EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
among
FIRST NATIONAL OF NEBRASKA, INC.
FIRST NATIONAL OF ILLINOIS, INC.
and
CASTLE BANCGROUP, INC.
Dated as of September 7, 2001
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. EFFECT OF THE MERGER . . . . . . . . . . . . . . . 1
SECTION 1.03. THE CLOSING . . . . . . . . . . . . . . . . . . . 2
SECTION 1.04. EFFECTIVE TIME . . . . . . . . . . . . . . . . . . 2
SECTION 1.05. CERTIFICATE OF INCORPORATION AND BYLAWS OF THE
SURVIVING CORPORATION . . . . . . . . . . . . . . 2
SECTION 1.06. DIRECTORS . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.07. OFFICERS . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
CONVERSION OF SHARES; PAYMENT FOR SHARES
SECTION 2.01. EFFECT ON STOCK . . . . . . . . . . . . . . . . . 3
SECTION 2.02. COMPANY STOCK OPTIONS . . . . . . . . . . . . . . 4
SECTION 2.03. PAYMENT FOR SHARES . . . . . . . . . . . . . . . . 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES CONCERNING
FIRST NATIONAL ILLINOIS AND FNNI
SECTION 3.01. ORGANIZATION . . . . . . . . . . . . . . . . . . . 7
SECTION 3.02. CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.03. AVAILABLE FUNDS . . . . . . . . . . . . . . . . . 8
SECTION 3.04. BROKER'S FEES . . . . . . . . . . . . . . . . . . 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES CONCERNING
THE COMPANY AND THE SUBSIDIARIES
SECTION 4.01. ORGANIZATION . . . . . . . . . . . . . . . . . . . 9
SECTION 4.02. CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.03. CAPITALIZATION . . . . . . . . . . . . . . . . . . 10
SECTION 4.04. OTHERS ENTITLED TO VOTE . . . . . . . . . . . . . 10
SECTION 4.05. NONCONTRAVENTION . . . . . . . . . . . . . . . . . 11
SECTION 4.06. REQUIRED STOCKHOLDER VOTE . . . . . . . . . . . . 11
SECTION 4.07. BROKERS' FEES . . . . . . . . . . . . . . . . . . 11
SECTION 4.08. THE SUBSIDIARIES . . . . . . . . . . . . . . . . . 11
SECTION 4.09. REPORTS AND FINANCIAL STATEMENTS . . . . . . . . . 12
SECTION 4.10. NO UNDISCLOSED MATERIAL LIABILITIES . . . . . . . 13
SECTION 4.11. NO VIOLATION OF LAW; LAWFUL OPERATIONS . . . . . . 13
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SECTION 4.12. ENVIRONMENTAL LAWS AND REGULATIONS . . . . . . . . 14
SECTION 4.13. EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . 14
SECTION 4.14. ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . 17
SECTION 4.15. TITLE . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.16. INVESTIGATIONS; LITIGATION . . . . . . . . . . . . 17
SECTION 4.17. TAX MATTERS . . . . . . . . . . . . . . . . . . . 18
SECTION 4.18. OPINION OF FINANCIAL ADVISOR . . . . . . . . . . . 19
SECTION 4.19. MATERIAL CONTRACTS . . . . . . . . . . . . . . . . 20
SECTION 4.20. INTELLECTUAL PROPERTY RIGHTS . . . . . . . . . . . 20
SECTION 4.21. INSURANCE . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.22. INDEMNIFICATION . . . . . . . . . . . . . . . . . 21
SECTION 4.23. LOANS . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.24. INVESTMENTS . . . . . . . . . . . . . . . . . . . 22
SECTION 4.25. INSIDER INTEREST . . . . . . . . . . . . . . . . . 23
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.01. GENERAL . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.02. INVESTIGATION AND ACCESS TO INFORMATION . . . . . 23
SECTION 5.03. ADDITIONAL REPORTS AND INFORMATION . . . . . . . . 24
SECTION 5.04. CONDUCT OF BUSINESS BY THE COMPANY AND
SUBSIDIARIES OTHER THAN THE BANK . . . . . . . . . 24
SECTION 5.05. CONDUCT OF BUSINESS BY THE BANK . . . . . . . . . 26
SECTION 5.06. NO SOLICITATION . . . . . . . . . . . . . . . . . 28
SECTION 5.07. ALLOWANCE FOR LOAN LOSSES . . . . . . . . . . . . 29
SECTION 5.08. REGULATORY APPROVALS . . . . . . . . . . . . . . . 30
SECTION 5.09. RECOMMENDATION OF APPROVAL . . . . . . . . . . . . 30
SECTION 5.10. SIGNIFICANT STOCKHOLDER APPROVAL . . . . . . . . . 30
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. ANTITAKEOVER STATUTE . . . . . . . . . . . . . . . 30
SECTION 6.02. PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . 30
SECTION 6.03. NOTICES OF CERTAIN EVENTS . . . . . . . . . . . . 31
SECTION 6.04. STOCKHOLDER APPROVAL; PROXY SOLICITATION; OTHER
FILINGS . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.05. INFORMATION PROVIDED . . . . . . . . . . . . . . . 32
SECTION 6.06. EFFORTS TO CONSUMMATE; FURTHER ASSURANCES . . . . 33
SECTION 6.07. UPDATING OF SCHEDULES . . . . . . . . . . . . . . 33
SECTION 6.08. DIRECTORS' AND OFFICERS' INDEMNIFICATION AND
INSURANCE . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.09. EMPLOYEES . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.10. COMPANY PLANS . . . . . . . . . . . . . . . . . . 35
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ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. CONDITIONS TO THE OBLIGATION OF FNNI AND FIRST
NATIONAL ILLINOIS . . . . . . . . . . . . . . . . 38
SECTION 7.02. CONDITIONS TO THE OBLIGATION OF THE COMPANY . . . 40
ARTICLE VIII
TERMINATION
SECTION 8.01. TERMINATION OR ABANDONMENT . . . . . . . . . . . . 41
SECTION 8.02. FNNI TERMINATION FEE AND EXPENSES . . . . . . . . 43
SECTION 8.03. COMPANY LIQUIDATED DAMAGES . . . . . . . . . . . . 43
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. COUNTERPARTS; EFFECTIVENESS . . . . . . . . . . . 43
SECTION 9.02. GOVERNING LAW . . . . . . . . . . . . . . . . . . 43
SECTION 9.03. JURISDICTION . . . . . . . . . . . . . . . . . . . 43
SECTION 9.04. NOTICES . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.05. ASSIGNMENT; BINDING EFFECT . . . . . . . . . . . . 45
SECTION 9.06. SEVERABILITY . . . . . . . . . . . . . . . . . . . 45
SECTION 9.07. ENFORCEMENT OF AGREEMENT . . . . . . . . . . . . . 45
SECTION 9.08. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES . . 45
SECTION 9.09. HEADINGS . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.10. FEES AND EXPENSES . . . . . . . . . . . . . . . . 46
SECTION 9.11. AMENDMENT OR SUPPLEMENT . . . . . . . . . . . . . 46
SECTION 9.12. EXTENSION OF TIME, WAIVER, ETC. . . . . . . . . . 46
SECTION 9.13. TIMING . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE X
DEFINITIONS
SECTION 10.01. DEFINITIONS . . . . . . . . . . . . . . . . . . . 47
SECTION 10.02. CONSTRUCTION . . . . . . . . . . . . . . . . . . 48
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered
into as of September 7, 2001 by and among FIRST NATIONAL OF NEBRASKA,
INC., a Nebraska corporation ("FNNI"), FIRST NATIONAL OF ILLINOIS,
INC., a Delaware corporation ("First National Illinois") which is a
wholly owned subsidiary of FNNI, and Castle BancGroup, Inc., a
Delaware corporation (the "Company"). FNNI, First National Illinois
and the Company are referred to collectively herein as the "Parties."
Terms used herein that are not otherwise defined in the text are
defined in Article X of this Agreement.
RECITALS
The Company owns 100% of the issued and outstanding shares of all
classes of stock of Castle Bank N.A., a national banking association
(the "Bank"), CasBanc Mortgage, Inc., an Illinois corporation, Castle
Finance Company, an Illinois corporation, and SBI Illinois, Inc., an
Illinois corporation, which, unless otherwise noted, shall be
collectively referred to as the "Subsidiaries."
The boards of directors of each of the Parties have approved and
declared it advisable and in the best interest of their respective
companies and their stockholders to effect a merger, whereby First
National Illinois will merge with and into the Company, in the manner
and on the terms and subject to the conditions set forth in Article I
below (the "Merger"), as a result of which the Company will become a
wholly owned subsidiary of FNNI;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations,
warranties and covenants herein contained, the Parties agree as
follows.
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER. At the Effective Time (as defined in
Section 1.04), in accordance with this Agreement and the Delaware
General Corporation Law (the "DGCL"), the Merger shall be consummated
with First National Illinois merging into the Company, and the Company
shall continue as the corporation surviving the Merger (the "Surviving
Corporation") and shall be a wholly owned subsidiary of FNNI.
SECTION 1.02. EFFECT OF THE MERGER. At the Effective Time, the
separate existence of First National Illinois shall cease, and the
Surviving Corporation shall possess all the rights, privileges, powers
and franchises, both public and private, of the Company and First
National Illinois, and the Surviving Corporation shall be vested with
all property, whether real, personal or mixed, and all debts due on
whatever account, and all other choses in action, and all and every
other interest belonging to or due to each of the Company and First
National Illinois; and shall be responsible and liable for all the
obligations and liabilities of each of the Company and First National
Illinois, all with the effect set forth in the DGCL.
SECTION 1.03. THE CLOSING. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the
offices of FNNI, Xxx Xxxxx Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000
commencing at 11:00 a.m. local time on the fifteenth business day
following the end of the month in which FNNI, First National Illinois
and the Company have received all final state and federal regulatory
approvals for the consummation of the transactions contemplated by
this Agreement, the stockholders of the Company have approved this
Agreement, and all applicable waiting periods have expired, or such
other date and location as mutually agreed upon by the Parties (the
"Closing Date").
SECTION 1.04. EFFECTIVE TIME. On the Closing Date, the Parties
shall execute and file in the office of the Secretary of State of the
State of Delaware a certificate of merger executed in accordance with
the DGCL (the "Certificate of Merger") and shall make all such other
filings or recordings as may be required to effectuate the Merger and
otherwise carry out the obligations of the Parties hereunder. The
Merger shall become effective at the time of filing of the Certificate
of Merger, or at such later time as is agreed upon by the Parties and
set forth therein (such time as the Merger becomes effective is
referred to herein as the "Effective Time").
SECTION 1.05. CERTIFICATE OF INCORPORATION AND BYLAWS OF THE
SURVIVING CORPORATION.
(a) At the Effective Time, the Certificate of Incorporation
of the Surviving Corporation shall be amended so that the
Certificate of Incorporation of First National Illinois as in
effect immediately prior to the Effective Time shall become the
Certificate of Incorporation of the Surviving Corporation until
thereafter amended as provided therein and by the DGCL.
(b) At the Effective Time, the Bylaws of the Surviving
Corporation shall be amended so that the Bylaws of First National
Illinois as in effect immediately prior to the Effective Time
shall become the Bylaws of the Surviving Corporation until
thereafter amended as provided by the DGCL, the Certificate of
Incorporation of the Surviving Corporation and such Bylaws.
SECTION 1.06. DIRECTORS. At the Effective Time, the directors
of First National Illinois immediately prior to the Effective Time
shall become the directors of the Surviving Corporation, to serve
until the earlier of their death, resignation or removal or until
their respective successors are duly elected and qualified.
SECTION 1.07. OFFICERS. At the Effective Time, the officers of
First National Illinois immediately prior to the Effective Time shall
become the officers of the Surviving Corporation, to serve until the
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earlier of their death, resignation or removal or until their
respective successors are duly elected and qualified.
ARTICLE II
CONVERSION OF SHARES; PAYMENT FOR SHARES
SECTION 2.01. EFFECT ON STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of the Company, FNNI,
First National Illinois or the holders of any securities of the
Company, FNNI or First National Illinois:
(a) Each issued and outstanding share of Common Stock, par
value $.33 1/3 per share, of the Company ("Company Common Stock")
except the Dissenting Shares defined in Section 2.01(c) hereof
shall be converted into the right to receive $18.00 or such
higher amount as FNNI and the Company may agree in cash, payable
by FNNI to the holder thereof, without interest thereon (the
"Merger Consideration"), upon surrender and exchange of the
certificate representing such share of Company Common Stock (a
"Certificate") in accordance with Section 2.03. As of the
Effective Time, except as provided in Section 2.01(b) or (c), all
shares of Company Common Stock shall no longer be outstanding,
shall automatically be cancelled and retired and shall cease to
exist, and each holder ("Stockholder") of a certificate or
certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the
"Certificates") shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration for
each share represented by such Stockholder's Certificates.
(b) Each share of Company Common Stock that is held in the
Company's treasury or by any of the Company's direct or indirect
wholly owned subsidiaries immediately prior to the Effective Time
("Company Treasury Stock") shall automatically be cancelled and
retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
(c) Notwithstanding any provision of this Agreement to the
contrary, each outstanding share of Company Common Stock that is
issued and outstanding immediately prior to the Effective Time
and the holder of which (i) has not voted in favor of the Merger,
(ii) has delivered a written demand for appraisal of such
holder's shares in accordance with Section 262 of the DGCL and
(iii) has not effectively withdrawn or lost such right to
appraisal (a "Dissenting Share") shall not be converted into or
represent a right to receive the Merger Consideration pursuant to
Section 2.01(a). The holder of a Dissenting Share shall instead
be entitled to receive payment of the appraised value of such
share in accordance with the provisions of Section 262 of the
DGCL; provided, however, that any Dissenting Share held by a
person at the Effective Time who shall, after the Effective Time,
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withdraw the demand for appraisal or lose the right of appraisal,
in either case pursuant to the DGCL, shall be deemed to be
converted into, as of the Effective Time, the right to receive
the Merger Consideration pursuant to Section 2.01(a). The
Company shall give FNNI prompt notice of any written demands for
appraisal, withdrawals of demands for appraisal and any other
instruments served pursuant to the applicable provisions of the
DGCL relating to the appraisal process received by the Company.
