EXECUTION COPY
AGREEMENT AND PLAN OF REORGANIZATION
-
by and among
BANKFINANCIAL CORPORATION,
a federal corporation,
FINANCIAL FEDERAL MHC, INC.,
a federal mutual holding company and the parent company of Buyer,
BFIN ACQUISITION CORPORATION,
a Delaware corporation and a wholly owned subsidiary of Buyer,
and
SUCCESS BANCSHARES, INC.,
a Delaware corporation
May 21, 2001
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
1.1 Definitions............................................................2
1.2 Principles of Construction............................................12
ARTICLE II
THE MERGER; EFFECT; PAYMENT; CLOSING
2.1 The Merger............................................................12
2.2 Closing; Effective Time...............................................12
2.3 Effects of Merger.....................................................13
2.4 Effects of Merger on Capital Stock and Stock Options..................13
2.5 Payment for Shares....................................................14
2.6 Payment of Option Spread..............................................15
2.7 Escheat...............................................................16
2.8 Dissenting Shares.....................................................16
2.9 Buyer's Deliveries at Closing.........................................16
2.10 Bancorp's Deliveries at Closing.......................................17
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 Organization..........................................................18
3.2 Authorization.........................................................19
3.3 Conflicts.............................................................20
3.4 Proxy Statement Disclosure............................................20
3.5 Litigation............................................................20
3.6 Adequate Funds........................................................21
3.7 No Share Ownership....................................................21
3.8 Compliance with Laws..................................................21
3.9 Buyer Regulatory Reports..............................................22
3.10 Regulatory Approvals..................................................22
3.11 No Brokers............................................................22
3.12 Buyer Material Adverse Effect.........................................22
3.13 Accuracy of Information Furnished.....................................22
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP
4.1 Organization..........................................................23
4.2 Authorization.........................................................23
4.3 Conflicts.............................................................24
4.4 Antitakeover Provisions Inapplicable..................................24
4.5 Capitalization and Stockholders.......................................24
4.6 The Bancorp Subsidiaries..............................................26
4.7 SEC Reports...........................................................27
4.8 Bancorp Regulatory Reports............................................27
4.9 Bancorp Bank Regulatory Reports.......................................27
4.10 Financial Statements..................................................28
4.11 Regulatory Investigations.............................................28
4.12 Compliance with Laws..................................................29
4.13 Litigation............................................................29
4.14 Taxes.................................................................30
4.15 Insurance.............................................................31
4.16 Loans.................................................................31
4.17 Investments...........................................................33
4.18 Bancorp Benefit Plans.................................................34
4.19 Environmental Matters.................................................37
4.20 Intellectual Property.................................................38
4.21 Properties............................................................38
4.22 ADA Compliance........................................................39
4.23 Fiduciary Accounts....................................................39
4.24 Indemnification.......................................................39
4.25 Insider Interests.....................................................40
4.26 Additional Disclosure Items...........................................40
4.27 Defaults..............................................................42
4.28 Operations Since December 31, 2000....................................42
4.29 Corporate Records.....................................................44
4.30 Fairness Opinion......................................................44
4.31 Rights Agreement......................................................44
4.32 No Brokers............................................................44
4.33 Accuracy of Information Furnished.....................................44
ARTICLE V
COVENANTS OF BANCORP
5.1 Conduct of Business by Bancorp until the Effective Time...............44
5.2 Stockholders' Meeting; Proxy Statement................................51
5.3 Recommendation of Approval............................................51
5.4 Certain Actions.......................................................52
5.5 Rights Agreement......................................................53
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5.6 Trust Preferred Securities............................................53
5.7 Covenants Relating to Excluded Notes..................................53
ARTICLE VI
COVENANTS OF BUYER
6.1 Regulatory Applications...............................................54
6.2 Director and Officer Liability Insurance..............................55
6.3 Indemnification.......................................................55
6.4 Appointment of New Directors..........................................56
6.5 Conduct of Business...................................................56
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Access to Information; Confidentiality................................57
7.2 Supplemental Reports and Information..................................57
7.3 Environmental Investigation...........................................58
7.4 Title Reports.........................................................59
7.5 Resolution of Bancorp Benefit Plans...................................59
7.6 Cooperation...........................................................61
7.7 Notification of Certain Matters.......................................62
7.8 Press Releases........................................................63
7.9 Merger of Subsidiary Banks............................................63
7.10 Execution of the Stock Option Agreement...............................64
ARTICLE VIII
CONDITIONS
8.1 Conditions to the Obligations of Buyer................................64
8.2 Conditions to the Obligations of Bancorp..............................66
8.3 Conditions to the Obligations of the Parties..........................66
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
9.1 Termination...........................................................67
9.2 Termination Fee.......................................................68
9.3 Expenses..............................................................70
9.4 Survival of Agreement.................................................70
9.5 Amendment.............................................................70
9.6 Waiver................................................................70
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ARTICLE X
GENERAL PROVISIONS
10.1 Survival..............................................................71
10.2 Notice................................................................71
10.3 Specific Enforceability...............................................71
10.4 Applicable Law........................................................72
10.5 Headings, Etc.........................................................72
10.6 Severability..........................................................72
10.7 Entire Agreement; Binding Effect; Nonassignment; Counterparts.........72
10.8 Timing................................................................72
EXHIBITS
Exhibit A - Legal opinion of Barack Xxxxxxxxxx Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx
Exhibit B - Legal opinion of Vedder, Price, Xxxxxxx & Kammholz
Exhibit C - Stock Option Agreement
SCHEDULES
Schedule 1.1(a) - Agreed-Upon Information
Schedule 1.1(b) - Excluded Notes
Schedule 4.5(d) - Outstanding Convertible Securities
Schedule 4.5(e) - 5% Stockholders
Schedule 4.6(a) - Bancorp Subsidiaries
Section 4.7 - Disclosures regarding SEC Reports
Section 4.10(c) - Certain Financial Information
Schedule 4.12(c) - CRA Compliance
Schedule 4.13 - Litigation
Schedule 4.14(a) - Taxes
Schedule 4.14(c) - Employment Tax Matters
Schedule 4.15 - Insurance
Schedule 4.16(a) - Loans
Schedule 4.16(b) - Encumbrances on Loans
Schedule 4.16(c) - Nonperforming Assets
Schedule 4.16(e) - Other Real Estate Owned
Schedule 4.17(a) - Investments
Schedule 4.17(b) - Encumbrances on Investments
Schedule 4.17(c) - Repurchase Obligations
Schedule 4.18(a)(i) - Bancorp Benefit Plans and Certain Agreements
Schedule 4.18(a)(ii) - Change in Control Benefits
Schedule 4.18(b) - Determination Letters
Schedule 4.18(e) - 280G Matters
Schedule 4.18(f) - Post-Employment Benefits
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Schedule 4.18(g) - Individuals Entitled to Change in Control Benefits
Schedule 4.21(a) - Bancorp Properties
Schedule 4.21(b) - Property Leases
Schedule 4.25 - Insider Interests
Schedule 4.26 - Certain Additional Disclosure Items
Schedule 4.28 - Certain Disclosures since December 31, 2000
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement") is made and
entered into as of the 21st day of May, 2001, by and among BANKFINANCIAL
CORPORATION, a federal corporation ("Buyer"), FINANCIAL FEDERAL MHC, INC., a
federal corporation and the sole stockholder of Buyer ("MHC"), BFIN ACQUISITION
CORPORATION, a Delaware corporation and a wholly owned subsidiary of Buyer
("MergerSub"), and SUCCESS BANCSHARES, INC., a Delaware corporation ("Bancorp").
W I T N E S S E T H:
WHEREAS, MHC is a registered mutual holding company under the Home Owners'
Loan Act, as amended (the "HOLA"), and the parent of Buyer;
WHEREAS, Buyer is a registered savings and loan holding company under the
HOLA, and a wholly owned subsidiary of MHC;
WHEREAS, Bancorp is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended;
WHEREAS, MergerSub is a Delaware corporation organized by Buyer solely for
the purpose of facilitating the transactions contemplated herein;
WHEREAS, the Boards of Directors of Buyer, MHC, MergerSub and Bancorp deem
it advisable that MergerSub be merged with and into Bancorp in accordance with
this Agreement, which provides, among other things, that Bancorp shall be the
Surviving Corporation; and
WHEREAS, immediately following the Merger of MergerSub with and into
Bancorp, Buyer intends to cause (i) Bancorp to be dissolved and liquidated into
Buyer and, (ii) immediately following such dissolution and liquidation, Success
National Bank, a wholly owned subsidiary of Bancorp ("Bancorp Bank"), to be
merged with and into BankFinancial, F.S.B., a wholly owned subsidiary of Buyer
(the "Bank"), with the Bank being the Surviving Bank;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties hereto agree as follows:
A G R E E M E N T:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. In addition to capitalized terms otherwise defined herein,
as used in this Agreement the following capitalized terms shall have the
meanings provided in this Section 1.1:
"Acquisition Transaction" shall have the meaning given to such term in
Section 5.4 (b) hereof.
"Adjusted Stockholder's Equity" shall mean the consolidated stockholder's
equity of Bancorp, calculated in accordance with GAAP (reflecting, in accordance
with GAAP, among other things, the recognition of or accrual for all expenses
paid, incurred or projected to be paid or incurred by Bancorp or Bancorp Bank in
connection with this Agreement and the Reorganization), but adjusted to exclude:
(i) any realized gains and losses (provided that losses shall only be excluded
if such losses are contemplated and provided for on the date of this Agreement
in Schedule 1.1(a)) with respect to any sales of securities occurring after
December 31, 2000; (ii) with respect to securities that are or were classified
as available for sale or as trading securities, any change in the amount of the
adjustment required pursuant to SFAS 115 resulting from changes in unrealized
gains and losses occurring after December 31, 2000; (iii) any adjustments
required in connection with the consummation of the Reorganization pursuant to
Section 7.6(e) hereof; and (iv) any Excluded Financial Effects (as defined
below); provided, however, that the term Adjusted Stockholders' Equity shall in
no event include the Subordinated Debentures, or the related Trust Preferred
Securities. Adjusted Stockholder's Equity shall be determined as set forth in
Section 8.1(h) hereof.
"Affiliate" of, or a Person "Affiliated" with, a specific Person is a
Person that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified.
"Applicable Governmental Authorities" shall mean, with respect to a Person,
the Regulatory Authorities and any other federal, state, county or local
governmental body, instrumentality, agency, board or official having authority
or jurisdiction to enforce any Applicable Law and Regulation.
"Applicable Law(s) and Regulation(s)" shall mean, with respect to a Person,
all statutes, laws, ordinances, regulations, rules and rulings, and all
published guidelines, interpretive letters, advisories or bulletins, of any
Applicable Governmental Authority that are applicable to or binding upon such
Person, the conduct of its business or any of its assets.
"Bancorp" shall mean Success Bancshares, Inc., a Delaware corporation and
the parent bank holding company for Bancorp Bank.
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"Bancorp Bank" shall mean Success National Bank, a national bank that is
wholly owned by Bancorp with its main office located at 0000 Xxxx Xxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxx 00000.
"Bancorp Bank Common Stock" shall have the meaning given such term in
Section 4.5(b) hereof.
"Bancorp Bank Regulatory Reports" shall have the meaning given to such term
in Section 4.9 hereof.
"Bancorp Benefit Plans" shall mean the plans, programs, arrangements and
agreements described in Section 4.18(a) hereof.
"Bancorp Capital Trust I" shall mean the trust created pursuant to and in
accordance with the Trust Agreement.
"Bancorp Certificate" shall mean a stock certificate evidencing ownership
of shares of Bancorp Common Stock.
"Bancorp Common Stock" shall have the meaning given to such term in Section
4.5(a) hereof.
"Bancorp Disclosure Schedule" shall mean the writing, together with its
written attachments, identified as the "Bancorp Disclosure Schedule" by Bancorp.
The Bancorp Disclosure Schedule was delivered to Buyer in final and complete
form, subject to the obligations of Bancorp under Section 7.7 hereof, not less
than five (5) Business Days prior to Bancorp's execution of this Agreement.
"Bancorp Financial Statements" shall have the meaning given to such term in
Section 4.10(a) hereof.
"Bancorp Material Adverse Effect" shall mean an effect that is or could
reasonably be expected to be material and adverse to the condition (financial or
otherwise), assets or results of operations of Bancorp and the Bancorp
Subsidiaries, taken as a whole, or that would reasonably be expected to
materially and adversely affect (i) the ability of Bancorp or Bancorp Bank to
consummate the Reorganization or (ii) the ability of Bancorp or the Bancorp
Subsidiaries to perform their material obligations (including timeliness)
hereunder but excluding any effect or change attributable to or resulting from
(A) changes in economic conditions or financial market conditions affecting the
banking and thrift industries generally in the Seventh Federal Reserve District
except to the extent that the effect or change is material and adverse when
compared to the effect or change, if any, on other banks, thrifts, bank holding
companies and thrift holding companies in the Seventh Federal Reserve District
with assets greater than $500 million but less than $1.5 billion; (B) changes in
laws, regulations, interpretations or laws or regulations, GAAP or regulatory
accounting requirements applicable to banks or their holding companies; (C) the
Excluded Financial Effects; and (D) actions, or effects of inactions, either
taken by Bancorp or any Bancorp Subsidiary in accordance with
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Section 7.6(e) hereof or the reasonable expenses or expenditures incurred in
connection with actions which were required by, or expressly contemplated in,
this Agreement.
"Bancorp OREO" shall mean other real estate owned by Bancorp Bank as
defined by the rules and regulations of the OCC.
"Bancorp Permitted Liens" shall mean (i) liens arising out of judgments or
awards in respect of which Bancorp or any Bancorp Subsidiary is in good faith
prosecuting an appeal or proceedings for review and in respect of which it has
secured a subsisting stay of execution pending such appeal or proceedings; (ii)
liens for taxes, assessments, and other governmental charges or levies the
payment of which is not past due, or as to which Bancorp or any Bancorp
Subsidiary is diligently contesting in good faith and by appropriate proceedings
either the amount thereof or the liability therefor or both; (iii) deposits,
liens or pledges to secure payments of worker's compensation, unemployment
insurance, pensions, or other social security obligations, or the performance of
bids, tenders, leases, contracts (other than contracts for the payment of
money), public or statutory obligations, surety, stay or appeal bonds, or
similar obligations arising in the ordinary course of business; (iv) zoning
restrictions, easements, licenses and other restrictions on the use of real
property or any interest therein, or minor irregularities in title thereto, that
do not materially impair the use of such property in the operation of the
business of Bancorp or any Bancorp Subsidiary or the merchantability or the
value of such property or interest therein for the purpose of such business; (v)
purchase money mortgages or other purchase money or vendor's liens or security
interests (including, without limitation, finance leases), provided that no such
mortgage, lien or security interest shall extend to or cover any other property
of Bancorp or any Bancorp Subsidiary other than that so purchased; and (vi)
pledges and liens given to secure deposits and other liabilities of Bancorp or
any Bancorp Subsidiary arising in the ordinary course of banking business.
"Bancorp Properties" shall mean (i) real estate currently owned or leased
by Bancorp or any Bancorp Subsidiary and used or formerly used in the conduct of
its business; (ii) the Bancorp OREO; (iii) real estate that is in the process of
pending foreclosure or forfeiture proceedings conducted by Bancorp or any
Bancorp Subsidiary; (iv) real estate that is held in trust for others by Bancorp
or any Bancorp Subsidiary; (v) real estate owned or leased by a partnership or
joint venture in which Bancorp or any Bancorp Subsidiary has an ownership
interest; and (vi) any other real estate owned or leased by Bancorp or any
Bancorp Subsidiary.
"Bancorp Qualified Plans" shall have the meaning given to such term in
Section 4.18(b) hereof.
"Bancorp Realty" shall mean Bancorp Realty Ventures, Inc., an Illinois
corporation that was wholly owned by Bancorp and which was liquidated and
dissolved on April 9, 2001.
"Bancorp Regulatory Reports" shall have the meaning given to such term in
Section 4.8 hereof.
"Bancorp SEC Reports" shall have the meaning given to such term in Section
4.7 hereof.
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"Bancorp Stock Option" shall mean each of the 248,000 stock options granted
to a Person by Bancorp, under the Bancorp Stock Option Plans or otherwise, prior
to the date of this Agreement that is outstanding, vested and fully exercisable
immediately prior to the Effective Time.
"Bancorp Stock Option Plans" shall mean the Bancorp, Inc. 1995 Employee
Stock Option Plan, as amended, and the Bancorp, Inc. 1999 Stock Option Plan.
"Bancorp Subsidiaries" shall mean Bancorp Bank, Bancorp Capital Trust I,
and any corporation and other entity that Bancorp directly or indirectly
controls, or of which Bancorp directly or indirectly owns or controls 5% or more
of the outstanding equity securities and any joint ventures created or existing
pursuant to a written agreement in which Bancorp has a 5% equity interest;
provided, however, there shall not be included any such entity to the extent
that the equity securities of such entity are owned or controlled in a bona fide
fiduciary capacity or as the result of the resolution of debt previously
contracted (whether previously or hereinafter created) in the ordinary course of
business. The term "Bancorp Subsidiary" shall mean any single subsidiary
constituting one of the several Bancorp Subsidiaries.
"Bancorp Suitor" shall have the meaning given to such term in Section 9.1
hereof.
"Bank" shall mean BankFinancial, F.S.B., a federally-chartered stock
savings bank that is wholly owned by Buyer, with its main office located at
00000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxxxxxx 00000.
"Bank Merger" shall mean the merger of Bancorp Bank with and into the Bank
as described in Section 7.9 hereof with the Bank being the Surviving Bank.
"Bank Merger Agreement" shall have the meaning given to such term in
Section 7.9 hereof.
"Best Efforts" shall mean commercially reasonable good faith efforts.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"BMA" shall mean the Bank Merger Act, as amended.
"Business Day" shall mean any day other than a Saturday, a Sunday or any
other day that the Bank is authorized or required to be closed.
"Buyer" shall mean BankFinancial Corporation, a federal corporation that is
wholly owned by MHC and is the parent savings and loan holding company for the
Bank.
"Buyer Material Adverse Effect" shall mean an effect that is or could
reasonably be expected to be material and adverse to the condition (financial or
otherwise), assets or results of operations of Buyer and the Buyer Subsidiaries,
taken as a whole, and that would reasonably be expected to materially and
adversely affect the ability of Buyer, MergerSub or the Bank to consummate the
Reorganization.
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"Buyer Subsidiaries" shall mean the Bank, MergerSub, Buyer Assurance
Services, Inc., Buyer Properties, Inc. and any corporation and other entity that
Buyer directly or indirectly controls, or of which Buyer directly or indirectly
owns or controls 5% or more of the outstanding equity securities and any joint
ventures created or existing pursuant to a written agreement in which Buyer has
a 5% equity interest; provided, however, there shall not be included any such
entity to the extent that the equity securities of such entity are owned or
controlled in a bona fide fiduciary capacity or as the result of the resolution
of debt previously contracted (whether previously or hereinafter created) in the
ordinary course of business. The term "Buyer Subsidiary" shall mean any single
subsidiary constituting one of the several Buyer Subsidiaries.
"Certificate of Merger" shall mean the certificate of merger to be filed by
Bancorp and MergerSub with the Secretary of State of the State of Delaware
pursuant to Section 2.2.
"Change in Control Benefit" shall have the meaning given to such term in
Section 4.18(a) hereof.
"Closing" shall mean the actions required to consummate the Reorganization
which shall take place as provided in Article II hereof after the satisfaction
or waiver of all of the conditions set forth in Article VIII hereof.
"Closing Date" shall mean the date the Closing occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" shall mean that agreement dated June 19, 2000,
between Buyer and Xxxxx, Xxxxxxxx & Xxxxx, Inc., as agent for Bancorp, as
amended from time to time.
"DGCL" shall mean the Delaware General Corporation Law, as amended.
"Disclosure Schedule Updates" shall have the meaning given such term in
Section 7.7(b) hereof.
"Dissenting Share" shall mean a share of Bancorp Common Stock held by any
Person who properly exercises (including timely perfection and timely compliance
with all other requirements under Section 262 of the DGCL) any appraisal rights
under the DGCL with respect to such share.
"Effective Time" shall mean the time at which the Certificate of Merger
relating to the Merger that will be filed pursuant to Section 2.2 hereof shall
become effective in accordance with the DGCL.
"Environmental Law(s)" shall mean any law, regulation, rule, ordinance or
similar requirement which governs or protects the environment enacted by the
United States, any state, or any county, city or agency or subdivision of the
United States or any state.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ESOP" shall have the meaning given to such term in Section 4.18(h) hereof.
"ESOP Loan" shall have the meaning given to such term in Section 4.18(h)
hereof.
"ESPP" shall have the meaning given to such term in Section 7.5(c) hereof.
"Excluded Financial Effects" shall mean, with respect only to the Excluded
Notes (as defined below), all expenses, all additions to or charge-offs against
Bancorp Bank's allowance for loan and lease losses, and all other items that are
made, accrued, received, recognized or realized between the date hereof and the
Effective Time and that constitute or are specifically attributable or allocable
to any of the following: (i) expenses, including attorney's fees, incurred in
order to enforce or collect an Excluded Note; (ii) expenses, including
attorney's fees, incurred in order to repossess or exercise creditor's rights
and remedies with respect to any Excluded Note Collateral; (iii) capital and
other expenditures made in connection with inspections and repairs of, and
improvements to, any Excluded Note Collateral in order to maintain a federal
airworthiness certificate presently in effect with respect to such collateral,
to comply with any manufacturer's recommended maintenance schedule applicable to
such collateral or to keep such collateral in good working order, but only to
the extent that such expenditures in the aggregate do not exceed ten percent
(10%) of the net book value of the Excluded Note secured by such collateral;
(iv) other expenses incurred in order to sell, appraise, store, preserve or
protect any Excluded Note Collateral, including the purchase of any property,
casualty or liability insurance or to force place such insurance; (v) losses
realized from the accidental destruction of any Excluded Note Collateral,
provided that insurance is maintained in accordance with the requirements of
Sections 5.7(b) and (c) hereof; (vi) losses realized from the sale of any
Excluded Note Collateral; (vii) losses realized from the write-down of the book
value of any Excluded Note due to the diminution in the fair market value of the
Excluded Note Collateral securing the Excluded Note; (viii) losses realized due
to the settlement of any obligations under an Excluded Note for less than the
net book value of such Excluded Note; (ix) any reversal of any portion of
Bancorp Bank's allowance for loan and lease losses that was reflected on Bancorp
Bank's books and records as of the date of this Agreement; (x) any accrued but
unpaid interest due under any Excluded Note; and (xi) any recovery under any
Excluded Note to the extent they are less than an amount equal to the sum of the
outstanding amounts (without duplication of any expenses referenced above) due
under the Excluded Note plus the aggregate of any expenses, other expenditures
or losses described in subparagraphs (i) through (viii) and attributable or
allocable to any Excluded Note. The expenses and other expenditures referenced
in subparagraph (i) through (iv) of this paragraph shall be subject to the
reasonableness limitations set forth in the agreements listed on Schedule 1.1(b)
pursuant to which Bancorp Bank's interests in the Excluded Notes were acquired.
