such forms, statements and reports with it.
3.14 INSURANCE. BFFC and the Bank maintain insurance with an
insurer which in the best judgment of management of BFFC is sound and reputable,
on their respective assets, and upon their respective businesses and operations,
against loss or damage, risks, hazards and liabilities of the kinds customarily
insured against by prudent corporations engaged in the same or similar
businesses. BFFC and the Bank maintain in effect all insurance required to be
carried by law or by any agreement by which they are bound, except where the
failure to so maintain
23
would not have a Material Adverse Effect on BFFC. All material claims under all
policies of insurance maintained by BFFC and the Bank have been filed in due and
timely fashion. Neither BFFC nor the Bank has had an insurance policy canceled
by the issuer of the policy within the past five (5) years. SCHEDULE 3.14 OF THE
DISCLOSURE SCHEDULE OF BFFC contains a description of all material claims filed
by BFFC or the Bank within the last five (5) years.
3.15 LOANS; INVESTMENTS.
------------------
(a) Except as otherwise disclosed in SCHEDULE 3.15 OF THE
DISCLOSURE SCHEDULE OF BFFC, each material loan reflected as an asset on the
BFFC Financial Statement, dated as of March 31, 2002, is evidenced by written
documentation issued in the normal course of BFFC's and the Bank's business and
constitutes, to the best of the knowledge of BFFC, the legal, valid and binding
obligation of the obligor named therein, enforceable in accordance with its
terms except to the extent that the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles or doctrines; to the best of the knowledge of BFFC, no obligor named
therein is seeking to avoid the enforceability of the terms of any loan under
any such laws or equitable principles or doctrines and no loan is subject to any
defense, offset or counterclaim. All such loans originated by BFFC or the Bank,
and to the best of the knowledge of BFFC, all such loans purchased by BFFC or
the Bank, were made or purchased in accordance with customary lending standards
of BFFC or the Bank and in the ordinary course of business of BFFC or the Bank.
Except as set forth in the SCHEDULE 3.15 OF THE DISCLOSURE SCHEDULE OF BFFC, all
such loans are, and at the Closing Date will be, free and clear of any security
interest, lien, encumbrance or other charge, and BFFC and the Bank have
complied, and at the Closing Date will have complied, in all material respects,
with all material laws and regulations relating to such loans. As of June 30,
2002, there are no loans or other assets of BFFC or the Bank that have been
classified by examiners or others as "Other Assets Specially Mentioned,"
"Substandard," "Doubtful" or "Loss." Set forth on SCHEDULE 3.15 OF THE
DISCLOSURE SCHEDULE OF BFFC is a complete list of the Bank's OREO as of March
31, 2002.
(b) All guarantees of indebtedness owed to BFFC or the Bank,
including but not limited to those of the Federal Housing Administration, the
Small Business Administration, and other state and federal agencies, are, to the
best of the knowledge of BFFC, valid and enforceable, except to the extent
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles or doctrines
and except as would not be material to BFFC on a consolidated basis.
(c) In originating, underwriting, servicing, and discharging
loans, mortgages, land contracts, and contractual obligations relating thereto,
either for its own account or for the account of others, the Bank has complied
in all material respects with all applicable terms and conditions of such
obligations and with all applicable laws, regulations, rules, contractual
requirements, and procedures with respect to such servicing, except where the
failure to comply would not have a Material Adverse Effect on BFFC.
(d) Except as set forth on SCHEDULE 3.15 OF THE DISCLOSURE
SCHEDULE OF BFFC, neither BFFC nor the Bank is a party to any interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements.
(e) Except as set forth in SCHEDULE 3.15 OF THE DISCLOSURE
SCHEDULE OF BFFC and except for pledges to secure public and trust deposits,
none of the investments reflected in
24
the BFFC Financial Statement, dated as of March 31, 2002, under the heading
"Investment Securities," and none of the investments made by BFFC or the Bank
since March 31, 2002, is subject to any restriction, whether contractual or
statutory, which materially impairs the ability of BFFC or the Bank freely to
dispose of such investment at any time. With respect to all material repurchase
agreements to which BFFC or the Bank is a party, BFFC has a valid, perfected
first lien or security interest in the government securities or other collateral
securing each such repurchase agreement, and the value of the collateral
securing each such repurchase agreement equals or exceeds the amount of the debt
secured by such collateral under such agreement. Except as set forth in the
SCHEDULE 3.15 OF THE DISCLOSURE SCHEDULE OF BFFC and except for transactions
aggregating less than $100,000, neither BFFC nor the Bank has sold or otherwise
disposed of any assets in a transaction in which the acquiror of such assets or
other person has the right, either conditionally or absolutely, to require BFFC
or the Bank to repurchase or otherwise reacquire any such assets. Set forth on
the SCHEDULE 3.15 OF THE DISCLOSURE SCHEDULE OF BFFC is a complete and accurate
list of each investment and debt security, mortgage-backed and related
securities, marketable equity securities and securities purchased under
agreements to resell owned by BFFC or the Bank, showing as of June 30, 2002, the
carrying values and the gross carrying values of the mortgage-backed and related
securities and the estimated cost of the marketable equity securities.
3.16 ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses shown
on the BFFC Financial Statement, dated as of March 31, 2002 (and as shown on any
financial statements to be delivered by BFFC to Midwest pursuant to SECTION 5.06
hereof), to the best of the knowledge of BFFC, as of such date was (and will be
as of such subsequent financial statement dates) adequate based upon its past
business practices to provide for possible or specific losses, net of recoveries
relating to loans previously charged off, on loans outstanding, and contained
(or will contain) an additional amount of unallocated reserves for unanticipated
future losses at a level considered adequate under the standards applied by
applicable federal and/or state regulatory authorities to financial
institutions. To the best of the knowledge of BFFC, the aggregate principal
amount of loans contained (or that will be contained) in the loan portfolio of
BFFC as of March 31, 2002 (and as of the dates of any financial statements to be
delivered by BFFC to Midwest pursuant to SECTION 5.06 hereof), in excess of such
reserve, was (and will be) fully collectible.
3.17 BFFC BENEFIT PLANS.
------------------
(a) SCHEDULE 3.17 OF THE DISCLOSURE SCHEDULE OF BFFC contains
a list or a true and complete copy (or, a description with respect to any oral
employee benefit plan, practice, policy or arrangement), including all
amendments thereto, of each compensation, consulting, employment, termination or
collective bargaining agreement, and each stock option, stock purchase, stock
appreciation right, recognition and retention, life, health, accident or other
insurance, bonus, deferred or incentive compensation, severance or separation
agreement or any agreement providing any payment or benefit resulting from a
change in control, profit sharing, retirement, or other employee benefit plan,
practice, policy or arrangement of any kind, oral or written, covering
employees, former employees, directors or former directors of BFFC or the Bank
or their respective beneficiaries, including, but not limited to, any employee
benefit plans within the meaning of Section 3(3) of Employee Retirement Income
Security Act, as amended ("ERISA"), which BFFC or the Bank maintains, to which
BFFC or the Bank contributes, or under which any employee, former employee,
director or former director of BFFC or the Bank is covered or has benefit rights
and pursuant to which any Liability of BFFC or the Bank exists or,
25
to the best of the knowledge of BFFC, is reasonably likely to occur (the "BFFC
Benefit Plans"), and current summary plan description, trust agreement,
insurance contracts, actuarial reports and valuations, financial statements and
IRS Form 5500 or 5500-C with respect thereto. Except as set forth in SCHEDULE
3.17 OF THE DISCLOSURE SCHEDULE OF BFFC, BFFC neither maintains nor has entered
into any BFFC Benefit Plan or other document, plan or agreement which contains
any change in control provisions which would cause an increase or acceleration
of benefits or benefit entitlements to employees or former employees of BFFC or
the Bank or their respective beneficiaries, or other provisions, which would
cause an increase in the Liability of BFFC, the Bank or to Midwest as a result
of the transactions contemplated by this Agreement or any related action
thereafter (a "Change in Control Benefit"). The term "BFFC Benefit Plans" as
used herein refers to all plans contemplated under the preceding sentences of
this SECTION 3.17, provided that the term "Plan" or "Plans" is used in this
Agreement for convenience only and does not constitute an acknowledgment that a
particular arrangement is an employee benefit plan within the meaning of Section
3 (37) of ERISA. Except as disclosed in the SCHEDULE 3.17 OF THE DISCLOSURE
SCHEDULE OF BFFC, no BFFC Benefit Plan is a multi-employer plan within the
meaning of Section 3(37) of ERISA. All payments and other compensation paid or
payable by BFFC or the Bank under this Agreement, the BFFC Benefit Plan or
otherwise, to or for the benefit of any employee or director or former employee
or director of BFFC or the Bank, are in compliance with all applicable rules,
regulations and bulletins promulgated by the OTS.
(b) Except as set forth on SCHEDULE 3.17 OF THE DISCLOSURE
SCHEDULE OF BFFC, each of the BFFC Benefit Plans that is intended to be a
pension, profit sharing, stock bonus, thrift, savings or employee stock
ownership plan that is qualified under Section 401(a) of the Code ("BFFC
Qualified Plans") has been determined by the Internal Revenue Service to qualify
under Section 401(a) of the Code, or an application for determination of such
qualification has been timely made to the Internal Revenue Service prior to the
end of the applicable remedial amendment period under Section 401(b) of the Code
(a copy of each such determination letter or pending application is included in
the SCHEDULE 3.17 OF THE DISCLOSURE SCHEDULE OF BFFC, and, to the best of the
knowledge of BFFC, there exist no circumstances likely to materially adversely
affect the qualified status of any such BFFC Qualified Plan. To the best
knowledge of BFFC, all such BFFC Qualified Plans established or maintained by
BFFC or the Bank or to which BFFC or the Bank contribute are in compliance in
all material respects with all applicable requirements of ERISA, and are in
compliance in all material respects with all applicable requirements (including
qualification and non-discrimination requirements in effect as of the Closing
Date) of the Code for obtaining the tax benefits the Code thereupon permits with
respect to such BFFC Qualified Plans. Except as set forth on SCHEDULE 3.17 OF
THE DISCLOSURE SCHEDULE OF BFFC, neither BFFC nor the Bank maintains a defined
benefit pension plan which is subject to Title IV of ERISA. All accrued
contributions and other payments required to be made by BFFC or the Bank to the
BFFC Benefit Plans through March 31, 2002, have been made or reserves adequate
for such purposes as of March 31, 2002, have been set aside therefore and
reflected in the BFFC Financial Statement, dated as of March 31, 2002. Neither
BFFC nor the Bank is in material default in performing any of its respective
contractual obligations under any of the BFFC Benefit Plans or any related trust
agreement or insurance contract, and there are no material outstanding
Liabilities of any such Plan other than Liabilities for benefits to be paid to
participants in such Plan and their beneficiaries in accordance with the terms
of such Plan and the Liabilities of the BFFC Employee Stock Ownership Plan (the
"ESOP") related to the loans outstanding thereunder and evidenced by a term note
dated December 19, 1996, in the principal
26
amount of $2,010,000 (the "ESOP Loan"). SCHEDULE 3.17 OF THE DISCLOSURE SCHEDULE
OF BFFC includes a true and correct copy of the term note and all agreements
relating thereto.
(c) There is no pending or, to the best knowledge of BFFC,
threatened litigation or pending claim (other than benefit claims made in the
ordinary course) by or on behalf of or against any of the BFFC Benefit Plans (or
with respect to the administration of any of such Plans) now or heretofore
maintained by BFFC or the Bank which allege violations of applicable state or
federal law which are reasonably likely to result in a material Liability on the
part of BFFC or the Bank or any such Plan.