Notwithstanding anything to the contrary in this Section 2.01(c),
if (A) the Merger is rescinded or abandoned or (B) the
Stockholders revoke the authority to effect the Merger, the right
of any Stockholder to be paid the fair value of such
Stockholder's Dissenting Shares pursuant to the DGCL shall cease.
(d) Each issued and outstanding share of common stock, par
value $.01 per share, of First National Illinois shall be
converted into one validly issued, fully paid and nonassessable
share of common stock of the Surviving Corporation.
SECTION 2.02. COMPANY STOCK OPTIONS. Each option (an "Option")
outstanding at the Effective Time under any of the Company's stock
option plans (the "Option Plans") to acquire Company Common Stock
shall be converted into the right to receive an amount (the "Option
Consideration") in cash equal to (a) the number of shares subject to
such Option multiplied by (b) an amount equal to the Merger
Consideration less the exercise price associated with such Option. At
Closing, each unvested option outstanding under the Option Plans shall
automatically become vested.
SECTION 2.03. PAYMENT FOR SHARES.
(a) PAYING AGENT. Prior to the Effective Time, FNNI shall
appoint First National Bank of Omaha to act as paying agent (the
"Paying Agent") for payment of the Merger Consideration and the
Option Consideration, and FNNI shall deposit or cause to be
deposited with the Paying Agent cash in an amount equal to the
aggregate Merger Consideration, to be held for the benefit of and
distributed to Stockholders in accordance with this Section and
the terms of a Paying Agent Agreement in the form acceptable to
the Parties. Prior to the Effective Time, FNNI or First National
Illinois shall deliver to the Paying Agent cash equal to the
aggregate Option Consideration less any applicable withholding
taxes together with instructions that such cash be promptly
distributed following the Effective Time to the holders of
Options in accordance with this Section. The Paying Agent shall
agree to hold such funds (such funds, together with earnings
thereon, being referred to herein as the "Payment Fund") for
delivery as contemplated by this Section. The Paying Agent
shall, pursuant to the Paying Agent Agreement substantially in
the form of Exhibit A, pay the aggregate Merger Consideration and
the aggregate Option Consideration less any applicable
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withholding taxes out of the Payment Fund, and the Payment Fund
shall not be used for any other purpose.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, but in no event more than five days
after the Effective Time, the Surviving Corporation shall cause
the Paying Agent to mail to each former Stockholder whose shares
are converted pursuant to Section 2.01(a) into the right to
receive the Merger Consideration (i) a letter of 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 to the Paying Agent and shall be in such form
and have such other provisions as the Surviving Corporation may
reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation
to the Paying Agent, together with such letter of transmittal
duly executed and completed in accordance with its terms, the
Paying Agent shall mail to the holder of such Certificate in
exchange therefor cash equal to the Merger Consideration
multiplied by the number of shares of Company Common Stock
formerly represented by such Certificate (less any required
withholding), which such holder has the right to receive pursuant
to the provisions of this Article II, payable by check, and the
Certificate so surrendered shall forthwith be canceled. Except
as provided in the DGCL with respect to Dissenting Shares, no
current or former Stockholder shall be entitled to receive
interest on any funds to be received in the Merger. In the event
of a transfer of ownership of Company Common Stock that is not
registered in the transfer records of the Company, a check equal
to the Merger Consideration multiplied by the number of shares of
Company Common Stock formerly owned by the Stockholder may be
issued to a transferee if the Certificate representing such
Company Common Stock is presented to the Paying Agent accompanied
by all documents required to evidence and effect such transfer
and evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.03(b),
each Certificate (other than for Dissenting Shares and Company
Treasury Stock) shall be deemed at all times after the Effective
Time and for all corporate purposes of the Surviving Corporation,
to represent only the right to receive, upon such surrender, the
Merger Consideration multiplied by the number of shares of
Company Common Stock formerly represented thereby, as
contemplated by this Article II, including as limited or adjusted
by paragraphs (c), (e), (h) and (i) below.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK;
STOCK TRANSFER BOOKS. All cash paid upon the surrender for
exchange of Certificates in accordance with the terms of this
Article II shall be deemed payment in full satisfaction of all
rights pertaining to the shares of Company Common Stock
theretofore represented by such Certificates. After the
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Effective Time there shall be no further registration of
transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock that were
outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be
cancelled against delivery of the Merger Consideration, except as
otherwise provided by law.
(d) TERMINATION OF PAYMENT FUND. Any portion of the
Payment Fund remaining undistributed to the former Stockholders
or former holders of Options one year after the Effective Time
shall be delivered to the Surviving Corporation upon demand, and
any former Stockholders who have not theretofore complied with
this Article II shall thereafter look only to the Surviving
Corporation for payment of their claim for Merger Consideration.
(e) NO LIABILITY. Neither the Company, FNNI, First
National Illinois, the Surviving Corporation nor the Paying Agent
shall be liable to any person with respect to cash from the
Payment Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(f) INVESTMENT OF PAYMENT FUND. The Paying Agent shall
invest all cash included in the Payment Fund as directed by FNNI,
provided such investments are in obligations of or guaranteed by
the United States of America and backed by the full faith and
credit of the United States of America or in commercial paper
obligations rated P-1 and A-1 or better by Xxxxx'x Investors
Service, Inc. and Standard & Poor's Corporation, respectively.
Any interest and other income resulting from such investments
shall be paid to the Surviving Corporation.
(g) LOST CERTIFICATES. For any Certificate that has been
lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required in the sole discretion of
the Surviving Corporation, the posting by such person of a bond
in such reasonable amount as the Surviving Corporation may direct
as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent will issue the
Merger Consideration in exchange for the shares of Company Common
Stock represented by such lost, stolen or destroyed Certificate.
(h) WITHHOLDING RIGHTS. Each of the Paying Agent and the
Surviving Corporation shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this
Agreement to any former Stockholder or former holder of an Option
such amounts as are required to be deducted and withheld with
respect to the making of such payment under the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), and the
rules and regulations promulgated thereunder, or any provision of
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state, local or foreign tax law. To the extent that amounts are
so withheld, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the former
Stockholder or Option holder in respect of which such deduction
and withholding was made.
(i) ADJUSTMENT OF MERGER CONSIDERATION. If, subsequent to
the date of this Agreement but prior to the Effective Time, the
outstanding shares of Company Common Stock shall have been
changed into a different number of shares or a different class as
a result of a stock split, reverse stock split, stock dividend,
subdivision, reclassification, split, combination, exchange,
recapitalization or other similar transaction, the Merger
Consideration shall be appropriately adjusted so that the
aggregate amount payable pursuant to this Agreement shall not
have increased or decreased as a result of such adjustment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES CONCERNING
FIRST NATIONAL ILLINOIS AND FNNI
First National Illinois and FNNI represent and warrant to the
Company that the statements contained in this Article III are correct
and complete.
SECTION 3.01. ORGANIZATION. Each of First National Illinois and
FNNI is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation. FNNI is
duly registered as a financial holding company under the Xxxxx-Xxxxx-
Bliley Act. FNNI owns all of the outstanding capital stock of First
National Illinois.
SECTION 3.02. CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION.
(a) Each of FNNI and First National Illinois has the legal
power and authority to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the boards of
directors of FNNI and First National Illinois and by FNNI as the
sole stockholder of First National Illinois and no other
corporate proceedings on the part of FNNI or First National
Illinois are necessary to authorize the consummation of the
transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by FNNI and First National
Illinois and, assuming this Agreement constitutes a valid and
binding agreement of the other Parties, this Agreement
constitutes a valid and binding agreement of FNNI and First
National Illinois, enforceable against FNNI and First National
Illinois in accordance with its terms, except that enforcement
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hereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a
proceeding at law or in equity).
(b) Neither FNNI nor First National Illinois is subject to
or obligated under any charter, bylaw or contract provision or
any license, franchise or permit, or subject to any order or
decree, which, by its terms, would be breached or violated or
would accelerate any payment or obligation, trigger any right of
first refusal or other purchase right as a result of FNNI or
First National Illinois executing or carrying out the
transactions contemplated by this Agreement, except for any
breaches or violations that would not, individually or in the
aggregate, have a Material Adverse Effect on FNNI or First
National Illinois. Other than in connection with or in
compliance with (i) the provisions of the DGCL, (ii) the Exchange
Act, and (iii) federal and state banking laws, no authorization,
consent or approval of, or filing with, any Governmental
Authority is necessary for the consummation by FNNI or First
National Illinois of the transactions contemplated by this
Agreement, except for such authorizations, consents, approvals or
filings the failure to obtain or make which would not,
individually or in the aggregate, have a Material Adverse Effect
on FNNI or First National Illinois or substantially impair or
delay the consummation of the transactions contemplated hereby.
SECTION 3.03. AVAILABLE FUNDS. FNNI and First National Illinois
have available all funds necessary to pay the aggregate Merger
Consideration and aggregate Option Consideration and to satisfy all of
their obligations under this Agreement.
SECTION 3.04. BROKER'S FEES. Neither First National Illinois
nor FNNI has any liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which the Company
could become liable or obligated.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES CONCERNING
THE COMPANY AND THE SUBSIDIARIES
The Company represents and warrants to First National Illinois
and FNNI that the statements contained in this Article IV are correct
and complete, except as set forth in the Disclosure Schedule delivered
as Annex I, which shall be delivered by the Company not later than
five days after the date hereof. The Parties shall use their
reasonable best efforts to take all action to ensure that the
Disclosure Schedule is reasonably acceptable to all the Parties. The
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Disclosure Schedule will be arranged in paragraphs corresponding to
the lettered and numbered paragraphs contained in this Article IV.
SECTION 4.01. ORGANIZATION. Each of the Company and each
Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation and
has the requisite power and authority to conduct its business as
presently conducted and to own its properties.
SECTION 4.02. CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION.
(a) The Company has the legal power and authority to enter
into this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly authorized by the board of directors of the Company and,
other than the vote of the Shareholders, no other corporate
proceeding on the part of the Company is necessary to authorize
the consummation of the transactions contemplated hereby. The
board of directors of the Company has determined that the
transactions contemplated by this Agreement are in the best
interest of the Company and its stockholders, has declared the
advisability of this Agreement and has determined to recommend to
such stockholders that they approve and adopt this Agreement.
This Agreement has been duly and validly executed and delivered
by the Company and, assuming this Agreement constitutes a valid
and binding agreement of the other Parties, this Agreement
constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except that enforcement hereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a
proceeding at law or in equity). Schedule 4.02 lists the
directors and officers of the Company and each Subsidiary.
(b) Neither the Company nor any Subsidiary is subject to or
obligated under any charter, bylaw or contract provision or any
license, franchise or permit, or subject to any order or decree,
which, by its terms, would be breached or violated or would
accelerate any payment or obligation, trigger any right of first
refusal or other purchase right as a result of the Company
executing or carrying out the transactions contemplated by this
Agreement, except for any breaches or violations that would not,
individually or in the aggregate, have a Material Adverse Effect
on the Company. Other than in connection with or in compliance
with (i) the provisions of the DGCL, (ii) the Exchange Act, and
(iii) federal and state banking laws, no authorization, consent
or approval of, or filing with, any Governmental Authority is
necessary for the consummation by the Company of the transactions
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contemplated by this Agreement, except for such authorizations,
consents, approvals or filings the failure to obtain or make
which would not, individually or in the aggregate, have a
Material Adverse Effect on the Company or substantially impair or
delay the consummation of the transactions contemplated hereby.
SECTION 4.03. CAPITALIZATION. The entire authorized capital
stock of the Company consists of 25,000,000 shares of Company Common
Stock, of which as of August 31, 2001 4,422,801 shares were issued and
outstanding and no shares were held in the Company's treasury. No
other shares of the Company Common Stock or any other stock, including
preferred stock or convertible preferred shares, are outstanding. All
of the issued and outstanding shares of Company Common Stock have been
duly authorized, are validly issued, fully paid and nonassessable and
are held of record by the respective persons as set forth in Schedule
4.03. The Options have been duly authorized by all necessary
corporate action (including stockholder approval if necessary), have
been validly executed, issued and delivered, constitute the legal,
valid, and binding obligations of the Company, and are enforceable as
to the Company in accordance with their terms and the terms of the
Option Plans identified in Schedule 4.03. The shares of Company
Common Stock to be issued upon exercise of the Options are validly
authorized and, upon such exercise of the Options in accordance with
their terms and the terms of the Option Plans, will be validly issued,
fully paid, and nonassessable. The Company has no outstanding stock
appreciation, phantom stock or similar rights, other than commitments
to make the payments referred to in Section 5.04(c). There are no
outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights or other
contracts or commitments that could require the Company to issue, sell
or otherwise cause to become outstanding any of its capital stock
other than in accordance with the Company's Dividend Reinvestment and
Employee Stock Purchase Plan and as set forth in Schedule 4.03. As of
the date hereof, the Company has amended its Dividend Reinvestment and
Employee Stock Purchase Plan so that (a) no further (i) purchases of
Common Stock and (ii) dividend reinvestments in Common Stock can be
made under this Plan and (b) all cash held in this Plan at the
effective time of such amendment shall be returned to the applicable
participants therein. Except as expressly contemplated by this
Agreement, there are no voting trusts, proxies or other agreements or
understandings with respect to the voting of the capital stock of the
Company. The Company does not have any declared and unpaid dividends
(whether payable in cash, securities or other consideration).