"Excluded Note Collateral" shall mean any collateral or security for any
obligation under an Excluded Note.
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"Excluded Notes" shall mean evidences of indebtedness in writing identified
on Schedule 1.1(b) to the Bancorp Disclosure Schedule, in which Bancorp Bank has
a participatory interest pursuant to the agreements identified on such Schedule
1.1(b) and that relates to such obligations.
"FDI Act" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve" shall mean the Board of Governors of the Federal Reserve
System.
"GAAP" shall mean generally accepted accounting principles as historically
applied on a consistent basis by Bancorp and Bancorp Bank or Buyer, MHC,
MergerSub and Bank, as applicable.
"Guarantee Agreement" shall mean that certain Guarantee Agreement between
Bancorp and Bankers Trust Company, as Guarantee Trustee, dated as of May 19,
1998.
"Hazardous Material(s)" shall mean any material or substance: (i) which is
a "hazardous substance," "pollutant" or "contaminant," pursuant to the
Comprehensive Environmental Response Compensation and Liability Act ("CERCLA")
(42 U.S.C. 9601 et seq.), as amended, and regulations promulgated thereunder;
(ii) containing gasoline, oil, diesel fuel or other petroleum product; (iii)
which is "hazardous waste" pursuant to the Federal Resource Conservation and
Recovery Act ("RCRA") (42 U.S.C. Section 6901 et seq.), as amended, and
regulations promulgated thereunder; (iv) containing polychlorinated biphenyls
(PCBs); (v) containing asbestos; (vi) which is radioactive; (vii) the presence
of which requires investigation or remediation under any Environmental Law
(defined above); or (viii) which is defined or identified as a "hazardous
waste," "hazardous substance," "pollutant," "contaminant," or "biologically
Hazardous Material" under any Environmental Law.
"HOLA" shall have the meaning given to such term in the Recitals to this
Agreement.
"HSRA" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976,
as amended.
"Immediate Family" shall mean a Person's spouse, parents, in-laws, children
and siblings.
"Indenture" shall mean that certain Junior Subordinated Indenture between
Bancorp and Bankers Trust Company, as Trustee, dated as of May 19, 1998.
"Intellectual Property" shall have the meaning given to such term in
Section 4.26(f) hereof.
"Investment Securities" shall have the meaning given to such term in
Section 4.17(a) hereof.
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"IRS" shall mean the Internal Revenue Service.
"Knowledge" or "to the Knowledge of" shall mean (unless otherwise expressly
provided herein), with respect to a party hereto, knowledge of any of the
members of the board of directors or the management officials having
responsibility for the matter in question of Bancorp and the Bancorp
Subsidiaries in the case of Bancorp, and of Buyer and the Buyer Subsidiaries in
the case of Buyer.
"Letter of Transmittal" shall have the meaning given to such term in
Section 2.5(c).
"Letter of Understanding" shall have the meaning given to such term in
Section 7.5(d) hereof.
"Liabilities" shall mean, with respect to a Person, all of the obligations
or liabilities of such Person, whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or becoming due, and regardless of when
asserted, arising out of transactions or events heretofore entered into, or any
action or inaction, including taxes with respect to or based upon transactions
or events heretofore occurring, that are required to be reflected, disclosed or
reserved against in such Person's audited consolidated financial statements in
accordance with GAAP.
"Loans" shall have the meaning given to such term in Section 4.16(a)
hereof.
"Mailing Date" shall have the meaning given to such term in Section 5.2(e)
hereof.
"Merger" shall mean the merger of MergerSub with and into Bancorp pursuant
to Article II hereof, which provides, among other things, that Bancorp shall be
the surviving corporation.
"Merger Consideration" shall mean the right to receive $19.00 in cash per
share of Bancorp Common Stock, into which right all shares of Bancorp Common
Stock shall be converted in the Merger pursuant to Article II hereof. The
aggregate Merger Consideration shall not exceed $46,344,420.
"MergerSub" shall mean BFIN Acquisition Corporation, a Delaware corporation
that is wholly owned by Buyer and was organized by Buyer solely for the purpose
of facilitating the Merger.
"MHC" shall mean Financial Federal MHC, Inc., a federally chartered mutual
holding company that is the parent of Buyer.
"Monthly Financial Statements" shall have the meaning given to such term in
Section 4.10(b) hereof.
"Mortgaged Premises" shall mean, for purposes of Section 4.19 only, each
(i) real property interest (including any fee or leasehold interest) that is
encumbered or affected by any mortgage, deed of trust, deed to secure debt or
other similar document or instrument granting
9
to Bancorp or any Bancorp Subsidiary a lien on or security interest in such real
property interest, and (ii) any other real property interest upon which is
situated assets or other property affected or encumbered by any document or
instrument granting to Bancorp or any Bancorp Subsidiary a lien thereon or
security interest therein.
"NASD" shall mean the National Association of Securities Dealers.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System.
"NBA" shall mean the National Bank Act, as amended.
"OCC" shall mean Office of the Comptroller of the Currency.
"Option Spread" shall have the meaning given to such term in Section 2.4(b)
hereof. The aggregate of the Option Spreads shall not exceed $2,016,240.
"OTS" shall mean the Office of Thrift Supervision.
"Paying Agent" shall mean American National Bank and Trust Company of
Chicago, as agent for the purpose of effectuating the payment of the Merger
Consideration in accordance with Article II hereof.
"Person" shall mean any individual, corporation, limited liability company,
business trust, association, partnership, joint venture, other entity,
government or governmental department or agency.
"Proxy Statement" shall have the meaning given to such term in Section
5.2(b) hereof.
"Regulatory Approvals" shall mean the approval, non-objection or waiver of
the OTS, the Federal Reserve, the U.S. Department of Justice and any other
Applicable Governmental Authorities whose approval, non-objection or waiver is
necessary for the consummation of the Reorganization.
"Regulatory Authorities" shall mean the OTS, the Federal Reserve, the U.S.
Department of Justice, and any Applicable Governmental Authorities having
jurisdiction over any aspect of the Reorganization.
"Reorganization" shall mean the series of transactions contemplated in this
Agreement including and resulting in the grant of the option contemplated in the
Stock Option Agreement, the Merger, the dissolution and liquidation of MergerSub
into Buyer, the Bank Merger and the actions contemplated in Section 6.1(c)
hereof with respect to the Trust Preferred Securities (as defined below).
"Rights Agreement" shall mean that Rights Agreement by and between Bancorp
and Xxxxxx Trust and Savings Bank dated as of August 1, 1998.
10
"SAIF" shall mean the Savings Association Insurance Fund administered by
the FDIC.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Series B Stock" shall have the meaning given to such term in Section
4.5(a) hereof.
"Significant Subsidiary" shall have the meaning given to such term in
Section 5.4(b) hereof.
"Signing Event" shall have the meaning given to such term in Section 9.2
hereof.
"Stock Option Agreement" shall mean that certain Stock Option Agreement of
even date herewith pursuant to which Bancorp has granted Buyer the right to
purchase from Bancorp shares of Bancorp Common Stock, subject to certain
conditions precedent, and certain other rights.
"Stockholders' Meeting" shall have the meaning given to such term in
Section 5.2(a) hereof.
"Subordinated Debentures" shall mean the subordinated debentures issued by
Bancorp pursuant to the Indenture.
"Surviving Bank" shall have the meaning given such term in Section 7.9
hereof.
"Surviving Corporation" shall have the meaning given such term in Section
2.1 hereof.
"Tax" shall have the meaning given to such term in Section 4.14(a) hereof.
"Termination Date" shall mean January 31, 2002, or such other date as shall
have been agreed to in writing by Bancorp and Buyer.
"Transaction Documents" shall mean this Agreement, the Stock Option
Agreement, the Bank Merger Agreement, the Certificate of Merger and the other
documents to be executed in connection with the Reorganization.
"Trust Agreement" shall mean that certain Amended and Restated Trust
Agreement among Bancorp, Bankers Trust Company, as property trustee, and Bankers
Trust (Delaware), as Delaware trustee, dated as of May 19, 1998, with respect to
Bancorp Capital Trust I.
"Trust Preferred Securities" shall mean the preferred securities issued
pursuant to the Trust Agreement and currently quoted under the symbol "SXNBP" on
the NASDAQ.
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1.2 PRINCIPLES OF CONSTRUCTION. In this Agreement, unless otherwise stated
or the context otherwise requires, the following usages apply: (a) unless
otherwise provided herein, actions permitted but not required under this
Agreement may be taken at any time, and from time to time, in the actor's sole
discretion; (b) in computing periods from a specified date to a later specified
date, the words "from" and "commencing on" (and the like) mean "from and
including," and the words "to," "until" and "ending on" (and the like) mean "to,
and including"; (c) headings are inserted for convenience of reference only and
are not a part of, nor shall they affect any construction or interpretation of
this Agreement; (d) unless otherwise specified, indications of time of day mean
Chicago, Illinois, time; (e) all references to Articles, Sections, Schedules and
Exhibits are to Articles, Sections, Schedules and Exhibits in or to this
Agreement unless otherwise specified; (f) references to a statute shall refer to
the statute and any successor statute, and to all regulations promulgated under
or implementing the statute or successor, as in effect at the relevant time; (g)
references to a governmental or quasi-governmental agency, authority or
instrumentality shall also refer to a regulatory body that succeeds to the
functions of the agency, authority or instrumentality; (h) "including" shall
mean "including, but not limited to;" (i) unless the context requires otherwise,
all words used in this Agreement in the singular number shall extend to and
include the plural, all words in the plural number shall extend to and include
the singular and all words in any gender shall extend to and include all
genders; (j) any reference to a document or set of documents in this Agreement,
and the rights and obligations of the parties under any such documents, shall
mean such document or documents as amended from time to time, and any and all
modifications, extensions, renewals, substitutions or replacements thereof; and
(k) all references to dollars ($) shall mean United States currency.
ARTICLE II
THE MERGER; EFFECT; PAYMENT; CLOSING
2.1 THE MERGER. In accordance with the terms and subject to the conditions
of this Agreement, including the receipt of all Regulatory Approvals and all
requisite stockholder approvals, Bancorp, MergerSub, Buyer and MHC shall cause
the Merger to be consummated, pursuant to which MergerSub shall be merged with
and into Bancorp and the separate corporate existence of MergerSub shall
thereupon cease, and Bancorp shall be the surviving corporation in the Merger
(the "Surviving Corporation").
2.2 CLOSING; EFFECTIVE TIME. Subject to all of the terms and conditions of
this Agreement, the Closing of the Merger shall occur on a date that is mutually
agreed upon by the parties, which shall be no later than the seventh (7th) day
following the date on which the conditions set forth in Article VIII have been
satisfied or waived. The Closing of the Merger and the consummation of the other
aspects of the Reorganization shall take place at the Law Offices of Barack
Xxxxxxxxxx et al., 000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx, 00000,
at a time to be mutually agreed upon by the parties. The Merger shall become
effective upon the filing of a certificate of merger with the Secretary of State
of the State of Delaware (the "Certificate of Merger"), or at such time
thereafter as Buyer and Bancorp may agree upon in writing and provide in the
Certificate of Merger.
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2.3 EFFECTS OF MERGER.(a) At and after the Effective Time, the Surviving
Corporation shall be governed by the laws of the State of Delaware with all of
its rights, privileges, powers and franchises unaffected by the Merger, and
shall possess all assets and property of every description, whether real,
personal or mixed, and every interest in the assets and property, contingent or
otherwise, wherever located, and the rights, privileges, immunities, powers,
franchises and authority, of a public as well as a private nature, of each of
Bancorp and MergerSub, including all debts due on whatever account, all choses
in action, and each and every interest of or belonging or due to each of Bancorp
or MergerSub, all of which shall vest in the Surviving Corporation without
further act or deed; and the title to all real estate, or any interest therein,
vested in any of such corporations shall not revert or in any way be impaired by
the Merger. At and after the Effective Time, the Merger shall have the further
effects as set forth in Sections 251, 259, 260 and 261 of the DGCL.
(b) The certificate of incorporation of MergerSub shall be
the certificate of incorporation of the Surviving Corporation until amended in
accordance with the provisions thereof and the DGCL.
(c) The bylaws of MergerSub in effect immediately prior to
the Effective Time shall be the bylaws of the Surviving Corporation until
altered, amended or repealed as provided therein, or in accordance with the
certificate of incorporation of the Surviving Corporation and the DGCL.
(d) The directors of the Surviving Corporation shall be the
Persons who were directors of MergerSub immediately prior to the Effective Time.
The officers of the Surviving Corporation shall be the Persons who were officers
of MergerSub immediately prior to the Effective Time.
2.4 EFFECTS OF MERGER ON CAPITAL STOCK AND STOCK OPTIONS. Upon the
Merger becoming effective and at the Effective Time:
(a) Each share of Bancorp Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger shall, ipso facto and
without any action on the part of any holder thereof, become and be converted
into the right to receive the Merger Consideration from Buyer. Each certificate
representing outstanding Bancorp Common Stock shall, after the Effective Time of
the Merger, represent only the right to receive the Merger Consideration from
Buyer. Each holder of Bancorp Common Stock, upon surrender to the Paying Agent,
in proper form for cancellation, of the Bancorp Certificate representing such
holder's Bancorp Common Stock, shall be entitled to receive a check from the
Paying Agent in an appropriate amount of the Merger Consideration for such
shares. Until so presented and surrendered in exchange for the Merger
Consideration, each certificate that represented issued and outstanding Bancorp
Common Stock shall be deemed for all purposes to evidence the right to receive
the Merger Consideration. No interest shall accrue or be payable with respect to
the Merger Consideration.
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(b) Each share of Bancorp Common Stock issued and owned of
record by Buyer or by Bancorp as treasury stock immediately prior to the
Effective Time of the Merger shall be canceled and retired, and no cash shall be
payable, with respect thereto.
(c) Each Bancorp Stock Option shall, ipso facto and without
any action on the part of holders thereof, become and be converted into the
right to receive the difference between the Merger Consideration and the
applicable option exercise price (the "Option Spread"), payable as provided
herein. Prior to the Effective Time, the board of directors of Bancorp and the
committee or committees established under the Bancorp Stock Option Plans shall
take such actions or make such determinations as may be required under the
Bancorp Stock Option Plans, subject to the approval of Buyer, to effect the
provisions of this Agreement, subject to the rights of optionees and other third
party beneficiaries under such Bancorp Stock Option Plans.
(d) Each share of the common stock of MergerSub that is issued
and outstanding at the Effective Time of the Merger shall, ipso facto and
without any action on the part of the holder thereof, continue as one share of
the common stock of the Surviving Corporation, and all of such shares of common
stock of the Surviving Corporation shall be owned by Buyer. Outstanding
certificates representing shares of common stock of MergerSub shall be deemed to
represent an identical number of shares of common stock of the Surviving
Corporation.
2.5 PAYMENT FOR SHARES. (a) As soon as practicable after the Effective
Time, the parties shall deliver or cause to be delivered to the Paying Agent a
certified copy of the list of the holders of Bancorp Common Stock as of the
Effective Time, after which time there shall be no further registrations or
transfers on the stock transfer books of Bancorp of the shares of Bancorp Common
Stock that were outstanding immediately prior to the Effective Time.
(b) Immediately prior to the Effective Time (and in all events
prior to the filing of the Certificate of Merger), Buyer shall make available or
cause to be made available to the Paying Agent amounts sufficient in the
aggregate to provide all funds necessary for the Paying Agent to make payments
of the Merger Consideration to the holders of Bancorp Common Stock issued and
outstanding immediately prior to the Effective Time.
(c) As soon as practicable after the Effective Time, the
Paying Agent shall mail to each Person (or deliver to each Person, at such
Person's expense, who requests delivery) who was, at the Effective Time, a
holder of record of issued and outstanding Bancorp Common Stock, a letter of
transmittal and instructions for use in effecting the surrender of Bancorp
Certificate(s) which, immediately prior to the Effective Time, represented such
shares (the "Letter of Transmittal"). The Paying Agent shall take all steps
necessary or advisable to permit holders of record of Bancorp Common Stock as of
the Effective Time to surrender their Bancorp Certificates prior to the
Effective Time so as to receive prompt payment of the Merger Consideration after
the Effective Time.
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(d) Upon surrender to the Paying Agent of such Bancorp
Certificates (or such documentation as is acceptable to and required by the
Paying Agent with respect to lost Bancorp Certificate(s)), together with such
Letter of Transmittal, duly executed and completed in accordance with the
instructions thereto, the Paying Agent shall promptly pay the Persons entitled
thereto a check in the amount to which such Persons are entitled, after giving
effect to any required Tax withholdings.
(e) If payment is to be made to a Person other than the
registered holder of Bancorp Certificate(s) surrendered, it shall be a condition
of any such payment that the Bancorp Certificate(s) so surrendered shall be
properly endorsed or otherwise executed in proper form for transfer and that the
Person requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a Person other than the registered holder of Bancorp
Certificate(s) surrendered, or establish to the satisfaction of Buyer or the
Paying Agent that any such Tax has been paid or is not applicable.
(f) One hundred eighty (180) days following the Effective
Time, the Paying Agent shall deliver to Buyer a certified list of the names and
addresses of all former registered holders of Bancorp Common Stock who have not
then surrendered their Bancorp Certificates to receive the Merger Consideration
to which they are entitled, and (ii) Buyer shall be entitled at its election to
cause the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) made available to the Paying Agent which have not
been disbursed to holders of certificates formerly representing Bancorp Common
Stock outstanding at the Effective Time. Upon the delivery of such funds to
Buyer, such holders shall be entitled to look to Buyer only as general creditors
thereof with respect to the cash payable upon due surrender of their Bancorp
Certificates.
(g) The Merger Consideration paid pursuant to this Article II
shall constitute and represent full satisfaction of all rights pertaining to
such shares of Bancorp Common Stock.
(h) Except as otherwise provided herein or in the Letter of
Transmittal, Buyer shall pay all charges and expenses, including those of the
Paying Agent, in connection with the payment of the Merger Consideration in
exchange for Bancorp Common Stock.
2.6 PAYMENT OF OPTION SPREAD. Immediately prior to the Effective Time, all
outstanding Bancorp Stock Options shall become immediately exercisable and fully
vested. At the Effective Time, all outstanding Bancorp Stock Options shall be
canceled and Bancorp shall promptly pay each holder, for each Bancorp Stock
Option held, an amount in cash equal to the Option Spread reduced by any
required Tax withholdings. The payment of the Option Spreads pursuant to this
Article II shall be delivered and paid by Bancorp in full satisfaction of all
rights pertaining to the Bancorp Stock Option Plans and the Bancorp Stock
Options.
2.7 ESCHEAT. Notwithstanding anything in this Article II or elsewhere in
this Agreement to the contrary, neither the Paying Agent nor any party hereto
shall be liable to a
15
former holder of Bancorp Common Stock or any Bancorp Stock Options for any funds
delivered to a public official pursuant to any applicable escheat or abandoned
property laws.
2.8 DISSENTING SHARES. The holder of any Dissenting Share shall have the
rights, subject to the limitations, provided by Section 262 of the DGCL. If at
any time a holder of Dissenting Shares shall lose or withdraw such holder's
rights to appraisal with respect to such holder's shares of Bancorp Common
Stock, then such shares shall be converted into the right to receive the Merger
Consideration in respect of such shares.
2.9 BUYER'S DELIVERIES AT CLOSING. At the Closing, Buyer shall deliver, or
cause to be delivered, to Bancorp the following items:
(a) evidence of the delivery by Buyer or its agents to the
Paying Agent of the aggregate amount of the Merger Consideration for payment to
the holders of Bancorp Common Stock as provided in this Agreement;
(b) good standing certificates for each of Buyer, MHC and
MergerSub issued by the OTS in the case of Buyer and MHC, and by the Secretary
of State of the State of Delaware in the case of MergerSub, each dated not more
than fifteen (15) Business Days prior to the Closing Date;
(c) a copy of the charter of Buyer and MHC and the certificate
of incorporation of MergerSub certified not more than fifteen (15) Business Days
prior to the Closing Date by the OTS in the case of Buyer and MHC, and by the
Secretary of State of the State of Delaware in the case of MergerSub.
(d) a certificate of the Secretary of each of Buyer, MHC and
MergerSub dated the Closing Date certifying (i) a copy of the bylaws of such
corporation; and (ii) copies of resolutions of the board of directors of each
such corporation and by MHC as the sole stockholder of Buyer authorizing and
approving this Agreement and the Reorganization, and by Buyer as the sole
stockholder of MergerSub;
(e) a certificate of the President of Buyer, MHC and MergerSub
dated the Closing Date certifying that, to his Knowledge: (i) there have been no
further amendments to the charter and certificate of incorporation delivered
pursuant to subsection (c) of this Section; (ii) all of the representations and
warranties of each of Buyer, MHC and MergerSub set forth in this Agreement
comply with the requirements set forth in Section 8.2(a) hereof as of the
Closing Date; and (iii) each of Buyer, MHC and MergerSub has performed or
complied, in all material respects, with all of the covenants and obligations to
be performed or complied with by each of Buyer and MergerSub, under the terms of
this Agreement on or prior to the Closing Date;
(f) copies of each of the Regulatory Approvals;
(g) such documents as shall be necessary to evidence the
assumption by Buyer of the obligations of Bancorp under the Indenture, the Trust
Agreement and the
16
Guarantee Agreement, together with any other documents that shall be required to
be delivered under the Indenture, Trust Agreement or Guarantee Agreement to
ensure that the Subordinated Debentures remain outstanding and the Trust
Preferred Securities issued pursuant to the Trust Agreement remain issued and
outstanding and are eligible to be traded in the secondary market in accordance
with Section 6.1(c) hereof;
(h) a legal opinion of Buyer's counsel, Barack Xxxxxxxxxx
Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx, substantially in the form set forth in Exhibit A
hereto and dated as of the Effective Time; and
(i) such other documents as Bancorp or its counsel shall
reasonably request.