(d) BFFC and the Bank and all other persons having fiduciary
or other responsibilities or duties with respect to the BFFC Benefit Plan are
and have since the inception of each such Plan been in substantial compliance
with, and each such Plan is and has been operated in substantial accordance
with, its provisions and in substantial compliance with the applicable laws,
rules and regulations governing such Plan, including, without limitation, the
rules and regulations promulgated by the Department of Labor, the Pension
Benefit Guaranty Corporation ("PBGC") and the Internal Revenue Service under
ERISA, the Code or any other applicable law. No "reportable events" (as defined
in Section 4043(c) of ERISA) for which the thirty (30) day notice period has not
been waived or extended have occurred with respect to the BFFC Benefit Plans. No
BFFC Benefit Plan has engaged in or been a party to a "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975(c) of the Code) that is not
subject to a statutory or other exemption under Section 408 of ERISA or Section
4975 of the Code. All BFFC Benefit Plans that are group health plans have been
operated in compliance with the group health plan continuation requirements of
Section 4980B of the Code and Section 601 of ERISA.
(e) Neither BFFC nor the Bank has incurred, nor to the best
knowledge of BFFC is reasonably likely to incur, any Liability under Title IV of
ERISA in connection with any Plan subject to the provisions of Title IV of ERISA
now or heretofore maintained or contributed to by BFFC or by the Bank.
(f) Except as set forth on SCHEDULE 3.17 OF THE DISCLOSURE
SCHEDULE OF BFFC, neither BFFC nor the Bank has made any payments, or is or has
been a party to any agreement or the BFFC Benefit Plan, that under any
circumstances could obligate BFFC or the Bank to make payments that are or will
not be deductible because of Section 280G of the Code.
(g) SCHEDULE 3.17 OF THE DISCLOSURE SCHEDULE OF BFFC
describes any obligation that BFFC or the Bank has to provide health or welfare
benefits to retirees or other former employees, directors or their dependents
(other than rights under Section 4980B of the Code or Section 601 of ERISA),
including information as to the number of retirees, other former employees or
directors and dependents entitled to such coverages and their ages.
(h) SCHEDULE 3.17 OF THE DISCLOSURE SCHEDULE OF BFFC lists:
(i) each officer of BFFC and the Bank and each director of BFFC who is eligible
to receive a Change in Control Benefit, showing the amount of each such Change
in Control Benefit, estimated compensation for 2002 based upon compensation
received to the date of this Agreement, and the individual's rate of
compensation in effect on the date of this Agreement, the individual's
participation in any bonus or other employee benefit plan, and such individual's
compensation from BFFC or the Bank for each of the calendar years 1997 through
2001 as reported by BFFC or the Bank on
27
Form W-2 or Form 1099; (ii) each other employee of BFFC or the Bank who may be
eligible for a Change in Control Benefit, showing the number of years of service
of each such employee together with his or her estimated compensation for 2002;
and (iii) each officer or director for whom a deferred compensation agreement is
maintained, showing the amounts due thereunder and the payment schedule thereof,
and the amounts accrued in the BFFC Financial Statement, dated as of March 31,
2002.
(i) BFFC and the Bank have filed or caused to be filed, and
will continue to file or cause to be filed, in a timely manner all filings
pertaining to each BFFC Benefit Plan with the Internal Revenue Service, the
PBGC, the Department of Labor, as prescribed by the Code or ERISA, or
regulations issued thereunder. All such filings, as amended, were complete and
accurate in all material respects as of the dates of such filings, and there
were no misstatements or omissions in any such filing which would be material to
the financial condition of BFFC on a consolidated basis.
3.18 COMPLIANCE WITH ENVIRONMENTAL LAWS.
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(a) To the best knowledge of BFFC and except as set forth in
SCHEDULE 3.18 OF THE DISCLOSURE SCHEDULE OF BFFC: (i) the operations of BFFC and
the Bank comply in all material respects with all applicable Environmental Laws;
(ii) none of the operations of BFFC or the Bank, no assets presently or formerly
owned or leased by BFFC or the Bank and no Mortgaged Premises or Participating
Facility (as defined below) are subject to any judicial or administrative
proceedings alleging the violation of any past or present Environmental Law, nor
are they the subject of any claims alleging damages to health or property,
pursuant to which BFFC, the Bank or any owner of a Mortgaged Premises or a
Participating Facility would be liable in law or equity; (iii) none of the
operations of BFFC or the Bank, no assets presently owned or formerly owned by
BFFC or the Bank and no Mortgaged Premises or a Participating Facility are the
subject of any federal, state or local investigation evaluating whether any
remedial action is needed to respond to a release or threatened release of any
Hazardous Substance, or any other substance into the environment, nor has BFFC
or the Bank, or any owner of a Mortgaged Premises or a Participating Facility
been directed to conduct such investigation, formally or informally, by any
governmental agency, nor have any of them agreed with any governmental agency or
private person to conduct any such investigation; and (iv) neither BFFC nor the
Bank nor any owner of a Mortgaged Premises or a Participating Facility has filed
any notice under any Environmental Law indicating past or present treatment,
storage or disposal of a Hazardous Substance or reporting a spill or release of
a Hazardous Substance, or any other substance into the environment.
(b) Except as disclosed in SCHEDULE 3.18 OF THE DISCLOSURE
SCHEDULE OF BFFC, to the best of the knowledge of BFFC, with respect to (i) the
real estate owned (other than OREO) or leased by BFFC or the Bank; (ii) OREO
presently or formerly held by BFFC or the Bank; and (iii) any real estate
formerly owned (other than OREO) or leased by BFFC or the Bank (the "BFFC
Premises"): (x) no part of the BFFC Premises has been used for the generation,
manufacture, handling, storage, or disposal of Hazardous Substances; (y) the
BFFC Premises do not contain, and have never contained, an underground storage
tank; and (z) the BFFC Premises do not contain and are not contaminated by any
quantity of a Hazardous Substance from any source.
28
3.19 DISCLOSURE SCHEDULE OF BFFC. The DISCLOSURE SCHEDULE OF BFFC
identifies, and shall be supplemented by BFFC, as required by SECTION 5.09
hereof, so as to contain at the Closing Date, in addition to the other
instruments, documents, lists and other matters mentioned herein, each of the
following documents, copies of which certified by an officer of BFFC to be true
and correct copies of such documents, have been furnished to Midwest.
(a) A list of each outstanding loan agreement, mortgage,
pledge agreement or other similar document or commitments to extend credit to
any officer or director of BFFC or the Bank, as well as a listing of all
deposits or deposit surrogates, including the amount, type and interest being
paid thereon, to which BFFC or the Bank is a party under which it may
(contingently or otherwise) have any Liability involving any officer or director
of BFFC or the Bank.
(b) A list of each outstanding letter of credit and each
commitment to issue a letter of credit in excess of $100,000 to which BFFC or
the Bank is a party and/or under which it may (contingently or otherwise) have
any Liability.
(c) A list of each material contract or agreement (not
otherwise included in the DISCLOSURE SCHEDULE OF BFFC or specifically excluded
therefrom in accordance with the terms of this Agreement) involving goods,
services or occupancy and which (i) has a term of more than six (6) months; (ii)
cannot be terminated on thirty (30) days (or less) written notice without
penalty; and (iii) involves an annual expenditure by BFFC or the Bank in excess
of $100,000.
(d) A list of each contract or commitment (other than
Permitted Liens as defined in SECTION 3.22(c)) hereof affecting ownership of,
title to, use of, or any interest in real estate which is currently owned by
BFFC or the Bank, and a list and description of all real estate owned, leased or
licensed by BFFC or the Bank.
(e) A list of all fees, salaries, bonuses and other forms of
compensation including but not limited to, country club memberships, automobiles
available for personal use, and credit cards available for personal use,
currently provided by BFFC or the Bank to any employee or officer or former
employee or officer of BFFC or the Bank who earned in excess of $50,000 in 2001
or to any director or former director of BFFC or the Bank.
(f) A list of each commitment made by BFFC or the Bank to or
with any director, officer or employee of BFFC or the Bank extending for a
period of more than three (3) months from the date hereof or providing for
earlier termination only upon the payment of a penalty or equivalent thereto.
(g) A list of each contract or commitment providing for
payment based in any manner upon outstanding loans or profits of BFFC or the
Bank.
(h) A list of all powers of attorney granted by BFFC or the
Bank which are currently in force.
(i) A list of all policies of insurance currently maintained
by BFFC or the Bank and those policies maintained during the past five (5) years
and a list and description of all
29
claims of BFFC or the Bank which have been filed with the companies providing
insurance coverage for BFFC or the Bank (except for routine claims for health
benefits).
(j) A list of all collective bargaining agreements to which
BFFC or the Bank is a party and all affirmative action plans or programs
covering employees of BFFC or the Bank, as well as all employee handbooks,
policy manuals, rules and standards of employment promulgated by BFFC or the
Bank.
(k) A list of all leases or licenses with respect to real or
personal property, whether as lessor, lessee, licensor or licensee, with annual
rental or other payments due thereunder in excess of $100,000 to which BFFC or
the Bank is a party, which does not expire within six (6) months from the date
hereof and cannot be terminated upon thirty (30) days (or less) written notice
without penalty.
(l) A list of all employment, consulting and professional
services contracts to which BFFC or the Bank is a party.
(m) A list of all judgments, orders, injunctions, court
decrees or settlement agreements arising out of or relating to the labor and
employment practices or decisions of BFFC or the Bank which, by their terms,
continue to bind or affect BFFC or the Bank.
(n) A list of all orders, decrees, memorandums, agreements or
understandings with regulatory agencies binding upon or affecting the current
operations of BFFC or the Bank or any of their directors or officers in their
capacities as such.
(o) A list of all trademarks, trade names, service marks,
patents, or copyrights, whether registered or the subject of an application for
registration, which are owned by BFFC or the Bank or licensed from a third party
(including computer software programs, codes and related materials);
(p) A list of all other agreements to which BFFC or the Bank
is a party (which do not expire within six (6) months from the date hereof and
cannot be terminated upon thirty (30) days (or less) written notice without
penalty) which individually during its term could commit BFFC or the Bank to an
expenditure (either individually or through a series of installments) in excess
of $100,000 or which create a material right or benefit to receive payments,
goods or services not referred to elsewhere in this SECTION 3.19 including
without limitation:
(i) all agreements of guaranty or indemnification
running to any person;
(ii) all agreements containing any covenant limiting
the right of BFFC or the Bank to engage in any line of business or to
compete with any person;
(iii) all agreements with respect to licenses,
permits and similar matters that are necessary to the operations of
BFFC or the Bank (including computer software programs, source codes
and related materials);
30
(iv) all agreements which require the consent or
approval of any other party in order to consummate the Merger;
(v) all agreements relating to the servicing of loans
and all mortgage forward commitments and similar agreements pursuant to
which BFFC or the Bank sells to others mortgages which it originates;
(vi) all contracts relating to the purchase or sale
of financial or other futures, or any put or call option relating to
cash, securities or commodities and all interest rate swap agreements
or other agreements relating to the hedging of interest rate risks and
all agreements or arrangements described in SECTION 3.15(d) hereof;
(vii) all contracts or agreements (with the exception
of the Xxxxxx Xxx Seller's Guide), including but not limited to
contracts or agreements pursuant to which BFFC or the Bank has sold,
transferred, assigned or agreed to service any loan, which provide for
any recourse or indemnification obligation on the part of BFFC or the
Bank; the name and address of each person which might or could be
entitled to recourse against or indemnification from BFFC or the Bank;
and the monetary amount of each actual or potential recourse or
indemnification obligation under each such contract or agreement; and
(viii) all agreements providing data processing
services to BFFC or the Bank.
3.20 DEFAULTS. There has not been any material default in any
obligation to be performed by BFFC or the Bank under any material contract or
commitment, and neither BFFC nor the Bank has waived, and will not waive prior
to the Closing Date, any material right under any material contract or
commitment which will have a Material Adverse Effect on BFFC. To the best of the
knowledge of BFFC, no other party to any material contract or commitment is in
material default in any material obligation to be performed by such party which
will have a Material Adverse Effect on BFFC.