SECTION 4.04. OTHERS ENTITLED TO VOTE. The Company does not
have outstanding any indebtedness which entitles the holder or holders
thereof to exercise voting rights in connection with the election of
its directors or the approval of this transaction, nor are there
outstanding any options, warrants, calls, rights, commitments or
agreements of any kind obligating the Company to issue any such
indebtedness. There are no outstanding contractual obligations of the
Company or any Subsidiary to repurchase, redeem or otherwise acquire
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any shares of its capital stock or any of its indebtedness prior to
maturity.
SECTION 4.05. NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, by the Company will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or other restriction of any government, governmental
agency or court to which the Company or any Subsidiary is subject or
any provision of the charter or bylaws of the Company or any
Subsidiary or (ii) except for the agreements set forth in Schedule
4.05, conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel or require any notice under
any agreement, contract, lease, license, instrument or other
arrangement to which the Company or any Subsidiary is a party or by
which it is bound or to which any of its assets is subject (or result
in the imposition of any Lien upon any of its assets), except where
the violation, conflict, breach, default, acceleration, termination,
modification, cancellation, failure to give notice or Lien would not
have a Material Adverse Effect on the Company and the Subsidiaries
taken as a whole or (iii) result in the creation of any Lien upon the
Company Common Stock.
SECTION 4.06. REQUIRED STOCKHOLDER VOTE. The only approval
required by the stockholders of the Company is that holders of a
majority of all Company Common Stock vote in favor of the Merger.
SECTION 4.07. BROKERS' FEES. Except for fees payable to Xxxxxxx
Xxxxx & Company, L.L.C. ("Xxxxxxx Xxxxx"), neither the Company nor any
Subsidiary has any liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
SECTION 4.08. THE SUBSIDIARIES. Schedule 4.08 sets forth for
each of the Subsidiaries (i) the number of authorized shares of each
class of its capital stock, (ii) the number of issued and outstanding
shares of each class of its capital stock and (iii) the number of
shares of its capital stock held in treasury. All of the issued and
outstanding shares of capital stock of the Subsidiaries have been duly
authorized and are validly issued, fully paid and nonassessable. The
Company holds of record and owns beneficially all of the outstanding
shares of the Subsidiaries free and clear of any restrictions on
transfer (other than restrictions under the Securities Act and state
securities laws), taxes, Liens, options, warrants, purchase rights,
contracts, commitments, equities, claims and demands, except as set
forth in Schedule 4.08. There are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights or other contracts or commitments that could
require the Company or the Subsidiaries to sell, transfer or otherwise
dispose of any capital stock of the Subsidiaries or that could require
the Subsidiaries to issue, sell or otherwise cause to become
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outstanding any of its own capital stock. There are no outstanding
stock appreciation, phantom stock, profit participation or similar
rights with respect to the Subsidiaries. There are no voting trusts,
proxies or other agreements or understandings with respect to the
voting of any capital stock of the Subsidiaries. Except for the
Company's ownership of the Subsidiaries and Investment Securities (as
defined in Section 4.24), neither the Company nor any Subsidiary
controls directly or indirectly or has any direct or indirect equity
participation in any corporation, partnership, trust or other business
association.
SECTION 4.09. REPORTS AND FINANCIAL STATEMENTS.
(a) The Company has previously furnished or made available
to FNNI true and complete copies of:
(i) the audited consolidated financial statements of
the Company and the Subsidiaries as of, and for the year
ended, December 31, 2000 (the "2000 Financial Statements");
(ii) the Company's Annual Reports on Form 10-K filed
with the Securities and Exchange Commission (the "SEC") for
each of the years ended December 31, 1998, 1999 and 2000;
(iii) each definitive proxy statement filed by the
Company with the SEC since December 31, 1998;
(iv) each final prospectus filed by the Company with
the SEC, except any final prospectus relating to a
Registration Statement on Form S-8; and
(v) all Current Reports on Form 8-K and Quarterly
Reports on Form 10-Q filed by the Company with the SEC since
December 31, 1999.
The 2000 Financial Statements and the audited consolidated
financial statements and unaudited consolidated interim financial
statements included in the reports, proxy statements and
prospectuses described in clauses (ii) through (v) above (the
"Company SEC Reports") (including any related notes and
schedules) fairly present in all material respects the financial
position of the Company and its Subsidiaries as of the dates
thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of the unaudited interim
financial statements, to normal recurring year-end adjustments),
in each case in accordance with accounting principles generally
accepted in the United States ("GAAP") consistently applied
during the periods involved (except as otherwise disclosed in the
notes thereto).
(b) As of their respective dates, the Company SEC Reports
(i) complied as to form in all material respects with the
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applicable requirements of the Securities Act, the Exchange Act
and the rules and regulations promulgated thereunder and (ii) did
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Company has
timely filed all reports, registration statements and other
filings required to be filed by it with the SEC under the rules
and regulations of the SEC since December 31, 1998. None of the
Subsidiaries is subject to the periodic reporting requirements of
the Exchange Act.
SECTION 4.10. NO UNDISCLOSED MATERIAL LIABILITIES. Neither the
Company nor any of the Subsidiaries has any liabilities or obligations
of any nature required to be reflected on a balance sheet prepared in
accordance with GAAP, whether or not accrued, contingent or otherwise,
and there is no existing condition, situation or set of circumstances
which would reasonably be expected to result in such a liability or
obligation, except (a) liabilities or obligations reflected in the
2000 Financial Statements, (b) liabilities or obligations incurred
since the date of the 2000 Financial Statements in the ordinary course
of business or (c) liabilities or obligations which would not,
individually or in the aggregate, have a Material Adverse Effect on
the Company and the Subsidiaries taken as a whole.
SECTION 4.11. NO VIOLATION OF LAW; LAWFUL OPERATIONS.
(a) The businesses of the Company and each of the
Subsidiaries are being conducted in compliance with all
applicable law and regulations, including the Federal Reserve
Act, the Federal Deposit Insurance Act, 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, fair
debt collection practices, usury, fair credit reporting and
consumer protection, and any statutes or ordinances relating to
the properties occupied or used by the Company and each of the
Subsidiaries, except for noncompliance which individually or in
the aggregate would not have a Material Adverse Effect on the
Company and the Subsidiaries taken as a whole.
(b) The policies, programs and practices of the Company and
each of the Subsidiaries relating to wages, hours of work and
other terms and conditions of employment are in compliance with
applicable laws and regulations governing employment and terms
and conditions of employment, except for noncompliance which
individually or in the aggregate would not have a Material
Adverse Effect on the Company and the Subsidiaries taken as a
whole. There are no disputes, claims or charges pending or, to
the Company's Knowledge, threatened, against the Company or any
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of the Subsidiaries alleging breach of any express or implied
employment contract or commitment, or material breach of any
applicable law and regulation relating to employment or terms and
conditions of employment.
SECTION 4.12. ENVIRONMENTAL LAWS AND REGULATIONS.
(a) To the Company's Knowledge, the Company and each of the
Subsidiaries are in compliance with all applicable laws and
regulations relating to pollution or protection of human health
or the environment (including ambient air, surface water, ground
water, land surface or subsurface strata) (collectively,
"Environmental Laws"), which compliance includes, but is not
limited to, the possession by the Company and the Subsidiaries of
all material permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with
the terms and conditions thereof, except for noncompliance which
individually or in the aggregate would not have a Material
Adverse Effect on the Company and the Subsidiaries taken as a
whole.
(b) Neither the Company nor any of the Subsidiaries has
received written notice of, or is the subject of, any actions,
causes of action, claims, investigations, demands or notices by
any person asserting an obligation to conduct investigations or
cleanup activities under any Environmental Law or alleging
liability under or noncompliance with any Environmental Law
(collectively, "Environmental Claims") that, individually or in
the aggregate, would have a Material Adverse Effect on the
Company and the Subsidiaries taken as a whole.
(c) To the Company's Knowledge following actual receipt of
written notice, there are no facts, circumstances or conditions
associated with any real property (i) on which the Company or any
of its Subsidiaries has a mortgage or lien securing a loan with a
balance of $100,000 or more and (ii) over which the Company or
its Subsidiaries exercise day-to-day control, that would
reasonably be expected to result in the assertion of an
Environmental Claim against the Company, its Subsidiaries or any
owner or operator of such real property.
SECTION 4.13. EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.13 contains a true and complete list of each
"employee benefit plan" (within the meaning of Section 3(3) of
ERISA), including pension, profit sharing, 401(k), severance,
welfare, disability and deferred compensation, and all other
material employee benefit plans, agreements, programs, policies
or arrangements, including stock purchase, stock option,
employment, change-in-control, fringe benefit, bonus and
incentive plans and agreements, whether or not subject to ERISA,
whether formal or informal, oral or written, legally binding or
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not, under which any employee, former employee, director or
former director of the Company or any Subsidiary has any present
or future right to benefits or under which the Company or any
Subsidiary has any present or future liability. All such plans,
agreements, programs, policies and arrangements shall be
collectively referred to as the "Company Plans" but shall be
separately identified on Schedule 4.13.
(b) The Company represents and warrants that:
(i) each Company Plan has been established and
administered in accordance with its terms, and each such
Company Plan and the Company are in all material respects in
full compliance with the applicable provisions of ERISA, the
Code and other federal and state applicable laws, rules and
regulations with respect thereto except for noncompliance
which, individually or in the aggregate, would not have a
Material Adverse Effect on the Company;
(ii) the Company has received, with respect to each
Company Plan that is an "employee pension benefit plan"
(within the meaning of ERISA Section 3(2)) and is intended
to meet the tax qualification requirements of Code Section
401(a), a favorable determination letter as to its
qualification. To the Knowledge of the Company each trust
for each such Company Plan is exempt from federal income Tax
under Code Section 501(a). To the Knowledge of the Company,
no event has occurred or circumstance exists that will or
could give rise to disqualification or loss of tax-exempt
status of any such Company Plan or trust;
(iii) to the Knowledge of the Company, no event has
occurred and no condition exists that likely could subject
the Company to any tax, fine, lien, penalty or other
liability imposed by ERISA (including any breach of
fiduciary responsibility by any director, officer or
employee), the Code or other applicable laws, rules and
regulations that would have a Material Adverse Effect on the
Company and the Subsidiaries taken as a whole;
(iv) for each Company Plan with respect to which a Form
5500 has been filed, no material change has occurred with
respect to the matters covered by the most recent Form 5500
since the date thereof;
(v) to the Knowledge of the Company, no Company Plan
is a Multiemployer Plan within the meaning of ERISA Section
4001(a)(3) or a plan subject to Title IV of ERISA and no
"prohibited transaction" (as such term is defined in ERISA
Section 406 and Code Section 4975) that is not the subject
of a statutory or administrative exemption under ERISA
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Section 408 and Code Section 4975 has occurred with respect
to any Company Plan;
(vi) to the Knowledge of the Company, all contributions
and payments made or accrued with respect to all Company
Plans and other benefit obligations are deductible under
Code Section 162 or 404, and no amount or any asset of any
Company Plan is subject to tax as unrelated business taxable
income;
(vii) to the Knowledge of the Company, no event has
occurred or circumstance exists that could result in a
material increase in premium costs of Company Plans and
other benefit obligations that are insured or a material
increase in benefit costs of such plans and obligations that
are self-insured;
(viii) except as set forth on Schedule 4.13 and
except to the extent required under ERISA Section 601 et
seq. and Code Section 4980B, the Company does not provide
health or welfare benefits for any retired or former
employee and is not obligated to provide health or welfare
benefits to any active employee following such employee's
retirement or other termination of service;
(ix) the Company has the right to modify and terminate
each Company Plan with respect to both retired and active
employees;
(x) to the Knowledge of the Company, the Company has
complied with the provisions of ERISA Section 601 et seq.
and Code Section 4980B, except for noncompliance which would
not, individually or in the aggregate, have a Material
Adverse Effect on the Company and the Subsidiaries taken as
a whole; and
(xi) except as may be expressly permitted by this
Agreement or as disclosed on Schedule 4.13, the Merger will
not result in the payment, vesting or acceleration of any
benefit under any Company Plan.
(c) With respect to any Company Plan, (i) no actions, suits
or claims (other than claims for benefits made in the ordinary
course of the Company Plan's operation) are pending or, to the
Knowledge of the Company, threatened; and (ii) to the Knowledge
of the Company, no facts or circumstances exist that reasonably
could give rise to any such actions, suits or claims.
Full payment has been made or accrued for all amounts which
are due to any of the Company Plans. Furthermore, the Company
has made adequate provision for reserves to meet contributions
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that have not been made because they are not yet due under the
terms of any of the Company Plans.
SECTION 4.14. ABSENCE OF CERTAIN CHANGES OR EVENTS. Other than
the transactions contemplated or permitted by this Agreement or as
disclosed in the any of the Company SEC Reports, since January 1,
2001, (a) the businesses of the Company and the Subsidiaries have been
conducted in the ordinary course consistent with past practice and (b)
there has not been any event, occurrence, development or state of
circumstances or facts that has had a Material Adverse Effect on the
Company and the Subsidiaries taken as a whole.
SECTION 4.15. TITLE. Schedule 4.15 contains a listing of all
real estate, including OREO and repossessed property, owned or leased
by the Company or any Subsidiary. Each of the Company and each
Subsidiary is the owner of good title to, or a valid leasehold
interest in, all of its material tangible assets, free and clear of
all liabilities, Liens and restrictions on transfer, except liens for
taxes not yet due and payable and easements of record affecting real
property that do not adversely affect the use of such property by the
Company or Subsidiary for the purposes for which it is currently used.
SECTION 4.16. INVESTIGATIONS; LITIGATION.