2.10 BANCORP'S DELIVERIES AT CLOSING. At the Closing, Bancorp shall
deliver, or cause to be delivered, to Buyer the following items:
(a) good standing certificates for Bancorp issued by the
Secretary of State of the State of Delaware and the Secretary of State of the
State of Illinois, each dated not more than fifteen (15) Business Days prior to
the Closing Date;
(b) a good standing certificate for Bancorp Bank issued by the
OCC and dated not more than fifteen (15) Business Days prior to the Closing
Date;
(c) a copy of the certificate of incorporation of Bancorp
certified by the Secretary of State of the State of Delaware, which shall be
certified as of a date which is not more than fifteen (15) Business Days prior
to the Closing Date;
(d) a copy of the articles of association of Bancorp Bank
certified by the OCC as of a date which is not more than fifteen (15) Business
Days prior to the Closing Date;
(e) a certificate of the Secretary of Bancorp dated the
Closing Date certifying (i) a copy of the bylaws of Bancorp, (ii) copies of
resolutions of the board of directors of Bancorp and the stockholders of Bancorp
authorizing and approving this Agreement and the Reorganization;
(f) a certificate of the Cashier of Bancorp Bank dated the
Closing Date certifying a copy of the bylaws of Bancorp Bank;
(g) a certificate executed by the President of Bancorp dated
the Closing Date certifying that, to his Knowledge: (i) there have been no
further amendments to the certificate of incorporation and articles of
association delivered pursuant to subsections (c) and (d) of this Section; (ii)
all of the representations and warranties of Bancorp set forth in this Agreement
comply with the requirements set forth in Section 8.1(a) hereof as of the
Closing Date; and (iii) Bancorp has performed or complied, in all material
respects, with all of the covenants and obligations to be performed or complied
with by Bancorp under the terms of this Agreement on or prior to the Closing
Date;
17
(h) such documents as shall be reasonably requested by Buyer
which evidence the approval of the assumption by Buyer of the obligations of
Bancorp under the Indenture, the Trust Agreement and the Guarantee Agreement and
ensure that the Subordinated Debentures remain outstanding and the Trust
Preferred Securities issued pursuant to the Trust Agreement remain outstanding
and are eligible to be traded in the secondary market in accordance with Section
6.1(c) hereof;
(i) a legal opinion of Bancorp's counsel, Vedder, Price,
Xxxxxxx & Kammholz, substantially in the form set forth in Exhibit B attached
hereto and dated as of the Effective Time; and
(j) such other documents as Buyer or its counsel shall
reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Each of Buyer and MHC represents and warrants to Bancorp that each of the
following statements is true and correct on the date hereof and will comply with
the requirements of Section 8.2(a) hereof as of the Effective Time.
3.1 ORGANIZATION. (a) Each of Buyer and MHC is a corporation duly
organized, validly existing and in good standing under the laws of the United
States and has all requisite power and authority, corporate and otherwise, to
own, operate and lease its assets, properties and businesses and to carry on its
businesses substantially as they have been and are now being conducted. Each of
Buyer and MHC is duly qualified to do business and is in good standing in each
jurisdiction where the character of the properties owned or leased by it or the
nature of the business transacted by it requires that it be so qualified, except
where the failure to so qualify would not have a Buyer Material Adverse Effect.
Each of Buyer and MHC has all requisite corporate power and authority to enter
into this Agreement and the other Transaction Documents to which it is a party
and, upon the receipt of all Regulatory Approvals, to consummate the
Reorganization. MHC is a duly registered mutual savings and loan holding company
under HOLA and the rules and regulations of the OTS thereunder. Buyer is duly
registered as a subsidiary savings and loan holding company under HOLA and the
rules and regulations of the OTS thereunder.
(b) MergerSub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite power and authority, corporate and otherwise, to own, operate and
lease its assets, properties and businesses and to carry on its businesses
substantially as they have been and are now being conducted. MergerSub is duly
qualified to do business and is in good standing in each jurisdiction where the
character of the properties owned or leased by it or the nature of the business
transacted by it requires that it be so qualified, except where the failure to
so qualify would not have a Buyer Material Adverse Effect. MergerSub has all
requisite corporate power and authority to enter
18
into this Agreement and the other Transaction Documents to which it is a party
and, upon the receipt of all Regulatory Approvals, to consummate the
Reorganization.
(c) The Bank is a federally-chartered stock savings bank duly
organized and in existence under the laws of the United States and its deposits
are insured by the FDIC through the SAIF to the full extent permitted under the
FDI Act. The Bank is a "qualified thrift lender," as that term is used in
Section 10(m) of HOLA. The Bank has all requisite corporate power and authority
to enter into the Bank Merger Agreement and, upon the receipt of all Regulatory
Approvals and the approval of Buyer as its sole stockholder, to consummate the
Reorganization. To the extent applicable, the Bank is duly qualified to do
business and is in good standing in each jurisdiction where the character of the
properties owned or leased by it or the nature of the business transacted by it
requires that it be so qualified.
(d) MHC has no direct or indirect subsidiaries other than
Buyer and the Buyer Subsidiaries. Buyer has no direct or indirect subsidiaries
other than the Buyer Subsidiaries. Each of the Buyer Subsidiaries is wholly
owned by either Buyer or the Bank. Each Buyer Subsidiary other than the Bank is
a duly organized and validly existing corporation in good standing under the
laws of the United States, the State of Illinois or Delaware, with corporate
power and authority to own, operate and lease its assets and properties, and
carry on its business substantially as it has been and is now being conducted.
(e) MHC, Buyer and each Buyer Subsidiary hold all licenses,
certificates, permits, franchises and rights from all Applicable Governmental
Authorities necessary for the conduct of its and their respective businesses,
except where the failure to so hold would not have a Buyer Material Adverse
Effect.
3.2 AUTHORIZATION. The execution, delivery and performance of the
Transaction Documents and the consummation of the Reorganization have been duly
and unanimously approved and authorized by the boards of directors of MHC,
Buyer, MergerSub and the Bank, and all necessary corporate action on the part of
MHC, Buyer, MergerSub and the Bank has been taken. The Transaction Documents
have been, or where applicable, will be, duly executed and delivered by MHC,
Buyer, MergerSub and the Bank, as applicable, and, subject to the Regulatory
Approvals, will constitute the valid and binding obligations of MHC, Buyer,
MergerSub and the Bank, except to the extent that enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principles and doctrines. Neither the charter nor the
bylaws of MHC or Buyer will need to be amended to effectuate the Reorganization.
3.3 CONFLICTS. (a) The execution and delivery of the Transaction Documents
do not, and the consummation of the Reorganization will not, conflict with or
result in any violation of the charter or bylaws of MHC, Buyer or the Bank, the
certificate of incorporation or bylaws of MergerSub or similar documents of any
other Buyer Subsidiary. The execution and delivery of the Transaction Documents
do not, and the consummation of the Reorganization will not, conflict with or
result in any violation, breach or termination of, or default or loss of a
material benefit under, or permit the acceleration of, any obligation or result
in the creation of any
19
material lien, charge or encumbrance on any of the property or assets under any
provision of any mortgage, indenture, lease, agreement or other instrument,
permit, concession, grant, franchise, license, judgment, order, decree or
Applicable Law and Regulation, other than any such conflicts, violations,
defaults or losses of benefits that (i) individually or in the aggregate do not
have a Buyer Material Adverse Effect, or (ii) will be cured or waived prior to
the Effective Time.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal or state governmental
authority is required by or with respect to MHC, Buyer, Bank or MergerSub in
connection with the execution and delivery of the Transaction Documents or the
consummation by MHC, Buyer, MergerSub and the Bank of the Reorganization, the
absence of which would have a Buyer Material Adverse Effect, except for the
filings to be submitted by MHC, Buyer and the Bank in order to obtain the
Regulatory Approvals, the filing of the Certificate of Merger with respect to
the Merger with the Secretary of State of the State of Delaware, any filings,
approvals or no-action letters with or from state securities authorities, any
antitrust filings, consents, waivers or approvals, and such filings,
applications, waivers and consents as are necessary to permit Buyer to assume
the obligations of Bancorp under the Indenture, the Trust Agreement and the
Guarantee Agreement, and to qualify the Trust Preferred Securities to be traded
in the secondary market in accordance with Section 6.1(c) hereof.
3.4 PROXY STATEMENT DISCLOSURE. None of the information to be supplied by
Buyer for inclusion in the Proxy Statement or any amendments thereof or
supplements thereto will, at the time of the first mailing thereof, or at the
time of the Stockholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.5 LITIGATION. There is no suit, action, investigation or proceeding,
legal, quasi-judicial, administrative or otherwise, pending or, to Buyer's
Knowledge, threatened against or affecting MHC, Buyer or any Buyer Subsidiary,
or any of their respective officers, directors, employees or agents, in their
capacities as such, which, if adversely determined, would have a Buyer Material
Adverse Effect, or which is seeking to enjoin consummation of the Reorganization
or to obtain other relief in connection with this Agreement or the
Reorganization, nor is there any judgment, decree, injunction, rule or order of
any court, arbitrator or Applicable Governmental Authority outstanding against
MHC, Buyer or any Buyer Subsidiary or any of their respective officers,
directors, employees or agents, in their capacities as such, having, or which
could reasonably be foreseen to have in the future, a Buyer Material Adverse
Effect.
3.6 ADEQUATE FUNDS. At the Effective Time, Buyer will have sufficient funds
and capital to carry out its obligations under the Transaction Documents and to
consummate the Reorganization.
20
3.7 NO SHARE OWNERSHIP. As of the date hereof, neither MHC, Buyer, any
Affiliate nor any Buyer Subsidiary owns any shares of Bancorp Common Stock.
3.8 COMPLIANCE WITH LAWS. (a) The businesses of MHC, Buyer and each Buyer
Subsidiary are not being conducted in violation of any Applicable Law and
Regulation, including the HOLA, the FDI 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, consumer protection,
occupational safety, fair employment practices, fair labor standards and laws
and regulations relating to employee benefits, and any statutes or ordinances
relating to the properties occupied or used by MHC, Buyer or any Buyer
Subsidiary, except for possible or actual violations which either individually
or in the aggregate do not and, insofar as reasonably can be foreseen in the
future, will not have a Buyer Material Adverse Effect.
(b) The policies, programs and practices of MHC, Buyer and
each Buyer Subsidiary relating to wages, hours of work, and other terms and
conditions of employment are in compliance in all material respects with
Applicable Laws and Regulations governing employment and terms and conditions of
employment. There are no disputes, claims, or charges, pending or, to Buyer's
Knowledge, threatened, against MHC, Buyer or any Buyer Subsidiary 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, and, to Buyer's Knowledge, there is no basis for any
valid claim or charge with regard to such matters.
(c) No investigation or review by any Applicable Governmental
Authority with respect to MHC, Buyer or any Buyer Subsidiary is pending or, to
Buyer's Knowledge, threatened, nor has any Applicable Governmental Authority
indicated to Buyer an intention to conduct the same, other than normal bank and
bank holding company regulatory examinations and those whose outcome will not
have a Buyer Material Adverse Effect.
(d) The Bank's current rating under the Community Reinvestment
Act of 1977 and the regulations promulgated thereunder is "outstanding."
3.9 BUYER REGULATORY REPORTS. Prior to the execution of this Agreement,
MHC, Buyer and Bank have delivered or made available to Bancorp complete and
accurate copies of all reports that MHC, Buyer and Bank have filed with the OTS
since January 1, 1997, and will provide Bancorp with the reports required by
Section 7.2(c) hereof (collectively, the "Buyer Regulatory Reports"). Since
January 1, 1997, MHC, Buyer and Bank have filed in a timely manner all Buyer
Regulatory Reports that they were required to file with the OTS. As of their
respective dates or as subsequently amended prior to the date hereof, each of
the Buyer Regulatory Reports, to Buyer's Knowledge, (i) is true and correct, and
(ii) complied or will comply with applicable rules and regulations of the OTS.
21
3.10 REGULATORY APPROVALS. Except as referred to in Section 3.3(b) hereof,
or in connection, or in compliance with the provisions of the HSRA, the
Securities Act, the Securities Exchange Act, the HOLA, the BHCA, the BMA, the
rules and regulations of the SEC, OTS and the NASD with respect to the OTCBB,
and the environmental, corporation, securities or blue sky laws or regulations
of the various states, no filing or registration with, or authorization, consent
or approval of, any other party is necessary for the consummation by Buyer or
MergerSub of the Reorganization. As of the date hereof, Buyer knows (based upon
such investigation as Buyer shall deem appropriate in its reasonable discretion
under the circumstances) of no reason why the Regulatory Approvals should not be
obtained prior to the Termination Date without the imposition of any
non-standard conditions or restrictions that, individually or in the aggregate,
would be substantially detrimental to the prospects or financial condition of
Buyer, MHC or any Buyer Subsidiary, or of Bancorp or any Bancorp Subsidiary.
3.11 NO BROKERS. No agent, broker, investment banker or other firm or
Person or officer or director of either is or will be entitled to any broker's
or finder's fee or any other commission, bonus or similar fee in connection with
any aspect of the Reorganization as the result of any action or inaction by
Buyer, except that Buyer is obligated to compensate Sandler X'Xxxxx & Partners,
LLP in connection with the Reorganization.
3.12 BUYER MATERIAL ADVERSE EFFECT. Since December 31, 2000, Buyer and
Buyer Subsidiaries have not suffered any Buyer Material Adverse Effect.
3.13 ACCURACY OF INFORMATION FURNISHED. The representations and warranties
made by Buyer in this Agreement do not contain any untrue statement of material
fact or omit to state any material fact which is necessary under the
circumstances in order to make the statements contained herein and therein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP
Bancorp represents and warrants to Buyer that, except as set forth in the
specific schedule, if any, expressly referenced in the specific representation
and warranty, which schedule shall be part of the Bancorp Disclosure Schedule,
each of the following statements is true and correct on the date hereof and will
comply with the requirements of Section 8.1(a) hereof as of the Effective Time:
4.1 ORGANIZATION. (a) Bancorp is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite power and authority, corporate and otherwise, to own, operate and
lease its assets, properties and businesses and to carry on its businesses
substantially as they have been and are now being conducted. Bancorp is duly
qualified to do business and is in good standing in each jurisdiction where the
character of the properties owned or leased by it or the nature of the business
transacted by it requires that it be so qualified, except where the failure to
so qualify would not have a Bancorp Material Adverse Effect. Bancorp has all
requisite corporate power and
22
authority to enter into this Agreement and the other Transaction Documents
to which it is a party and, upon the receipt of all Regulatory Approvals and, in
the case of this Agreement, the approval of the majority of the shares of
Bancorp Common Stock as hereinafter provided, to consummate the Reorganization.
Bancorp is duly registered as a bank holding company under the BHCA.
(b) Bancorp Bank is a national bank duly organized and in
existence under the laws of the United States and its deposits are insured by
the FDIC to the full extent permitted under the FDI Act. Bancorp Bank has all
requisite corporate power and authority to enter into the Bank Merger Agreement
and, upon the receipt of all Regulatory Approvals and the approval of Bancorp as
its sole stockholder, to consummate the Reorganization.
(c) Bancorp and each Bancorp Subsidiary hold all licenses,
certificates, permits, franchises and rights from all Applicable Governmental
Authorities necessary for the conduct of its and their respective business,
except where the failure to so hold would not have a Bancorp Material Adverse
Effect.
4.2 AUTHORIZATION. The execution, delivery and performance of the other
Transaction Documents and the consummation of the Reorganization have been duly
approved and authorized by the board of directors of Bancorp and, as necessary
or appropriate, by the board of directors of Bancorp Bank, and all necessary
corporate action on the part of Bancorp and Bancorp Bank has been taken, subject
to the approval of this Agreement by the stockholders of Bancorp and the
approval of the Bank Merger Agreement by the board of directors and the sole
shareholder of Bancorp Bank. The Transaction Documents have been, or where
applicable, will be, duly executed and delivered by Bancorp and Bancorp Bank, as
applicable, and, subject to the Regulatory Approvals, and, in the case of this
Agreement and the Reorganization, the approval by the holders of a majority of
the shares of Bancorp Common Stock, will constitute the valid and binding
obligations of Bancorp and Bancorp Bank, except to the extent that
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles or doctrines.
Neither the certificate of incorporation nor the bylaws of Bancorp will need to
be amended to effectuate the Reorganization.
4.3 CONFLICTS. (a) The execution and delivery of the Transaction Documents
do not, and the consummation of the Reorganization will not, conflict with or
result in any violation of the certificate of incorporation or bylaws of Bancorp
or similar documents of any Bancorp Subsidiary. The execution and delivery of
the Transaction Documents do not, and the consummation of the Reorganization
will not, conflict with or result in any violation, breach or termination of, or
default or loss of a material benefit under, or permit the acceleration of, any
obligation or result in the creation of any material lien, charge or encumbrance
on any of the property or assets under any provision of any mortgage, indenture,
lease, agreement or other instrument, permit, concession, grant, franchise,
license, judgment, order, decree or Applicable Law and Regulation, other than
any such conflicts, violations, defaults or losses of benefits that (i)
individually or in the aggregate do not have a Bancorp Material Adverse Effect
on Bancorp, or (ii) will be cured or waived prior to the Effective Time.
23
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Applicable Governmental Authority
is required by or with respect to Bancorp in connection with the execution and
delivery of the Transaction Documents or the consummation of the Reorganization,
the absence of which would have a Bancorp Material Adverse Effect, except for
the filings to be submitted by Buyer, Bancorp and the Bank in order to obtain
the Regulatory Approvals, the Proxy Statement, the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware, any filings,
approvals or no-action letters with or from state securities authorities, any
necessary antitrust filings, consents, waivers or approvals and such consents as
are necessary to permit Buyer to assume the obligations of Bancorp under the
Indenture, the Trust Agreement and the Guarantee Agreement.
4.4 ANTITAKEOVER PROVISIONS INAPPLICABLE. No "business combination,"
"moratorium," "control share" or other state antitakeover statute or regulation,
nor any provision in Bancorp's certificate of incorporation or bylaws, (i)
prohibits or restricts Bancorp's ability to perform its obligations under any
Transaction Document, or its ability to consummate the Reorganization, (ii)
would have the effect of invalidating or voiding any Transaction Document or any
provision hereof or thereof, or (iii) would subject Buyer to any material
impediment or material adverse condition in connection with the exercise of any
of its rights under any Transaction Document.
4.5 CAPITALIZATION AND STOCKHOLDERS. (a) The authorized capital stock of
Bancorp consists of the following: (i) 7,500,000 shares of common stock, par
value $0.001 per share (the "Bancorp Common Stock"), of which 2,439,180 shares
are issued and outstanding and 635,146 shares are held by Bancorp as treasury
shares; and (ii) 1,000,000 shares of Preferred Stock, $0.001 par value, none of
which are issued and outstanding and 90,000 shares of which have been designated
as Series B Junior Participating Preferred Stock ("Series B Stock"). All of the
issued and outstanding shares of Bancorp Common Stock have been duly and validly
authorized and issued, and are fully paid and non-assessable. None of the
outstanding shares of Bancorp Common Stock are subject to any preemptive rights
of the current or past stockholders of Bancorp. All of the issued and
outstanding shares of Bancorp Common Stock will be entitled to vote to approve
the Agreement.
(b) The authorized capital stock of Bancorp Bank consists of
589,557 shares of common stock, 41,000 shares of which are designated as having
a par value of $10.00 per share and 548,557 shares of which are designated as
having a par value of $1.00 per share (collectively, the "Bancorp Bank Common
Stock"). All of the issued and outstanding shares of Bancorp Bank Common Stock
have been duly and validly authorized and issued, and are fully paid and
non-assessable. None of the outstanding shares of Bancorp Bank Common Stock are
subject to any preemptive rights of the current or past stockholders of Bancorp
Bank.
(c) Bancorp has issued $15,000,000 principal amount of
Subordinated Debentures pursuant to the Indenture. The Subordinated Debentures
were duly and validly issued and represent the obligations of Bancorp in
accordance with the terms of the Indenture. All of the Subordinated Debentures
are owned by Bancorp Capital Trust I. Bancorp Capital
24
Trust I was duly and validly organized pursuant to and in accordance with the
Trust Agreement and all Applicable Laws and Regulations. The beneficial
interests in Bancorp Capital Trust I consist of 46,391.752 shares of common
securities, all of which are owned by Bancorp and 1,500,000 shares of Trust
Preferred Securities, all of which are issued and outstanding. All of the issued
and outstanding Trust Preferred Securities have been duly and validly authorized
and issued, and are fully paid and non-assessable.
(d) Bancorp has 370,000 shares of Bancorp Common Stock
reserved for issuance under the Bancorp Stock Option Plans pursuant to which
Bancorp Stock Options for an aggregate of 248,000 shares of Bancorp Common Stock
are outstanding. Except as set forth in this Section 4.5(d) and except for the
transactions herein and as provided under the Stock Option Agreement, there are
no shares of capital stock or other equity securities of Bancorp outstanding and
no outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock of Bancorp, or
contracts, commitments, understandings, or arrangements by which Bancorp is or
may be bound to issue additional shares of its capital stock or options,
warrants, or rights to purchase or acquire any additional shares of its capital
stock. Each Bancorp Stock Option is vested and exercisable or will be, absent an
earlier vesting pursuant to the terms of this Agreement, vested and exercisable
as of the date set forth in Schedule 4.5(d) to the Bancorp Disclosure Schedule
and has an exercise price in the amount set forth in Schedule 4.5(d) to the
Bancorp Disclosure Schedule. No optionee or third party beneficiary has the
right to prevent or delay the conversion of any Bancorp Stock Option into the
right to receive the Option Spread.