3.21 MATERIALITY. For purposes of SECTIONS 3.19 and 3.20, a
contract, commitment or agreement is material if it involves the payment by or
liability (contingent or otherwise) of BFFC or the Bank in any amount in excess
of $100,000 or if such contract together with other related contracts involving
less than $200,000 and not listed in the DISCLOSURE SCHEDULE OF BFFC for that
reason, exceed $100,000 in the aggregate.
3.22 OPERATIONS SINCE MARCH 31, 2002. Between March 31, 2002, and
the date hereof, there has not been, except as set forth on the DISCLOSURE
SCHEDULE OF BFFC or on any mutually accepted up-date thereof:
(a) Any increase in the compensation payable or to become
payable by BFFC or the Bank to any executive officer or director;
(b) except for the payment of the regular quarterly cash
dividend of $0.06 per share, any payment of dividends by BFFC or the Bank or any
distribution by either of them, whether directly or indirectly, of any assets of
any kind whatsoever, except for any such payment
31
or distribution from the Bank to BFFC, on or in redemption or as the purchase
price of, any of their respective capital stocks, or any prepayment of any
indebtedness to any Stockholder;
(c) any mortgage, pledge or subjection to lien, charge or
encumbrance of any kind of or on any asset, tangible or intangible, of BFFC or
the Bank, except the following (each of which, whether arising before or after
the date hereof, is herein referred to as a "Permitted Lien"): (i) liens arising
out of judgments or awards in respect of which BFFC or the Bank is in good faith
prosecuting an appeal or proceedings for review and in respect of which it has
secured a subsisting stay of execution pending such appeal or proceedings; (ii)
liens for taxes, assessments, and other governmental charges or levies, the
payment of which is not past due, or as to which BFFC or the Bank is diligently
contesting in good faith and by appropriate proceedings either the amount
thereof or the liability therefore or both; (iii) deposits, liens or pledges to
secure payments of worker's compensation, unemployment insurance, pensions, or
other social security obligations, or the performance of bids, tenders, leases,
contracts (other than contracts for the payment of money), public or statutory
obligations, surety, stay or appeal bonds, or similar obligations arising in the
ordinary course of business; (iv) zoning restrictions, easements, licenses and
other restrictions on the use of real property or any interest therein, or minor
irregularities in title thereto, which do not materially impair the use of such
property in the operation of the business of BFFC or the Bank or the
merchantability or the value of such property or interest therein for the
purpose of such business; (v) purchase money mortgages or other purchase money
or vendor's liens or security interests (including, without limitation, finance
leases), provided that no such mortgage, lien or security interest shall extend
to or cover any other property of BFFC or the Bank other than that so purchased;
and (vi) pledges and liens given to secure deposits and other liabilities of
BFFC or the Bank arising in the ordinary course of banking business;
(d) any creation or assumption of indebtedness (including
the extension or renewal of any existing indebtedness, or the increase thereof),
by BFFC or the Bank for borrowed money, or otherwise, other than in the ordinary
course of business, none of which (except those which are being disputed in good
faith) is in default;
(e) the establishment of any new, or increase in the formula
for contributions to or benefits under any existing, retirement, pension, profit
sharing, stock bonus, savings or thrift plan, or any similar plan of deferred
compensation, whether funded or unfunded and whether qualified or unqualified
(within the meaning of the Code) by BFFC or the Bank;
(f) any action by BFFC or the Bank seeking any cancellation
of, or decrease in the insured limit under, or increase in the deductible amount
or the insured's retention (whether pursuant to coinsurance or otherwise) of or
under, any policy of insurance maintained directly or indirectly by BFFC or the
Bank on any of their respective assets or businesses, including but not by way
of limitation, fire and other hazard insurance on its assets, automobile
liability insurance, general public liability insurance, and directors and
officers liability insurance; and if an insurer takes any such action, BFFC
shall promptly notify Midwest;
(g) any change in BFFC's independent auditors, historic
methods of accounting (other than as required by past practices or regulatory
accounting principles), or in its system for maintaining its equipment and real
estate;
32
(h) any purchase, whether for cash or secured or unsecured
obligations (including finance leases), by BFFC or the Bank of any fixed asset
which either (i) has a purchase price individually or in the aggregate in excess
of $25,000 or (ii) is outside of the ordinary course of business;
(i) any sale or transfer of any asset in excess of $50,000 of
BFFC or the Bank or outside of the ordinary course of business with the
exception of loans and marketable securities sold in the ordinary course of
business at market prices;
(j) any cancellation or compromise of any debt to, claim by
or right of, BFFC the Bank except in the ordinary course of business;
(k) any amendment or termination of any material contract or
commitment (as defined in SECTION 3.21 above) to which BFFC or the Bank is a
party, other than in the ordinary course of business; or
(l) any Materially Adverse Effect on BFFC.
3.23 CORPORATE RECORDS. The corporate record books, transfer books
and stock ledgers of BFFC and the Bank are complete and accurate in all material
respects and reflect all meetings, consents and other material actions of the
organizers, incorporators, stockholders, Boards of Directors and committees of
the Boards of Directors of BFFC and the Bank, and all transactions in their
respective capital stocks, since the Conversion.
3.24 UNDISCLOSED LIABILITIES. All Liabilities have, in the case of
BFFC and the Bank, been reflected, disclosed or reserved against in the BFFC
Financial Statement (or the footnotes thereto), dated as of March 31, 2002, in
accordance with GAAP, and BFFC and the Bank have no other Liabilities except (a)
Liabilities incurred since March 31, 2002 in the ordinary course of business or
(b) as disclosed in the SCHEDULE 3.24 OF THE DISCLOSURE SCHEDULE OF BFFC.
3.25 ASSETS.
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(a) BFFC and the Bank have good, sufficient and marketable
title to their real properties, including any leaseholds and ground leases, and
their other assets and properties, all as reflected as owned by BFFC or the Bank
in the BFFC Financial Statement, dated as of March 31, 2002, except for (i)
assets and properties disposed of since such date in the ordinary course of
business and (ii) Permitted Liens. Substantially all of the buildings,
structures, fixtures and appurtenances comprising part of the real properties of
BFFC and the Bank (whether owned or leased by BFFC or the Bank) are in good
operating condition and have been adequately maintained, reasonable wear and
tear excepted. Title to all real property listed as being owned by BFFC and the
Bank on SCHEDULE 3.25 OF THE DISCLOSURE SCHEDULE OF BFFC is held in fee simple.
The Bank owns the building which constitutes the Bank's main office and all its
other office buildings free and clear of any and all liens, charges,
encumbrances, security interest and/or equities. BFFC and the Bank have title or
other rights to all their other assets sufficient in all material respects for
the conduct of their respective businesses as presently conducted, and, except
for the Permitted Liens, free, clear and discharged of, and from any and all
liens, charges, encumbrances, security interests and/or equities which are
material to BFFC on a consolidated basis.
33
(b) All leases pursuant to which BFFC or the Bank, as lessee,
leases real or personal property which are material to the business of BFFC on a
consolidated basis are, to the best of the knowledge of BFFC, valid, effective,
and enforceable against the lessor in accordance with their respective terms.
There is not under any of such leases any existing default, or any event which
with notice or lapse of time or both would constitute a default, with respect to
either BFFC or the Bank, or to the best knowledge of BFFC, the other party.
Except as disclosed in the SCHEDULE 3.25 OF THE DISCLOSURE SCHEDULE OF BFFC,
none of such leases contains a prohibition against assignment by BFFC or the
Bank, by operation of law or otherwise, or any other provision which would
preclude BFFC or the Bank from possessing and using the leased premises for the
same purposes and upon the same rental and other terms upon the consummation of
the Merger as are applicable to the possession and use by BFFC or the Bank as of
the date of this Agreement. Except as disclosed in SCHEDULE 3.25 OF THE
DISCLOSURE SCHEDULE OF BFFC, neither BFFC nor the Bank has made a prior
assignment for collateral purposes of any such lease.
3.26 INDEMNIFICATION. To the best of the knowledge of BFFC, except
as set forth in SCHEDULE 3.26 OF THE DISCLOSURE SCHEDULE OF BFFC, no action or
failure to take action by any director, officer or employee of BFFC or the Bank
has occurred which would give rise to a claim or a potential claim by any such
person for indemnification from BFFC or the Bank under the corporate
indemnification provisions of BFFC or the Bank in effect on the date of this
Agreement.
3.27 INSIDER INTERESTS. To the best of the knowledge of BFFC, all
outstanding loans and other contractual arrangements (including deposit
relationships) between BFFC or the Bank and any officer, director or employee of
BFFC or the Bank conform to the applicable rules and regulations and
requirements of all applicable regulatory agencies which were in effect when
such loans and other contractual arrangements were entered into. No officer,
director or employee of BFFC or the Bank has any material interest in any
property, real or personal, tangible or intangible, used in or pertaining to the
business of BFFC or the Bank.
3.28 FEES. Other than the financial advisory services performed for
BFFC by Xxxxx Financial, LLC, neither BFFC or the Bank, nor any of their
respective officers, directors, employees or agents, has employed a broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions, or finder's fees, and no broker or finder has acted directly
or indirectly for BFFC or the Bank in connection with this Agreement or the
transactions contemplated hereby.
3.29 DISCLOSURE. None of the information supplied by BFFC for
inclusion in the Proxy Statement (as defined in SECTION 2.03 hereof) to be
delivered to the Stockholders as required by SECTION 5.04 hereof will at the
time of the meeting of the Stockholders to be held in connection with the Merger
as required by SECTION 5.04 hereof, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.30 NO OTHER REPRESENTATION OR WARRANTY. Except for the
representations and warranties expressly contained in this ARTICLE III, BFFC has
not made any other representation or warranty (express or implied, oral or
written).
34
IV. COVENANTS
4.01 CONDUCT OF BUSINESS BY BFFC UNTIL THE CLOSING DATE. During
the period commencing on the date hereof and continuing until the Closing Date,
BFFC agrees (except as expressly contemplated by this Agreement or to the extent
that Midwest shall otherwise consent in writing) that:
(a) Except as contemplated by this Agreement, BFFC and the
Bank will carry on their respective businesses in, and only in, the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted, maintain their respective books in accordance with past practices,
conduct their respective businesses and operations only in accordance with safe
and sound banking and business practices, and, to the extent consistent with
such businesses, use all reasonable efforts to preserve intact their present
business organizations, to generally keep available the services of their
present officers and employees and to preserve their relationships with
customers, suppliers and others having business dealings with them to the end
that their respective goodwill and going business shall be unimpaired at the
Closing Date.
(b) BFFC will, and will cause the Bank to, use its reasonable
best efforts to comply promptly with all requirements which federal or state law
may impose on either of them with respect to the Merger and will promptly
cooperate with and furnish information to Midwest, in connection with any such
requirements imposed upon either of them in connection with the Merger.
(c) BFFC will, and will cause the Bank to, use its reasonable
best efforts to obtain (and to cooperate with Midwest in obtaining) any consent,
authorization or approval of, or any exemption by, any governmental authority or
agency, or other third party, required to be obtained or made by any of them in
connection with the Merger or the taking of any action contemplated hereby. BFFC
will not, nor will they permit the Bank to, knowingly or willfully take any
action that would adversely affect the ability of such party to perform its
obligations under this Agreement.
(d) Except for the regular quarterly cash dividend of $0.06
per share, BFFC will not declare or pay any dividends on or make other
distributions in respect of capital stock and will not repurchase any shares of
its capital stock.
(e) BFFC will not, and will not permit the Bank to, sell,
lease or otherwise dispose of any assets, except in the ordinary course of
business, which are material, individually or in the aggregate, to the business
or financial condition of BFFC on a consolidated basis.
(f) BFFC will not, and will not permit the Bank to, acquire by
merging or consolidating with, purchasing substantially all of the assets of or
otherwise, any business or any corporation, partnership, association or other
business organization or division thereof.