(a) To the Company's Knowledge, there is no investigation
or review being undertaken or that is pending by any Governmental
Authority with respect to the Company or any of the Subsidiaries
that, individually or in the aggregate, would have a Material
Adverse Effect on the Company and the Subsidiaries taken as a
whole, nor has any governmental body or authority notified the
Company of an intention to conduct the same.
(b) There are no actions, suits or proceedings pending or
to the Knowledge of the Company threatened against or affecting
the Company or the Subsidiaries or their officers or directors,
in their capacities as such, or any of their respective
properties, at law or in equity, or before any federal, state,
local or foreign court or Governmental Authority, that,
individually or in the aggregate, would have a Material Adverse
Effect on the Company and the Subsidiaries taken as a whole.
(c)(i) Neither the Company nor any of the Subsidiaries is
subject to any cease-and-desist or other order or enforcement
action issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to
any commitment letter or similar undertaking to, or is subject to
any order or directive by, or has been since January 1, 1998, a
recipient of any supervisory letter from, or has been ordered to
pay any civil money penalty by, or has adopted any policies,
procedures or board resolutions at the request of any
Governmental Authority that currently restricts in any material
respect the conduct of its business or that in any material
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manner relates to its capital adequacy, its ability to pay
dividends, its credit or risk management policies, its management
of its business, nor has the Company or any of the Subsidiaries
been advised in writing by any Governmental Authority since
January 1, 1998 that it is considering issuing, initiating,
ordering or requesting any of the foregoing.
(ii) Except for routine examinations conducted by the
Federal Reserve Board (the "Federal Reserve") and the Office of
Comptroller of the Currency (the "OCC") in the regular course of
the business of the Company or any of the Subsidiaries, neither
the Federal Reserve, the OCC, the Illinois Office of Banks and
Real Estate (the "IOBRE"), the Illinois Department of Financial
Institutions (the "IDFI"), the Federal Deposit Insurance
Corporation (the "FDIC") nor the SEC has initiated any proceeding
or, to the Company's Knowledge, investigation into the business
or operations of the Company or any of the Subsidiaries within
the past three (3) years. To the Company's Knowledge, there is
no unresolved violation, criticism or exception by the Federal
Reserve, the OCC, the IOBRE, the IDFI, the SEC or the FDIC that,
individually or in the aggregate, would have a Material Adverse
Effect on the Company and the Subsidiaries taken as a whole.
SECTION 4.17. TAX MATTERS.
(a) All material Tax Returns for all periods ending on or
before the Closing Date that are or were required to be filed by
or with respect to the Company or any of the Subsidiaries, either
separately or as a member of an affiliated group of corporations,
have been filed on a timely basis and in accordance with
applicable laws, regulations and administrative requirements.
All such Tax Returns that have been filed on or before the
Closing Date were, when filed, and continue to be, true, correct
and complete in all material respects.
(b) The Company has made available to FNNI all reports of
and communications for all open years from Internal Revenue
Service agents and the corresponding agents of other state, local
and foreign Governmental Authorities who have examined the
respective books and records applicable to the Company and the
Subsidiaries. Schedule 4.17(b) describes all adjustments in
respect of the Company to income Tax returns filed by, or on
behalf of, the Company or any affiliated group of corporations of
which the Company is or was a member, for all open taxable years,
that have been proposed by any representative of any Governmental
Authority, and Schedule 4.17(b) describes the resulting income
Taxes, if any, proposed to be assessed. All deficiencies
proposed (plus interest, penalties and additions to tax that were
or are proposed to be assessed thereon, if any) as a result of
such examinations have been paid, reserved against or settled or,
as described in Schedule 4.17(b), are being contested in good
faith by appropriate proceedings. Except as set forth in given
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or been requested to give waivers or extensions (or is or would
be subject to a waiver or extension given by any other entity) of
any statute of limitations relating to the payment of Taxes for
which the Company may be liable.
(c) The Company and each of the Subsidiaries have paid, or
made provision for the payment of, all Taxes that have or may
become due for all periods ending on or before the Closing Date,
except such Taxes, if any, as are set forth in Schedule 4.17(c)
that are being contested in good faith and as to which adequate
reserves (determined in accordance with GAAP consistently
applied) have been provided. In all material respects, all Taxes
that the Company is or was required by law to withhold or collect
have been duly withheld or collected and, to the extent required,
have been paid to the appropriate Governmental Authority. There
are no Liens with respect to Taxes upon any of the properties or
assets, real or personal, tangible or intangible, of the Company
(except for Taxes not yet due).
(d) There are no closing agreements, requests for rulings
or requests for technical advice, in respect of any Taxes,
pending between the Company and any Governmental Authority.
(e) There is no existing tax-sharing agreement that may or
will require that any payment be made by or to the Company on or
after the Closing Date.
(f) The Company has not agreed to and is not required to
make any adjustment pursuant to Section 481(a) of the Code, nor
has the Internal Revenue Service proposed any such adjustment or
change in accounting method with respect to the Company. The
Company does not have any application pending with any
Governmental Authority requesting permission for any change in
accounting method.
(g) Except as set forth on Schedule 4.17, there is no
contract, agreement, plan or arrangement covering any person
that, individually or collectively, as a consequence of this
transaction could give rise to the payment of any amount that
would not be deductible by FNNI, the Surviving Corporation or the
Company by reason of Section 280G of the Code.
(h) The Company was not a party to any deferred
intercompany transaction that will be restored (pursuant to the
Treasury Regulations under Section 1502 of the Code) and will
result in income or loss to the Company due to the contemplated
transaction.
SECTION 4.18. OPINION OF FINANCIAL ADVISOR. The Company has
received the opinion of Xxxxxxx Xxxxx, dated on or before the date of
this Agreement, substantially to the effect that the Merger
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Consideration is fair to the holders of the Company Common Stock
(other than FNNI) from a financial point of view.
SECTION 4.19. MATERIAL CONTRACTS.
(a) Schedule 4.19(a) contains a complete and accurate list
of each Company Material Contract.
(b) Each Company Material Contract is valid and binding on
the Company or a Subsidiary and, to the Knowledge of the Company,
is enforceable against the other party thereto, in each case,
except as enforceability may be subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or
other similar laws of general applicability now or thereafter in
effect relating to or affecting creditors' rights, and to general
equity principles (regardless of whether enforcement is sought in
a procedure in equity or at law). The Company and the
Subsidiaries are and have been in material compliance with all
applicable terms and requirements of each Company Material
Contract to which they are a party. Neither the Company nor any
of the Subsidiaries has given to or received from any other
person any written notice or other written communication
regarding any actual or alleged violation or breach of, or
default under, any Company Material Contract.
SECTION 4.20. INTELLECTUAL PROPERTY RIGHTS. The Company and the
Subsidiaries own or have a valid license to use all Intellectual
Property individually or in the aggregate material to the conduct of
the businesses of the Company and the Subsidiaries taken as a whole.
Neither the Company nor any Subsidiary is in default (or with the
giving of notice or lapse of time, or both, would be in default) under
any license to use such Intellectual Property, except for such
defaults that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company and the Subsidiaries taken as a
whole. To the Knowledge of the Company, such Intellectual Property is
not being infringed by any third party and neither the Company nor any
Subsidiary is infringing any Intellectual Property of any third party,
except for such defaults and infringements that, individually or in
the aggregate, would not have a Material Adverse Effect on the Company
and the Subsidiaries taken as a whole.
SECTION 4.21. INSURANCE. Schedule 4.21 includes copies of
declaration pages and binder for all insurance policies and bonds
presently maintained by the Company or the Subsidiaries with respect
to their respective businesses, operations, properties or assets. All
such insurance policies and bonds are in full force and effect.
Neither the Company nor any Subsidiary is in default of any of its
obligations under any such insurance policy or bond. The Company and
each Subsidiary maintain all insurance and bonds they are required to
carry by law or by any agreement by which they are bound. Except for
claims filed by employees of the Company and the Subsidiaries under
applicable medical insurance policies maintained for the benefit of
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such employees, Schedule 4.21 lists and briefly describes all claims
that have been filed under such insurance policies and bonds since
June 30, 1999 and the current status of such claims. All claims
listed on Schedule 4.21 have been filed in a due and timely fashion.
Neither the Company nor any Subsidiary has had an insurance policy or
bond cancelled or nonrenewed by the issuer of the policy or bond
within the past five (5) years.
SECTION 4.22. INDEMNIFICATION. Except as set forth in Schedule
4.22, to the Company's Knowledge, there are no unresolved claims of
any director, officer, employee or agent of the Company or any of the
Subsidiaries for indemnification by the Company or any of the
Subsidiaries under any indemnification agreement with, or under the
respective charter and bylaws of, the Company or any of the
Subsidiaries, or under any applicable laws and regulations.
SECTION 4.23. LOANS.
(a) Except as disclosed in Schedule 4.23(a), each
outstanding loan, loan agreement, note, lease or other borrowing
agreement, any participation therein and any guaranty, renewal or
extension thereof (collectively, "Loans") reflected on the books
and records of the Company is, to the Company's Knowledge,
evidenced by appropriate and sufficient documentation in all
material respects and constitutes, to the Company's Knowledge,
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 relating to or affecting the enforcement of creditors'
rights generally or equitable principles or doctrines and except
as would not have a Material Adverse Effect on the Company and
the Subsidiaries taken as a whole. To the Company's Knowledge,
(i) no obligor named therein has provided notice to the Company
or a Subsidiary that such obligor intends to attempt to avoid the
enforceability of any term of any Loan under any such laws or
equitable principles or doctrines and (ii) no Loan is subject to
any valid defense, offset or counterclaim that has been asserted
with respect to such Loan, except in each case as would not have
a Material Adverse Effect on the Company and the Subsidiaries
taken as a whole.
(b) To the Company's Knowledge, all guarantees of
indebtedness owed to the Company or any Subsidiary, including
those of the Federal Housing Administration, the Small Business
Administration and other state and federal agencies, are valid
and enforceable, except to the extent enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting the
enforcement of creditors' rights generally or equitable
principles or doctrines, and except as would not have a Material
whole.
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(c) In originating, underwriting, servicing and discharging
Loans, mortgages, land contracts and contractual obligations
relating thereto, either for their own account or for the account
of others, the Company and each Subsidiary have complied with all
applicable terms and conditions of such obligations and with all
applicable laws and regulations, contractual requirements and
procedures, except for noncompliance that, individually or in the
aggregate, would not have a Material Adverse Effect on the
Company and the Subsidiaries taken as a whole.
SECTION 4.24. INVESTMENTS.
(a) Set forth on Schedule 4.24(a) is a complete and
accurate list of all investment and debt securities, mortgage-
backed and related securities, marketable equity securities and
securities purchased under agreements to resell that are owned by
the Company or any Subsidiary, other than in a fiduciary or
agency capacity (the "Investment Securities"). Schedule 4.24(a)
shows, as of June 30, 2001, the applicable CUSIP numbers, the
applicable maturity dates and the applicable coupon rates of the
Investment Securities, the carrying values and estimated fair
values of investment and debt securities, the gross carrying
value and estimated fair value of the mortgage-backed and related
securities, and the estimated cost and the estimated fair value
of the marketable equity securities.
(b) Except as set forth in Schedule 4.24(b), none of the
Investment Securities is subject to any restriction, whether
contractual or statutory, that materially impairs the ability of
the Company or any Subsidiary freely to dispose of such
investment at any time. With respect to all material repurchase
agreements to which the Company or any Subsidiary is a party, the
Company or such Subsidiary has a valid, perfected first lien or
security interest in the 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.
(c) Except as set forth in Schedule 4.24(c), neither the
Company nor any Subsidiary 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 the Company or any Subsidiary to repurchase or
otherwise reacquire any such assets.
(d) All Investment Securities that are classified as "held
to maturity," "available for sale" and "trading" held by the
Company or any Subsidiary have been classified and accounted for
in accordance with SFAS 115 and the intentions of the Company's
management.
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(e) There are no interest rate swaps, caps, floors, option
agreements or other interest rate risk management arrangements to
which the Company or any of the Subsidiaries is bound.
SECTION 4.25. INSIDER INTEREST. Except as set forth on Schedule
4.25 or in the Company SEC Reports, no officer or director of the
Company or any of the Subsidiaries, nor any member of the immediate
family of any such person or any entity that any such person
"controls" within the meaning of Regulation O of the Federal Reserve,
has any Loan, deposit account or any other agreement with the Company
or any of the Subsidiaries, any interest in any material property,
real, personal or mixed, tangible or intangible, used in or pertaining
to the business of the Company or any of the Subsidiaries, or any
other interest or transaction that would be required to be disclosed
under Regulation S-K of the SEC.
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.01. GENERAL. Each of the Parties will use its
reasonable best efforts to take all action and to do all things
necessary in order to consummate and make effective the transactions
contemplated by this Agreement (including ensuring that the Disclosure
Schedule that is delivered by the Company under Article IV is
reasonably acceptable to all the Parties and satisfying, but not
waiving, the closing conditions set forth in Article VII below).
SECTION 5.02. INVESTIGATION AND ACCESS TO INFORMATION. FNNI may
conduct and complete additional due diligence review of the financial
condition, operations, contracts and commitments, Loans, investments,
customer base and management of the Company and the Subsidiaries, as
well as the Disclosure Schedule, for a period of 30 calendar days
following the date of this Agreement (the "Due Diligence Review").