(e) Schedule 4.5(e) to the Bancorp Disclosure Schedule
accurately identifies the names of all of the stockholders who, to Bancorp's
Knowledge, beneficially own more than five percent (5%) of the shares of Bancorp
Common Stock and the number of shares of Bancorp Common Stock held by each such
stockholder, by each director and senior officer of Bancorp and by the Bancorp
Benefits Plans.
(f) Bancorp 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 the Reorganization, nor
are there outstanding any options, warrants, calls, rights, commitments or
agreements of any kind obligating Bancorp or any Bancorp Subsidiary to issue or
sell any such indebtedness. There are no outstanding contractual obligations of
Bancorp or any Bancorp Subsidiary to repurchase, redeem or otherwise acquire any
shares of its capital stock or any of its indebtedness.
4.6 THE BANCORP SUBSIDIARIES. (a) Schedule 4.6(a) to the Bancorp Disclosure
Schedule accurately identifies the number of shares of authorized and
outstanding capital stock of the Bancorp Subsidiaries, and a description of the
business of each Bancorp Subsidiary. Except for Bancorp Capital Trust I, Bancorp
owns directly or indirectly all of the issued and outstanding shares of capital
stock of each of the Bancorp Subsidiaries. As to Bancorp Capital Trust I,
Bancorp owns all of its issued and outstanding common securities. Except as set
forth in Schedule 4.6(a) to the Bancorp Disclosure Schedule, neither Bancorp nor
the Bancorp
25
Subsidiaries own directly or indirectly any debt or equity securities, or other
proprietary interest in any other corporation, joint venture, partnership,
entity, association or other business. No capital stock of any of the Bancorp
Subsidiaries is or may become required to be issued by reason of any options,
warrants, scrip, rights to subscribe to, calls, or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of any of the Bancorp Subsidiaries. There are
no contracts, commitments, understandings or arrangements relating to the rights
of Bancorp to vote or to dispose of shares of the capital stock of any Bancorp
Subsidiary. All of the shares of capital stock of each Bancorp Subsidiary held
by Bancorp or a Bancorp Subsidiary are fully paid and non-assessable and, except
as disclosed on Schedule 4.6(a) are owned by Bancorp or such Bancorp Subsidiary
free and clear of any claim, lien or encumbrance.
(b) Each Bancorp Subsidiary other than Bancorp Bank is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or organized, and is duly qualified to
do business and in good standing in each jurisdiction where the character of the
properties owned or leased by it or the nature of the business transacted by it
requires it to be so qualified, except where the failure to so qualify, either
individually or in the aggregate, would not have a Bancorp Material Adverse
Effect. Each Bancorp Subsidiary has the power and authority necessary for it to
own, operate or lease its assets, properties and business and to carry on its
business substantially as they have been and are now being conducted.
(c) Bancorp Realty was liquidated and dissolved in accordance
with applicable laws of its state of incorporation and the states in which
Bancorp Realty was qualified to conduct business.
4.7 SEC REPORTS. Prior to the execution of this Agreement, Bancorp has
delivered or made available to Buyer complete and accurate copies of the
following (collectively and together with the deliveries required under Section
7.2(a) below, the "Bancorp SEC Reports"): (a) Bancorp's Annual Reports on Form
10-K for the years ended December 31, 1998, 1999 and 2000 as filed with the SEC;
(b) all Bancorp proxy statements and annual reports to stockholders used in
connection with meetings of Bancorp's stockholders held since January 1, 1996;
(c) Bancorp's Quarterly Reports on Form 10-Q for the quarters ended March 31,
2000, June 30, 2000 and September 30, 2000 as filed with the SEC; and (d)
Bancorp's Current Reports on Form 8-K as filed with the SEC since January 1,
1997. Except as set forth in Schedule 4.7 to the Bancorp Disclosure Schedule,
each Bancorp SEC Report was timely filed and as of their respective dates or as
subsequently amended prior to the date hereof, each of the Bancorp SEC Reports
(i) do 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 statement
therein, in light of the circumstances under which it was made, not misleading,
(ii) complies as to form in all material respects with the applicable accounting
requirements and the rules and regulations of the SEC and, (iii) with respect to
financial statements included in any Bancorp SEC Report, such included financial
statements fairly present in all material respects the consolidated financial
condition of Bancorp and the Bancorp Subsidiaries as of the dates thereof and
the consolidated results of operations, consolidated statement of changes in
stockholders' equity
26
and consolidated cash flows for the periods then ended (subject, in the case of
the unaudited statements, to recurring year end adjustments normal in nature and
amount, the absence of certain footnotes and other appropriate adjustments.
4.8 BANCORP REGULATORY REPORTS. Prior to the execution of this Agreement,
Bancorp has delivered or made available to Buyer complete and accurate copies of
all reports that Bancorp has filed with the Federal Reserve since January 1,
1997, and will provide Buyer with the reports required by Section 7.2(b) hereof
(collectively, the "Bancorp Regulatory Reports"). Since January 1, 1997, Bancorp
has filed in a timely manner all Bancorp Regulatory Reports that it was required
to file with the Federal Reserve. As of their respective dates or as
subsequently amended prior to the date hereof, each of the Bancorp Regulatory
Reports (i) is true and correct in all material respects, (ii) complies or will
comply in all material respects with applicable rules and regulations of the
Federal Reserve applied on a consistent basis.
4.9 BANCORP BANK REGULATORY REPORTS. Prior to the execution of this
Agreement, Bancorp has delivered or made available to Buyer complete and
accurate copies of all reports that Bancorp Bank has filed with the OCC since
January 1, 1997, and will provide Buyer with the reports required by Section
7.2(b) hereof (collectively, the "Bancorp Bank Regulatory Reports"). Since
January 1, 1997, Bancorp Bank has filed in a timely manner all Bancorp Bank
Regulatory Reports that it was required to file with the OCC. As of their
respective dates or as subsequently amended prior to the date hereof, each of
the Bancorp Bank Regulatory Reports (i) is true and correct in all material
respects, (ii) complies or will comply in all material respects with applicable
rules and regulations of the OCC, applied on a consistent basis.
4.10 FINANCIAL STATEMENTS. (a) Prior to the execution of this
Agreement, Bancorp has delivered or made available to Buyer complete and
accurate copies of Bancorp's audited consolidated financial statements for the
years ended December 31, 1998, 1999 and 2000, and will provide Buyer with the
Bancorp reports required by Section 7.2(e) hereof (collectively, the "Bancorp
Financial Statements"). The Bancorp Financial Statements have been, or will be,
prepared in accordance with GAAP, applied on a consistent basis during the
periods involved, except as indicated in the notes thereto or, in the case of
unaudited statements, as permitted by SEC Form 10-Q (or other applicable SEC
Form), and fairly present, or will fairly present in all material respects, the
consolidated financial condition of Bancorp and the Bancorp Subsidiaries as of
the dates thereof and the consolidated results of operations, consolidated
statement of changes in stockholders' equity and consolidated cash flows for the
periods then ended (subject, in the case of the unaudited statements, to
recurring year end adjustments normal in nature and amount, the absence of
certain footnotes and other appropriate adjustments, none of which will result
in the failure of the unaudited financial statements to fairly present in all
material respects the consolidated financial condition of Bancorp and the
Bancorp Subsidiaries as of the dates thereof and for the periods then ended).
(b) Bancorp has delivered or made available to Buyer the
statement of condition of Bancorp Bank as of the month ending February 28, 2001,
and the related income
27
statement for the monthly period then ended, and will provide Buyer with the
Bancorp and Bancorp Bank reports required by Section 7.2(f) hereof
(collectively, the "Monthly Financial Statements"). Each of the Monthly
Financial Statements (i) has been derived from the books and records of Bancorp
Bank, (ii) have been or will be relied upon by Bancorp and Bancorp Bank
management and the Bancorp and Bancorp Bank Boards of Directors in the operation
and management of Bancorp and the Bancorp Subsidiaries, (iii) have been prepared
in a manner that is consistent with the past practices and, (iv) to Bancorp's
Knowledge, are not, and will not be, false or misleading in any material
respect.
(c) Except as set forth in Schedule 4.10(c), since December
31, 2000, Bancorp and the Bancorp Subsidiaries have not undergone, suffered or
experienced any Bancorp Material Adverse Effect. To the Knowledge of Bancorp, no
facts or circumstances exist which would result in a Bancorp Material Adverse
Effect.
4.11 REGULATORY INVESTIGATIONS. (a) Neither Bancorp nor any Bancorp
Subsidiary 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, 1997, 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 Regulatory Authority or
other Applicable Governmental Authority that currently restricts in any material
respect the conduct of its business or that in any material manner relates to
its capital adequacy, its ability to pay dividends, its credit or risk
management policies, its management or its business, nor, has Bancorp or any
Bancorp Subsidiary been advised by any Regulatory Authority or other Applicable
Governmental Authority that it is considering issuing, initiating, ordering or
requesting any of the foregoing.
(b) Except for routine examinations conducted by the Federal
Reserve or the OCC in the regular course of the business of Bancorp or any
Bancorp Subsidiary, neither the Federal Reserve, the OCC, the FDIC nor the SEC
has initiated any proceeding or, to Bancorp's Knowledge, investigation into the
business or operations of Bancorp or any Bancorp Subsidiary within the past
three (3) years. To Bancorp's Knowledge, there is no unresolved violation,
criticism or exception by the Federal Reserve, the OCC, the SEC or the FDIC that
would have a Bancorp Material Adverse Effect.
4.12 COMPLIANCE WITH LAWS. (a) The businesses of Bancorp and each Bancorp
Subsidiary are not being conducted in violation of any Applicable Laws and
Regulations, including the BHCA, the NBA, the FDI 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,
consumer protection, unfair trade practices, occupational safety, fair
employment practices, fair labor standards, escheat and laws and regulations
relating to employee benefits, and any statutes or ordinances relating
28
to the Bancorp Properties, except for possible violations which either
individually or in the aggregate do not and will not have a Bancorp Material
Adverse Effect.
(b) The policies, programs and practices of Bancorp and each
Bancorp Subsidiary relating to wages, hours of work, and other terms and
conditions of employment are in compliance in all material respects with
Applicable Laws and Regulations governing employment and terms and conditions of
employment. There are no disputes, claims, or charges, pending or, to Bancorp's
Knowledge, threatened, against Bancorp or any Bancorp Subsidiary alleging breach
of any express or implied employment contract or commitment, or a material
breach of any Applicable Law and Regulation relating to employment or terms and
conditions of employment, and, to Bancorp's Knowledge, there is no basis for any
valid claim or charge with regard to such matters.
(c) Schedule 4.12(c) to the Bancorp Disclosure Schedule sets
forth Bancorp Bank's current rating under the Community Reinvestment Act of 1977
and the regulations promulgated thereunder.
4.13 LITIGATION. Schedule 4.13 to the Bancorp Disclosure Schedule includes
copies of all attorney responses to auditor letters provided in connection with
the audited financial statements of Bancorp for the years ended December 31,
1998, 1999 and 2000. Except as disclosed in Schedule 4.13 to the Bancorp
Disclosure Schedule, there is no suit, action, investigation or proceeding,
legal, quasi-judicial, administrative or otherwise, pending or, to Bancorp's
Knowledge, threatened against or affecting Bancorp or any Bancorp Subsidiary, or
any of their respective officers, directors, employees or agents, in their
capacities as such, which is seeking damages against Bancorp, any Bancorp
Subsidiary, or any of their respective officers, directors, employees or agents,
in their capacities as such. None of the matters disclosed in Schedule 4.13 has
or will have a Bancorp Material Adverse Effect, or is seeking to enjoin the
consummation of any aspect of the Reorganization, or to obtain other relief in
connection with the Transaction Documents or the Reorganization, except as
disclosed in such schedule. No judgment, decree, injunction, rule or order of
any court, arbitrator or Applicable Governmental Authority is outstanding
against Bancorp or any Bancorp Subsidiary or any of their respective officers,
directors, employees or agents, in their capacities as such, having, or which
could have a Bancorp Material Adverse Effect.
4.14 TAXES. (a) Bancorp and each Bancorp Subsidiary and all members of any
consolidated, affiliated, combined or unitary group of which Bancorp or any of
the Bancorp Subsidiaries is a member have each timely filed all Tax and Tax
information returns or reports, including all Forms 1099, 1098 and 5498,
required to be filed (all such returns and reports being correct and complete in
all material respects to Bancorp's Knowledge) and have paid (or Bancorp has paid
on behalf of each Bancorp Subsidiary), or have accrued on their respective books
and set up an adequate reserve for the payment of, all Taxes required to be paid
in respect of the periods covered by such returns or reports, and have accrued
on their respective books and set up an adequate reserve for the payment of all
income and other Taxes anticipated to be payable. Neither Bancorp nor any
Bancorp Subsidiary is delinquent in the payment of any Tax, assessment or
governmental charge. No deficiencies for any Taxes have been
29
proposed, asserted or assessed against Bancorp or any Bancorp Subsidiary that
have not been resolved or settled, and no requests for waivers of the statute of
limitations to assess any such Tax are pending or have been agreed to. Except as
set forth on Schedule 4.14(a) to the Bancorp Disclosure Schedule, to Bancorp's
Knowledge, the Tax returns and reports of Bancorp and each Bancorp Subsidiary
have not been audited by either the IRS, the Illinois Department of Revenue, the
Delaware Department of Revenue, or any other federal, state or local Taxing
authorities, for any of the last six (6) years. Neither Bancorp nor any Bancorp
Subsidiary is a party to any action or proceeding by any Applicable Governmental
Authority for the assessment or the collection of Taxes. Deferred Taxes of
Bancorp and each Bancorp Subsidiary have been accounted for in accordance with
GAAP and consistent with past practices. Bancorp and each Bancorp Subsidiary has
delivered to Buyer correct and complete copies of all federal and state income
Tax returns and reports and supporting schedules for all Tax years since
December 31, 1995. For purposes of this Agreement, "Tax" means any federal,
state, local or foreign income, gross receipts, license, payroll, employment,
excise, severance, prohibited transaction, stamp, occupation, premium, property
or windfall profits tax, environmental tax, customs duty, capital stock,
franchise, employees' income withholding, foreign or domestic withholding,
social security, unemployment, disability, workers' compensation,
employment-related insurance, real property, personal property, sales, use,
transfer, value added, alternative or add-on minimum or other tax, fee or
assessment imposed by a taxing jurisdiction, including any interest, penalties
or additional amounts in respect of the foregoing, for each party hereto and its
commonly controlled entities and all members of any consolidated, affiliated,
combined or unitary group of which any of them is a member.
(b) Bancorp has not filed any consolidated federal income tax
return with an "affiliated group" within the meaning of Section 1504 of the Code
where Bancorp was not the common parent of the group. Neither Bancorp nor any
Bancorp Subsidiary is, or has been, a party to any Tax allocation agreement or
arrangement pursuant to which it has any contingent or outstanding liability to
anyone other than Bancorp or any Bancorp Subsidiary.
(c) Bancorp and each Bancorp Subsidiary have each withheld
amounts from its employees, stockholders, borrowers and holders of deposit
accounts in compliance with the tax withholding provisions of Applicable Laws
and Regulations, has filed all federal, state and local returns and reports for
all years for which any such return or report would be due with respect to
employee income tax withholding, social security, unemployment taxes, income and
other Taxes and all payments or deposits with respect to such Taxes have been
timely made and, except as set forth in Schedule 4.14(c) to the Bancorp
Disclosure Schedule, has complied with all applicable federal, state and local
Tax laws concerning the providing of all forms, statements or reports to
employees, stockholders and holders of deposit accounts.
4.15 INSURANCE. Schedule 4.15 to the Bancorp Disclosure Schedules includes
copies of all insurance policies and bonds presently maintained by Bancorp or
the Bancorp Subsidiaries with respect to their respective businesses,
operations, properties or assets. All such insurance policies and bonds are in
full force and effect. Neither Bancorp nor any Bancorp Subsidiary is in default
of any of its obligations under any such insurance policy or bond. Bancorp and
each Bancorp Subsidiary maintain all insurance and bonds they are
30
required to carry by law or by any agreement by which they are bound. Except for
routine claims filed by employees of Bancorp and Bancorp Bank under applicable
medical insurance policies maintained for the benefit of such employees,
Schedule 4.15 to the Bancorp Disclosure Schedule lists and briefly describes all
claims that have been filed under such insurance policies and bonds since March
31, 1999 and the current status of such claims. All claims listed on Schedule
4.15 to the Bancorp Disclosure Schedule have been filed in a due and timely
fashion. Neither Bancorp nor any Bancorp Subsidiary has had an insurance policy
or bond canceled or non-renewed by the issuer of the policy or bond within the
past five (5) years.
4.16 LOANS. (a) Except as disclosed in Schedule 4.16(a) to the Bancorp
Disclosure Schedule or with respect to the Excluded Notes, each loan, loan
agreement, note, lease or other borrowing agreement, any participation therein,
and any guaranty, renewal or extension thereof (collectively, "Loans") reflected
as an asset on any Bancorp Financial Statement, any Bancorp SEC Report, or as
otherwise reflected on the books and records of Bancorp Bank is, to Bancorp's
Knowledge, evidenced by appropriate and sufficient documentation in all material
respects and constitutes, to Bancorp'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. To Bancorp's Knowledge, (i) no obligor named therein
has stated or otherwise indicated to Bancorp or Bancorp Bank 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
any Loan. For purposes of this Section 4.16(a), Bancorp Knowledge as of the date
of this Agreement shall mean the knowledge of Xxxxxx X. Xxxxxx, Xxxxxxx
Xxxxxxxxx, Xxxxxx Xxxxxxxxxxxx, Xxxx Xxxxx, Xxxxxx Xxxxx and Xxxxx Xxxx.
(b) All Loans originated by Bancorp or any Bancorp Subsidiary,
and all Loans purchased by Bancorp or any Bancorp Subsidiary, were made or
purchased in accordance with the policies of the boards of directors of Bancorp
and such Bancorp Subsidiary and in the ordinary course of the business of
Bancorp and such Bancorp Subsidiary. Except as set forth in Schedule 4.16(b) to
the Bancorp Disclosure Schedule, Bancorp Bank has not suffered or allowed the
creation of any security interest, lien, encumbrance or other charge in or
against any Loan.
(c) Except as disclosed in Schedule 4.16(c) to the Bancorp
Disclosure Schedule which contains the list of non-performing assets of Bancorp
Bank, neither Bancorp nor Bancorp Bank is a party to any Loan (i) under the
terms of which the obligor is more than sixty (60) days delinquent in payment of
principal or interest or has been declared to be in default of any other
material provision as of the dates shown thereon or for which Bancorp Bank has
discontinued the accrual of interest; (ii) that has been classified as
"substandard," "doubtful," "loss," "other loans especially mentioned" or any
comparable classifications by Bancorp or Bancorp Bank, or by any Applicable
Governmental Authority, (iii) that has been listed on any "watch list" or
similar internal report of Bancorp or Bancorp Bank or has been categorized as a
"potential problem loan" in any Bancorp SEC Report; or (iv) to any Person that,
to Bancorp's
31
Knowledge, is an Affiliate of an obligor under any Loan described in the "watch
list" of Bancorp or Bancorp Bank.
(d) The allowance for loan and lease losses reflected in the
financial statements contained in any of the Bancorp SEC Reports, Bancorp
Financial Statements and Monthly Financial Statements as of any date subsequent
to December 31, 2000 and required to be furnished by Bancorp to Buyer pursuant
to Sections 7.2(e) and 7.2(f) hereof was, or will be, calculated in accordance
with Bancorp Bank's Commercial and Retail Credit Policy (as of the date hereof
with such changes as shall be required by Applicable Laws and Regulations),
consistently applied and was or will be, in each case as of the date thereof,
adequate in all material respects as of their respective dates under GAAP and
the standards applied by the OCC (in accordance with the OCC release,
"OCC-CH-A-Allowance for Loan and Lease Leases") for determining the adequacy of
allowances for loan and lease losses. Notwithstanding the foregoing, in
determining whether Bancorp Bank's allowance for loan and lease losses is
adequate pursuant to this Section 4.16(d) or any other provision of this
Agreement (including Sections 5.1(b)(vi) and 8.1(h)) under GAAP and the
standards applied by the OCC (in accordance with the OCC release,
"OCC-CH-A-Allowance for Loan and Lease Losses), (i) the Excluded Notes shall be
disregarded for determining such adequacy; (ii) the amount of the allowance for
loan and lease losses that is reflected as an allocated reserve for the Excluded
Notes (in accordance with the "Summary of Commercial and Commercial Real Estate
Loans by Grade" as of March 31, 2001 provided to Buyer pursuant to Section
4.26(h) hereof) shall be deemed to be a part of the unallocated general reserve
and shall be considered for determining such adequacy; (iii) any portion of the
allowance for loan and lease losses as of March 31, 2001 in accordance with the
material provided to Buyer pursuant to Section 4.26(h) that is recharacterized
subsequent to the date of this Agreement as an allocated reserve for an Excluded
Note shall be considered for determining such adequacy; and (iv) any future
additions to the allowance for loan and lease losses that are allocated as a
reserve for an Excluded Note shall be disregarded for determining such adequacy.
(e) Schedule 4.16(e) to the Bancorp Disclosure Schedule
contains a complete list of the Bancorp OREO and other repossessed property
having a carrying value of $100,000 or greater. The Bancorp OREO and other
repossessed property (excluding repossessed property that has a carrying value
of less than $100,000) are carried on the Bancorp SEC Reports, the Bancorp
Financial Statements, the Bancorp Regulatory Reports, the Bancorp Bank
Regulatory Reports and the Bancorp Bank Financial Statements in accordance with
GAAP.
(f) To Bancorp's Knowledge, all guarantees of indebtedness
owed to Bancorp or any Bancorp 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 Bancorp Material Adverse Effect.