(g) BFFC will not, and will not permit the Bank to, issue,
sell, authorize or propose the issuance of, or purchase or propose the purchase
of, permit the conversion of or otherwise acquire or transfer for any
consideration any shares of the capital stock of any class of BFFC or the Bank
or securities convertible into, or rights, warrants or options to acquire, any
such shares or other convertible securities, or to increase or decrease the
number of shares of
35
capital stock by split-up, reclassification, reverse split, stock dividend or
change in par or stated value, except as contemplated herein.
(h) BFFC will not, and will not permit the Bank to, incur any
indebtedness for money borrowed or issue or sell any debt securities other than
in the ordinary course of business or consistent with past practices as to
inter-company borrowings or permit or suffer the imposition on any shares of
stock held by BFFC or by the Bank of any lien, charge or encumbrance.
(i) Except as disclosed in SCHEDULE 4.01(i) TO THE DISCLOSURE
SCHEDULE OF BFFC, BFFC will not, and will not permit the Bank to, grant to any
director, officer or employee any increase in compensation (except in accordance
with existing plans or agreements), or pay any bonus (except in accordance with
existing plans or agreements) or increase in any severance or termination pay,
or enter into or amend any employment or severance agreement with any such
person, except as contemplated herein.
(j) Except as disclosed in SCHEDULE 4.01(j) TO THE DISCLOSURE
SCHEDULE OF BFFC and as provided in SECTION 4.03 hereof, neither BFFC, nor the
Bank, will enter into any material lease or license with respect to any
property, whether real or personal, or any other contract, agreement or
commitment for goods or services which has a term of six (6) months after the
date hereof and involves the payment by BFFC or the Bank of more than $50,000 in
the aggregate.
(k) Except as disclosed in SCHEDULE 4.01(k) TO THE DISCLOSURE
SCHEDULE OF BFFC, BFFC will not, and will not permit the Bank to, adopt or amend
in any material respect any collective bargaining, employee pension,
profit-sharing, retirement, insurance, incentive compensation, severance,
vacation, stock option, or other plan, agreement, trust, fund or arrangement for
the benefit of employees, whether written or oral, except as contemplated
herein.
(l) BFFC will, and will cause the Bank to, use its reasonable
best efforts to maintain the respective properties and assets of BFFC and the
Bank in their present state of repair, order and condition, reasonable wear and
tear excepted, and to maintain and keep in full force and effect all policies of
insurance presently in effect, including the insurance of accounts with the
FDIC. BFFC will, and will cause the Bank to, take all requisite action
(including without limitation the making of claims and the giving of notices)
pursuant to its directors' and officers' liability insurance policy or policies
in order to preserve all rights thereunder with respect to all matters known by
BFFC which could reasonably give rise to a claim prior to the Closing Date.
(m) BFFC will not, and will not permit the Bank to, amend its
Articles of Incorporation, Charter or by-laws, except as contemplated herein.
(n) BFFC will not, and will not permit the Bank to: (i) enter
into, renew or increase any loan or credit commitment (including letters of
credit) to, or invest or agree to invest in any person or entity or modify any
of the material provisions or renew or otherwise extend the maturity date of any
existing loan or credit commitment (collectively, "Lend to") in an amount in
excess of $500,000 or in any amount which, when aggregated with any and all
loans or credit commitments of BFFC and/or the Bank to such person or entity,
would be in
36
excess of $500,000; provided, however, that BFFC and the Bank may make, renew or
increase any loan to an existing customer without Midwest's consent provided
such renewal or increase is made in accordance with the Bank's past practices
and provided further, such customer has not been on the "watch list" or similar
internal report of the Bank during the two (2) previous years; (ii) Lend to any
person or entity in an amount in excess of $500,000 or in any amount which, or
when aggregated with any and all loans or credit commitments of BFFC and/or the
Bank to such person or entity, would be in excess of $500,000; (iii) Lend to any
person other than in accordance with lending policies as in effect on the date
hereof, provided that in the case of clauses (i) and (iii) BFFC or the Bank may
make any such loan in the event (A) BFFC or the Bank has delivered to Midwest a
notice of its intention to make such loan and such information as Midwest may
reasonably require in respect thereof and (B) Midwest shall not have reasonably
objected to such loan by giving written or facsimile notice of such objection
within two (2) business days following the delivery to Midwest of the notice of
intention and information as aforesaid; or (iv) Lend to any person or entity any
of the loans or other extensions of credit to which or investments in which are
on a "watch list" or similar internal report of BFFC or the Bank; provided,
however, that nothing in this subsection shall prohibit BFFC or the Bank from
honoring any contractual obligation in existence on the date of this Agreement.
(o) BFFC will not, and will not permit the Bank to, materially
restructure or change its investment securities portfolio, through purchases,
sales or otherwise, or the manner in which the portfolio is classified or
reported, or execute individual investment transactions of greater than
$1,000,000 for U.S. Treasury Securities and mortgage backed securities and
$1,000,000 for all other investment instruments.
(p) BFFC will not, and will not permit the Bank to enter into
any new, or modify, amend or extend the terms of any existing, contracts
relating to the purchase or sale of financial or other futures, or any put or
call option relating to cash, securities or commodities or any interest rate
swap agreements or other agreements relating to the hedging of interest rate
risks.
(q) BFFC will not, and will not permit the Bank to, enter
into, increase or renew any loan or credit commitment (including letters of
credit) to any executive officer or director of BFFC or the Bank, any five (5)
percent Stockholder, or any entity controlled, directly or indirectly, by any of
the foregoing or engage in any transaction with any of the foregoing prohibited
by 12 U.S.C. 371c and 12 U.S.C. 371c-1. For purposes of this Section, "control"
shall have the meaning associated with that term under 12 U.S.C. 371c.
(r) BFFC will promptly advise Midwest orally and in writing of
any event or series of events which has resulted in or is reasonably likely to
result in a Material Adverse Effect on BFFC or which may adversely affect the
satisfaction of any conditions to the consummation of the Merger.
4.02 BFFC STOCK OPTIONS. At the Effective Time, each BFFC Stock
Option shall be converted into and represent the right to receive cash
calculated as follows: (A) the Adjusted Option Shares (as defined below) shall
be multiplied by the Midwest Reference Stock Price and (B) reduced by the
product of the Adjusted Exercise Price (as defined below) times the Adjusted
Option Shares. For purposes of this Agreement, the term "Adjusted Option Shares"
shall mean the number of shares of BFFC Common Stock subject to a BFFC Stock
Option multiplied by the
37
Exchange Ratio and the term "Adjusted Exercise Price" shall mean the per share
exercise price for such BFFC Stock Option divided by the Exchange Ratio. The
Board of Directors of BFFC and the committee established under the BFFC Stock
Option Plans shall take such actions or make such determinations as may be
required under such plans to effect the provisions of this SECTION 4.02 and BFFC
shall use its best efforts to cause all holders of BFFC Stock Options to enter
into written agreements (in a form mutually acceptable to BFFC and Midwest)
pursuant to which they agree they will not exercise such options prior to the
Effective Time, with such agreements being delivered to Midwest within five (5)
business days of the date hereof.
4.03 INDEMNIFICATION. Except as may be limited by applicable law,
Midwest hereby agrees to maintain all rights of indemnification currently
provided by BFFC and the Bank in favor of their current and former employees,
directors, officers and agents on terms no less favorable than those provided in
the Articles of Incorporation or By-Laws of BFFC or otherwise in effect on the
date of this Agreement or as otherwise required by Illinois law for a period of
not less than three (3) years from the Effective Time with respect to matters
occurring prior to the Effective Time. In the event Midwest or any of its
successors or assigns (i) reorganizes or consolidates with or merges into or
enters into another business combination transaction with any other person or
entity and is not the resulting, continuing, or surviving corporation or entity
of such reorganization, consolidation, merger, or transaction, or (ii)
liquidates, dissolves, or transfers all or substantially all of its properties
and assets to any person or entity, then, and in each such case, proper
provision will be made so that such surviving corporation or transferee and its
successors and assigns assume the obligations set forth in this SECTION 4.03.
Midwest agrees that, prior to or at the Effective Time, BFFC may secure, at its
expense, prior acts and omissions coverage under its directors' and officers'
liability insurance for current and former employees, officers, directors and
agents of BFFC and the Bank for a period of at least three (3) years following
the Effective Time which insurance shall contain at least the same coverage and
amounts, and contains terms and conditions not less advantageous as that
coverage currently provided by BFFC and the Bank. After said three (3) year
period, Midwest will use its reasonable best efforts to secure such insurance
coverage for another two (2) years; provided, however, that Midwest shall not be
obligated to purchase such coverage if it costs more than $50,000, provided
further, that BFFC may purchase such coverage prior to the Effective Time but
may not spend more than $50,000 therefor.
4.04 CERTAIN ACTIONS.
---------------
(a) Neither BFFC (or the Bank) nor any of the Representatives
(as defined below) (i) shall solicit, initiate, participate in discussions of,
or encourage or take any other action to facilitate (including by way of the
disclosing or furnishing of any information that it is not legally obligated to
disclose or furnish) any inquiry or the making of any proposal relating to a
Takeover Proposal (as defined below) or a potential Takeover Proposal with
respect to BFFC or the Bank or (ii) shall (A) solicit, initiate, participate in
discussions of, or encourage or take any other action to facilitate any inquiry
or proposal, or (B) enter into any agreement, arrangement, or understanding
(whether written or oral), regarding any proposal or transaction providing for
or requiring BFFC to abandon, terminate or fail to consummate this Agreement, or
compensating BFFC or the Bank under any of the instances described in this
clause. BFFC shall immediately instruct and otherwise use its best efforts to
cause BFFC's and the Bank's respective stockholders, directors, officers,
employees, agents, advisors (including, without limitation, any investment
banker, attorney, or accountant retained by BFFC or the Bank), consultants and
other
38
representatives (the "Representatives") to comply with such prohibitions. Any
action described in clauses (i) and (ii) of this SECTION 4.04(a) and in the
following sentence taken by a Representative shall be deemed to be an action
taken by BFFC. Any breach of an Affiliate Agreement attached hereto as EXHIBIT
4.04 shall deemed to be a breach of this SECTION 4.04(a). BFFC shall immediately
cease and cause to be terminated, and shall cause the Representatives to cease
or terminate, any existing activities, discussions, or negotiations with any
parties conducted heretofore with respect to such activities. BFFC shall
promptly notify Midwest orally and in writing in the event BFFC or any of the
Representatives receives any such inquiry or proposal and shall provide
reasonable detail of all relevant facts relating to such inquiries. This SECTION
4.04 shall not prohibit accurate disclosure by BFFC in any document, including
the Proxy Statement, or other disclosure in each case to the extent required by
applicable law if, pursuant to advice given by Vedder, Price, Xxxxxxxx &
Kammholz, disclosure is required under applicable law as to the transactions
contemplated hereby. Notwithstanding the foregoing, BFFC may provide information
at the request of or enter into negotiations with a third party with respect to
an unsolicited Takeover Proposal if the Board of Directors of BFFC determines,
in good faith, that the exercise of its fiduciary duties to the Stockholders
under applicable law, as advised by Vedder, Price, Xxxxxxxx & Kammholz, requires
it to take such action, and provided further, that BFFC may not, in any event,
provide to such third party any information which it has not provided to
Midwest. BFFC shall promptly notify Midwest orally and in writing in the event
it receives any such inquiry or proposal and shall provide reasonable detail of
all relevant facts relating to such inquiries or proposals, along with a summary
of the advice provided by Vedder, Price, Xxxxxxxx & Kammholz.