The Company shall afford FNNI and its officers, employees,
accountants, counsel and other authorized representatives access
during normal business hours upon reasonable notice, throughout the
period prior to the earlier of the Effective Time or the date, if any,
on which this Agreement is earlier terminated pursuant to Article VIII
hereof (the "Termination Date"), to its and the Subsidiaries'
properties, contracts, commitments, books and records and any report,
schedule or other document filed or received by it pursuant to the
requirements of federal or state securities laws and the Company and
the Subsidiaries shall use their reasonable best efforts to cause
their respective representatives to furnish promptly to FNNI such
additional financial and operating data and other information as to
its and the Subsidiaries' respective businesses and properties as FNNI
or its duly authorized representatives may from time to time
reasonably request. FNNI agrees that it will treat any such
information in accordance with the terms of the letter agreement
between Xxxxxxx Xxxxx and FNNI dated May 31, 2001 (the
"Confidentiality Letter"), the terms of which are incorporated herein.
-23-
Notwithstanding any provision of this Agreement to the contrary,
neither the Company nor any Subsidiary shall be required to provide
access to or to disclose information where such access or disclosure
would (a) violate or prejudice the rights of the Company's or a
Subsidiary's customers or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into
before the date of this Agreement, or (b) impair any attorney-client
privilege of the disclosing party.
SECTION 5.03. ADDITIONAL REPORTS AND INFORMATION.
(a) The Company shall furnish to FNNI copies of any reports
of the type referred to in Section 4.09 that it files with the
SEC and federal and state bank regulators on or after the date
hereof.
(b) From and after the date hereof and prior to the
Effective Time or the Termination Date, the Company shall deliver
to FNNI quarterly and monthly unaudited consolidated financial
statements prepared in the ordinary course of business, including
balance sheets, statements of operations and statements of cash
flow, but excluding footnotes thereto, within 10 days of the end
of such period.
(c) Any unaudited consolidated interim financial statements
delivered by the Company pursuant to this Section 5.03 (including
any related notes and schedules) will fairly present in all
material respects the financial position of the Company and its
Subsidiaries as of the dates thereof and the results of
operations and changes in financial position or other information
included therein for the periods then ended (subject, where
appropriate, to normal year-end adjustments), in each case in
accordance with past practice and GAAP consistently applied
during the periods involved (except as otherwise disclosed in the
notes thereto).
SECTION 5.04. CONDUCT OF BUSINESS BY THE COMPANY AND
SUBSIDIARIES OTHER THAN THE BANK. Solely for the purposes of this
Section 5.04, the term "Subsidiaries" shall refer to Subsidiaries
other than the Bank. From and after the date hereof and prior to the
Effective Time or the Termination Date, and except (i) as may be
required by law (provided that any Party availing itself of such
exception must first consult with the other Parties), (ii) as may be
consented to in writing by FNNI, such consent not to be unreasonably
withheld, or (iii) as may be expressly permitted pursuant to this
Agreement, the Company:
(a) shall, and shall cause each of the Subsidiaries to,
conduct its operations according to their ordinary and usual
course of business in substantially the same manner as heretofore
conducted and shall use its reasonable best efforts, and shall
cause each of the Subsidiaries to use its reasonable best
-24-
efforts, to preserve intact its business organization and
goodwill, prevent adverse change in the financial condition,
liabilities, assets, business, operating results or prospects of
the Company and the Subsidiaries and prevent the destruction or
damage to or loss of any asset of the Company and the
Subsidiaries that would have a Material Adverse Effect on the
Company and the Subsidiaries taken as a whole;
(b) shall not declare any dividends, other than the regular
semi-annual dividends on the Company Common Stock in an amount
not to exceed $0.14 per share expected to be payable to holders
of record on or about December 31, 2001;
(c) shall not authorize or issue any shares of stock or
other securities convertible into or in lieu of or in
substitution for shares of its stock (whether through the
issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) other than upon
the exercise of Options which are outstanding on the date hereof
or pursuant to the Company's Dividend Reinvestment and Stock
Purchase Plan (in each case, as in effect on the date hereof),
provided (i) the number of shares issued upon the exercise of
Options (vested or unvested) which are outstanding on the date
hereof shall not exceed 216,225; and (ii) the Company in its
discretion may make payments which shall not exceed $335,000 in
the aggregate to persons who previously agreed to a cancellation
of Options;
(d) shall not propose or adopt any amendments to its
corporate charter or bylaws;
(e) except in the ordinary course of business, and in a
manner consistent with past practices, shall not, and shall not
permit any of the Subsidiaries to, (i) make capital expenditures
in excess of $100,000 or (ii) change or modify any of its current
financing terms, conditions or facilities with banks and
financial institutions except in the ordinary course consistent
in all material respects with prudent banking practices and as
necessary to consummate the transactions set forth in this
Agreement;
(f) shall not, and shall not permit any of the Subsidiaries
to, (i) make any Tax election or settle or compromise any
material Tax liability, (ii) change its fiscal year, (iii)
revalue any of its material assets or (iv) change its methods of
accounting (including make any material write-off or reduction in
the carrying value of any assets) in effect at December 31, 2000,
except as required by changes in GAAP;
(g) shall not create, incur, assume or guarantee additional
indebtedness; and
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(h) shall provide representatives of FNNI with notice of
the Company's and the Subsidiaries' board of directors meetings
and shall allow representatives of FNNI to attend such meetings,
provided they shall not be entitled to vote or participate at
such meetings and shall withdraw from such meetings whenever the
chairperson of the meeting determines that the presence of FNNI's
representatives is inappropriate or inadvisable.
Notwithstanding any provision to the contrary contained in this
Section 5.04, neither FNNI nor First National Illinois shall have,
directly or indirectly, any right to control or direct the Company's
operations prior to the Effective Time and prior to the Effective
Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over
its operations.
SECTION 5.05. CONDUCT OF BUSINESS BY THE BANK. From and after
the date hereof and prior to the Effective Time or the Termination
Date, and except (i) as may be required by law (provided that any
Party availing itself of such exception must first consult with the
other Parties), (ii) as may be consented to by FNNI, such consent not
to be unreasonably withheld, or (iii) as may be expressly permitted
pursuant to this Agreement, the Bank:
(a) shall conduct its operations according to its ordinary
and usual course of business in substantially the same manner as
heretofore conducted and shall use its reasonable best efforts to
preserve intact its business organization and goodwill, prevent
material adverse change in the financial condition, liabilities,
assets, business, operating results or prospects of the Bank and
prevent the destruction or damage to or loss of any asset of the
Bank that would have a Material Adverse Effect on the Bank;
(b) shall not propose or adopt any amendments to its
corporate charter or bylaws;
(c) except for payments permitted under Section 5.04(c),
shall not (i) enter into, adopt or amend any compensation,
severance, bonus or similar agreements or arrangements with any
director or officer, or (ii) except in the ordinary course of
business, consistent with past practice, increase in any manner
the compensation or fringe benefits of any employee not described
in the preceding clause (i) or pay any such employee any benefit
not required by a Company Plan as in effect as of the date
hereof;
(d) except in the ordinary course of business, and in a
manner consistent with past practices, shall not (i) make capital
expenditures in excess of $25,000 or (ii) change or modify any of
its current financing terms, conditions or facilities with banks
and financial institutions except in the ordinary course
consistent in all material respects with prudent banking
-26-
practices and as necessary to consummate the transactions set
forth in this Agreement;
(e) shall not file any applications for additional
branches, open any new office or branch, close any current office
or branch, or relocate operations from existing locations;
(f) shall not make any new Loan, discount or commitment to
loan or discount to any new borrower or group of related
borrowers or dealers(s) where the funds to be loaned, discounted
or committed by the Bank exceed $1,000,000; provided, however,
the foregoing shall not apply to any new Loan of less than
$750,000 that is secured by a first mortgage lien on real estate
with an appraised value of at least 125% of the Loan amount;
(g) shall not make new advances with respect to, or renew,
restructure or amend, any classified Loan with an outstanding
balance of greater than $250,000;
(h) shall not enter into any contract or agreement to buy,
sell, exchange or otherwise deal in any assets or series of
assets (other than capital expenditures) in a single transaction
except for (i) the origination, purchase and sale of residential
mortgage Loans; (ii) the purchase of Investment Securities as
permitted; (iii) sales of the Bank's OREO and other repossessed
properties; or (iv) the acceptance of a deed in lieu of
foreclosure;
(i) shall not accept or renew any brokered deposits;
(j) shall not purchase any Investment Securities except
that existing Investment Securities may be replaced at maturity
or upon call with United States Treasury or United States agency
securities with similar value and that have maturities of 12
months or less;
(k) shall not change the manner in which its portfolio of
Investment Securities is classified or reported in accordance
with SFAS 115 or otherwise, or restructure or materially change
its Investment Securities portfolio (other than replacing
maturing mortgage Loans with Investment Securities as set forth
herein) or its gap position;
(l) shall not change accounting methods or practices
(including any change in depreciation or amortization policies or
rates); and
(m) shall provide representatives of FNNI with notice of
all Bank loan committee meetings and board of directors meetings
and shall allow representatives of FNNI to attend such meetings,
provided they shall not be entitled to vote or participate at
such meetings and shall withdraw from such meetings whenever the
-27-
chairperson of the meeting determines that the presence of FNNI's
representatives is inappropriate or inadvisable.
Notwithstanding any provision to the contrary contained in this
Section 5.05, neither FNNI nor First National Illinois shall have,
directly or indirectly, any right to control or direct the Bank's
operations prior to the Effective Time and prior to the Effective
Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over
its operations.
SECTION 5.06. NO SOLICITATION.
(a) The Company represents and warrants that it is not
currently engaged in any discussions or negotiations with any
person (other than FNNI) concerning any Purchase Proposal (as
defined below). From and after the date hereof, the Company will
not, and shall use its reasonable best efforts not to permit any
of its officers, directors, employees, attorneys, financial
advisors, agents or other representatives or those of any of the
Subsidiaries (collectively, "Company Representatives") to,
directly or indirectly, solicit, initiate or knowingly encourage
(including by way of furnishing nonpublic information) any
Purchase Proposal from any persons or engage in or continue
discussions or negotiations relating thereto, or take any other
action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any
Purchase Proposal, except that the Company may, in response to a
Purchase Proposal that the Company's board of directors
determines is reasonably likely to constitute a Superior Proposal
(as defined below) that was not solicited by the Company or any
Company Representatives and that did not result from a breach of
this Section, and subject to providing prior written notice of
its decision to take such action to FNNI, (x) furnish information
(including nonpublic information) with respect to the Company and
the Subsidiaries to any person making such a Purchase Proposal
pursuant to a customary confidentiality agreement with terms
substantially similar to those of the Confidentiality Letter and
(y) participate in discussions or negotiations regarding such
Purchase Proposal. The Company will advise FNNI orally (within
one business day) and in writing (as promptly as practicable) of
the receipt of any inquiry or request for information with
respect to, or which could reasonably be expected to lead to, a
Purchase Proposal. As used in this Agreement, (i) "Purchase
Proposal" shall mean any inquiry, proposal or offer from any
person relating to any direct or indirect acquisition or purchase
of business that constitutes 15% or more of the net revenues, net
income or assets of the Company and the Subsidiaries taken as a
whole, or 15% or more of the voting securities of the Company or
any of the Subsidiaries, any tender offer or exchange offer that
if consummated would result in any person beneficially owning 15%
or more of the voting securities of the Company or any of the
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Subsidiaries, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of the Subsidiaries, other than the
transactions contemplated by this Agreement, and (ii) "Superior
Proposal" shall mean any Purchase Proposal made by a third party
on terms that are substantially the same or superior from a
financial point of view to the stockholders of the Company to the
terms set forth in this Agreement, including with respect to
conditions to consummation, financing and the percentage of
outstanding equity securities acquired, as determined by the
board of directors of the Company in their good faith judgment
(based on the advice of a financial advisor of nationally
recognized reputation or such other matters as the Company's
board of directors deems relevant).
(b) The board of directors of the Company shall not (i)
withdraw or modify, or propose to withdraw or modify, in a manner
adverse to FNNI or First National Illinois, the approval or
recommendation by such board of directors of this Agreement or
the Merger or (ii) approve or recommend, or propose to approve or
recommend, any Purchase Proposal, unless, in each case, the
Company receives an unsolicited Purchase Proposal that the
Company's board of directors determines is a Superior Proposal.
The board of directors of the Company may not enter into an
agreement with respect to a Purchase Proposal except in
connection with a termination of this Agreement as set forth in
Article VIII. Nothing contained in this Section 5.06 shall
prohibit the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated
under the Exchange Act or from making any disclosure to the
Company's stockholders that, in the good faith judgment of the
board of directors of the Company after consultation with outside
counsel, is required under applicable law, provided that, except
as otherwise permitted in this Section 5.06, the Company does not
withdraw or modify, or propose to withdraw or modify, its
position with respect to the Merger or approve or recommend, or
propose to approve or recommend, a Purchase Proposal.
Notwithstanding anything contained in this Agreement to the
contrary, any action by the board of directors of the Company
permitted by, and taken in accordance with, this Section 5.06
shall not constitute a breach of this Agreement by the Company.
SECTION 5.07. ALLOWANCE FOR LOAN LOSSES. FNNI and Company shall
endeavor in good faith to reach an agreement as to the amount of loan
loss reserve, as that term is defined in applicable bank regulations.
Upon reaching such agreement as to such loan loss reserve amount,
Company agrees to adjust the loan loss reserve accordingly prior to
the expected Closing Date; provided, however, that any such
adjustment: (a) shall not be prohibited by GAAP, applied on a
consistent basis, or any applicable laws or regulations; (b) shall not
be made by the Company until the later of (i) 30 calendar days prior
to the expected Closing Date or (ii) the receipt of all approvals of
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federal and state banking regulators and Company stockholders
necessary to consummate the Merger; and (c) shall not be considered
in determining the Company's minimum equity pursuant to Section
7.01(l) of this Agreement.