32
(g) 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, Bancorp and each
Bancorp Subsidiary have complied with all applicable terms and conditions of
such obligations and with all Applicable Laws and Regulations, contractual
requirements, and procedures with respect to such servicing, except where the
failure to comply would not have a Bancorp Material Adverse Effect.
4.17 INVESTMENTS. (a) Set forth on Schedule 4.17(a) to the Bancorp
Disclosure Schedule 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 Bancorp or
any Bancorp Subsidiary (together with any securities hereafter acquired, the
"Investment Securities"). Schedule 4.17(a) shows, as of March 31, 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 4.17(b) to the Bancorp
Disclosure Schedule, none of the Investment Securities is subject to any
restriction, whether contractual or statutory, that materially impairs the
ability of Bancorp freely to dispose of such investment at any time. With
respect to all material repurchase agreements to which Bancorp or any Bancorp
Subsidiary is a party, Bancorp or such Bancorp 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 4.17(c) to the Bancorp
Disclosure Schedule, neither Bancorp nor any Bancorp 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 Bancorp or any Bancorp 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 Bancorp or any Bancorp
Subsidiary have been classified and accounted for in accordance with SFAS 115
and the intentions of Bancorp's management.
(e) There are no interest rate swaps, caps, floors, option
agreements or other interest rate risk management arrangements to which Bancorp
or any Bancorp Subsidiary is a party or by which any of its assets or properties
may be bound.
4.18 BANCORP BENEFIT PLANS. (a) Schedule 4.18(a)(i) to the Bancorp
Disclosure Schedule contains a list and a true and correct copy (or, a
description with respect to any oral employee benefit plan, practice, policy or
arrangement), including all amendments thereto, of
33
each compensation, consulting, employment, termination (excluding any
termination agreement between Bancorp or any Bancorp Subsidiary and any
individual that is no longer employed with Bancorp or any Bancorp Subsidiary
provided such agreements do not require further action or payment (after the
date hereof) by, and do not create any liability upon, Bancorp or any Bancorp
Subsidiary) or collective bargaining agreement, and each stock option, stock
purchase, stock appreciation right, recognition and retention, life (including
split-dollar arrangements), health, accident or other insurance, bonus, deferred
or incentive compensation, severance (excluding any severance agreement between
Bancorp or any Bancorp Subsidiary and any individual that is no longer employed
with Bancorp or any Bancorp Subsidiary provided such agreements do not require
further action or payment (after the date hereof) by, and do not create any
liability upon, Bancorp or any Bancorp Subsidiary) or separation agreement or
any agreement providing any payment or benefit resulting from a change in
control, profit sharing, retirement, or other employee benefit plan, practice,
policy or arrangement of any kind, oral or written, covering employees, former
employees, directors or former directors of Bancorp or each Bancorp Subsidiary
or their respective beneficiaries, including any employee benefit plans within
the meaning of Section 3(3) of ERISA, which Bancorp or any Bancorp Subsidiary
maintains, to which Bancorp or any Bancorp Subsidiary contributes, or under
which any employee, former employee, director or former director of Bancorp or
any Bancorp Subsidiary is covered or has benefit rights and pursuant to which
any liability of Bancorp or any Bancorp Subsidiary exists or is reasonably
likely to occur (the "Bancorp Benefit Plans"), and current summary plan
descriptions, trust agreements, and insurance contracts and IRS Form 5500 or
5500-C (for the three most recently completed plan years) with respect thereto.
Except as set forth on Schedule 4.18(a)(ii) of the Bancorp Disclosure Schedule,
Bancorp neither maintains nor has entered into any Bancorp Benefit Plan or other
document, plan or agreement which contains any change in control provisions
which would cause an increase or acceleration of benefits or benefit
entitlements to employees or former employees of Bancorp or any Bancorp
Subsidiary or their respective beneficiaries, or other provisions, which would
cause an increase in the liability of Bancorp or any Bancorp Subsidiary or to
Buyer as a result of the Reorganization or any related action thereafter (as
used in this Section 4.18, a "Change in Control Benefit"). The term "Bancorp
Benefit Plans" as used herein refers to all plans contemplated under the
preceding sentences of this Section 4.18, provided that the term "Plan" or
"Plans" is used in this Agreement for convenience only and does not constitute
an acknowledgment that a particular arrangement is an employee benefit plan
within the meaning of Section 3(3) of ERISA. No Bancorp Benefit Plan is a
multiemployer plan within the meaning of Section 3(37) of ERISA. Neither Bancorp
nor any Bancorp Subsidiary has been notified by any Applicable Governmental
Authority to amend any payments or other compensation paid or payable by Bancorp
or any Bancorp Subsidiary under this Agreement, any Bancorp Benefit Plan or
otherwise, to or for the benefit of any employee or director of Bancorp or any
Bancorp Subsidiary and to Bancorp's Knowledge, all such payments are in
compliance with all applicable rules, regulations and bulletins promulgated by
the Applicable Governmental Authorities.
(b) Each of the Bancorp Benefit Plans that is intended to be a
pension, profit sharing, stock bonus, thrift, savings or employee stock
ownership plan that is qualified under Section 401(a) of the Code ("Bancorp
Qualified Plans") has been determined by the IRS to
34
qualify under Section 401(a) of the Code, or an application for determination of
such qualification will be timely made to the IRS prior to the end of the
applicable remedial amendment period under Section 401(b) of the Code (a copy of
each such determination letter or pending application is included in Schedule
4.18(b) of the Bancorp Disclosure Schedule), and, to Bancorp's Knowledge, there
exist no circumstances likely to materially adversely affect the qualified
status of any such Bancorp Qualified Plan. All such Bancorp Qualified Plans
established or maintained by Bancorp or each Bancorp Subsidiary or to which
Bancorp or any Bancorp Subsidiary contribute are in compliance in all material
respects with all applicable requirements of ERISA, and are in compliance in all
material respects with all applicable requirements (including qualification and
non-discrimination requirements in effect as of the Effective Time) of the Code
for obtaining the tax benefits the Code thereupon permits with respect to such
Bancorp Qualified Plans, except for any amendments (which are described in
Schedule 4.18(b)) for which the remedial amendment period has not yet expired.
No Bancorp Qualified Plan is a defined benefit pension plan that is subject to
Title IV of ERISA. All accrued contributions and other payments required to be
made by Bancorp or each Bancorp Subsidiary to any Bancorp Benefit Plan through
the date hereof, have been made or reserves adequate for such purposes as of the
date hereof, have been set aside therefor and reflected in Bancorp Financial
Statements. Neither Bancorp nor any Bancorp Subsidiary has accumulated any
funding deficiency under Section 412 of the Code. Neither Bancorp nor any
Bancorp Subsidiary is in material default in performing any of its respective
contractual obligations under any of Bancorp Benefit Plans or any related trust
agreement or insurance contract, and there are no material outstanding
liabilities of any such Plan other than liabilities for benefits to be paid to
participants in such Plan and their beneficiaries in accordance with the terms
of such Plan.
(c) Except as set forth on Schedule 4.18(c) to the Bancorp
Disclosure Schedule, there is no pending or, to Bancorp's Knowledge, threatened
litigation or pending claim (other than benefit claims made in the ordinary
course) by or on behalf of or against any of Bancorp Benefit Plans (or with
respect to the administration of any of such Plans) now or heretofore maintained
by Bancorp or any Bancorp Subsidiary that allege violations of any Applicable
Laws or Regulations or the terms of the Plan which are reasonably likely to
result in a Liability on the part of Bancorp or any Bancorp Subsidiary or any
such Plan in excess of $50,000.
(d) Bancorp and each Bancorp Subsidiary and all other Persons
having fiduciary or other responsibilities or duties with respect to any Bancorp
Benefit Plan are, and since the inception of each such Plan have been, in
substantial compliance with, and each such Plan is and has been operated in
substantial accordance with, its provisions and in substantial compliance with
the Applicable Laws and Regulations governing such Plan, including the rules and
regulations promulgated by the Department of Labor, and the IRS under ERISA, the
Code or any other applicable law. No Bancorp Benefit Plan has engaged in or been
a party to a "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975(c) of the Code) without an exemption thereto under Section 408 of
ERISA or 4975(d) of the Code. All Bancorp Benefit Plans that are group health
plans have been operated in substantial compliance with the group health plan
continuation requirements of Section 4980B of the Code and Section
35
601 of ERISA and with the certification of prior coverage and other requirements
of Section 701 of ERISA.
(e) Except as set forth on Schedule 4.18(e) to the Bancorp
Disclosure Schedule, neither Bancorp nor any Bancorp Subsidiary has made any
payments, or is or has been a party to any agreement or any Bancorp Benefit
Plan, that under any circumstances could obligate it, Bancorp Bank, or any
successor of either of them, to make any payment that is not or will not be
deductible in full because of Section 162(m) or 280G of the Code.
(f) Schedule 4.18(f) to the Bancorp Disclosure Schedule
describes any obligation that Bancorp or any Bancorp Subsidiary has to provide
health or welfare benefits to retirees or other former employees, directors or
their dependents (other than rights under Section 4980B of the Code or Section
601 of ERISA), including information as to the number of retirees, other former
employees or directors and dependents entitled to such coverages and their ages.
(g) Schedule 4.18(g) to the Bancorp Disclosure Schedule lists:
(i) each officer and director of Bancorp and each Bancorp Subsidiary who is
eligible to receive a Change in Control Benefit, showing the amount of each such
Change in Control Benefit and the basis of the calculation thereof, estimated
compensation for calendar year 2001 based upon compensation received to the date
of this Agreement, and the individual's rate of salary in effect on the date of
this Agreement, the individual's participation in any bonus or other employee
benefit plan, and such individual's compensation from Bancorp or any Bancorp
Subsidiary for each of the calendar years 1996 through 2001 as reported by
Bancorp or each Bancorp Subsidiary on IRS Form W-2 or Form 1099; (ii) each other
employee of Bancorp or any Bancorp Subsidiary who may be eligible for a Change
in Control Benefit, showing the number of years of service of each such employee
together with his or her estimated salary for calendar year 2001; (iii) a
listing of each Bancorp Stock Option, showing the holder thereof, the number of
shares, the exercise price per share and a copy of the option agreements
relating thereto; (iv) a listing of the participants in the Bancorp Employee
Stock Ownership Plan ("ESOP"), showing the number of outstanding shares of
Bancorp Common Stock credited to each participant, the vesting dates thereof,
and the unpaid balance of any loans owing by the ESOP to Bancorp or any party as
of the date hereof (the "ESOP Loan"), the number of unallocated shares of
Bancorp Common Stock under the ESOP; and (v) each officer or director for whom a
supplemental executive retirement, salary continuation or deferred compensation
plan or agreement is maintained, showing the calculations of the amounts due
under each such plan or agreement and the payment schedule thereof, and the
amounts accrued in the Bancorp Financial Statements with respect thereto.
(h) Bancorp and each Bancorp Subsidiary have filed or caused
to be filed, and will continue to file or cause to be filed, in a timely manner
all filings pertaining to each Bancorp Benefit Plan with the IRS, the Department
of Labor, as prescribed by the Code or ERISA, or regulations issued thereunder.
All such filings, as amended, were complete and accurate in all material
respects as of the dates of such filings, and there were no misstatements or
omissions in any such filing which would have a Bancorp Material Adverse Effect.
36
(i) Neither Bancorp nor any Bancorp Subsidiary is a party to
or bound by any collective bargaining agreement and, to Bancorp's Knowledge, no
labor union claims to or is seeking to represent any employees of Bancorp or any
Bancorp Subsidiary.
4.19 ENVIRONMENTAL MATTERS. (a) Except as set forth in Schedule 4.19(a) to
the Bancorp Disclosure Schedule, to the Knowledge of Bancorp, there are no
present or past conditions on Bancorp Properties or Mortgaged Premises involving
or resulting from a past or present storage, spill, discharge, leak, emission,
injection, escape, dumping or release of any kind whatsoever of any Hazardous
Materials or from any generation, transportation, treatment, storage, disposal,
use or handling of any Hazardous Materials, that would, in the case of Bancorp
Properties, have a Bancorp Material Adverse Effect.
(b) Bancorp and each Bancorp Subsidiary are in compliance in
all material respects with all applicable Environmental Laws. Neither Bancorp
nor any Bancorp Subsidiary have received notice of, nor to their Knowledge are
there outstanding or pending, any public or private claims, lawsuits, citations,
penalties, unsatisfied abatement obligations or notices or orders of
non-compliance relating to the environmental condition of Bancorp Properties,
which have or may have a Bancorp Material Adverse Effect.
(c) Except as set forth in Schedule 4.19(c) to the Bancorp
Disclosure Schedule, to the Knowledge of Bancorp, no Bancorp Properties are
currently undergoing remediation or cleanup of Hazardous Materials or other
environmental conditions, the actual or estimated cost of which may have a
Bancorp Material Adverse Effect.
(d) To the Knowledge of Bancorp, Bancorp and each Bancorp
Subsidiary have all governmental permits, licenses, certificates of inspection
and other authorizations governing or protecting the environment necessary to
conduct its present business. Further, Bancorp warrants and represents that
these permits, licenses, certificates of inspection and other authorizations are
fully transferable, to the extent permitted by law, to Buyer.
4.20 INTELLECTUAL PROPERTY. With respect to each item of Intellectual
Property owned by Bancorp or any Bancorp Subsidiary, Bancorp or such Bancorp
Subsidiary possesses all right, title and interest in and to the item, free and
clear of any lien, claim, royalty interest or encumbrance. With respect to each
item of Intellectual Property that Bancorp or any Bancorp Subsidiary is licensed
or authorized to use, the license, sublicense, agreement or permission covering
such item is legal, valid, binding, enforceable and in full force and effect and
has not been breached by any party thereto. To Bancorp's Knowledge, neither
Bancorp nor any Bancorp Subsidiary has ever received any charge, complaint,
claim, demand or notice alleging any interference, infringement,
misappropriation or violation with or of any intellectual property rights of a
third party (including any claims that Bancorp or such Bancorp Subsidiary must
license or refrain from using any intellectual property rights of a third party)
that may have a Bancorp Material Adverse Effect. To Bancorp's Knowledge, neither
Bancorp nor any Bancorp Subsidiary has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any intellectual property
rights of third parties and no third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any
37
intellectual property rights of Bancorp or any Bancorp Subsidiary that may
result in a Bancorp Material Adverse Effect.
4.21 PROPERTIES. (a) Schedule 4.21(a) to the Bancorp Disclosure Schedule
contains a list and description of all Bancorp Properties. Bancorp and each
Bancorp Subsidiary have good, sufficient and marketable title to such Bancorp
Properties, except for (i) assets and properties disposed of since such date in
the ordinary course of business, (ii) Bancorp Permitted Liens, and (iii) as set
forth in Schedule 4.21(a) to the Bancorp Disclosure Schedule. All buildings,
structures, fixtures and appurtenances comprising part of the Bancorp Properties
are in good operating condition and have been well-maintained, normal wear and
tear excepted. Bancorp and each Bancorp Subsidiary have title or other rights to
its assets sufficient in all material respects for the conduct of their
respective businesses as presently conducted, and such assets are free, clear
and discharged of, and from any and all liens, charges, encumbrances, security
interests and/or equities. Title to all Bancorp Properties listed on Schedule
4.21(a) as being owned by Bancorp or a Bancorp Subsidiary is held in fee simple,
except as disclosed on such schedule.
(b) Schedule 4.21(b) to the Bancorp Disclosure Schedule
contains copies of all leases of real or personal property to which Bancorp or
any Bancorp subsidiary is a party as lessee. To Bancorp's Knowledge, all such
leases are valid, effective, and enforceable against the lessor in accordance
with their respective terms. There is not under any of such leases any existing
default, or any event which, with notice or lapse of time or both, would
constitute a default, with respect to either Bancorp or any Bancorp Subsidiary,
or to Bancorp's Knowledge, the other party. None of such leases contains a
prohibition against assignment by Bancorp or any Bancorp Subsidiary, by
operation of law or otherwise, or any other provision that would preclude Buyer
or any Buyer Subsidiary from possessing and using the leased premises or
property for the same purposes and upon the same rental and other terms upon the
consummation of the Merger and the Bank Merger as are applicable to the
possession and use of such premises or property by Bancorp or any Bancorp
Subsidiary as of the date of this Agreement. Neither Bancorp nor any Bancorp
Subsidiary has made a prior assignment for collateral purposes of any such
lease.
4.22 ADA COMPLIANCE. To the Knowledge of Bancorp, all "alterations" (as
such term is defined in the Americans with Disabilities Act and the regulations
issued thereunder (collectively, the "ADA")) to the respective business property
and facilities of Bancorp and each Bancorp Subsidiary, including automated
teller machines (collectively, the "Company Facilities") undertaken after
January 26, 1992, are in compliance in all material respects with the ADA and
the ATBCB Accessibility Guidelines for Buildings and Facilities ("ADAAG"). To
the Knowledge of Bancorp, there are no investigations, proceedings or
complaints, formal or informal, pending or overtly threatened against Bancorp or
any Bancorp Subsidiary in connection with the Company Facilities under ADA,
ADAAG, or any other local, state or federal law concerning accessibility for
individuals with disabilities.
4.23 FIDUCIARY ACCOUNTS. Since March 31, 1991, neither Bancorp nor any
Bancorp Subsidiary has acted as a fiduciary, including as a trustee, agent,
custodian (other than as a
38
custodian for non-discretionary individual retirement accounts), court-appointed
personal representative, guardian, conservator or investment advisor. Neither
Bancorp nor Bancorp Bank exercises trust powers.
4.24 INDEMNIFICATION. To Bancorp's Knowledge, no action or failure to take
action by any director, officer, employee or agent of Bancorp or any Bancorp
Subsidiary has occurred that may give rise to a claim or a potential claim by
any such Person for indemnification against Bancorp or any Bancorp Subsidiary
under any agreement with, or the corporate indemnification provisions of,
Bancorp or any Bancorp Subsidiary, or under any Applicable Laws and Regulations.
4.25 INSIDER INTERESTS. Except as set forth on Schedule 4.25 to the Bancorp
Disclosure Schedule, or as otherwise disclosed in the Bancorp Disclosure
Schedule, no officer or director of Bancorp or any Bancorp Subsidiary, any
member of the Immediate Family of any such Person, and no entity that any such
Persons "controls" within the meaning of Regulation O of the FRB, has any Loan,
deposit account or any other agreement with Bancorp or any of the Bancorp
Subsidiaries, any interest in any material property, real, personal or mixed,
tangible or intangible, used in or pertaining to the business of Bancorp or any
of the Bancorp Subsidiaries, or any other interest or transaction that would be
required to be disclosed under Regulation S-K of the SEC.
4.26 ADDITIONAL DISCLOSURE ITEMS. Schedule 4.26 to the Bancorp Disclosure
Schedule contains the following information or copies of the following
documents, if and to the extent any of the following are not specifically
included in other Schedules to the Bancorp Disclosure Schedule or the Bancorp
SEC Reports:
(a) A list and description of each outstanding letter of
credit and each commitment to issue or confirm a letter of credit (excluding
commitments to issue letters of credit under existing lines of credit unless a
letter of credit has been expressly requested by or on behalf of the borrower)
in excess of $25,000 to which Bancorp or any Bancorp Subsidiary is a party
and/or under which it may (contingently or otherwise) have any Liability.
(b) Complete and correct copies of the certificate of
incorporation, charter and bylaws of Bancorp and each Bancorp Subsidiary.
(c) A list and description of all powers of attorney granted
by Bancorp or any Bancorp Subsidiary that are currently in force.
(d) All judgments, orders, injunctions, court decrees or
settlement agreements arising out of or relating to the labor and employment
practices or decisions of Bancorp or each Bancorp Subsidiary which, by their
terms, continue to bind or affect Bancorp, any Bancorp Subsidiary or any of its
assets.
(e) All orders, decrees, memoranda, agreements or
understandings with any Applicable Governmental Authority that are binding upon
or affecting the current operations of
39
Bancorp or any Bancorp Subsidiary or any of their directors or officers in their
capacities as such.
(f) All trademarks, trade names, service marks, patents, or
copyrights, whether registered or the subject of an application for
registration, which are owned by Bancorp or any Bancorp Subsidiary or licensed
from a third party (excluding computer software programs, source codes and
related materials) (collectively, the "Intellectual Property").
(g) All contracts, agreements or commitments, or amendments
thereto, to which Bancorp and any Bancorp Subsidiary is a party that:
(i) affect ownership, title to or the use of any Bancorp
Properties;
(ii) relate to employment, severance, consulting or
professional service arrangements with any Person except for termination
agreements and termination letters that do not require any further action
or payment by, or do not create any liability upon, Bancorp or any Bancorp
Subsidiary;
(iii) provide for the payment of commissions to or the
sharing of profits with any Person;
(iv) require the consent or approval of, or notice to,
any Person as a result of or in connection with the Merger or the Bank
Merger;
(v) involve data processing or merchant processing;
(vi) involve the guaranty or accommodation by Bancorp or
any Bancorp Subsidiary of the Liabilities of any Person;
(vii) contain any covenant materially limiting the
right of Bancorp or any Bancorp Subsidiary to engage in any line of
business or compete with any Person, or limiting the right of any Person to
compete with Bancorp or a Bancorp Subsidiary or solicit its employees or
customers;
(viii) relate to any material license or material permit
that is necessary to the operation of the business of Bancorp or any
Bancorp Subsidiary;
(ix) involve an aggregate annual payment by Bancorp
or any Bancorp Subsidiary of more than $10,000 in any year and that provide
for any recourse or indemnification obligation on the part of Bancorp or
any Bancorp Subsidiary in excess of $50,000;
(x) relate to the servicing of Loans for any Person or
the sale of servicing rights with respect to any Loans;
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(xi) involve forward commitments or similar arrangements
to purchase or sell mortgages;
(xii) involve as a party any present officer or director
of Bancorp or any Bancorp Subsidiary;
(xiii) is an agreement that would be required to be
filed as an exhibit under Applicable Laws and Regulations of the SEC except
for agreements that have been filed with the SEC and are available on the
SEC's XXXXX archives;
(xiv) (A) has a term of more than one (1) year and
involve an aggregate annual payment by Bancorp or any Bancorp Subsidiary of
more than $10,000 in any year, (B) cannot be terminated without the payment
of liquidated damages, a penalty or an equivalent thereto in excess of
$100,000, or (C) involves an annual expenditure on the part of Bancorp or
any Bancorp Subsidiary in excess of $100,000; or
(xv) a list of all brokered deposits including the
amount of such deposit, the name of the depositor, the interest rate, the
maturity and the name of the broker for such deposit; or
(h) The report known as the "Analysis of the Reserve for Loan
and Lease Loss Adequacy" and related documentation prepared by management of
Bancorp Bank calculating the adequacy of its allowance for loan and lease losses
as of the date hereof.