(b) "Takeover Proposal" shall, with respect to BFFC, mean any
of the following: (i) a merger or consolidation, or any similar transaction
(other than the Merger) of any company with either BFFC or any significant
subsidiary (as defined in Rule 1.02 of Regulation S-X of the SEC) of BFFC (a
"Significant Subsidiary"), (ii) a purchase, lease or other acquisition of all or
substantially all the assets of either BFFC or any Significant Subsidiary, (iii)
a purchase or other acquisition of "beneficial ownership" by any "person" or
"group" (as such terms are defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) (including by way of merger, consolidation,
share exchange, or otherwise) which would cause such person or group to become
the beneficial owner of securities representing 9.9% or more of the voting power
of either BFFC or any Significant Subsidiary, (iv) a tender or exchange offer to
acquire securities representing 9.9% or more of the voting power of BFFC, (v) a
public proxy or consent solicitation made to Stockholders seeking proxies in
opposition to any proposal relating to any of the transactions contemplated by
this Agreement that has been recommended by the Board of Directors of BFFC, (vi)
the filing of an application or notice with the Federal Reserve Board, the OTS
or any other federal or state regulatory authority seeking approval to engage in
one or more of the transactions referenced in clauses (i) through (iv) above, or
(vii) the making of a bona fide proposal to BFFC or the Stockholders by public
announcement or written communication, that is or becomes the subject of public
disclosure, to engage in one or more of the transactions referenced in clauses
(i) through (v) above.
4.05 TITLE MATTERS. As soon as practical after the date hereof and
at least thirty (30) days prior to the Effective Time, Midwest shall, at its own
expense, obtain:
(a) With respect to the real estate described on SCHEDULE 3.25
OF THE DISCLOSURE SCHEDULE OF BFFC (other than real estate subject to leases or
real estate acquired in a
39
foreclosure or similar action), an owner's preliminary report on title covering
a date subsequent to the date hereof, issued by a title insurance company
reasonably acceptable to Midwest, which preliminary report shall contain a
commitment of such title insurer to issue an owner's title insurance policy on
ALTA 1992 Owner's Form B insuring the fee simple title of BFFC or the Bank in
such real estate in an amount equal to the fair market value of such real estate
subject only to (A) liens of current state and local property taxes which are
not delinquent or subject to penalty; and (B) such other matters as may be
disclosed that are reasonably approved in writing by Midwest.
(b) Surveys certified in accordance with ALTA land survey
standards by a registered land surveyor licensed in the state in which such real
estate is located as of a date subsequent to the date hereof of the real estate
described in SCHEDULE 3.25 OF THE DISCLOSURE SCHEDULE OF BFFC (i) showing with
respect to such real estate: (1) the legal description; (2) all buildings,
structures and improvements thereon and all "setback" lines, restrictions of
record and other restrictions that have been established by any applicable
zoning or building code or ordinance and all easements or rights of way; (3) no
encroachments upon such parcel or adjoining by buildings, structures,
improvements or easements; (4) legal access to such parcel from a public street;
and (5) no easements which materially and adversely affect the use of such
parcel or the improvements located thereon.
(c) At least (5) business days prior to the Closing Date,
Midwest shall, at its own expense, owner's title insurance policies dated the
Closing Date on ALTA 1992 Owner's Form B with an extended coverage endorsement
guaranteeing over the standard exceptions to title customarily contained in such
policies, covering the real estate covered by the commitments referred to in
SCHEDULE 3.25 OF THE DISCLOSURE SCHEDULE OF BFFC hereof issued by the insurer
which issued such commitments insuring the fee simple estate of the Bank (or
such other entity reasonably acceptable to Midwest) in the real estate in the
amount reasonably satisfactory to Midwest subject only to the matters set forth
in SCHEDULE 3.25 OF THE DISCLOSURE SCHEDULE OF BFFC hereof or SCHEDULE 3.25 OF
THE DISCLOSURE SCHEDULE OF BFFC.
4.06 AFFILIATE AGREEMENT. Simultaneously with the execution of this
Agreement, BFFC is delivering to Midwest a fully executed copy of the Affiliate
Agreement attached hereto as EXHIBIT 4.04 by the directors and executive
officers of BFFC and the Bank.
4.07 CONDUCT OF BUSINESS BY MIDWEST UNTIL THE CLOSING DATE. During
the period commencing on the date hereof and continuing until the Closing Date,
Midwest agrees (except as expressly contemplated by this Agreement or to the
extent that BFFC shall otherwise consent in writing, which consent shall not be
unreasonably withheld or delayed) that:
(a) Except as contemplated by this Agreement, Midwest and the
Midwest Subsidiaries will carry on their respective businesses in, and only in,
the usual, regular and ordinary course in substantially the same manner as
heretofore conducted, maintain their respective books in accordance with GAAP,
conduct their respective businesses and operations only in accordance with safe
and sound banking and business practices, and, to the extent consistent with
such businesses, use all reasonable efforts to preserve intact their present
business organizations, to generally keep available the services of their
present officers and employees and to preserve their relationships with
customers, suppliers and others having
40
business dealings with them to the end that their respective goodwill and going
business shall be unimpaired at the Closing Date.
(b) Midwest will, and will cause the Midwest Subsidiaries to,
use their reasonable best efforts to comply promptly with all requirements which
federal or state law may impose on any of them with respect to the Merger and
will promptly cooperate with and furnish information to BFFC in connection with
any such requirements imposed upon any of them in connection with the Merger.
(c) Midwest will, and will cause the Midwest Subsidiaries to,
use their reasonable best efforts to obtain (and to cooperate with BFFC in
obtaining) any consent, authorization or approval of, or any exemption by, any
governmental authority or agency, or other third party, required to be obtained
or made by any of them in connection with the Merger or the taking of any action
contemplated hereby. Midwest will not, nor will it permit any of the Midwest
Subsidiaries to, knowingly or willfully take any action that would adversely
affect its ability to perform its obligations under this Agreement.
(d) Midwest shall cooperate with BFFC to coordinate the record
and payment dates of their cash dividends for the quarter the Merger is
consummated as provided in SECTION 4.01(d) hereof.
(e) Midwest will promptly advise BFFC orally and in writing of
any event or series of events which has resulted in or is reasonably likely to
result in a Material Adverse Effect on Midwest or which may adversely affect the
satisfaction of any conditions to the consummation of the Merger.
V. ADDITIONAL AGREEMENTS
5.01 INSPECTION OF RECORDS; CONFIDENTIALITY.
--------------------------------------
(a) BFFC shall afford Midwest and Midwest's accountants,
counsel and other representatives, reasonable access during normal business
hours during the period prior to the Closing Date to all of its and the Bank's
respective properties, books, contracts, commitments and records, including all
attorneys' responses to auditors' requests for information, and accountants'
work papers, developed by either of them or their accountants or attorneys, and
will permit Midwest and its respective representatives to discuss such
information directly with BFFC's officers, directors, employees, attorneys and
accountants and permit Midwest to perform various accounting procedures, testing
or analysis as Midwest deems reasonably appropriate. During such period, BFFC
shall use its reasonable best efforts to furnish promptly to Midwest all other
information concerning the business, properties and personnel of BFFC and the
Bank as Midwest may reasonably request. Any failure to comply with this covenant
shall be disregarded if promptly corrected without material adverse consequences
to Midwest. The availability or actual delivery of information shall not affect
the representations, warranties, covenants, and agreements of BFFC that are
contained in this Agreement or in any certificates or other documents delivered
pursuant hereto. Nothing contained in this SECTION 5.01(a) shall be construed as
prohibiting Midwest from terminating this Agreement if there is a material
change as of the date of this Agreement to the information disclosed in the
initial DISCLOSURE SCHEDULE of the BFFC.
41
(b) BFFC and Midwest agree that certain information
("Confidential Information") has been disclosed, will be disclosed, or will be
discovered concerning BFFC and its employees, representatives, owners, agents,
customers, assets and other non-specified items/issues, which is either
non-public, confidential or proprietary in nature, including customer lists and
accounts, in the form not only of written information but also information which
may be transmitted orally, visually, on computer disk, or by other means by any
person or entity or any representative or advisor of BFFC or one or more of its
representatives, agents, persons, entities or interested/non-interested parties
containing or based on, the information prepared for the purpose of the
discussions and transactions contemplated between BFFC and Midwest. BFFC and
Midwest agree all the Confidential Information prepared in the course of or for
the purpose of the discussions between BFFC and Midwest and the consummation of
the transactions contemplated herein shall not be used by Midwest or its agents,
representatives, persons or entities in any manner whatsoever or for any purpose
unless specified herein or agreed to in writing by the parties. Midwest will
keep confidential all such information (as well as any other information
obtained prior to the date hereof in connection with entering into this
Agreement) in accordance and subject to the terms of the Confidentiality
Agreement, dated August 28, 2001, between Midwest and Xxxxx Financial, LLC, as
the agent of BFFC. In the event of a conflict or an inconsistency between the
terms of this Agreement and the Confidentiality Agreement, the terms of this
Agreement shall govern. No investigation by Midwest shall affect the
representations and warranties of BFFC and each such representation and warranty
shall survive any such investigation.
(c) BFFC shall allow a representative of Midwest to attend as
an observer all meetings of the Board of Directors of BFFC and the Bank. BFFC
shall give reasonable notice to Midwest of any such meeting and, if known, the
agenda for or business to be discussed at such meeting. BFFC shall provide to
Midwest all information provided to the directors on all such Boards in
connection with all such meetings or otherwise provided to the directors, and
shall provide any other financial reports or other analysis prepared for senior
management of BFFC or the Bank in each case excluding information relating to
this Agreement or the transactions contemplated hereby and information which is
privileged or is subject to any restriction on disclosure. It is understood by
the parties that Midwest's representative will not have any voting rights with
respect to matters discussed at these meetings and that Midwest is not managing
the business or affairs of BFFC. All information obtained by Midwest at these
meetings shall be treated in confidence as provided in SECTION 5.01(b) hereof.
Notwithstanding the foregoing, Midwest shall not be permitted to attend any
portion of a meeting and BFFC shall not be required to provide Midwest with any
materials, in violation of applicable law, or that relate to this Agreement or a
Takeover Proposal (except for information to be provided as required by SECTION
4.04 hereof), or that involve matters protected by the attorney-client
privilege.
5.02 COOPERATION. Each party covenants that it will use its
reasonable best efforts to bring about the transactions contemplated by this
Agreement as soon as practicable, unless this Agreement is terminated as
provided herein and that it will not willfully or intentionally breach this
Agreement. Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use all reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. In case at any time
after the Closing Date any further action is necessary or desirable to carry out
the purposes of this Agreement, the proper officers and/or directors of Midwest
or BFFC, as the case may be,
42
shall take all such necessary action. Each party shall use its reasonable best
efforts to preserve for itself and each other party each available legal
privilege with respect to confidentiality of their negotiations and related
communications including the attorney-client privilege.
5.03 REGULATORY APPLICATIONS. Midwest shall, within thirty (30)
days of the date hereof, cause Xxxxxxx & Xxxxxxxxxx to file an application on
Form Y-4 with the Federal Reserve Board and such other applications with the
appropriate bank regulatory authorities. Midwest shall use its best efforts to
respond as promptly as practicable to all inquiries received concerning said
applications and to satisfy all conditions that may be required; provided,
however, that Midwest shall have no obligation to accept non-standard conditions
or restrictions with respect to the aforesaid approval of the Federal Reserve
Board or the OTS if it shall reasonably determine that such conditions or
restrictions would have a Material Adverse Effect on BFFC or would be materially
burdensome to Midwest. In the event of an adverse or unfavorable determination
by any regulatory authority, or in the event the Merger is challenged or opposed
by any administrative or legal proceeding, whether by the United States
Department of Justice or otherwise, the determination of whether and to what
extent to seek appeal or review, administrative or otherwise, or other
appropriate remedies shall be made by Midwest. Midwest shall deliver a copy of
all regulatory applications to BFFC in advance of filing them (in order to
provide BFFC with an opportunity to review and comment) and copies of all
responses, written communications from or to regulatory authorities relating to
such applications, the Merger or this Agreement (to the extent permitted by
law), and Midwest shall deliver a final copy of all regulatory applications to
BFFC promptly after they are filed with the appropriate regulatory authority.
Midwest shall advise BFFC periodically of the status of its regulatory
applications.