SECTION 5.08. REGULATORY APPROVALS. The Parties acknowledge
that consummation of the transactions contemplated by this Agreement
will require the prior written approval of federal and state banking
regulators. Accordingly, within 30 days after all Parties have
executed this Agreement, FNNI and First National Illinois shall file
applications with the applicable regulators for approval of the
transactions contemplated by this Agreement and otherwise exercise
their reasonable best efforts and diligence to obtain such approval
and any other approvals that may be required to consummate the
transactions contemplated hereby. The Company will use its reasonable
best efforts to assist FNNI and First National Illinois in their
efforts.
SECTION 5.09. RECOMMENDATION OF APPROVAL. Subject to its
fiduciary duties, the board of directors of the Company shall
recommend to its stockholders the approval of this Agreement and the
Merger, and shall include such recommendation in the Proxy Statement
referred to in Section 6.04.
SECTION 5.10. SIGNIFICANT STOCKHOLDER APPROVAL. Certain
directors of Company, who collectively own approximately 30 percent of
Company Common Stock, by execution of Attachment A to this Agreement,
agree that they will vote to approve the Merger, on the terms and
subject to the conditions set forth herein, at the stockholders'
meeting to be convened for such purpose. The execution of Attachment
A is solely for the purpose of approving the Merger and no other
purpose.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. ANTITAKEOVER STATUTE. If any "fair price,"
"moratorium," "control share acquisition" or other form of
antitakeover statute or regulation shall become applicable to the
transactions contemplated hereby, each of the Company and FNNI and the
members of their respective boards of directors shall grant such
approvals and take such actions as are reasonably necessary so that
the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such statute or regulation on the
transactions contemplated hereby.
SECTION 6.02. PUBLIC ANNOUNCEMENTS. Upon execution of this
Agreement, the Parties hereto agree that a press release and Form 8-K
filings shall be made. The Company and FNNI will consult with and
provide each other the opportunity to review and comment upon any
-30-
press release or other public statement or filing prior to the
issuance of such press release or other public statement or filing
relating to this Agreement or the transactions contemplated herein and
shall not issue any such press release or other public statement or
filing without the prior consent of the other Party, which consent
shall not be unreasonably withheld; provided, however, that a Party
may, without the prior consent of the other Party, issue such press
release or make such other public statement as required by law if it
has (a) used its reasonable best efforts to consult with the other
Party and to obtain such Party's consent but has been unable to do so
in a timely manner and (b) faxed a copy of such release or public
statement to such other Party at a reasonable time prior to issuing
such release or making such statement.
SECTION 6.03. NOTICES OF CERTAIN EVENTS. Each Party shall
promptly notify the other Parties of the receipt of:
(a) any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement;
and
(b) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by
this Agreement.
Each Party shall promptly notify the other Parties of any
proceedings commenced or threatened against such Party or any of the
Subsidiaries that relate to the consummation of the transactions
contemplated by this Agreement.
SECTION 6.04. STOCKHOLDER APPROVAL; PROXY SOLICITATION; OTHER
FILINGS.
(a) STOCKHOLDER APPROVAL; PROXY SOLICITATION. The Company,
acting through its board of directors, shall in accordance with
applicable law as promptly as practicable after completion of the
Due Diligence Review call for a meeting of its stockholders at
the earliest practicable time at which the Company will submit
the Merger and the other transactions contemplated hereby to the
stockholders for approval as required under the DGCL and its
certificate of incorporation and bylaws (the "Company Meeting").
In connection therewith, the Company shall take, at its own
expense, all steps necessary to the solicitation of proxies from
the stockholders, including the preparation, filing and mailing
of a letter to stockholders, notice of meeting, proxy statement
and form of proxy to be distributed to stockholders in connection
with such meeting and any schedules required to be filed with the
SEC in connection therewith (the "Proxy Statement"). The Company
together with FNNI and First National Illinois will proceed
diligently with the preparation and filing of the Proxy Statement
with the SEC. FNNI and First National Illinois shall furnish all
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information about themselves, their business and operations and
their owners and all financial information to the Company as may
be necessary in connection with the preparation of the Proxy
Statement. The Company will provide FNNI with a reasonable
opportunity to review and comment on the Proxy Statement and any
amendment or supplement to the Proxy Statement prior to filing
such with the SEC and will provide FNNI with a reasonable number
of copies of all such filings made with the SEC. The Company
shall, as promptly as practicable after receipt thereof, provide
copies of any written comments received from the SEC with respect
to the Proxy Statement to FNNI and advise FNNI of any oral
comments with respect to the Proxy Statement received from the
SEC. Each of FNNI and the Company shall use all reasonable
efforts to resolve all SEC comments with respect to the Proxy
Statement as promptly as practicable after receipt thereof. If
the Company learns of any event that should be set forth in an
amendment or supplement to the Proxy Statement, the Company will
prepare and mail to its stockholders such an amendment or
supplement to the extent required by applicable federal
securities laws. If FNNI or First National Illinois learns of
any event that should be set forth in an amendment or supplement
to the Proxy Statement, such Party will promptly inform the
Company in writing of such event.
(b) OTHER FILINGS. As promptly as practicable the Company,
FNNI and First National Illinois shall properly prepare and file
any other filings required under the Exchange Act or any other
federal or state law relating to the Merger and the transactions
contemplated by this Agreement (the "Other Filings"). Each of
the Company, FNNI and First National Illinois shall promptly
notify the other of the receipt of any comments on, or any
request for amendments or supplements to, any of the Other
Filings by the SEC or any other Governmental Authority or
official, and each of the Company, FNNI and First National
Illinois shall supply the other with copies of all correspondence
between it and each of its subsidiaries and representatives, on
the one hand, and the SEC or the members of its staff or any
other appropriate Governmental Authority or official, on the
other hand, with respect to any of the Other Filings. The
Company, FNNI and First National Illinois each shall use all
reasonable efforts to obtain and furnish the information required
to be included in any of the Other Filings.
SECTION 6.05. INFORMATION PROVIDED. None of the information
supplied by the Company specifically for inclusion or incorporation by
reference in the Proxy Statement or the Other Filings, or any
amendment thereof or supplement thereto, will, at the respective times
filed with the SEC or other Governmental Authority, and with respect
to the Proxy Statement, at the date mailed to the Company's
stockholders and at the time of the Company Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
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statements therein, in light of the circumstances under which they are
made, not misleading. The Proxy Statement, insofar as it relates to
the Company or other information supplied by the Company for inclusion
therein, will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations
promulgated thereunder. The Company makes no representation, warranty
or covenant with respect to information concerning First National
Illinois or FNNI or their affiliates included in the Proxy Statement
or information supplied by First National Illinois or FNNI for
inclusion in the Proxy Statement. None of the information supplied by
First National Illinois or FNNI specifically for inclusion or
incorporation by reference in the Proxy Statement or the Other
Filings, or any amendment thereof or supplement thereto, will, at the
respective times filed with the SEC or other Governmental Authority,
and with respect to the Proxy Statement, at the date mailed to the
Company's stockholders and at the time of the Company Meeting, contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading. The Proxy Statement, insofar as it relates to
First National Illinois or FNNI or other information supplied by First
National Illinois or FNNI for inclusion therein, will comply as to
form in all material respects with the requirements of the Exchange
Act and the rules and regulations promulgated thereunder. First
National Illinois and FNNI make no representation, warranty or
covenant with respect to information concerning the Company or the
Subsidiaries included in the Proxy Statement or information supplied
by the Company or the Subsidiaries for inclusion in the Proxy
Statement.
SECTION 6.06. EFFORTS TO CONSUMMATE; FURTHER ASSURANCES.
Subject to the terms and conditions of this Agreement, the Parties
shall use their reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary or
desirable to consummate the transactions contemplated herein. The
Parties agree to execute and deliver promptly such other documents,
certificates, agreements, instruments and other writings (including
any amendments or supplements thereto) and to take, or cause to be
taken, such other actions as may be necessary or desirable in order to
consummate or implement expeditiously the transactions contemplated
hereby, including promptly making their respective filings and
thereafter making any other required submissions under the applicable
federal and state banking laws and regulations and taking all such
further action as reasonably may be necessary to resolve such
objections, if any, as any such authorities of any national or other
jurisdiction or any other person may assert under relevant laws with
respect to the transactions contemplated hereby.
SECTION 6.07. UPDATING OF SCHEDULES. The Parties agree that any
Disclosure Schedules delivered by the Company to FNNI will be updated
by the Company as of the Closing Date, with any and all changes
specifically marked, so that the condition to the obligations of each
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of the Company, FNNI and First National Illinois to effect the Merger
set forth in Section 7.02(a) and 7.01(a), respectively, shall have
been fulfilled as of the Closing Date.
SECTION 6.08. DIRECTORS' AND OFFICERS' INDEMNIFICATION AND
INSURANCE.
(a) The Certificate of Incorporation and Bylaws of the
Surviving Corporation shall contain the exculpatory and
indemnification provisions for the benefit of any individual who
served as director or officer of the Company at or at any time
prior to the Effective Time that are set forth, as of the date of
this Agreement, in the Certificate of Incorporation and the
bylaws of the Company, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at or at any time prior to
the Effective Time were directors or officers of the Company.
(b) FNNI shall cause the Surviving Corporation and all
Subsidiaries to maintain for a period of at least six years the
current policies of directors' and officers' liability insurance
and fiduciary liability insurance currently by the Company as of
the date of this Agreement (provided that substitute policies may
be used if such substitute policies have at least the same
coverage and amounts and are issued by reputable and financially
sound insurance companies containing terms and conditions which
are, in the aggregate, no less advantageous to the insured) with
respect to claims arising from facts or events that occurred on
or before the Effective Time, including in respect of the
transactions contemplated by this Agreement; provided, however,
that in no event shall the Surviving Corporation be required to
pay premiums therefor in any one year in an amount in excess of
175% of the annual premiums currently paid by the Company for
such insurance; provided, further, that if the annual premiums of
such insurance coverage exceed such amount, the Surviving
Corporation shall be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such amount.
The provisions of the immediately preceding sentence shall be
deemed to have been satisfied if prepaid policies have been
obtained by the Company prior to the Closing for purposes of this
Section, which policies provide such directors and officers with
coverage for an aggregate period of not less than six years with
respect to claims arising from facts or events that occurred on
or before the Effective Time, including in respect of the
transactions contemplated by this Agreement. If such prepaid
policies have been obtained by the Company prior to the Closing,
FNNI shall and shall cause the Surviving Corporation to maintain
such policies in full force and effect, and continue to honor the
Company's obligations thereunder.
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(c) FNNI or the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any
other corporation or entity and is not the continuing or
surviving corporation or entity of such consolidation or merger
or (ii) transfers all or substantially all of its properties and
assets to any individual, corporation or other entity, then, and
in each such case, proper provisions shall be made so that the
successors and assigns of FNNI or the Surviving Corporation shall
assume all of the obligations set forth in this Section 6.08.
(d) The provisions of this Section are intended to be for
the benefit of, and shall be enforceable by, each of the
indemnified parties under this Section, their heirs and their
representatives.
SECTION 6.09. EMPLOYEES. Each employee of the Company and the
Subsidiaries as of the Effective Time shall continue to be employed by
the Surviving Corporation, a Subsidiary or FNNI (and, if such employee
is an officer of the Bank, with the same title) for a period ending no
earlier than the first to occur of (a) the date 180 days after the
Effective Time; (b) the date of death of the employee, (c) the date of
the employee's voluntary termination of employment with the Surviving
Corporation, a Subsidiary or FNNI and (d) the date on which the
employee is terminated by the Surviving Corporation, a Subsidiary or
FNNI for cause, as reasonably determined by the Surviving Corporation,
a Subsidiary or FNNI. During such minimum period of continued
employment, each such employee shall continue to receive base
compensation, incentive compensation and bonuses from the Surviving
Corporation, a Subsidiary or FNNI at a rate at least equal to that in
effect with respect to his employment by the Company and the
Subsidiaries as of the Effective Time.
SECTION 6.10. COMPANY PLANS.
(a) As of the Effective Time, each employee of the Company
and the Subsidiaries shall become immediately entitled to
participate in each of the employee benefit plans in accordance
with the terms of the respective plans maintained by FNNI, the
Surviving Corporation and the Subsidiaries, including without
limitation, group hospitalization, medical, life and disability
insurance plans, severance plans, tax qualified retirement,
savings and profit sharing plans, and stock option and stock
award plans ("FNNI Plans") in which similarly situated employees
of FNNI, the Surviving Corporation and the Subsidiaries,
participate, and to the same extent as such employees of FNNI,
the Surviving Corporation and the Subsidiaries. The period of
employment and compensation of each employee of the Company and
the Subsidiaries with the Company and the Subsidiaries prior to
the Effective Time shall be counted for all purposes of the FNNI
Plans (except for purposes of benefit accrual) including without
limitation for purposes of vesting and eligibility. Any expenses
incurred by an employee of the Company or the Subsidiaries under
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any Company Plan, such as deductibles or co-payments, shall be
counted for all purposes under the applicable FNNI Plan. FNNI,
the Surviving Corporation, the Subsidiaries and the FNNI Plans
shall waive any pre-existing condition exclusions for conditions
existing at the Effective Time, and actively at work requirements
for periods ending at the Effective Time, contained in the FNNI
Plans as they apply to employees and former employees of the
Company and the Subsidiaries and their dependents, provided that
such waiver of pre-existing conditions shall not extend to any
condition that has prevented coverage of an employee or former
employee of the Company or a Subsidiary or a dependent thereof
under comparable Company Plans. Except as hereinafter
specifically provided with respect to the Castle BancGroup, Inc.