4.27 DEFAULTS. There has not been any default, or the occurrence of an
event which, with notice or lapse of time or both, would constitute a default in
any obligation to be performed by Bancorp or any Bancorp Subsidiary under any
material contract or material commitment. Neither Bancorp nor any Bancorp
Subsidiary has waived any right under any contract or commitment, except where
any such default or waiver, individually or in the aggregate with any other such
defaults or waivers, would not have a Bancorp Material Adverse Effect. To
Bancorp's Knowledge, no other party to any contract with or commitment to
Bancorp or any Bancorp Subsidiary is in material default in any material
obligation to be performed by such party.
4.28 OPERATIONS SINCE DECEMBER 31, 2000. Between December 31, 2000, and the
date hereof, there has not been, except as set forth on Schedule 4.28 to the
Bancorp Disclosure Schedule or as contemplated and provided for in Schedule
1.1(a):
(a) any increase in the compensation payable or to become
payable by Bancorp or any Bancorp Subsidiary to any officer or director;
(b) any payment of dividends by Bancorp or any Bancorp
Subsidiary, except for payment of dividends on Trust Preferred Securities
pursuant to Section 5.1(c)(iv) below, or any distribution by any of them,
whether directly or indirectly, of any assets of any kind
41
whatsoever, on or in redemption or as the purchase price of any of their
respective capital stocks, or any prepayment of any indebtedness to any
stockholder;
(c) any mortgage, pledge or subjection to lien, charge or
encumbrance of any kind of or on any asset, tangible or intangible, of Bancorp
or any Bancorp Subsidiary, except for Bancorp Permitted Liens;
(d) any creation or assumption of indebtedness, including the
extension or renewal of any existing indebtedness, or the increase thereof, by
Bancorp or any Bancorp Subsidiary for borrowed money, other than in the ordinary
course of business, none of which is in default;
(e) the establishment of any new, or an increase in the
formula for or rate of contributions to or benefits under, any existing
retirement, pension, profit sharing, stock bonus, employee stock ownership,
savings or thrift plan, or any similar plan of deferred compensation, whether
funded or unfunded and whether qualified or unqualified (within the meaning of
the Code) by Bancorp or any Bancorp Subsidiary;
(f) any action by Bancorp or any Bancorp Subsidiary seeking
any cancellation of, or a decrease in the insured limit under, or increase in
the deductible amount of the insured's retention under, any policy of insurance
or bond maintained directly or indirectly by Bancorp or any Bancorp Subsidiary
on any of their respective assets or businesses, including fire and other hazard
insurance on its assets, automobile liability insurance, general public
liability insurance, directors and officers liability insurance, and blanket
bond;
(g) any change in independent auditors, or the historic
methods or practices of accounting of Bancorp or any Bancorp Subsidiary (other
than as required by GAAP or regulatory accounting principles);
(h) any purchase by Bancorp or any Bancorp Subsidiary of any
fixed asset that either (i) has a purchase price individually or in the
aggregate in excess of $25,000 or (ii) is outside of the ordinary course of
business;
(i) any sale or transfer of any asset in excess of $50,000 of
Bancorp or any Bancorp Subsidiary, except for loans (and collateral therefor)
and marketable securities sold in the ordinary course of business at market
prices, or any other sale or transfer of any asset of Bancorp or any Bancorp
Subsidiary outside of the ordinary course of business;
(j) any write-down of any asset in excess of $50,000;
(k) any cancellation or compromise of any debt to, claim by or
right of, Bancorp or any Bancorp Subsidiary, except in the ordinary course of
business (including the compromise of any previously charged-off debt);
42
(l) any amendment or termination of any material contract
or commitment to which Bancorp or any Bancorp Subsidiary is a party;
(m) any agreement, contract or commitment entered into, or
agreed to be entered into, except in the ordinary course of business;
(n) any theft, damage, destruction or loss of or to any
property or properties owned or used by Bancorp, whether or not covered by
insurance which could have a Bancorp Material Adverse Affect;
(o) any Bancorp Material Adverse Effect; or
(p) agreed to do any of the foregoing.
4.29 CORPORATE RECORDS. The corporate record books, transfer books and
stock ledgers of Bancorp and each Bancorp Subsidiary are complete and accurate
in all material respects, and reflect all meetings, consents and other material
actions of the organizers, incorporators, stockholders, boards of directors and
committees of the boards of directors of Bancorp and each Bancorp Subsidiary,
and all transactions in their respective capital stocks, since their respective
inceptions.
4.30 FAIRNESS OPINION. Bancorp has received an opinion dated the date of
this Agreement from Xxxxx, Xxxxxxxx & Xxxxx, Inc. to the effect that, subject to
the terms, conditions and qualifications set forth therein, as of the date
thereof, the Merger Consideration to be received by the stockholders of Bancorp
pursuant to the Merger is fair to such stockholders from a financial point of
view.
4.31 RIGHTS AGREEMENT. Bancorp and its board of directors have taken all
necessary action to (i) render the Rights Agreement inapplicable with respect to
any aspect of the Reorganization and (ii) ensure that neither Buyer nor
MergerSub nor any of their Affiliates will be deemed to be an "Acquiring Person"
or a "Restricted Person" (as such terms are defined in the Rights Agreement) and
no "Share Acquisition Date" or "Distribution Date" (as such terms are defined in
the Rights Agreement) occurs by reason of announcement, approval, execution or
delivery of the Transaction Documents or the consummation of any aspect of the
Reorganization.
4.32 NO BROKERS. No agent, broker, investment banker or other firm or
Person or officer or director of either is or will be entitled to any broker's
or finder's fee or any other commission, bonus or similar fee in connection with
any aspect of the Reorganization, except that Bancorp may pay fees to Xxxxx,
Xxxxxxxx & Xxxxx, Inc., as set forth in the letter dated February 22, 1999, as
amended on August 9, 2000, a copy of which has heretofore been delivered to
Buyer.
4.33 ACCURACY OF INFORMATION FURNISHED. The representations and warranties
made by Bancorp in this Agreement, as qualified in the appropriate Schedule
hereto furnished by Bancorp, do not contain any untrue statement of a material
fact or omit to state any material
43
fact which is necessary under the circumstances in order to make the statements
contained herein and therein not misleading.
ARTICLE V
COVENANTS OF BANCORP
5.1 CONDUCT OF BUSINESS BY BANCORP UNTIL THE EFFECTIVE TIME. During the
period commencing on the date hereof and continuing until the Effective Time,
Bancorp agrees that:
(a) Bancorp and each Bancorp Subsidiary will carry on their
respective businesses in, and only in, the ordinary course of business in
substantially the same manner as heretofore conducted, maintain their financial
records in accordance with GAAP, conduct their respective businesses and
operations only in accordance with safe and sound banking and business
practices, and, to the extent consistent with such businesses, use their Best
Efforts to preserve intact their present business organizations, to keep
available the services of their present officers and employees, and to preserve
their relationships with customers, suppliers and others having business
dealings with them, in each case to the end that their respective goodwill and
going businesses shall be unimpaired at the Effective Time.
(b) Unless required by this Agreement, contemplated and
provided for in Schedule 1.1(a) or otherwise consented to in writing and in
advance by Buyer, Bancorp shall, and shall cause each Bancorp Subsidiary to:
(i) Comply in all material respects with all Applicable
Laws and Regulations;
(ii) File in a timely manner (including permitted
extensions) all Bancorp SEC Reports, Bancorp Regulatory Reports, Bancorp
Bank Regulatory Reports, state and federal tax returns, and all other
reports that it is required to file under Applicable Laws and Regulations;
(iii) Comply in all material respects with all material
leases, contracts, licenses and agreements;
(iv) Maintain its properties and assets in their
present states of repair, order and condition, normal wear and tear
excepted, and maintain and keep in full force and effect all policies of
insurance and bonds presently in effect, including the insurance of
accounts with the FDIC;
(v) Make and commit to make Loans only in accordance
with safe and sound banking practices and on terms and conditions that are
consistent with the Loan policies and procedures of Bancorp Bank, as
established by the board of directors of Bancorp Bank prior to the date of
this Agreement, including any such changes or modifications to such
policies and procedures that are required by Applicable Laws and
Regulations; and
44
(vi) Maintain reserves for possible loan, lease and
other losses at the level set forth in Schedule 1.1(a) and that are
otherwise adequate in all material respects under the requirements of GAAP
and Applicable Laws and Regulations; provided, however, that the
determination of adequacy shall be made in accordance with Section 4.16(d).
(c) Unless required by this Agreement or otherwise consented
to in advance and in writing, Bancorp shall not, and shall not cause or permit
any Bancorp Subsidiary to:
(i) Amend or propose to amend its certificate of
incorporation, articles of association, charter, bylaws or similar
organizational or corporate documents;
(ii) Except with regard to the ESPP (as amended
pursuant to Section 7.5(c) hereof) or as required by law, issue, sell,
grant or otherwise permit to become outstanding any additional shares of
Bancorp Common Stock, preferred stock or any other capital stock or equity
securities of Bancorp, securities convertible into or exchangeable for its
equity securities, warrants, stock appreciation rights, options or other
rights to acquire its equity securities (including pursuant to any employee
stock options or similar stock based employee compensation rights), or any
bonds, debt securities or other securities of Bancorp;
(iii) Except for routine distributions of cash in
lieu of Bancorp Common Stock by the ESOP, redeem, purchase, acquire or
offer to acquire any shares of capital stock of Bancorp or any Bancorp
Subsidiary or other securities of Bancorp or any Bancorp Subsidiary;
(iv) Split, combine or reclassify any outstanding
shares of capital stock of Bancorp or any Bancorp Subsidiary, or declare,
set aside or pay any dividend or other distribution payable in cash, stock,
property or otherwise with respect to shares of capital stock of Bancorp or
any Bancorp Subsidiary, except that (A) Bancorp Bank may pay dividends to
Bancorp in amounts sufficient to enable Bancorp to pay its ordinary
operating expenses and accrued liabilities, and (B) Bancorp Capital Trust I
may pay scheduled dividends on the Trust Preferred Securities;
(v) Acquire, by merger, exchange, consolidation,
acquisition of stock or assets or otherwise, any corporation, partnership,
limited liability company, joint venture or other business organization or
division or material assets thereof, or assets or deposits that are
material to Bancorp and Bancorp Bank (on a consolidated basis), except in
connection with the resolution of debt previously contracted (whether
previously or hereinafter created) in the ordinary course of business;
(vi) Change any policies or practices with respect to
liquidity management and cash flow planning, marketing, loan and deposit
pricing or fee schedules, deposit origination, lending, budgeting, profit
and tax planning, accounting or any other material aspect of its business
or operations, except for such changes as
45
may be required in the opinion of the management of Bancorp to respond to
then current market or economic conditions or as may be required by
Applicable Governmental Authorities provided that Bancorp notifies Buyer of
any material change in writing within 2 days after such change is made;
(vii) File any applications for additional branches,
open any new office or branch, close any current office or branch, or
relocate operations from existing locations other than actions taken in
connection with the relocation of the South Libertyville branch;
(viii) Incur or become subject to any indebtedness
for borrowed money except (A) for Federal Home Loan Bank borrowings with a
term of one (1) year or less, (B) for non-brokered deposit accounts
established in the ordinary course of business (including general deposits)
on terms and conditions, including interest rates, that are not more
favorable in any material respect than those available from local
commercial banks in arms' length transactions in the ordinary course of
business, (C) as necessary for Bancorp Bank to cover daylight overdrafts
and other temporary indebtedness incurred in the ordinary course of
business and (D) brokered certificates of deposit (including wholesale
deposit products originated through Express Data) created in compliance
with Bancorp deposit policy as of the date of this Agreement, provided that
the maturity date of any such certificate shall not exceed 5 years and the
aggregate amount of all such certificates shall not exceed 5% of total
deposits at any time;
(ix) Mortgage, pledge or subject any of its assets to
any lien or other encumbrance except (A) in the ordinary course of
business, (B) liens and encumbrances for current property taxes not yet due
and payable or being contested in good faith, (C) Bancorp Permitted Liens,
(D) liens and encumbrances resulting from Federal Home Loan Bank borrowings
permitted hereunder, and (E) the revolving line of credit in the maximum
principal amount of $10,000,000 maintained with American National Bank and
Trust Company of Chicago as of the date of this Agreement;
(x) Discharge or satisfy any material lien or
encumbrance on its assets or repay any material indebtedness for borrowed
money, except for scheduled repayments of (A) Federal Home Loan Bank
advances, (B) Bancorp's revolving line of credit with American National
Bank and Trust Company of Chicago, (C) repayments or satisfaction as may be
dictated by market conditions, and (D) other obligations incurred and
repaid in the ordinary course of business;
(xi) Invest in, purchase or lease any real estate,
except for investments in Bancorp OREO, subleases of office space located
in downtown Chicago or the relocation of the South Libertyville branch;
(xii) Make any single or group of related capital
expenditures or commitments therefor in excess of $50,000, other than
pursuant to binding commitments existing on the date hereof and disclosed
herein, and as necessary to maintain its assets in good repair;
46
(xiii) 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 in excess of $50,000 in
aggregate value, except for (i) a sale of the real estate located in
Libertyville that is presently operated as the South Libertyville branch;
(ii) the origination, purchase and sale of mortgage Loans and Loan
participations as permitted herein; (iii) the purchase of Investment
Securities as permitted; (iv) sales of Bancorp OREO and other repossessed
properties; or (v) the acceptance of a deed in lieu of foreclosure;
(xiv) Enter into any new, or modify, amend, renew or
extend (through action or inaction) the term of any existing, lease,
contract or license that has a term of more than one (1) year, or that
involves payments of more than $25,000 in the aggregate after 2001;
(xv) Terminate any material lease, contract or license
involving an aggregate payment of more than $50,000;
(xvi) Allow any material lease, contract or license
to terminate or expire, or any option to terminate, extend or renew the
term thereof to lapse or expire, without providing Buyer with at least ten
(10) days prior notice thereof;
(xvii) Institute, settle or agree to settle any
claim, action or proceeding, whether or not initiated in a court of law,
involving an expenditure in excess of $100,000 without providing Buyer with
at least five (5) days prior notice thereof;
(xviii) Accept or renew any brokered deposits, except
for certificates of deposit not having a maturity of more than 5 years,
provided that the aggregate amount of such certificates of deposit shall
not exceed 5% of deposits at any time;
(xix) Make or commit to make any Loans except for (A)
unsecured Loans having a principal balance of less than $250,000, excluding
daylight and ordinary overdrafts to customers who are underwritten to
present "passing grade" credit risk (i.e., shall be graded a 4 risk or
better prior to the overdraft) and overdraft loans of up to $500,000 to
borrowers having a risk rating of 5 or better that are authorized by
Bancorp Bank's Chief Executive Officer, (B) purchased loan participations
having a participatory share of less than $4,000,000 subject to Bancorp
Bank's loan policies and procedures as of the date hereof and (C) other
Loans authorized under loan policies and procedures of Bancorp Bank
established by the Board of Directors and delivered to Buyer prior to the
date of this Agreement;
(xx) Except for any Loans or commitments for Loans
existing on the date thereof, make, commit to make, renew, extend the term
or increase the amount of any Loan to any Person that would, when
aggregated with all outstanding Loans and commitments for Loans made to
such Person and such Person's Immediate Family and Affiliates, exceed
$6,000,000, for customers who are underwritten to present "passing
47
grade" credit risk (i.e., shall be graded a 4 risk or better) prior to the
extension of credit;
(xxi) Except for loans having a risk rating of 5 or
better and a principal amount of $1,000,000 or less that have been approved
by the loan committee of the Board of Directors and that are being renewed
or extended for a period of less than one year, make, commit to make,
renew, extend the term or increase the amount of any Loan to any Person if
such Loan or any other Loans to such Person or an Affiliate or member of
the Immediate Family of such Person is on the "watch list" or similar
internal report of Bancorp or Bancorp Bank, or has been classified as
"substandard," "doubtful," "loss," or "other Loans specially mentioned or
listed as a "potential problem loan;" provided, however, that nothing in
this subsection shall prohibit Bancorp or Bancorp Bank from entering into a
forbearance agreement with any such Person if the CEO or Board of Directors
of Bancorp Bank determines that such action is necessary to protect the
interests of Bancorp Bank and such forbearance agreement shall expire or
mature prior to the Effective Time;
(xxii) Make, commit to make, renew, extend the term
or increase the amount of any Loan to any executive officer (as defined in
Regulation O of the Federal Reserve) except in compliance with Regulation
O;
(xxiii) Cancel or release any material Loan, other
debt or claims, release any collateral therefor, or waive any rights of
material value, except in the ordinary course of business or upon payment
in full;
(xxiv) Sell any Investment Securities except as may
be required in the opinion of the management of Bancorp to respond to then
current market or economic conditions or as may be required by any
Applicable Governmental Authority provided that Bancorp notifies Buyer of
any such within two (2) days after such sale is consummated;
(xxv) Purchase any Investment Securities except that
existing Investment Securities may be replaced at maturity or upon earlier
call or upon a permitted sale with the United States Treasury or agency
securities (including Federal Home Loan Bank, Xxxxxxx Mac and Xxxxxx Mae
issues) with similar value, that qualify to secure Federal Home Loan Bank
advances and that have maturities of either (i) 3 years or less or (ii)
more than 3 years but less than 5 years provided the aggregate amount of
such securities does not exceed $10,000,000 at any time;
(xxvi) 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;
48
(xxvii) Purchase or otherwise acquire any investments,
direct or indirect, in any derivative securities, financial futures or
commodities or enter into any interest rate swap, floors and option
agreements, or other similar interest rate management agreements;
(xxviii) Enter into any new, or amend, modify or
terminate any existing employment, severance, retention, covenant not to
compete or similar agreements or arrangements with any officer, director or
employee, except as expressly provided by this Agreement;
(xxix) Grant any bonuses, wage, salary or
compensation increases, or any severance, termination or retention payments
to any officer, director or employee except pursuant to a program that has
been approved in advance and in writing by Buyer or grants made by the
Chief Executive Officer of Bancorp that do not exceed, in the aggregate,
$100,000 and that shall have been determined by the Chief Executive Officer
of Bancorp to be necessary to retain a key employee or settle an employment
claim;
(xxx) Hire any employee with an annual salary that is
not contemplated and provided for in Schedule 1.1(a) except for employees
at will who are hired at a comparable or lesser salary to replace employees
who have resigned or whose employment has otherwise been terminated;
(xxxi) Amend the Bancorp Benefit Plans except as
required by Applicable Laws and Regulations to consummate any aspect of the
Reorganization in accordance with Applicable Laws and Regulations and in
accordance with a plan or program that has been approved in advance and in
writing by Buyer, or adopt any other profit sharing, stock option, pension,
retirement, employee stock ownership, restricted stock, incentive
compensation, deferred compensation, bonus, severance, retention, vacation,
insurance or other employee benefit plan, trust, fund, contract or
arrangement for the benefit or welfare of any employees;
(xxxii) Make contributions to any Bancorp Benefit
Plan except as required by the terms of such plans or agreements as in
effect as of the date of this Agreement, and as contemplated by this
Agreement; provided, however, that Bancorp may make matching contributions
under the ESOP, at the percentage contributed for the preceding plan year
for the ESOP, and provided further that any such matching contributions are
prorated to reflect only those employee elective deferral contributions
made through the Effective Time; or
(xxxiii) Agree or commit to do any of the foregoing.
(d) With respect to any written request by Bancorp for Buyer's
consent to any non-permitted action of Bancorp or Bancorp Bank described in this
Section 5.1, Buyer shall not withhold its consent unreasonably, and Bancorp
shall be entitled to conclusively presume that Buyer has consented to any such
action unless Bancorp shall have received Buyer's written
49
objection to such action within five (5) Business Days of the date of Buyer's
actual receipt of such written request; provided, however, in the event that the
Chief Executive Officer of Bancorp sends a request in accordance with Section
10.2 hereof and expressly and conspicuously requests expedited consideration of
a matter, Bancorp shall be entitled to conclusively presume that Buyer has
consented to any such action unless Bancorp shall have received Buyer's written
objection to such action within two (2) Business Days of the date of Buyer's
actual receipt of such written request. Receipt shall be conclusively evidenced
by fax transmittal notification.
5.2 STOCKHOLDERS' MEETING; PROXY STATEMENT. (a) The board of directors of
Bancorp has determined that this Agreement and the transactions contemplated
hereby are in the best interests of Bancorp and its stockholders, and has
directed that this Agreement and the transactions contemplated hereby be
submitted to Bancorp's stockholders for adoption and approval at a duly held
meeting of such stockholders. Bancorp shall, as soon as practicable, take all
steps necessary to duly call, give notice of, convene and hold Bancorp's regular
annual meeting of its stockholders and to take such actions as shall be
appropriate for the annual meeting and for the purpose of obtaining stockholder
approval of this Agreement and the transactions contemplated hereby, including
the Merger (the "Stockholders' Meeting").
(b) Bancorp shall prepare a proxy statement for the purpose of
holding the Stockholders' Meeting (the "Proxy Statement") and shall submit the
Proxy Statement to the SEC within thirty (30) days after (i) the date on which
Bancorp receives the no-action letter contemplated in Section 6.1(d) below or
(ii) the date on which the SEC advises Bancorp or its counsel that it will not
issue the requested no-action letter. Notwithstanding the foregoing, Bancorp
shall submit the Proxy Statement to the SEC no later than July 15, 2001. The
Proxy Statement shall be prepared in accordance with all applicable requirements
of the Securities Exchange Act and the rules and regulations promulgated
thereunder. The Proxy Statement shall include the Keefe, Bruyette, & Xxxxx
Fairness Opinion referred to in Section 4.32 above, which shall be redated and
reconfirmed as of the date of mailing of the Proxy Statement.