5.04 REGISTRATION STATEMENT; STOCKHOLDER APPROVAL. Within
forty-five (45) days of the date hereof, Midwest shall cause Xxxxxxx &
Xxxxxxxxxx to file the Registration Statement with the SEC, and BFFC and Midwest
shall use their reasonable best efforts to cause the Registration Statement to
become effective under the Securities Act. Midwest will take any action required
to be taken under the applicable blue sky or securities laws in connection with
the issuance of the shares of Midwest Common Stock in the Merger. Each party
shall furnish all information concerning it and the holders of its capital stock
as the other party may reasonably request in connection with such action. BFFC
shall call a Stockholders' Meeting to be held as soon as reasonably practicable
after the date of this Agreement for the purpose of voting upon this Agreement
and the Merger. In connection with the Stockholders' Meeting, (i) Midwest shall
cause Xxxxxxx & Xxxxxxxxxx to prepare the Proxy Statement as part of the
Registration Statement with the assistance of Vedder, Price, Xxxxxxx & Kammholz
and BFFC shall mail the Proxy Statement to the Stockholders; provided, however,
that the Proxy Statement shall not be mailed to the Stockholders until Xxxxx
Financial, LLC, has delivered to the Board of Directors of BFFC for inclusion in
the Proxy Statement an opinion, dated the mailing date, to the effect the
Exchange Ratio is fair to the Stockholders from a financial point of view in
standard industry form with respect to transaction of this nature; (ii) the
Board of Directors of BFFC shall recommend to the Stockholders the approval of
this Agreement and the Merger; and (iii) the Board of Directors of BFFC shall
otherwise use its best efforts to the extent consistent with its fiduciary
duties to obtain such Stockholders' approval. Subject to the requirements of
applicable laws, nothing contained in this SECTION 5.04 shall limit BFFC's
obligation to hold and convene the Stockholders' Meeting (regardless of whether
the unanimous recommendation of the Board of Directors of BFFC shall have been
withdrawn or modified).
43
5.05 AFFILIATE LETTERS. BFFC shall use its reasonable best efforts
to obtain and deliver to Midwest as promptly as practicable after (and shall use
its reasonable best efforts to obtain and deliver within five (5) business days
after) the date hereof a signed representation letter substantially in the form
of EXHIBIT 5.05 hereto from each executive officer and director of BFFC and each
Stockholder who may reasonably be deemed an "affiliate" of BFFC within the
meaning of such term as used in Rule 145 under the Securities Act and shall use
best efforts to obtain and deliver to Midwest a signed representation letter
substantially in the form of EXHIBIT 5.05 from any person who becomes an
executive officer or director of BFFC or any Stockholder who becomes such an
"affiliate" after the date hereof as promptly as practicable after (and shall
use its reasonable best efforts to obtain and deliver within five (5) business
days after) such person achieves such status.
5.06 FINANCIAL STATEMENTS AND REPORTS. From the date of this
Agreement and prior to the Effective Time: (a) each party will deliver to the
other, not later than ninety (90) days after the end of any fiscal year, its
Annual Report on Form 10-K (and all schedules and exhibits thereto) for the
fiscal period then ended prepared in conformity with GAAP and the rules and
regulations of the SEC; (b) BFFC will deliver to Midwest not later than thirty
(30) days after the end of any calendar quarter, the Reports of Condition and
Income filed with the OTS by the Bank which shall be prepared in accordance with
the rules and regulations of the OTS; (c) each party will deliver to the other
not later than forty-five (45) days after the end of each quarter, its Report on
Form 10-Q for such quarter as filed with the SEC which shall be prepared in
conformity with GAAP and the rules and regulations of the SEC; and (d) each
party will deliver to the other any and all other material reports filed with
the SEC, the FDIC, the Federal Reserve Board, the OTS, or the Commissioner or
any other regulatory agency within three (3) business days of the filing of any
such report.
5.07 NOTICE. At all time prior to the Closing Date, each party
shall promptly notify the other in writing of the occurrence of any event which
will or may result in the failure to satisfy any of the conditions specified in
SECTIONS 6.01, 6.02 or 6.03 hereof. In the event that any party becomes aware of
the occurrence or impending occurrence of any event which would constitute or
cause a breach by it of any of the representations and warranties or agreements
or covenants contained herein in any material respect, or would have constituted
or caused a breach by it of the representations and warranties or agreements or
covenants contained herein in any material respect, had such an event occurred
or been known prior to the date hereof, said party shall immediately give
detailed and written notice thereof to the other party, and shall, unless the
same has been waived in writing by the other party, use its reasonable efforts
to remedy the same, provided that such efforts, if not successful, shall not be
deemed to satisfy any condition precedent to the Merger.
5.08 PRESS RELEASES. At all times prior to the Closing Date, each
party shall mutually agree with the other prior to the issuance of any press
release or other information to the press or any third party for general
circulation with respect to this Agreement or the transactions contemplated
hereby; provided, however, that Midwest and BFFC shall issue a mutually agreed
upon press release promptly following the execution of this Agreement which
shall be prepared and filed in accordance with Rule 165 under the Securities
Act, Rule 14a-12 of the Securities Exchange Act and Regulation FD of the
Securities Exchange Act; provided, further Midwest and BFFC shall agree to a
mutually agreeable form of notice to the employees of BFFC and the Bank promptly
following the execution of this Agreement.
44
5.09 DELIVERY OF SUPPLEMENTS TO DISCLOSURE SCHEDULES. Five (5)
business days prior to the Closing Date, each party will supplement or amend its
DISCLOSURE SCHEDULE with respect to any matter hereafter arising which, if
existing or occurring at or prior to the date of this Agreement, would have been
required to be set forth or described in such DISCLOSURE SCHEDULE or which is
necessary to correct any information in the DISCLOSURE SCHEDULE or in any
representation and warranty made by the disclosing party which has been rendered
inaccurate thereby. For purposes of determining the accuracy of the
representations and warranties contained in ARTICLE II and ARTICLE III hereof in
order to determine the fulfillment of the conditions set forth in SECTION
6.01(a) and SECTION 6.02(a) hereof, the DISCLOSURE SCHEDULES OF BFFC and MIDWEST
shall be deemed to include only that information contained therein on the date
it is initially delivered to Midwest or BFFC.
5.10 TAX OPINION. Midwest and BFFC shall obtain a written opinion
of Xxxxx Xxxxxx and Company, LLP addressed to Midwest and BFFC, dated the
Closing Date, subject to the customary representations and assumptions referred
to therein, and substantially to the effect that (a) the Merger will constitute
a tax-free reorganization within the meaning of Section 368 of the Code and that
Midwest and BFFC will each be a party to the reorganization; (b) the exchange in
the Merger of Midwest Common Stock for BFFC Common Stock will not give rise to
the recognition of any income, gain or loss to Midwest, BFFC, or the
Stockholders with respect to such exchange (except, with respect to the
Stockholders, to the extent of any cash paid in lieu of fractional shares); (c)
the adjusted tax basis of the Midwest Common Stock received by the Stockholders
who exchange all of their BFFC Common Stock in the Merger will be the same as
the adjusted tax basis of the shares of the BFFC Common Stock surrendered in
exchange therefore (reduced by any amount allocable to a fractional share
interest for which cash is received); (d) the holding period of the shares of
the Midwest Common Stock received in the Merger will include the period during
which the shares of BFFC Common Stock surrendered in exchange therefore were
held, provided such shares of BFFC Common Stock were held as capital assets at
the Effective Time; (e) the adjusted tax basis of the assets of BFFC in the
hands of Midwest will be the same as the adjusted tax basis of such assets in
the hands of BFFC immediately prior to the exchange; and (f) the holding period
of the assets of BFFC transferred to Midwest will include the period during
which such assets were held by BFFC prior to the exchange.
5.11 RESOLUTION OF BFFC BENEFIT PLANS. BFFC and Midwest shall
cooperate in effecting the following treatment of the BFFC Benefit Plans, except
as mutually agreed upon by Midwest and BFFC prior to the Effective Time:
(a) At the Effective Time, Midwest or a Midwest Subsidiary
shall be substituted for BFFC as the sponsoring employer under those BFFC
Benefit Plans with respect to which BFFC or the Bank is a sponsoring employer
immediately prior to the Effective Time, and shall assume and be vested with all
of the powers, rights, duties, obligations and liabilities previously vested in
BFFC or the Bank with respect to each such plan. Except as otherwise provided
herein, each such plan and any BFFC Benefit Plan sponsored by BFFC or the Bank
shall be continued in effect by Midwest or any applicable Midwest Subsidiary
after the Effective Time without a termination or discontinuance thereof as a
result of the Merger, subject to the power reserved to Midwest or any applicable
Midwest Subsidiary under each such plan to subsequently amend or terminate the
plan, which amendments or terminations shall comply with applicable law. BFFC,
the Bank, and Midwest will use all reasonable efforts (i) to effect said
45
substitutions and assumptions, and such other actions contemplated under this
Agreement, and (ii) to amend such plans as to the extent necessary to provide
for said substitutions and assumptions, and such other actions contemplated
under this Agreement.
(b) At or as promptly as practicable after the Effective Time
as Midwest shall reasonably determine, Midwest shall provide, or cause any
Midwest Subsidiary to provide, to each employee of BFFC and the Bank as of the
Effective Time ("BFFC Employees") the opportunity to participate in each
employee benefit plan and program maintained by Midwest or the Midwest
Subsidiaries for similarly-situated employees (the "Midwest Benefit Plans")
provided that with respect to such Midwest Benefit Plans, BFFC Employees shall
be given credit for service with BFFC or the Bank in determining eligibility for
and vesting in benefits thereunder, but not for purposes of benefit accrual;
provided further that BFFC Employees shall not be subject to any waiting periods
or pre-existing condition exclusions under the Midwest Benefit Plans to the
extent that such periods are longer or restrictions impose a greater limitation
than the periods or limitations imposed under the BFFC Benefit Plans; and
provided further that to the extent that the initial period of coverage for BFFC
Employees under any Midwest Benefit Plan that is an "employee welfare benefit
plan" as defined in Section 3(1) of ERISA is not a full 12-month period of
coverage, BFFC Employees shall be given credit under the applicable Midwest
Benefit Plans for any deductibles and co-insurance payments made by such BFFC
Employees under the BFFC Benefit Plans during the balance of such 12-month
period of coverage. Nothing in the preceding sentence shall obligate Midwest to
provide or cause to be provided any benefits duplicative to those provided under
any BFFC Benefit Plan continued pursuant to subparagraph (a) above, including,
but not limited to, extending participation in any Midwest Benefit Plan which is
an "employee pension benefit plan" under ERISA with respect to any portion of
the year during which benefits are accrued to BFFC Employees under the ESOP or
the BFFC Profit Sharing and Savings Plan. Except as otherwise provided in this
Agreement, the power of Midwest, the Bank or any Midwest Subsidiary to amend or
terminate any benefit plan or program, including any BFFC Benefit Plan shall not
be altered or affected. Moreover, this Agreement shall not confer upon any BFFC
Employee any rights or remedies hereunder and shall not constitute a contract of
employment or create any rights, to be retained or otherwise, in employment at
Midwest, the Bank or any Midwest Subsidiary.
(c) As of the Effective, Time, the ESOP shall be terminated
in accordance with its terms. Prior to the Effective Time, BFFC shall be
permitted to make such changes to the ESOP as it deems appropriate to carry out
the provisions of the ESOP and this SECTION 5.11(c) and shall file a request for
determination with the IRS with respect to the termination of the ESOP. BFFC
shall submit to Midwest for its review and comment such ESOP changes before they
are made and the request for determination before it is filed with the IRS.