401(k) Profit Sharing Plan (the "401(k) Plan"), and subject to
assumption of the obligations existing under each Company Plan as
of the Effective Time pursuant to paragraph (d) of this section,
FNNI, the Surviving Corporation and the Subsidiaries after the
Effective Time shall have sole discretion with respect to the
determination whether to terminate, merge or continue any Company
Plan. At the Effective Time, FNNI or the Surviving Corporation
shall be substituted for the Company or a Subsidiary as the
sponsoring employer under those Company Plans with respect to
which the Company or a Subsidiary is the sponsoring employer
immediately prior to the Effective Time and which Plan is assumed
by FNNI or the Surviving Corporation pursuant to the terms of
this Agreement, and FNNI, First National Illinois or the
Surviving Corporation shall assume and be vested with all of the
powers, rights, duties, obligations and liabilities previously
vested in the Company or a Subsidiary with respect to each such
Company Plan.
(b) From and after the Effective Time, former and current
officers and employees of the Company and its Subsidiaries and
their dependents who satisfy conditions for any post-retirement
medical and health insurance coverage under any FNNI Plan shall
be entitled to participate in such Plan under the terms and
conditions of such Plan.
(c) Until the Effective Time, the Company and its
Subsidiaries shall be liable for all obligations for continued
health coverage, pursuant to Section 4980B of the Code and
Sections 601 through 609 of ERISA ("COBRA") with respect to each
qualified beneficiary (as defined in COBRA) of the Company or a
Subsidiary who incurs a qualifying event (as defined in COBRA)
prior to the Effective Time. FNNI, the Surviving Corporation and
the Subsidiaries shall be liable for (i) all obligations for
continued health coverage under COBRA with respect to each
qualified beneficiary of the Company or a Subsidiary who incurs a
qualifying event from and after the Effective Time, and (ii) for
continued health coverage under COBRA from and after the
Effective Time for each qualified beneficiary of the Company or a
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Subsidiary who incurs a qualifying event before the Effective
Time.
(d) Any obligation of the Company or any Subsidiary under
any employment agreement, employment letter, employment security
agreement, stay bonus agreement, supplemental profit sharing
plan, annual incentive plan, long-term incentive plan, or
severance plan, or under any other Company Plan set forth in
Schedule 4.13, as of the Effective Time, shall continue to be
binding from and after the Effective Time, and FNNI, the
Surviving Corporation and the Subsidiaries shall comply with and
satisfy all such obligations pursuant to the terms of such
Company Plan.
(e) The transactions described in this Agreement shall
constitute a change in control for purposes of each Company Plan.
(f) The Company and the Subsidiaries maintain the 401(k)
Plan which Plan shall be terminated prior to the Effective Time.
All 401(k) Plan participants shall fully vest and have a
nonforfeitable interest in their accounts under the 401(k) Plan,
determined as of the Effective Time. As soon as practicable
after the receipt of a favorable determination letter from the
IRS as to the tax qualified status of the 401(k) Plan upon its
termination under Code Section 401(a) (the "Determination
Letter"), distribution of the benefits under the 401(k) Plan
shall be made to 401(k) Plan participants pursuant to the terms
of the 401(k) Plan. From and after the date of this Agreement,
and in anticipation of such determination and distribution, the
Company and the Subsidiaries and their respective
representatives, prior to the Effective Time, and FNNI, the
Surviving Corporation the Subsidiaries and their respective
representatives after the Effective Time, shall use their best
efforts to apply for and obtain such favorable Determination
Letter from the IRS. In the event that the Company and the
Subsidiaries and their respective representatives prior to the
Effective Time, and FNNI, the Surviving Corporation and the
Subsidiaries and their respective representatives after the
Effective Time, reasonably determine that the 401(k) Plan cannot
obtain a favorable Determination Letter, or that the amounts held
therein cannot be so applied, allocated or distributed without
causing the 401(k) Plan to lose its tax qualified status, the
Company and the Subsidiaries prior to the Effective Time, and
FNNI, the Surviving Corporation and the Subsidiaries after the
Effective Time, shall take such action as they may determine with
respect to the distribution of benefits to the 401(k) Plan
participants, provided that the assets of the 401(k) Plan shall
be held or paid only for the benefit of the 401(k) Plan
participants, and provided further that in no event shall any
portion of the amounts held in the 401(k) Plan revert, directly
or indirectly, to the Company, any Subsidiary, FNNI or the
Surviving Corporation.
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ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. CONDITIONS TO THE OBLIGATION OF FNNI AND FIRST
NATIONAL ILLINOIS. The obligations of FNNI and First National
Illinois to effect the Merger are subject to the satisfaction, at or
prior to the Closing Date, of all of the following conditions, the
compliance with which, or the occurrence of which, may be waived prior
to the Closing Date in writing by FNNI and First National Illinois in
their sole discretion.
(a) CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties of the Company contained in
this Agreement shall be correct and complete in all material
respects as of the Closing Date as if made on the Closing Date,
except as otherwise contemplated by this Agreement.
(b) PERFORMANCE OF AGREEMENTS. The Company shall have
performed, complied with and satisfied in all material respects
all covenants and agreements required by this Agreement to be
performed, complied with or satisfied by the Company at or prior
to the Closing Date.
(c) THE COMPANY'S CLOSING CERTIFICATE. The Company shall
furnish a certificate, signed by a senior executive officer of
the Company and dated the Closing Date, to the effect that the
conditions specified in paragraphs (a) and (b) of this Section
7.01 have been satisfied.
(d) SECRETARY'S CERTIFICATE. The Company shall have
furnished a certificate of its secretary, dated as of the Closing
Date, certifying as to:
(i) the consent of the stockholders of the Company and
the resolutions of the Company's board of directors
authorizing the execution, delivery and performance of this
Agreement by the Company and the execution, delivery and
performance of all documents to be executed and delivered by
the Company at Closing, with copies of such resolutions
attached thereto; and
(ii) the incumbency of its officers executing this
Agreement and the documents delivered at Closing.
(e) NO INJUNCTIONS, ORDERS OR RESTRAINTS; ILLEGALITY. No
preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a
Governmental Authority (an "Injunction") nor any statute, rule,
regulation or executive order promulgated or enacted by any
Governmental Authority shall be in effect which would (i) make
the consummation of the Merger illegal, or (ii) otherwise prevent
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or prohibit the consummation of the transactions contemplated in
this Agreement, including the Merger; provided, however, that
prior to invoking this condition, FNNI and First National
Illinois shall use their reasonable best efforts to have any such
Injunction vacated.
(f) CONSENTS AND AUTHORIZATIONS. Other than the filing
required under Section 1.04, the Company shall have delivered to
FNNI written confirmation of all notices, filings, consents,
approvals, including bank and other regulatory approvals,
permits, authorizations or orders of and all registrations,
declarations or filings with third parties, including creditors,
contract parties or public or Governmental Authorities
(collectively the "Consents"), necessary for the authorization,
execution and delivery of this Agreement by the Company or the
consummation by the Company or the Subsidiaries of the
transactions contemplated by this Agreement, except for such
Consents, the absence of which would not have a Material Adverse
Effect on the Company and the Subsidiaries taken as a whole.
(g) OPINION OF COUNSEL. The Company shall have delivered
to FNNI an opinion of counsel to the Company substantially of the
form and content set forth in Exhibit B, addressed to FNNI and
dated as of the Closing Date.
(h) APPRAISAL RIGHTS. The holders of not more than 10% of
the Company Common Stock shall have validly asserted appraisal
rights under the DGCL.
(i) COMPANY STOCK. The Company shall have no more than
4,639,026 shares of Company Common Stock outstanding on a fully
diluted basis as of the Closing Date, including any shares of
Company Common Stock issued after the date hereof upon the
exercise of Options which are outstanding on the date hereof or
pursuant to the Company's Dividend Reinvestment and Stock
Purchase Plan.
(j) XXXXXXX XXXXX. Xxxxxxx Xxxxx shall have delivered to
FNNI a receipt, in a form reasonably satisfactory to FNNI,
executed by Xxxxxxx Xxxxx acknowledging receipt of any and all
amounts due.
(k) CERTIFICATE OF MERGER. The Company shall deliver to
FNNI a fully executed Certificate of Merger and written evidence
that the Merger has been approved by at least the portion of the
Company's stockholders as required by corporate law.
(l) MINIMUM EQUITY. On the Closing Date: (i) the Company's
stockholders' equity reported on the consolidated interim
financial statements prepared and delivered pursuant to Section
5.03 as of the month end immediately preceding the Closing Date
shall equal or exceed $46,000,000; provided, however, that any
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adjustment that is made to the Company's loan loss reserve
pursuant to Section 5.07 shall not be considered in determining
the Company's minimum equity under this Section.
(m) OTHER DOCUMENTS. The Company shall have delivered to
FNNI all other documents reasonably requested by FNNI and
contemplated by this Agreement or required to be delivered by the
Company to FNNI pursuant to this Agreement and not previously
delivered.
SECTION 7.02. CONDITIONS TO THE OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is subject to the
satisfaction, at or prior to the Closing Date, of all of the following
conditions, the compliance with which, or the occurrence of which, may
be waived prior to the Closing Date in writing by the Company in its
sole discretion.
(a) CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties of FNNI and First National
Illinois contained in this Agreement shall be correct and
complete in all material respects as of the Closing Date as if
made on the Closing Date.
(b) PERFORMANCE OF AGREEMENTS. FNNI and First National
Illinois shall have performed, complied with and satisfied in all
material respects all covenants and agreements required by this
Agreement to be performed, complied with or satisfied by them at
or prior to the Closing Date.
(c) FNNI AND FIRST NATIONAL ILLINOIS' CLOSING CERTIFICATE.
FNNI shall furnish a certificate, signed by a senior executive
officer of FNNI and First National Illinois and dated the Closing
Date, to the effect that the conditions specified in paragraphs
(a) and (b) of this Section 7.02 have been satisfied.
(d) SECRETARY'S CERTIFICATE. Each of FNNI and First
National Illinois shall have furnished a certificate of its
secretary dated as of the Closing Date certifying as to:
(i) the resolutions of the company's board of
directors or managing member authorizing the execution,
delivery and performance of this Agreement by FNNI and First
National Illinois, with copies of such resolutions attached
thereto; and
(ii) the incumbency of its officers executing this
Agreement and the documents delivered at Closing.
(e) NO INJUNCTIONS, ORDERS OR RESTRAINTS; ILLEGALITY. No
Injunction nor any statute, rule, regulation or executive order
promulgated or enacted by any Governmental Authority shall be in
effect which would (i) make the consummation of the Merger
-40-
illegal, or (ii) otherwise prevent or prohibit the consummation
of the transactions contemplated in this Agreement, including the
Merger; provided, however, that prior to invoking this condition,
the Company shall use its reasonable best efforts to have any
such Injunction vacated.
(f) CONSENTS AND AUTHORIZATIONS. Other than the filing
required under Section 1.04, FNNI shall have delivered to the
Company written confirmation of all Consents necessary for the
authorization, execution and delivery of this Agreement by FNNI
or First National Illinois or the consummation by FNNI or First
National Illinois of the transactions contemplated by this
Agreement, except for such Consents, the absence of which would
not have a Material Adverse Effect on FNNI and its subsidiaries
taken as a whole.
(g) OPINION OF COUNSEL. FNNI shall have delivered to the
Company an opinion of counsel to FNNI substantially of the form
and content set forth in Exhibit C, addressed to the Company and
dated as of the Closing Date.
(h) PURCHASE PRICE. Deposit of the aggregate Merger
Consideration and the aggregate Option Consideration to the
Paying Agent shall have been made pursuant to Article II hereof.
ARTICLE VIII
TERMINATION
SECTION 8.01. TERMINATION OR ABANDONMENT. Notwithstanding
anything contained in this Agreement to the contrary, this Agreement
may be terminated and abandoned at any time prior to the Effective
Time, whether before or after any approval of the matters presented in
connection with the Merger by the stockholders of the Company:
(a) by the mutual written consent of the Company and FNNI
by action of their respective boards of directors;
(b) by FNNI within ten days after completion of the Due
Diligence Review if FNNI discovers information from which a
reasonable buyer would conclude that the business, results of
operations or financial condition of the Company or any
Subsidiary are, in the aggregate, materially different than as
described in the Company SEC Reports, the 2000 Financial
Statements and the representations and warranties in this
Agreement (including the Schedules hereto);
(c) by either the Company or FNNI if (i) the Effective Time
shall not have occurred on or before March 31, 2002 and (ii) the
Party seeking to terminate this Agreement pursuant to this
Section 8.01 shall not have breached in any material respect its
obligations under this Agreement in any manner that shall have
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proximately contributed to the failure to consummate the Merger
on or before such date;
(d) by either the Company or FNNI if (i) a statute, rule,
regulation or executive order shall have been enacted, entered or
promulgated prohibiting the consummation of the Merger
substantially on the terms contemplated hereby or (ii) an order,
decree, ruling or injunction shall have been entered permanently
restraining, enjoining or otherwise prohibiting the consummation
of the Merger substantially on the terms contemplated hereby and
such order, decree, ruling or injunction shall have become final
and nonappealable and the Party seeking to terminate this
Agreement pursuant to this Section 8.01(d) shall have used its
reasonable best efforts to remove such injunction, order or
decree;
(e) by the Company if the stockholders of the Company fail
to approve the Merger at the Company Meeting or at any
adjournment thereof;
(f) by the Company if the board of directors of the Company
reasonably determines that a Purchase Proposal constitutes a
Superior Proposal and the Company pays to FNNI the amount
specified in Section 8.02 within the time period specified in
Section 8.02;
(g) by FNNI if the board of directors of the Company shall
have (i) withdrawn or modified in a manner adverse to FNNI its
approval or recommendation of this Agreement and the transactions
contemplated hereby or (ii) approved or recommended, or proposed
publicly to approve or recommend, any Purchase Proposal;
(h) by FNNI if a tender offer or exchange offer for 50% or
more of the outstanding shares of capital stock of the Company is
commenced prior to the Company Meeting, and the board of
directors of the Company fails to recommend against acceptance of
such tender offer or exchange offer by its stockholders
(including by taking no position with respect to the acceptance
of such tender offer or exchange offer by its stockholders)
within the time period specified by Rule 14e-2 under the Exchange
Act; or
(i) by either the Company or FNNI if there shall have been
a material breach by the other of any of its respective
representations or warranties (as such representations or
warranties made by the Company may be modified by the Disclosure
Schedules, as updated pursuant to Section 6.07), or covenants or
agreements contained in this Agreement, which if not cured would
cause the respective conditions set forth in Article VII, as the
case may be, not to be satisfied, and such breach is incapable of
being cured or shall not have been cured within 30 days after
-42-
notice thereof shall have been received by the Party alleged to
be in breach.