(c) Buyer shall furnish such information concerning Buyer and
the Bank as is necessary to prepare the Proxy Statement, insofar as it relates
to Buyer or the Bank, in accordance with all applicable requirements of the
Securities Exchange Act and the rules and regulations promulgated thereunder.
Buyer agrees promptly to advise Bancorp if at any time prior to the
Stockholders' Meeting any information provided by Buyer for use in the Proxy
Statement becomes incorrect or incomplete in any material respect, and to
provide to Bancorp the information needed to correct such inaccuracy or
omission.
(d) Bancorp shall deliver a draft of the Proxy Statement to
Buyer and its counsel at least two (2) Business Days prior to filing it with the
SEC, and shall provide Buyer with copies of all responses from or written
communications from SEC relating to the Proxy Statement. Bancorp shall also
deliver a copy of the final Proxy Statement to Buyer promptly after the SEC has
completed its review thereof.
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(e) Bancorp shall mail the Proxy Statement to its stockholders
as soon practicable, but in no event later than thirty (30) days after the date
the SEC has completed its review of the Proxy Statement (the "Mailing Date").
5.3 RECOMMENDATION OF APPROVAL. Subject to its fiduciary duties, the board
of directors of Bancorp shall recommend to its stockholders the approval of this
Agreement and the Reorganization, including the Merger, and shall include such
recommendation in the Proxy Statement; and shall otherwise use its Best Efforts
to the extent consistent with its fiduciary duties to obtain such stockholders'
approval.
5.4 CERTAIN ACTIONS.
(a) None of Bancorp or any Bancorp Subsidiary or their
directors, officers or employees (i) shall solicit, initiate, participate in
discussions of, or encourage or take any other action to facilitate (including
by way of the disclosing or furnishing of any information that it is not legally
obligated to disclose or furnish) any inquiry or the making of any proposal
relating to an Acquisition Transaction (as defined below) or a potential
Acquisition Transaction with respect to itself or any Bancorp Subsidiary, or
(ii) shall enter into any agreement, arrangement, or understanding (whether
written or oral), regarding any proposal or transaction providing for or
requiring it to abandon, terminate or fail to consummate this Agreement, or
compensating it or any Bancorp Subsidiary under any of the instances described
in this clause. Bancorp shall immediately instruct and otherwise use its Best
Efforts to cause its agents, advisors (including any investment banker, attorney
or accountant retained by it or any Bancorp Subsidiary), consultants and other
representatives to comply with such prohibition. Bancorp shall immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to such activities.
Notwithstanding the foregoing, Bancorp may provide information at the request of
or enter into negotiations with a third party with respect to an Acquisition
Transaction if the board of directors of Bancorp determines, in good faith, that
to fail to do so would be determined to violate its fiduciary duties to
Bancorp's stockholders under applicable law, after taking into account advice
provided in writing by Vedder, Price, Xxxxxxx & Kammholz, and, provided further,
that Bancorp may not, in any event, provide to such third party any information
which it has not provided to Buyer. Bancorp shall promptly notify Buyer orally
and in writing in the event it receives any such inquiry or proposal and shall
provide reasonable detail of all relevant facts relating to such inquiries,
along with a summary of the advice provided by Vedder, Price, Xxxxxxx &
Kammholz.
(b) "Acquisition Transaction" shall, with respect to Bancorp,
mean any of the following: (i) a merger or consolidation, or any similar
transaction (other than the Merger) of any company with either Bancorp or any
significant subsidiary (as defined in Rule 1.2 of Regulation S-X of the SEC) (a
"Significant Subsidiary") of Bancorp; (ii) a purchase, lease or other
acquisition of all or substantially all the assets of either Bancorp or any
Significant Subsidiary of Bancorp; (iii) a purchase or other acquisition of
"beneficial ownership" by any "person" or "group" (as such terms are defined in
Section 13(d)(3) of the Securities Exchange Act) (including by way of merger,
consolidation, share exchange or otherwise) which would
51
cause such person or group to become the beneficial owner of securities
representing 12 1/2% or more of the voting power of either Bancorp or any
Significant Subsidiary of Bancorp; (iv) a tender or exchange offer to acquire
securities representing 12 1/2% or more of the voting power of Bancorp; (v) a
public proxy or consent solicitation made to stockholders of Bancorp seeking
proxies in opposition to any proposal relating to any aspect of the
Reorganization that has been recommended by the board of directors of Bancorp;
(vi) the filing of an application or notice with the Federal Reserve, the OCC or
any other federal or state regulatory authority (which application has been
accepted for processing) seeking approval to engage in one or more of the
transactions referenced in clauses (i) through (iv) above; or (vii) the making
of a bona fide proposal to Bancorp or its stockholders, by public announcement
or written communication, that is or becomes the subject of public disclosure,
to engage in one or more of the transactions referenced in clauses (i) through
(v) above.
5.5 RIGHTS AGREEMENT. Bancorp shall take all necessary steps to terminate
the Rights Agreement at no cost to Bancorp or Buyer effective upon the Effective
Time.
5.6 TRUST PREFERRED SECURITIES. Bancorp shall take all actions that are
necessary or that are otherwise reasonably requested by Buyer to cause, as of
the Effective Time, Buyer to be the successor to, or to assume the obligations
of, Bancorp under and pursuant to the Trust Agreement, the Indenture and the
Guarantee Agreement and to ensure that the Subordinated Debentures remain
outstanding and the Trust Preferred Securities issued pursuant to the Trust
Agreement remain outstanding and to be traded in the secondary market in
accordance with Section 6.1(c).
5.7 COVENANTS RELATING TO EXCLUDED NOTES. Bancorp and Bancorp Bank (a)
shall not acquire or take title to any Excluded Note Collateral other than
through a subsidiary or other limited liability entity formed specifically for
that purpose; (b) shall maintain or cause to be maintained property and casualty
insurance on all Excluded Note Collateral providing coverages against all
property and casualty risks normally insured against by commercial air carriers,
in amounts at least equal to the net book value of the Excluded Note Collateral;
(c) shall maintain or cause to be maintained liability insurance with respect to
all Excluded Note Collateral providing coverages against all liability risks
normally insured against by commercial air carriers, and in an amount at least
equal to the amount of liability insurance currently maintained for such
Excluded Note Collateral; (d) shall provide Buyer with written monthly reports
itemizing all expenses, other expenditures, losses and other items that are
considered or claimed to be Excluded Financial Effects, as soon as practicable
after the end of each calendar month between the date of this Agreement and the
Effective Time, and in no event later than the twenty-fifth day of the month
following the month in which such expenses, other expenditures, losses or other
items were made, incurred, accrued, received, recognized or realized; (e) shall
provide Buyer with an itemized written report of any individual expense, other
expenditure, loss or other item in excess of $50,000 that is considered or
claimed to be an Excluded Financial Effect, within five (5) Business Days after
such expense, other expenditure, loss or other item is made, incurred, accrued,
received, recognized or realized; and (f) shall not, without the prior written
consent of Buyer, make any capital or other expenditures in connection with the
inspection or repair of, or the making of improvements to,
52
any Excluded Note Collateral in order to maintain a federal airworthiness
certificate presently in effect with respect to such Excluded Note Collateral,
to comply with any manufacturer's recommended maintenance schedule applicable to
such Excluded Note Collateral, or to keep such Excluded Note Collateral in good
working order, in an aggregate amount in excess of ten percent (10%) of the net
book value of the Excluded Note secured by such Excluded Note Collateral.
Section 5.1(d) hereof shall apply to any request made by Bancorp for Buyer's
consent to any action that is not permitted by Section 5.7(f).
ARTICLE VI
COVENANTS OF BUYER
6.1 REGULATORY APPLICATIONS. For purposes of this Article, Buyer and MHC
shall be referred to as "Buyer." (a) Buyer shall, within thirty (30) days of the
date hereof, file applications or notices with the OTS and any other Applicable
Governmental Authorities, and shall use its Best Efforts to promptly prosecute
all notices, applications, appeals and any other pending matters before OTS and
any other Applicable Governmental Authorities.
(b) Buyer shall deliver a draft of the nonconfidential
portions of all regulatory applications and notices to Bancorp prior to filing
them, and shall provide Bancorp with copies of the nonconfidential portions of
all responses from or written communications from Regulatory Authorities
relating to the Merger or this Agreement to the extent permitted by law,
including, but not limited to, any notices that an application or appeal is
being, or may be, or has been withdrawn, or is, or may be, or has been denied,
or is not subject to further appeal or review. Buyer shall also deliver a final
copy of the nonconfidential portions of all regulatory applications and notices
to Bancorp promptly after they are filed with the appropriate Regulatory
Authority.
(c) Buyer shall enter into all documentation necessary for
Buyer to assume the obligations of Bancorp under the Trust Agreement, the
Indenture and the Guarantee Agreement governing the Trust Preferred Securities.
Further Buyer and Bancorp agree to use their Best Efforts to maintain and to
cause Buyer to maintain the trading of the Trust Preferred Securities in the
secondary market in the most liquid form reasonably available under the
circumstances until one (1) year after the Closing. In any event, Buyer shall
arrange (including making arrangements with two (2) market-makers and complying
with any reporting requirements of such market-makers) for the Trust Preferred
Securities to be quoted on the "Over-the-Counter Pink Sheets" for a least one
(1) year after the Closing.
(d) Buyer and Bancorp shall jointly prepare and submit to the
SEC a request for guidance with respect to whether the actions proposed in
Schedule 6.1(c) to this Agreement require compliance by Bancorp with certain
pertinent securities laws. Bancorp shall deliver a draft of the foregoing
requests to Buyer and Buyer's legal counsel for review and comment prior to
their submission to the SEC and the NASD. Bancorp shall also deliver a final
copy of the requests and responses thereto to Buyer promptly after they are
filed with, or received
53
from, the SEC. Buyer shall provide Bancorp with all information that Buyer
reasonably requests in connection with the preparation of the above request.
6.2 DIRECTOR AND OFFICER LIABILITY INSURANCE. With respect to director and
officer liability insurance:
(a) for a period of five (5) years after the Effective Time of
the Merger, Buyer shall use its Best Efforts to cause to be maintained in effect
the current policies of directors' and officers' liability insurance maintained
by Bancorp (provided that Buyer may substitute therefor policies of at least the
same coverage and amount containing terms and conditions which are substantially
no less advantageous) with respect to claims arising from facts or events which
occurred before the Effective Time of the Merger; provided, however, that in no
event shall Buyer be obligated to expend, in order to maintain or provide
insurance coverage pursuant to this paragraph, any amount, in aggregate, in
excess of 150% of the amount of the annual premiums paid as of the date hereof
by Bancorp for such insurance (the "Maximum Amount") and provided further that,
prior to the Effective Time of the Merger, Bancorp shall notify the appropriate
directors' and officers' liability insurers of the Merger and of all pending or
threatened claims, actions, suits, proceedings or investigations asserted or
claimed against any Indemnified Party, or circumstances likely to give rise
thereto to the extent known to the Bancorp, in accordance with terms and
conditions of the applicable policies. If the amount of the annual premiums
necessary to maintain or procure such insurance coverage exceeds the Maximum
Amount, Buyer shall use reasonable efforts to maintain the most advantageous
policies of directors' and officers' insurance obtainable for an annual premium
equal to the Maximum Amount;
(b) if Buyer or any of its successors or assigns (A) shall
consolidate with or merge into any other corporation or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (B) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in each such
case, proper provision shall be made so that the successors and assigns of Buyer
shall assume the obligations set forth in this paragraph; and
(c) the provisions of this paragraph are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
6.3 INDEMNIFICATION. With respect to the indemnification of directors and
officers, Buyer agrees as follows:
(a) Following the Effective Date of the Merger, Buyer shall
indemnify, defend and hold harmless any person who is now, or has been at any
time prior to the date hereof, or who becomes, prior to the Effective Time of
the Merger, a director or officer of Bancorp or any Bancorp Subsidiary (an
"Indemnified Party" and, collectively, the "Indemnified Parties"), to the same
extent as Bancorp is obligated to indemnify, defend and hold harmless the
Indemnified Parties in Bancorp's articles of incorporation or bylaws or similar
governing documents of any Bancorp Subsidiary, as applicable in the particular
case
54
and as in effect on the date hereof, with respect to claims arising from (A)
facts or events that occurred before the Effective Time of the Merger, or (B)
this Agreement or any of the transactions contemplated by this Agreement,
whether in any case asserted or arising before or after the Effective Time of
the Merger. Nothing contained in this paragraph shall be deemed to preclude the
liquidation, consolidation, or merger of Bancorp or any Bancorp Subsidiary, in
which case all of such rights to indemnification and limitations on liability
shall be deemed to survive and continue as contractual rights notwithstanding
any such liquidation or consolidation or merger; provided, however, that in the
event of liquidation or sale of substantially all of the assets of Bancorp,
Buyer shall guarantee, to the extent of the net asset value of Bancorp or any
Bancorp Subsidiary as of the Effective Date of the Merger, the indemnification
obligations of Bancorp or any Bancorp Subsidiary to the extent of
indemnification obligations of Bancorp and the Bancorp Subsidiaries described
above. Notwithstanding anything to the contrary contained in this paragraph,
nothing contained herein shall require Buyer to indemnify any person who was a
director or officer of Bancorp or any Bancorp Subsidiary to a greater extent
than Bancorp or any Bancorp Subsidiary is, as of the date of this Agreement,
required to indemnify any such person;
(b) any Indemnified Party wishing to claim indemnification
under paragraph (a) above, upon learning of any such claim, action, suit,
proceeding, or investigation, shall promptly notify Buyer thereof, but the
failure to so notify shall not relieve Buyer of any liability it may have to
such Indemnified Party. In the event of any such claim, action, suit,
proceeding, or investigation (whether arising before or after the Effective Time
of the Merger) (A) Buyer shall have the right to assume the defense thereof and
Buyer shall not be liable to any Indemnified Party for any legal expenses of
other counsel or any other expenses subsequently incurred by such Indemnified
Party in connection with the defense thereof, except that if Buyer elects not to
assume such defense or counsel for the Indemnified Party advises that there are
issues which raise conflicts of interest between Buyer and the Indemnified
Party, the Indemnified Party may retain counsel satisfactory to them, and Buyer
shall pay the reasonable fees and expenses of such counsel for the Indemnified
Party promptly as statements therefor are received, provided, however, that
Buyer shall be obligated pursuant to this subparagraph (b) to pay for only one
firm of counsel for all Indemnified Parties in any jurisdiction unless the use
of one counsel for such Indemnified Parties would present such counsel with a
conflict of interest, and (B) such Indemnified Party shall cooperate in the
defense of any such matter.
6.4 APPOINTMENT OF NEW DIRECTORS. Buyer shall, at the Effective Time, cause
a director of Bancorp to become a director of Buyer and MHC, another director of
Bancorp to become a director of the Bank, and another director of Bancorp to
become a director of Financial Assurance Services, Inc. In the event that any of
the above individuals that is appointed to serve as a director resigns or fails
to stand for reelection, such director may propose to Buyer a person that can
serve as a successor director. Such proposal shall not be binding upon Buyer or
any Affiliate of Buyer.
6.5 CONDUCT OF BUSINESS. From and after the execution and delivery of this
Agreement and until the Effective Time, Buyer and Buyer Subsidiaries shall
conduct their
55
business and operate only in accordance with sound banking and business
practices and remain in good standing, and file all required reports with all
Applicable Governmental Authorities unless the failure to do any of the
foregoing shall not result in a Buyer Material Adverse Affect.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 ACCESS TO INFORMATION; CONFIDENTIALITY. (a) Between the date hereof and
the Effective Time, Bancorp will afford, and will cause each Bancorp Subsidiary
to afford, to the officers, accountants, attorneys and authorized
representatives of Buyer, reasonable access during normal business hours to the
corporate and banking offices, personnel, advisors, consultants, properties,
contracts, commitments, books and records of Bancorp and each Bancorp
Subsidiary, whether such documents are located on the premises of Bancorp or
elsewhere. Bancorp shall furnish Buyer with all such statements (financial and
otherwise), records and documents or copies thereof, and other information
concerning the business and affairs of Bancorp and each Bancorp Subsidiary, as
Buyer shall from time to time reasonably request. Bancorp further agrees to
cause its accountants, attorneys and such other persons as the parties shall
mutually agree upon to fully cooperate with Buyer and its representatives in
connection with the right of access granted herein.
(b) Bancorp shall allow Buyer's Chairman to attend the
meetings of the boards of directors and board committees of Bancorp and Bancorp
Bank as an observer. Bancorp shall give reasonable notice to Buyer of the date,
time and place of each such meeting, and if known, the agenda for or business to
be discussed at each such meeting. Bancorp shall also provide to Buyer all
written agendas and meeting materials provided to the boards of directors of
Bancorp and Bancorp Bank in connection with such board and board committee
meetings. Notwithstanding the foregoing, Bancorp shall not be required to permit
Buyer's Chairman to attend any portion of any meeting, or to provide to Bancorp
with any materials, that relate to this Agreement or an Acquisition Transaction,
or that involve matters protected by the attorney-client privilege.
(c) Except for information and documents that do not
constitute "Evaluation Material" as defined in the Confidentiality Agreement,
all information and documents to which Buyer is given access pursuant hereto
shall be subject to the Confidentiality Agreement. All information furnished by
Bancorp or any Bancorp Subsidiary to Buyer pursuant hereto shall be treated as
the sole property of Bancorp until the consummation of the Merger contemplated
hereby, and if the Merger shall not occur, Buyer shall destroy or return such
information to Bancorp to the extent required by the Confidentiality Agreement.
7.2 SUPPLEMENTAL REPORTS AND INFORMATION. (a) Bancorp shall deliver to
Buyer complete copies of all Bancorp Quarterly Reports on Form 10-Q, all Bancorp
Current Reports on Form 8-K and all Bancorp proxy materials and related Bancorp
annual reports to
56
stockholders that are filed with the SEC after the date hereof and prior to the
Effective Time, within three (3) days of the applicable filing date.
(b) Bancorp shall deliver to Buyer complete copies of all
Bancorp Regulatory Reports and Bancorp Bank Regulatory Reports that are filed
during the period after the date hereof and prior to the Effective Time, within
three (3) days of the applicable filing date.
(c) Buyer shall deliver to Bancorp complete copies of all
Buyer Regulatory Reports that are filed during the period after the date hereof
and prior to the Effective Time, within three (3) days of the applicable filing
date.
(d) Bancorp will furnish to Buyer (i) a copy of each other
material report filed by it with any other Applicable Governmental Authority,
including any federal, state or local taxing authority and any federal or state
bank regulatory or securities authority during the period after the date hereof
and prior to the Effective Time, within three (3) days of the applicable filing
date, and (ii) all other information concerning its business, properties and
personnel as Buyer may reasonably request.
(e) As soon as reasonably available but not later than the
25th day of July and October, (i) financial statements as of June 30th and for
the three (3) and six (6) month periods ended June 30th and (ii) financial
statements as of September 30th for the three (3) and nine (9) month periods
ended September 30th, respectively. Each of the foregoing financial statement
deliveries shall be accompanied by a report in accordance with SAS 71 prepared
by Bancorp's independent certified accountants.
(f) During the period after the date hereof and prior to the
Effective Time, Bancorp will provide to Buyer, as soon as reasonably available
but not later than the 25th day of each calendar month, (i) the reports of
management of Bancorp and Bancorp Bank to the boards of directors of Bancorp and
the Bancorp Bank, respectively, for the most recently available month, including
to the extent available, delinquency schedules, additions to loan loss reserves,
and payroll reports, (ii) monthly financial statements prepared by Bancorp and
Bancorp Bank for the preceding month, and (iii) schedules of all Loans made
during the immediately preceding month which set forth the name of the borrower,
the amount of and interest rate for each Loan and the collateral provided by the
borrower.
(g) Buyer will furnish to Bancorp a copy of each material
report filed by it with the OTS during the period after the date hereof and
prior to the Effective Time, within three (3) days of the applicable filing
date.
7.3 ENVIRONMENTAL INVESTIGATION. (a) Buyer may, at its election, engage a
mutually acceptable environmental consultant to conduct a preliminary Phase I
environmental assessment of each of the parcels of real estate used in the
operation of the businesses of Bancorp and Bancorp Bank. The fees and expenses
of the consultant with respect to the Phase I assessments shall be paid by
Buyer. The consultant shall complete and deliver the Phase I assessments not
later than sixty (60) days after the date of this Agreement. If any
57
environmental conditions are found or suspected or would tend to be indicated by
the report of the consultant which may be contrary to the representations and
warranties of Bancorp set forth herein without regard to any exceptions that may
be contained in the Bancorp Disclosure Schedule, then the parties shall obtain
from one or more mutually acceptable consultants or contractors, as appropriate,
an estimate of the cost of any further environmental investigation, sampling,
analysis, remediation, or other follow-up work that may be necessary to address
those conditions in accordance with applicable laws and regulations.
(b) Upon receipt of the estimate of the costs of all follow-up
work to the Phase I assessments or any subsequent investigation phases that may
be conducted, the parties shall attempt to agree upon a course of action for
further investigation and remediation of any environmental condition suspected,
found to exist, or that would tend to be indicated by the report of the
consultant. All post-Phase I investigations or assessments (the cost of which
shall be paid by Buyer), all work plans for any post-Phase I assessments or
remediation and any removal or remediation actions that may be performed shall
be mutually satisfactory to Buyer and Bancorp. If the work plans or removal or
remediation actions would cost more than $250,000 (individually or in the
aggregate) to complete, Buyer and Bancorp shall discuss a mutually acceptable
modification of this Agreement. Buyer and Bancorp shall cooperate in the review,
approval and implementation of all work plans.
(c) If the parties are unable to agree upon a course of action
for further investigation and remediation of an environmental condition or issue
raised by an environmental assessment and/or a mutually acceptable modification
to this Agreement, and the condition or issue is not one for which it can be
determined to a reasonable degree of certainty that the risk and expense to
which Buyer and the Buyer Subsidiaries would be subject as owner of the property
involved can be quantified, in good faith, and limited to an amount less than
$500,000, then Buyer may abandon this Agreement as soon as possible but in no
event more than 120 days after the receipt of the Phase I assessments.