Midwest acknowledges that approval of the Merger by the Stockholders shall
constitute a "change in control" under the ESOP and that, pursuant to the terms
thereof, the ESOP Trustee will sell a sufficient number of unallocated shares of
BFFC Common Stock to repay the then outstanding ESOP Loan in full, and that the
ESOP Trustee may sell such shares to BFFC. As soon as practicable after receipt
of a favorable determination letter from the IRS with respect to the
termination, the assets of the ESOP shall be distributed to the participants and
beneficiaries or transferred pursuant to an eligible rollover distribution as a
participant or beneficiary may direct (including a rollover into a qualified
plan of Midwest, if approved by Midwest, in which the individual is then
participating). Prior to the Effective Time, BFFC and the Bank shall be entitled
to make contributions to the ESOP with the consent of Midwest, which consent
shall not
46
be unreasonably withheld, for purposes of making prepayments on the ESOP Loan,
provided such prepayments are fully deductible by BFFC or the Bank under Section
404 of the Code (without regard to the carryover provisions of Section 404) and
otherwise in compliance with Section 415 of the Code and do not adversely affect
the tax qualified status of the ESOP under Sections 401(a) and 4975 of the Code.
(d) As of the Effective Time, the Fairfield Savings Bank
Retirement Plan (the "Retirement Plan") shall be terminated, the accrued
benefits of participants thereunder shall become nonforfeitable in accordance
with its terms, and as soon as practicable after receipt of a favorable
determination letter from the IRS and the lapse of time without receipt of a
notice of noncompliance (or upon reversal of such a notice) from the PBGC with
respect to the termination, the benefits shall be distributed to participants
and their beneficiaries, including the actuarial equivalent of a participant's
accrued benefit in a lump sum or optional form as permitted under the Retirement
Plan as a participant or beneficiary may direct (including a rollover to a
qualified plan of Midwest, if approved by Midwest, in which the individual is
then participating). Prior to the Effective Time, BFFC shall be permitted to
make such changes to the Retirement Plan as it deems appropriate to carry out
the provisions of the Retirement Plan and this SECTION 5.11(d) and shall issue
required notices to the PBGC and participants and beneficiaries and shall file a
request for determination with the IRS with respect to the termination of the
Retirement Plan. BFFC shall submit to Midwest for its review and comment all
such changes to the Retirement Plan before they are made, all such notices
before they are given to participants, beneficiaries or the PBGC and the request
for determination before it is filed with the IRS. As of the Effective Time, the
Supplemental Pension Plan of BFFC shall be terminated and benefits paid to
participants thereunder in accordance with its terms.
(e) Midwest agrees to honor (i) the Recognition and Retention
Plan and Trusts, (ii) the employment agreements, (iii) the employee retention
agreements, (iv) the consulting agreements, (v) the severance pay plan, and (vi)
all other written agreements with employees as set forth on the DISCLOSURE
SCHEDULE OF BFFC according to their terms with such modifications as set forth
in the DISCLOSURE SCHEDULE OF BFFC. Midwest hereby acknowledges that the Merger
and the Closing constitute a change of control for purposes of the
above-mentioned agreements. BFFC shall take such actions regarding certain
payments to the executive officers of BFFC as set forth on SCHEDULE 5.11(e) OF
THE DISCLOSURE SCHEDULE OF BFFC.
5.12 TAX TREATMENT. Neither BFFC or the Bank nor Midwest or any of
the Midwest Subsidiaries shall voluntarily take any action which would
disqualify the Merger as a "reorganization" that would be tax free or deferred
to the Stockholders of BFFC pursuant to Section 368 of the Code. In addition,
Midwest and BFFC agree to take any and all necessary or advisable steps to
restructure or modify the terms of the transactions contemplated hereby, if such
steps are necessary or advisable to qualify the transactions contemplated hereby
as a tax-free reorganization under Section 368 of the Code; provided, however,
that nothing contained in this SECTION 5.12 should be deemed to require Midwest
or BFFC to take any steps to alter the Exchange Ratio.
5.13 STOCK EXCHANGE LISTING. Midwest shall use its best efforts to
list on the Nasdaq/NMS, subject to official notice of issuance, the shares of
Midwest Common Stock to be issued in the Merger.
47
VI. CONDITIONS
6.01 CONDITIONS TO THE OBLIGATIONS OF MIDWEST. Notwithstanding any
other provision of this Agreement, the obligation of Midwest to consummate the
Merger is subject to the following conditions precedent (except as those which
Midwest may chose to waive):
(a) All of the representations and warranties made by BFFC in
this Agreement and in any documents or certificates provided by BFFC shall have
been true and correct in all material respects as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date, except
for information contained in a subsequent DISCLOSURE SCHEDULE OF BFFC relating
to an event or series of events arising after the date hereof which does not
have a Material Adverse Effect on BFFC or as otherwise contemplated by this
Agreement.
(b) BFFC shall have performed in all material respects all
obligations and shall have complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with by it
prior to or at the Closing Date.
(c) There shall not have been any action taken, or any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Merger by any federal or state government or governmental
agency or instrumentality or court, which would prohibit Midwest's ownership or
operation of all or a material portion of BFFC's business or assets, or would
compel Midwest to dispose of or hold separate all or a material portion of
BFFC's business or assets, as a result of this Agreement, or which would render
Midwest or BFFC unable to consummate the transactions contemplated by this
Agreement.
(d) Since the date hereof, BFFC shall not have suffered a
Material Adverse Effect.
(e) Midwest shall have received proof satisfactory to it that
BFFC has paid all expenses in connection with the transactions contemplated by
this Agreement.
(f) If as of the Effective Time, BFFC or the Bank is a party
to any agreement with, or directive or order issues by, the FDIC, the OTS or any
other bank regulatory authority, which imposes any material restrictions or
requirements not applicable to federal savings institutions generally with
respect to the conduct of BFFC or the Bank's business, Midwest shall have
received written confirmation from each bank regulatory authority which has
entered into such an agreement with BFFC or the Bank or which has issued such a
directive or order, in form and substance satisfactory to Midwest, to the effect
that such agreement, directive or order will not be binding on or in any way to
BFFC, the Bank, Midwest or any subsidiary of Midwest following the Effective
Time.
(g) Midwest shall have received a certificate signed by the
President and Chief Executive Officer of BFFC, dated as of the Closing Date,
certifying that based upon his best knowledge, the conditions set forth in
SECTIONS 6.01(a), (b) AND (d) hereof have been satisfied.
48
6.02 CONDITIONS TO THE OBLIGATIONS OF BFFC. Notwithstanding any
other provision of this Agreement, the obligation of BFFC to consummate the
Merger is subject to the following conditions precedent (except as those which
BFFC may chose to waive):
(a) All of the representations and warranties made by Midwest
in this Agreement and in any documents or certificates provided by Midwest shall
have been true and correct in all material respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, except for information contained in a subsequent DISCLOSURE SCHEDULE OF
MIDWEST relating to an event or series of events arising after the date hereof
which does not have a Material Adverse Effect on Midwest or as otherwise
contemplated by this Agreement.
(b) Midwest shall have performed in all material respects all
obligations and shall have complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with by it
prior to or at the Closing Date.
(c) Since the date hereof, Midwest shall not have suffered a
Material Adverse Effect.
(d) BFFC shall have received the fairness opinion of Xxxxx
Financial, LLC, as described in SECTION 5.04 hereof.
(e) BFFC shall have received a certificate signed by the
President and Chief Executive Officer of Midwest, dated as of the Closing Date,
that based upon their best knowledge, the conditions set forth in SECTIONS
6.02(a), (b) and (c) have been satisfied.
6.03 CONDITIONS TO THE OBLIGATIONS OF THE PARTIES. Notwithstanding
any other provision of this Agreement, the obligations of Midwest on the one
hand, and BFFC on the other hand, to consummate the Merger are subject to the
following conditions precedent (except as those which Midwest and BFFC may chose
to waive):
(a) No preliminary or permanent injunction or other order by
any federal or state court which prevents the consummation of the Merger shall
have been issued and shall remain in effect.
(b) Midwest shall have received the approval of the Federal
Reserve Board and any other applicable regulatory authority to acquire BFFC and
all required waiting periods shall have expired.
(c) The Merger shall have been approved by the requisite
vote of the Stockholders.
(d) The Registration Statement shall have been declared
effective under the Securities Act and no stop orders shall be in effect and no
proceedings for such purpose shall be pending or threatened by the SEC.
(e) Each party shall have received the tax opinion addressed
to it referred to in SECTION 5.11 of this Agreement.
49
(f) The Midwest Common Stock to be issued to holders of BFFC
Common Stock shall have been approved for listing on Nasdaq/NMS subject to
official notice of issuance.
VII. TERMINATION; AMENDMENT; WAIVER
7.01 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date:
(a) By mutual written consent of the Board of Directors of
Midwest and the Board of Directors of BFFC; or
(b) At any time prior to the Closing Date, by Midwest or BFFC
if there shall have been a final judicial or regulatory determination (as to
which all periods for appeal shall have expired and no appeal shall be pending)
that any material provision of this Agreement is illegal, invalid or
unenforceable (unless the enforcement thereof is waived by the affected party)
or denying any regulatory application the approval of which is a condition
precedent to any party's obligations hereunder; or
(c) At any time on or before the date specified in SECTION
7.01(f) hereof, by Midwest or BFFC in the event that any of the conditions
precedent to the obligations of the other to the Merger are rendered impossible
to be satisfied or fulfilled by said date (other than by reason of a breach by
the party seeking to terminate); or
(d) By Midwest or BFFC, in the event of a material breach by
the other of any representation, warranty, covenant or agreement contained
herein or in any schedule or document delivered pursuant hereto, which breach
would result in the failure to satisfy the closing condition set forth in
SECTION 6.01(a) or 6.01(b), in the case of Midwest, or SECTION 6.02(a) or
6.02(b), in the case of BFFC, and which breach cannot be or is not cured within
thirty (30) days after written notice of such breach is given by the
non-breaching party to the party committing such breach; or
(e) By BFFC pursuant to written notice given under the
circumstances and subject to the conditions set forth in SECTION 1.03(a) hereof;
or
(f) By either Midwest or BFFC on or after March 31, 2003 (or
April 30, 2003 in the event a protest is filed with bank regulatory authorities
alleging the failure of a party or a party's Subsidiary to comply with the
Community Reinvestment Act of 1977), in the event the Merger has not been
consummated by such date (provided that the terminating party is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein).
In the event either Midwest or BFFC elects to effect any termination pursuant to
SECTION 7.01(B) through 7.01(F) above, it shall give written notice to the other
specifying the basis for such termination.
7.02 EXPENSES. (a) Except as provided elsewhere herein, Midwest
and BFFC shall each bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial or other consultants, investment bankers,
accountants, and counsel.
50
(b) In the event one of the parties hereto files suit to
recover costs and expenses or damages for breach of this Agreement, the costs,
fees, charges and expenses (including attorneys' fees and expenses) of the
prevailing party in such litigation (and any related litigation) shall be borne
by the losing party.
7.03 PAYMENT IN LIEU OF FEES AND EXPENSES AND OPPORTUNITY COSTS. In
addition to the rights and remedies available to Midwest under SECTION 7.04, if
this Agreement is terminated by Midwest pursuant to SECTION 7.01(c) or 7.01(d)
due to a violation of SECTION 4.04 or this Agreement is terminated due to the
decision of BFFC's Board of Directors to provide information at the request of
or enter into negotiations with a third party with respect to an unsolicited
Takeover Proposal or to pursue a Takeover Proposal made by a third party and
prior thereto or within eighteen (18) months after such termination and:
(a) BFFC shall have entered into an agreement amounting to a
Takeover Proposal or arising in connection with a Takeover Proposal, or a
Takeover Proposal shall have occurred (other than as contemplated by and in
connection with this Agreement), or
(b) the Board of Directors of BFFC shall have authorized or
approved a Takeover Proposal or shall have publicly announced an intention to
authorize or approve or shall have recommended that the stockholders of BFFC
approve or accept any Takeover Proposal in each case other than as contemplated
by this Agreement,
then BFFC shall promptly, but in no event later than five (5) days after the
first of such events shall have occurred, pay Midwest (to the extent it has not
already at the time of termination) a fee equal to One Million Seven Hundred
Fifty Thousand Dollars ($1,750,000).