In the event of termination of this Agreement pursuant to this
Section 8.01, this Agreement shall terminate (except for the
confidentiality provisions contained in Section 5.02 and the
provisions of Sections 8.02 and 9.10), and there shall be no other
liability on the part of the Company or FNNI to the other except
liability arising out of an intentional breach of this Agreement or as
provided for in the Confidentiality Letter.
SECTION 8.02. FNNI TERMINATION FEE AND EXPENSES.
Notwithstanding any provision in this Agreement to the contrary, if
this Agreement is terminated by the Company pursuant to Section
8.01(g), then the Company shall pay to FNNI a fee of $2,400,000.
Additionally, in the event this Agreement is terminated by the Company
pursuant to Section 8.01(g), then the Company shall reimburse FNNI for
its out of pocket expenses incurred in connection with the
transactions set forth in this Agreement. Such fee and expense
reimbursement shall be payable in immediately available funds on the
second business day following the termination of this Agreement.
SECTION 8.03. COMPANY LIQUIDATED DAMAGES. Notwithstanding any
provision in this Agreement to the contrary, if this Agreement is
terminated (a) by FNNI pursuant to Section 8.01(i), then Company shall
pay to FNNI liquidated damages in the amount of $1,000,000 to
reimburse FNNI for its reasonably anticipated expenses incurred in
connection with the transactions set forth in this Agreement, or (b)
by the Company pursuant to Section 8.01(i), then FNNI shall pay to the
Company liquidated damages in the amount of $1,000,000 to reimburse
the Company for its reasonably anticipated expenses incurred in
connection with the transactions set forth in this Agreement. Such
liquidated damages shall be payable in immediately available funds on
the second business day following the termination of this Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. COUNTERPARTS; EFFECTIVENESS. This Agreement may
be executed in two or more counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto
were upon the same instrument, and shall become effective when one or
more counterparts have been signed by each of the Parties and
delivered (by telecopy or otherwise) to the other Parties.
SECTION 9.02. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware,
without regard to the principles of conflicts of laws thereof.
SECTION 9.03. JURISDICTION. Each of the Parties (a) consents to
submit itself to the personal jurisdiction of any federal court
-43-
located in the State of Delaware or any Delaware state court in the
event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement and (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court.
SECTION 9.04. NOTICES. All notices, requests, demands, claims
and other communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be
deemed duly given if delivered personally at the address set forth
below for the intended recipient during normal business hours at such
address, if sent by facsimile transmission to the respective number
set forth below with telephone confirmation of receipt or if sent by
recognized overnight courier or by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the
intended recipient as set forth below:
FNNI: Xx. Xxxxxx X. X'Xxxxx
First National of Nebraska, Inc.
One First National Center
00xx & Xxxxx Xxxxxxx
Xxxxx, XX 00000
(000) 000-0000 (Telephone)
(000) 000-0000 (Facsimile)
Xx. Xxxxxxx X. Xxxx
First National of Nebraska, Inc.
One First National Center
00xx & Xxxxx Xxxxxxx
Xxxxx, XX 00000
(000) 000-0000 (Telephone)
(000) 000-0000 (Facsimile)
Xxxxxxx X. Xxxxxx, Esq.
Xxxxx Xxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxx, XX 00000
(000) 000-0000 (Telephone)
(000) 000-0000 (Facsimile)
Company: Xx. Xxxx X. Xxxxxx
Castle BancGroup, Inc.
000 Xxxx Xxxxxxx Xxxxxxx
XxXxxx, XX 00000
(000) 000-0000 (Telephone)
(000) 000-0000 (Facsimile)
Xxxx X. Xxxxxx, Esq.
Xxxxxx Xxxxxx & Xxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, XX 00000
(000) 000-0000 (Telephone)
(000) 000-0000 (Facsimile)
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Each communication made in accordance with this Section 9.04 shall be
deemed given upon delivery, upon confirmation of receipt of facsimile
transmission, one business day after deposit with a nationally
recognized overnight delivery service or two business days after
deposit for mailing in a United States post office.
SECTION 9.05. ASSIGNMENT; BINDING EFFECT. Neither this
Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the Parties (whether by operation of law
or otherwise) without the prior written consent of the other Parties.
Subject to the preceding sentence, this Agreement shall be binding
upon and shall inure to the benefit of the Parties and their
respective successors and assigns.
SECTION 9.06. SEVERABILITY. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall,
as to that jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement in
any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be interpreted to
be only so broad as is enforceable.
SECTION 9.07. ENFORCEMENT OF AGREEMENT. The Parties recognize
and hereby acknowledge that it may be impossible to measure in money
the damages that would result to a Party by reason of the failure of
any 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. The Parties agree that this provision is without
prejudice to any other rights that the Parties may have for any
failure to perform this Agreement.
SECTION 9.08. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
This Agreement constitutes the entire agreement, and supersedes all
other prior agreements and understandings, both written and oral,
between the Parties, or any of them, with respect to the subject
matter hereof and thereof and, except as set forth in Section 6.08, is
not intended to and shall not confer upon any person other than the
Parties any rights or remedies hereunder.
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SECTION 9.09. HEADINGS. Headings of the Articles and Sections
of this Agreement are for convenience of the Parties only, and shall
be given no substantive or interpretive effect whatsoever.
SECTION 9.10. FEES AND EXPENSES. The Parties agree that except
as provided in Section 8.02, each of the Company and FNNI shall bear
its own costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby; provided, however, that any
and all fees, of whatsoever nature, payable by the Company including
any and all fees to Xxxxxxx Xxxxx, those for all Parties' attorneys,
accountants, investment bankers, any fees to consultants relating to
this Agreement or to the transaction, including such fees for a
fairness opinion, and any brokerage fees incurred and/or paid by the
Company relating to this Agreement or to the Merger, including any
such fees relating to any special committee or special counsel to the
board of directors shall be accrued or paid prior to Closing.
SECTION 9.11. AMENDMENT OR SUPPLEMENT. At any time before or
after approval of the matters presented in connection with the Merger
by the stockholders of the Company and prior to the Effective Time,
this Agreement may be amended or supplemented by a writing signed by
each of the Parties with respect to any of the terms contained in this
Agreement, except that following approval by the stockholders of the
Company there shall be no amendment or change to the provisions hereof
which by law or in accordance with the rules of any relevant stock
exchange requires further approval by such stockholders without such
further approval or any amendment or change not permitted under
applicable law.
SECTION 9.12. EXTENSION OF TIME, WAIVER, ETC. At any time prior
to the Effective Time, any Party may:
(a) extend the time for the performance of any of the
obligations or acts of any other Party;
(b) waive any inaccuracies in the representations and
warranties of any other Party contained herein or in any document
delivered pursuant hereto; or
(c) waive compliance with any of the agreements or
conditions of any other Party contained herein.
Notwithstanding the foregoing, no failure or delay by a Party in
exercising any right hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or
further exercise of any other right hereunder. Any agreement on the
part of a Party to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such Party.
SECTION 9.13. TIMING. Time is of the essence with regard to
this Agreement.
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ARTICLE X
DEFINITIONS
SECTION 10.01. DEFINITIONS. In addition to the other terms
defined herein, the following terms used herein shall have the
meanings herein specified (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"COMPANY MATERIAL CONTRACTS" shall mean any written contract or
other arrangement to which the Company or any of the Subsidiaries is a
party as to which the breach, nonperformance, cancellation or failure
to renew by any party thereto could have a Material Adverse Effect on
the Company and the Subsidiaries taken as a whole.
"DISCLOSURE SCHEDULE" shall mean the disclosures of the Company
set forth in Annex I, as may be updated pursuant to Section 6.07.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
and rulings issued thereunder.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"GOVERNMENTAL AUTHORITIES" shall mean any department, division,
branch, office or official of a duly elected or appointed governmental
office of any country, state, province, county, parish or
municipality.
"INTELLECTUAL PROPERTY" shall mean patents and patent rights,
trademarks and trademark rights, trade names and trade name rights,
service marks and service xxxx rights, service names and service name
rights, copyrights and copyright rights and other proprietary
intellectual property rights and all pending applications for and
registrations of any of the foregoing.
"KNOWLEDGE" shall mean, with respect to the Company, the
knowledge of each of the Chairman of the Board, the President and
Chief Executive Officer, the Vice President and Controller, and the
Regional Vice Presidents for the Southern and Central Regions,
respectively, of the Company, in each case which such person actually
knows about the subject without independent investigation.
"LIEN" shall mean any encumbrance, security interest, secured
claim, mortgage, deed of trust or charge upon an asset whether
consensual, statutory or the result of a court order or judgment.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to a Party,
such state of facts, event, change or effect that has had, or would
reasonably be expected to have, an adverse effect (i) with respect to
the Company, of at least $300,000 on the business, results of
-47-
operations or financial condition thereof and which results in the
failure by the Company to satisfy the condition set forth in Section
7.01(l), or (ii) on the validity or enforceability of this Agreement
or the ability of such Party to perform its obligations hereunder in a
timely fashion, provided that changes, circumstances or effects
relating to the economy in general or the general economic conditions
within the industry in which the Company and the Subsidiaries operate
shall not give rise to a Material Adverse Effect.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"TAX" shall mean any federal, state or local gross receipts,
license, payroll, employment, excise, severance, stamp, occupation,
windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on
minimum tax, or any other tax of any kind whatsoever, including any
interest, penalty or addition thereto, whether disputed or not.
"TAX RETURN" shall mean any return, declaration, report, claim
for refund or information return or statement relating to Taxes,
including any schedule or attachment thereto and including any
amendment thereof.
SECTION 10.02. CONSTRUCTION. All capitalized words or terms
herein have the meaning ascribed to them as immediately thereafter.
All references in this Agreement to particular Articles or Sections
are references to the Articles or Sections of this Agreement, unless
some other references are clearly indicated. All accounting terms not
specifically defined in this Agreement shall be construed in
accordance with GAAP as in effect on the date hereof. In this
Agreement, unless the context otherwise requires, (a) words describing
the singular number shall include the plural and vice versa, (b) words
denoting any gender shall include all genders and (c) the word
"including" shall mean "including, without limitation." This
Agreement and the other instruments and documents to be delivered
pursuant hereto shall not be construed more favorably against one
Party than the other based on who drafted the same, it being
acknowledged that all Parties contributed meaningfully to the drafting
of this Agreement.
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IN WITNESS WHEREOF, the Parties have executed this Agreement on
the date first above written.
FIRST NATIONAL OF NEBRASKA, INC.
By: /s/ Xxxxxx X. X'Xxxxx
------------------------------
Name Xxxxxx X. X'Xxxxx
-----------------------------
Title Senior Vice President
----------------------------
FIRST NATIONAL OF ILLINOIS, INC.
By: /s/ Xxxxxx X. X'Xxxxx
------------------------------
Name Xxxxxx X. X'Xxxxx
---------------------------
Title Senior Vice President
----------------------------
CASTLE BANCGROUP, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name Xxxx X. Xxxxxx
---------------------------
Title Chairman of the Board
---------------------------
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ATTACHMENT A
ADDENDUM SIGNATURE PAGE
To induce First National of Nebraska, Inc. ("FNNI") and First
National of Illinois, Inc. ("First National Illinois") to enter into
the Agreement and Plan of Merger dated as of September 7, 2001 (the
"Merger Agreement") among FNNI, First National Illinois and Castle
BancGroup, Inc. (the "Company"), and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned Significant Stockholders of the Company
hereby each agrees to the provisions of Section 5.10 of the Merger
Agreement and further hereby agrees, at a properly called meeting of
Company stockholders or by a written consent of Company stockholders,
each will vote to approve the Merger described in the Merger
Agreement, a copy of which is attached hereto. (The signatures of
these Significant Stockholders are for the sole purpose of approving
the Merger, and no other purpose, and no Party shall assert or imply
any other purpose to such signatures.)
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxx X. Xxxxxx
---------------------------------------- -------------------------------
Xxxx X. Xxxxxx, 453,279 shares Xxx X. Xxxxxx, 16,798 shares
Xxx X. Xxxxxx 1992 Trust, 90,000 shares
Xxxxx X. Xxxxxx 1992 Trust, 90,000 shares By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx 1992 Trust, 90,000 shares -------------------------------
Xxxx X. Xxxxxx 1992 Trust, 90,000 shares Xxxxx X. Xxxxxx, 34,846 shares
By: /s/ Xxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
---------------------------------------- -------------------------------
Xxx X. Xxxxxx, co-trustee Xxxxx X. Xxxxxx, 16,798 shares
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxx
---------------------------------------- -------------------------------
Xxxxx X. Xxxxxx, co-trustee Xxxx X. Xxxxxx, 16,798 shares
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. XxXxxxx
---------------------------------------- -------------------------------
Xxxxx X. Xxxxxx, co-trustee Xxxxx X. XxXxxxx, 264,278 shares
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------- -------------------------------
Xxxx X. Xxxxxx, co-trustee
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------- -------------------------------
Xxxxxx X. Xxxxxx, 60,676 shares Xxxxxxx X. Xxxxxx and Xxxxxxx X.
Xxxxxx, 202,450 shares
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx, 24,000 shares
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