7.04 SURVIVAL OF AGREEMENTS. In the event of termination of this
Agreement by either Midwest or BFFC as provided in SECTION 7.01, this Agreement
shall forthwith become void and have no effect except that the agreements
contained in SECTIONS 5.01, 7.02, 7.03 and 7.04 hereof shall survive the
termination hereof. Notwithstanding the prior sentence or SECTION 7.03, in the
event of termination of this Agreement caused by (i) willful breach by a party
of any agreement, covenant, or undertaking of such party contained herein or in
any exhibit hereto; or (ii) any uncured material misrepresentations or breach of
warranty in any material respect by a party herein; or (iii) the failure of any
condition set forth in ARTICLE VI hereof which has failed because a party did
not exercise good faith and commercially reasonable efforts towards the
fulfillment of such condition, then the other party shall in addition to any
other rights herein (including those described in SECTION 7.02 and SECTION 7.03
hereof) be entitled to all its legal and equitable remedies with respect to such
termination and the causes thereof.
7.05 AMENDMENT. This Agreement may be amended by the parties hereto
by action taken by the Board of Directors of Midwest and the Board of Directors
of BFFC at any time before or after approval hereof by the Stockholders but,
after such approval, no amendment shall be made which changes the form of
consideration or adversely affects or decreases the value of the consideration
to be received by the Stockholders or which in any other way adversely affects
the rights of such Stockholders without the further approval of such
Stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of Midwest and BFFC. Midwest and BFFC may, without
approval of their respective Boards of Directors, make such technical changes to
this Agreement, not inconsistent with the purposes hereof, as may be required to
effect or facilitate any governmental approval or acceptance of the Merger or
51
of this Agreement or to effect or facilitate any filing or recording required
for the consummation of any of the transactions contemplated hereby.
7.06 WAIVER. Any term, provision or condition of this Agreement may
be waived in writing at any time by the party which is, or the stockholders of
which are, entitled to the benefits hereof. Each and every right granted to any
party hereunder, or under any other document delivered in connection herewith or
therewith, and each and every right allowed it by law or equity, shall be
cumulative and may be exercised from time to time. The failure of either party
at any time or times to require performance of any provision hereof shall in no
manner affect such party's right at a later time to enforce the same. No waiver
by any party of a condition or of the breach of any term, agreement, covenant,
representation or warranty contained in this Agreement, whether by conduct or
otherwise, in any one or more instances shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach or a waiver of any
other condition or of the breach of any other term, agreement, covenant,
representation or warranty of this Agreement. No investigation, review or audit
by Midwest of BFFC prior to or after the date hereof shall stop or prevent
Midwest from exercising any right hereunder or be deemed to be a waiver of any
such right.
VIII. GENERAL PROVISIONS
8.01 SURVIVAL. All representations, warranties, covenants and
agreements of the parties in this Agreement or in any instrument delivered by
the parties pursuant to this Agreement shall not survive the Effective Time;
provided, however, that all of agreements, covenants and obligations of Midwest
set forth herein which are contemplated to be performed after the Effective Time
shall survive the Effective Time.
8.02 DEFINED TERMS; PRINCIPLES OF CONSTRUCTION.
-----------------------------------------
(a) For purposes of this Agreement, the following terms are
defined in the indicated Sections:
TERM SECTION TERM SECTION
---- ------- ---- -------
Accountants 4.07 Federal Reserve Board 2.03
Adjusted Exercise Price 4.02 GAAP 2.01(b)
First paragraph of the
Adjusted Option Shares 4.02 HOLA Recitals
Second paragraph of the
Bank Recitals Hazardous Substances 2.16(c)
Fourth paragraph of the
Bank Merger Recitals IBCA 1.01(a)
Bank Reports 3.06 Lend to 4.01(n)
BFFC Benefit Plans 3.17(a) Liability 2.12
BFFC Employees 5.12(b) Material Adverse Effect 2.01(b) and 3.01(b)
Third paragraph of the
BFFC Financial Statements 3.06 Merger Recitals
52
TERM SECTION TERM SECTION
---- ------- ---- -------
BFFC Licenses 3.12 Midwest Benefit Plans 5.11(b)
Third paragraph of the
BFFC Premises 3.18(b) Midwest Common Stock Recitals
BFFC Qualified Plans 3.17(b) Midwest Financial Statements 2.07
Midwest Reference Stock
BFFC Stock Options 3.05(b) Price 1.03(a)
BFFC Stock Option Plans 3.05(b) Mortgaged Premises 2.16(c)
First paragraph of the
BHC Recitals NASD 2.09
Certificates 1.08(b) Nasdaq 1.03(b)
Change in Control Benefit 3.17(a) OTS 2.03
Closing 1.05(a) Participating Facility 2.16(c)
Closing Audit 4.07 PBGC 3.17(d)
Closing Date 1.05(a) Permitted Lien 3.22(c)
Fifth paragraph of the
Code Recitals Phase I 4.02(a)
Comfort Letter 6.01(g) Retirement Plan 5.11(d)
Commissioner 2.09 SEC 2.03
Conversion 3.07(c) Securities Act 2.03
Dissenting Shares 1.09 Securities Exchange Act 2.08
Effective Time 1.01(b) Proxy Statement 2.03
Environmental Laws 2.16(c) Registration Statement 2.03
ERISA 3.17(a) Significant Subsidiary 4.04(b)
Third paragraph of the
ESOP 3.17(b) Stockholders Recitals
ESOP Loan 3.17(b) Surviving Corporation 1.01(a)
Exchange Agent 1.08(a) Valuation Date 6.01(g)
Exchange Ratio 1.03(a)
(b) In this Agreement, unless otherwise stated or the context
otherwise requires, the following uses apply: (i) actions permitted under this
Agreement may be taken at any time and from time to time in the actor's sole
discretion; (ii) references to a statute shall refer to the statute and any
successor statute, and to all regulations promulgated under or implementing the
statute or successor, as in effect at the relevant time; (iii) in computing
periods from a specified date to a later specified date, the words "from" and
"commencing on" (and the like) mean "from and including," and the words "to,"
"until" and "ending on" (and the like) mean "to, but excluding;" (iv) references
to a governmental or quasi-governmental agency, authority or instrumentality
shall also refer to a regulatory body that succeeds to the functions of
53
the agency, authority or instrumentality; (v) indications of time of day mean
Chicago, Illinois time; (vi) "including" means including, but not limited to;
(vii) all references to Sections, Schedules and Exhibits are to Sections,
Schedules and Exhibits in or to this Agreement unless otherwise specified;
(viii) all words used in this Agreement will be construed to be of such gender
or number as the circumstances require; and (ix) the captions and headings of
Articles, Sections, Schedules and Exhibits appearing in or attached to this
Agreement have been inserted solely for convenience of reference and shall not
be considered a part of this Agreement nor shall any of them affect the meaning
of interpretation of this Agreement or any of its provisions. All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP.
(c) The DISCLOSURE SCHEDULES of each of Midwest and BFFC
referred to in this Agreement shall consist of the information, agreements and
other documentation described and referred to in this Agreement as being
included in the DISCLOSURE SCHEDULES with respect to such party, which
DISCLOSURE SCHEDULES were delivered by each of Midwest and BFFC to the other not
less than one calendar day before the date of this Agreement. Disclosure of any
fact or item in any DISCLOSURE SCHEDULE or Exhibit hereto referenced by a
particular paragraph or section in this Agreement shall, should the existence of
the fact or item or its contents be relevant to any other paragraph or section,
be deemed to be disclosed with respect to that other paragraph or section
whether an explicit cross-reference appears.
8.03 NOTICES. All notices, consents, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly given to
any party or parties (a) upon delivery to the address of the party or parties as
specified below if delivered in person or by courier or if sent by certified or
registered mail (return receipt requested), or (b) upon dispatch if transmitted
by telecopy or other means of facsimile transmission and such transmission is
confirmed successfully by the transmitting machine, provided that such
transmission is received during normal business hours and that any transmission
received outside of normal business hours shall be deemed to be received at the
start of normal business hours commencing immediately after the dispatch of the
transmission, in each case addressed as follows:
if to Midwest: Xxxx X. Xxxxxx
President and Chief Executive Officer
Midwest Banc Holdings, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Email: xxxxxx@xxxxxxxxxxx.xxx
copy to: Xxxxxxx X. Xxxxxxxx
Xxxxxxx & Xxxxxxxxxx
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Email: xxxxxxxxx@xxxxxxxxxx.xxx
54
if to BFFC: Xxxxxxx X. XxXxx
President and Chief Executive Officer
Big Foot Financial Corp.
0000 XXX
Xxxx Xxxxx, Xxxxxxxx 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Email: xxxxxx@xxxxxxxxxxxxx.xxx
copy to: Xxxxxx X. XxXxx, XX
Vedder, Price, Xxxxxxx & Kammholz
000 X. XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Email: xxxxxx@xxxxxxxxxxx.xxx
8.04 SPECIFIC ENFORCEABILITY. The parties recognize and hereby
acknowledge that it is impossible to measure in money the damages that would
result to a party by reason of the failure of either of the parties to perform
any of the obligations imposed on it by this Agreement and that in any event
damages would be an inadequate remedy in this instance. Accordingly, if any
party should institute an action or proceeding seeking specific enforcement of
the provisions hereof, the party against which such action or proceeding is
brought hereby waives the claim or defense that the party instituting such
action or proceeding has an adequate remedy at law and hereby agrees not to
assert in any such action or proceeding the claim or defense that such a remedy
at law exists and shall waive or not assert any requirement to post bond in
connection with seeking specific performance.
8.05 APPLICABLE LAW; JURISDICTION.
----------------------------
(a) THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED
ACCORDING TO THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF, EXCEPT TO THE EXTENT THAT THE LAWS OF
THE STATE OF ILLINOIS SHALL APPLY TO THE MERGER.
(b) In addition, each of the parties hereto (i) consents to
submit itself to the personal jurisdiction of any federal or state court located
in Xxxx County, Illinois (and elsewhere with respect to appellate courts with
jurisdiction over such matter) in the event any dispute arises our of this
Agreement or any of the transactions contemplated hereby, and consents to
service of process by notice as provided in SECTION 8.03 of this Agreement, (ii)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (iii) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a federal or state court sitting in
Xxxx County, Illinois.
55
8.06 HEADINGS, ETC. The article headings and section headings
contained in this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this Agreement.
8.07 SEVERABILITY. If any term, provision, covenant, or restriction
contained in this Agreement is held by a final and unappealable order of a court
of competent jurisdiction to be invalid, void, or unenforceable, then the
remainder of the terms, provisions, covenants, and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired, or invalidated unless the effect would be to cause this
Agreement to not achieve its essential purposes.
8.08 ENTIRE AGREEMENT; BINDING EFFECT; NON-ASSIGNMENT;
COUNTERPARTS. Except as otherwise expressly provided herein, this Agreement
(including the documents and instruments referred to herein) (a) constitutes the
entire agreement between the parties hereto and supersedes all other prior
agreements and undertakings, both written and oral, between the parties, with
respect to the subject matter hereof; and (b) is not intended to confer upon any
other person any rights or remedies hereunder except as specifically provided
herein. This Agreement shall be binding upon and inure to the benefit of the
parties named herein and their respective successors. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
party hereto without the prior written consent of the other parties hereto;
provided, however, that Midwest may assign its rights hereunder to an affiliate
of Midwest; provided further, that such an assignment by Midwest shall not
relieve Midwest from any Liability if such affiliate fails to perform this
Agreement. This Agreement may be executed in two or more counterparts which
together shall constitute a single agreement.
8.09 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY OR DISPUTE THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS OF THIS SECTION 8.09.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the day and year first above written.
MIDWEST BANC HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Xxxx X. Xxxxxx,
President and Chief Executive Officer
BIG FOOT FINANCIAL CORP.
By: /s/ Xxxxxxx X. XxXxx
-----------------------------------------
Xxxxxxx X. XxXxx,
President and Chief Executive Officer
57