7.4 TITLE REPORTS. As soon as practical after the date hereof, but in any
event no later than thirty (30) days after the date hereof, Bancorp shall, at
Buyer's expense, obtain and deliver to Buyer, with respect to all real estate
owned or held pursuant to a ground lease by Bancorp and any Bancorp Subsidiary,
an owner's preliminary report of title covering a date subsequent to the date
hereof, issued by Chicago Title and Trust or such other title insurance company
as is reasonably acceptable to Buyer, showing fee simple title in Bancorp or
such Bancorp Subsidiary in such real estate or the appropriate leasehold
interest of Bancorp or such Bancorp Subsidiary, subject only to (i) the standard
exceptions to title customarily contained in a policy on ALTA 1970 Owner's Form
B; (ii) liens of current state and local property taxes which are not delinquent
or subject to penalty; and (iii) other liens, encumbrances, restrictions and
conditions of record that do not materially adversely affect the value or use of
such real estate.
7.5 RESOLUTION OF BANCORP BENEFIT PLANS. Bancorp and Buyer shall cooperate
in effecting the following treatment of the Bancorp Benefit Plans, except as
mutually agreed upon by Buyer and Bancorp prior to the Effective Time:
58
(a) At the Effective Time, Buyer (or a Buyer Subsidiary) shall
be substituted for Bancorp as the sponsoring employer under those Bancorp
Benefit Plans with respect to which Bancorp or Bancorp Bank is a sponsoring
employer immediately prior to the Effective Time, and shall assume and be vested
with all of the powers, rights, duties, obligations and liabilities previously
vested in Bancorp or Bancorp Bank with respect to each such Plan. Except as
otherwise provided herein, each such Plan and any Bancorp Benefit Plan sponsored
by Bancorp or Bancorp Bank shall be continued in effect by Buyer or any
applicable Buyer Subsidiary after the Effective Time, subject to the power
reserved to Buyer or any applicable Buyer Subsidiary under each such Plan to
subsequently amend or terminate the Plan in accordance with Applicable Laws and
Regulations. Bancorp, Bancorp Bank and Buyer will use all reasonable efforts (i)
to effect said substitutions and assumptions, and take such other actions
contemplated under this Agreement, and (ii) to amend such Plans as to the extent
necessary to provide for said substitutions and assumptions, and such other
actions contemplated under this Agreement.
(b) At or as promptly as practicable after the Effective Time
as Buyer shall reasonably determine, Buyer shall provide, or cause any Buyer
Subsidiary to provide, to each employee of Bancorp and Bancorp Bank as of the
Effective Time ("Bancorp Employees") the opportunity to participate in each
employee benefit plan and program maintained by Buyer or the Buyer Subsidiaries
for similarly situated employees (the "Buyer Benefit Plans"); provided, however,
that with respect to such Buyer Benefit Plans, Bancorp Employees shall be given
credit for service with Bancorp or Bancorp Bank in determining eligibility for
and vesting in benefits thereunder, but not for purposes of benefit accrual;
provided further that Bancorp Employees shall not be subject to any waiting
periods or pre-existing condition exclusions under the Buyer Benefit Plans to
the extent that such periods are longer or restrictions impose a greater
limitation than the periods or limitations imposed under Bancorp Benefit Plans.
Nothing in the preceding sentence shall obligate Buyer to provide or cause to be
provided any benefits duplicative of those provided under any Bancorp Benefit
Plan continued pursuant to subparagraph (a) above, including, but not limited
to, extending participation in any Buyer Benefit Plan which is an "employee
pension benefit plan" under ERISA with respect to any year during which
allocations are made to Bancorp Employees under a Bancorp Qualified Plan. Except
as otherwise provided in this Agreement, the power of Bancorp, Buyer, Bancorp
Bank or any Buyer Subsidiary to amend or terminate any benefit plan or program,
including any Bancorp Benefit Plan, shall not be altered or affected. Moreover,
this Agreement shall not confer upon any Bancorp employee any rights or remedies
hereunder and shall not constitute a contract of employment or create any right,
to be retained or otherwise, in employment with Buyer, Bancorp Bank or any Buyer
Subsidiary.
(c) Bancorp shall, as promptly as practicable following the
date of this Agreement, amend the Bancorp Employee Stock Purchase Plan ("ESPP")
as follows: (i) the ESPP shall be terminated effective immediately with respect
to the executive officers of Bancorp and the Bancorp Subsidiaries and all
amounts contributed by such executive officers after, or for any period after,
December 31, 2000 shall be refunded, in cash; and (ii) with respect to all other
Persons, the ESPP shall be terminated effective June 30, 2001. The parties agree
that Bancorp may honor all contributions and purchase elections made in
accordance
59
with this Agreement and the ESPP by employees (other than executive officers of
Bancorp and the Bancorp Subsidiaries) for the six (6) month period ending June
30, 2001. For the purposes of this Section 7.5(c), the term "executive officers
of Bancorp and the Bancorp Subsidiaries" shall mean the officers of Bancorp or
any Bancorp Subsidiary that are required to file reports under Section 16 of the
Securities Exchange Act.
(d) Bancorp Bank and each of Messrs. Xxxxxx, Love and Xxxxx
and Xx. Xxxxxxxxxxxx and Xx. Xxxxxxxxx have executed amendments to their
respective employment agreements which set forth the terms of their continued
employment after the Reorganization and which are attached as Schedule 7.5(d).
Immediately after the execution of this Agreement, Bancorp shall use its Best
Efforts to obtain from each other officer who is a party to an employment
agreement or special termination agreement with Bancorp or Bancorp Bank a Letter
of Understanding with Buyer on terms acceptable to Buyer (each a "Letter of
Understanding"), relating to (i) such officer's employment terms after the
Effective Time and (ii) such officer's employment agreement or special
termination agreement.
(e) From and after the date of this Agreement through the
Effective Time, Bancorp and/or Bancorp Bank (i) shall not make any contributions
to the ESOP that will be used to repay, nor shall they repay, the ESOP Loan or
any amounts due thereunder and (ii) shall cooperate with Buyer and take any
action requested by Buyer to prepare for the termination of the ESOP after the
consummation of the Reorganization.
7.6 COOPERATION. (a) Subject to the terms and conditions herein provided,
each of Buyer and Bancorp agrees to use Best Efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary, proper
or advisable under Applicable Laws and Regulations to consummate and make
effective the Reorganization. In case at any time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and/or directors of Buyer or Bancorp, as the case may be, shall take
all such necessary action consistent with the parties' rights and
responsibilities under this Agreement.
(b) Bancorp will cooperate in the preparation by Buyer of such
applications to the Applicable Governmental Authorities and any other regulatory
authorities as may be necessary in connection with the Regulatory Approvals.
Buyer and Bancorp will each cooperate in the preparation of such applications,
statements or materials as may be required to be furnished to the stockholders
of Bancorp or filed or submitted to Applicable Governmental Authorities in
connection with the Merger and the Bank Merger, and with solicitation of the
approval by stockholders of Bancorp in respect thereof.
(c) Bancorp and Bancorp Bank will cooperate with Buyer in
obtaining any consent, authorization or approval of, or any exemption by, any
Applicable Governmental Authority or other third party that must be obtained or
made by any of them in connection with the Merger and the Bank Merger, or the
taking of any other action contemplated hereby.
(d) If necessary to expedite or facilitate the Closing, the
Regulatory Approvals and any other aspect of the Reorganization, the parties
agree that, at the election of
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Buyer, Buyer may restructure the transaction as a merger of Bancorp with and
into Buyer or with and into an acquisition subsidiary of the Bank, provided that
any such restructuring shall not result in any change in the Merger
Consideration, change the federal income tax treatment of the transactions
contemplated hereunder, or delay the Closing or Buyer's receipt of the
Regulatory Approvals. In the event such election is made, Bancorp will take or
perform any additional reasonably necessary or advisable steps to enable Buyer
to restructure the transaction in such manner.
(e) Bancorp agrees that it shall, and shall cause Bancorp
Bank, to: (i) make any accounting adjustments or entries to its books of account
and other financial records; (ii) make or not make additional provisions to
Bancorp Bank's loan loss reserve; (iii) sell or transfer any investment
securities held by it; (iv) charge-off any Loan; (v) create any new reserve
account or make additional provisions to any other existing reserve account;
(vi) make changes in any accounting method; (vii) accelerate, defer or accrue
any anticipated obligation, expense or income item; and (viii) make any other
adjustments which would affect the financial reporting of the Surviving
Corporation, on a consolidated basis after the Effective Time, in any case as
Buyer shall reasonably request, provided, however, that neither Bancorp nor
Bancorp Bank shall be obligated to take any such requested action until
immediately prior to the Closing and at such time as Bancorp shall have received
reasonable assurances that all conditions precedent to Bancorp's obligations
under this Agreement (except for the completion of actions to be taken at the
Closing) have been satisfied, and no such adjustment which Bancorp or Bancorp
Bank would not have been required to make but for the provisions of this Section
7.6(e) in and of itself result in a breach of any warranty or representation
made herein, have any effect on Bancorp's Adjusted Stockholders' Equity, change
the amount of the Merger Consideration or the Option Spread to be paid to the
holders of Bancorp Common Stock and the Bancorp Stock Options, or delay the
Closing or Buyer's receipt of the Regulatory Approvals.
7.7 NOTIFICATION OF CERTAIN MATTERS. (a) Each party shall give prompt
notice to the other parties of (i) the occurrence or failure to occur of any
event or the discovery of any information, which occurrence, failure or
discovery would be likely to cause any representation or warranty made by such
party in this Agreement on its part contained in this Agreement to be no longer
re-certifiable under the standards in Sections 8.1(a) and 8.2(a) above with
respect to Buyer or Bancorp, as the case may be, after the date hereof or, in
case of any representation or warranty given as of a specific date, would be
likely to cause any such warranty or representation made by such party in this
Agreement to be no longer re-certifiable under the standards in Sections 8.1(a)
and 8.2(a) above with respect to Buyer or Bancorp, as the case may be, as of
such specific date and (ii) any material failure of such party to comply with or
satisfy any material covenant or agreement to be complied with or satisfied by
it hereunder.
(b) From and after the date hereof to the Effective Time, and
at and as of the Effective Time, Bancorp shall supplement or amend any of its
representations and warranties which apply to the period after the date hereof
by delivering monthly updates to the Bancorp Disclosure Schedule ("Disclosure
Schedule Updates") to Buyer with respect to any matter
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hereafter arising which, in the good faith judgment of Bancorp, would render any
such representation or warranty after the date of this Agreement materially
inaccurate or incomplete as a result of such matter arising. The Disclosure
Schedule Updates shall be provided to Buyer on or before the 25th day of each
calendar month. A Disclosure Schedule Update that causes any warranty or
representation made by Bancorp to be breached shall not cure or be deemed to
cure such breach. Buyer may exercise its right to terminate this Agreement
pursuant to Section 9.1(d) hereof any time after the thirtieth (30th) day after
receipt of the Disclosure Statement Update, if the information in such
Disclosure Schedule Update together with the information in any or all of the
Disclosure Schedule Updates previously provided by the Bancorp indicates that
Bancorp is reasonably likely to fail to satisfy the closing condition set forth
in Section 8.1(a) hereof.
(c) From and after the date hereof to the Effective Time, and
at and as of the Effective Time, Buyer shall amend any of its representations
and warranties which apply to the period after the date hereof by delivering
monthly updates to Bancorp ("Buyer Updates") with respect to any matter
hereafter arising which, in the good faith judgment of Buyer, would render any
such representation or warranty after the date of this Agreement materially
inaccurate or incomplete as a result of such matter arising. Buyer Updates, to
the extent one is required, shall be provided to Bancorp on or before the 25th
day of each calendar month. A Buyer Update that causes any warranty or
representation made by Buyer to be breached shall not cure or be deemed to cure
such breach. Bancorp may exercise its right to terminate this Agreement pursuant
to Section 9.1(d) hereof any time after the thirtieth (30th) day after receipt
of the Buyer Updates, if the information in such Buyer Update together with the
information in any or all of the Buyer Updates previously provided by Buyer
indicates that Buyer is reasonably likely to fail to satisfy the closing
condition set forth in Section 8.2(a) hereof.
7.8 PRESS RELEASES. Buyer and Bancorp shall coordinate all publicity
relating to any aspect of the Reorganization and, except as otherwise required
by Applicable Laws and Regulations, or with respect to employee meetings,
neither party shall issue any press release, publicity statement or other public
notice relating to any Transaction Document or any aspect of the Reorganization
without obtaining the prior consent of the other, which consent shall not be
unreasonably withheld.
7.9 MERGER OF SUBSIDIARY BANKS. Bancorp and Buyer shall take all action
necessary and appropriate to cause the Bank and Bancorp Bank to enter into a
plan and agreement of merger (the "Bank Merger Agreement") pursuant to which the
Bank and Bancorp Bank shall merge (the "Bank Merger") immediately after the
consummation of the Merger, with the Bank being the surviving bank thereof (the
"Surviving Bank") in accordance with Applicable Laws and Regulations. The Bank
Merger Agreement shall be in a form mutually agreed-upon by the parties and
shall provide, among other things, that the depositors of Bancorp Bank shall be
grandfathered as depositors of Bank to the fullest extent allowed by law.
7.10 EXECUTION OF THE STOCK OPTION AGREEMENT. Simultaneously with the
execution of this Agreement, and as a condition precedent to Buyer's obligations
hereunder, Buyer and Bancorp shall have approved, executed and delivered a stock
option agreement (the "Stock
62
Option Agreement"), which grants to Buyer an option to acquire up to 19.9% of
the issued and outstanding shares of Bancorp Common Stock upon the occurrence of
certain circumstances, substantially in the form attached hereto as Exhibit C.
ARTICLE VIII
CONDITIONS
8.1 CONDITIONS TO THE OBLIGATIONS OF BUYER. Notwithstanding any other
provision of this Agreement, the obligations of Buyer to consummate the Merger
are subject to the following conditions precedent:
(a) All of the representations and warranties made by Bancorp
in this Agreement and in any other Transaction Document executed or provided by
Bancorp shall have been true and correct as of the date of this Agreement and
remain true and correct in all material respects as of the Effective Time as
though made at and as of the Effective Time. For the purposes of this Section
8.1(a), the representations and warranties made by Bancorp shall be deemed to be
true and correct in all material respects as of the Effective Date unless the
failure of any such representations and warranties to be true and correct,
either individually or in the aggregate, and without giving effect to any
qualification as to materiality or Bancorp Material Adverse Effect set forth in
any such representation or warranty, is reasonably likely to result, in a
Bancorp Material Adverse Effect.
(b) Bancorp shall have performed in all material respects all
of its obligations and shall have performed or complied in all of the material
respects with all agreements and covenants required by this Agreement to be
performed by or complied with by Bancorp prior to or at the Effective Time.
(c) To the extent the consummation of the Reorganization
requires that Bancorp or any Bancorp Subsidiary, as the case may be, obtain the
consent or waiver of the other party to any material lease, license, loan or
financing agreement or other contract or agreement to which Bancorp or any
Bancorp Subsidiary, as the case may be, is a party, such consent or waiver shall
have been obtained, unless the failure to obtain such consent or waiver would
not have a Bancorp Material Adverse Effect.
(d) Since the date of this Agreement, a Bancorp Material
Adverse Effect shall not have occurred, it being understood that updates
provided pursuant to Section 7.7 hereof shall not constitute a waiver or other
consent to any such Bancorp Material Adverse Effect.
(e) No action, suit, proceeding or claim shall have been
instituted, made or threatened (provided the Buyer shall have determined in good
faith that the threatened action, suit, proceeding or claim may result in a
judgment exceeding $100,000) by any Person relating to the Merger or the
validity or propriety of any aspect of the Reorganization that would make
consummation of the Reorganization inadvisable in the reasonable opinion of
Buyer.
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(f) The Bank Merger Agreement shall have been duly authorized
and approved by Bancorp and Bancorp Bank and the other terms and conditions of
the Bank Merger Agreement shall have been satisfied so as to permit the Bank
Merger to be consummated as contemplated thereby.
(g) The aggregate number of Dissenting Shares shall not exceed
ten percent (10%) of the outstanding shares of Bancorp Stock at the Effective
Time.
(h) Bancorp's Adjusted Stockholders' Equity as of the Closing
Date shall not be less than $29,700,000, and the allowance for loan and lease
losses of Bancorp Bank shall be adequate under GAAP and the standards applied by
the OCC (in accordance with the OCC release, "OCC-CH-A-Allowance for Loan and
Lease Losses), and in any event, shall not be less than an amount equal to the
amount contemplated for the month on which the Closing Date occurs in Schedule
1.1(a) of the Bancorp Disclosure Schedule; provided, however, that the
determination of adequacy shall be made in accordance with Section 4.16(d).
Bancorp's Adjusted Stockholders' Equity shall be calculated by Bancorp's
independent certified public accountants as of the close of business on the day
immediately preceding the Closing Date, using reasonable estimates of revenues
and expenses where actual amounts are not available and shall be based upon
consolidated financial statements of Bancorp and the Bancorp Subsidiaries
prepared as of and for the period ending on the last day of the month for the
month immediately preceding the month during which the Closing Date occurs
("Closing Financial Statements"). The Closing Financial Statements shall be
delivered to Buyer at least seven (7) days prior to the Closing Date and shall
be accompanied by a report in accordance with SAS 71 prepared by Bancorp's
independent certified accountants. The Closing Financial Statements and
Bancorp's calculation of Adjusted Stockholder's Equity shall be verified and
approved by certified public accountants selected by Buyer, which verification
and approval shall not be withheld unreasonably.
(i) The employment agreements (as amended in accordance with
the amendments executed by pursuant to Section 7.5(d) above) of Messrs. Meinen,
Felde and Love and Xx. Xxxxxxxxx and Xxxxxxxxxxxx shall be in full force and
effect and no breach shall have occurred under any such employment agreement.
(j) Bancorp shall have tendered for delivery all of the
certificates, documents and other items set forth in Section 2.10 of this
Agreement.
8.2 CONDITIONS TO THE OBLIGATIONS OF BANCORP. Notwithstanding any other
provision of this Agreement, the obligations of Bancorp to consummate the Merger
are subject to the following conditions precedent:
(a) All of the representations and warranties made by Buyer in
this Agreement and in any other Transaction Document executed or provided by
Buyer shall have been true and correct as of the date of this Agreement and
remain true and correct in all material respects as of the Effective Time as
though made at and as of the Effective Time. For the purposes of this Section
8.2(a), the representations and warranties made by Buyer shall be
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deemed to be true and correct in all material respects as of the Effective Date
unless the failure of any such representations and warranties to be true and
correct, either individually or in the aggregate, and without giving effect to
any qualification as to materially or Buyer Material Adverse Effect set forth in
any such representation or warranty, is reasonably likely to result, in a Buyer
Material Adverse Effect.
(b) Buyer shall have performed in all material respects all of
its obligations and shall have performed or complied in all material respects
with all of the agreements and covenants required by this Agreement to be
performed by or complied with by Buyer prior to or at the Effective Time.
(c) The Bank Merger Agreement shall have been duly authorized
and approved by Buyer and the Bank and the other terms and conditions of the
Bank Merger Agreement shall have been satisfied so as to permit the Bank Merger
to be consummated as contemplated thereby.
(d) Buyer shall have tendered for delivery all of the
certificates, documents and other items set forth in Section 2.9 of this
Agreement.
(e) Buyer shall have complied in all respects with its
obligations under Section 6.1(c) on or prior to the Closing Date.
8.3 CONDITIONS TO THE OBLIGATIONS OF THE PARTIES. Notwithstanding any other
provision of this Agreement, the obligations of Buyer on the one hand, and
Bancorp on the other hand, to consummate the Merger are subject to the following
conditions precedent:
(a) No preliminary or permanent injunction or other order by
any federal or state court that prevents the consummation of the Merger shall
have been issued and shall remain in effect.
(b) This Agreement and the Reorganization, including the
Merger, shall have been duly approved by the requisite vote of the stockholders
of Bancorp at a meeting duly called and held for such purpose.
(c) Buyer shall have received the Regulatory Approvals to
acquire Bancorp and to consummate the Reorganization and all required waiting
periods relating thereto shall have expired; provided, however, that Buyer shall
have no obligation to accept any nonstandard condition or restriction in a
Regulatory Approval unless (i) such condition or restriction was imposed in an
approval order issued by the OTS within two (2) years of the date hereof in a
similar transaction and such order was published on the official OTS web site as
of the date hereof, or (ii) such condition or restriction, individually or in
the aggregate with other nonstandard restrictions and conditions, is not
substantially detrimental to the prospects or financial condition of Buyer, MHC
or any Buyer Subsidiary, or of Bancorp or any Bancorp Subsidiary.
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ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
9.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time:
(a) by mutual written consent of the board of directors of
Buyer and the board of directors of Bancorp;
(b) by either Buyer or Bancorp, if any of the conditions to
such party's obligation to consummate any aspect of the Reorganization shall
have become impossible to satisfy prior to the Termination Date (unless such
impossibility shall be due to the action or failure to act in breach of this
Agreement by the party seeking to terminate this Agreement);
(c) by Buyer or Bancorp at any time after the stockholders of
Bancorp fail to approve this Agreement and the Merger in a vote taken at a
meeting duly convened for that purpose;
(d) by Buyer or Bancorp in the event of a breach by the other
party of any representation, warranty, covenant or agreement contained herein or
in the Bancorp Disclosure Schedule or any notice delivered pursuant to this
Agreement, which breach would result in the failure to satisfy any closing
conditions set forth in Section 8.1 hereof, in the case of Buyer, or Section 8.2
hereof, the case of Bancorp, except in each case, for any such breach which has
been disclosed pursuant to Section 7.7 and waived by the non-disclosing party
pursuant to Section 7.7 or cured by the disclosing party prior to the Effective
Time and within the time period specified in Section 7.7;
(e) by either party after the Termination Date, in the event
the Merger has not been consummated by such date (provided that the terminating
party is not then in material breach of any representation, warranty, or in a
material breach of a covenant or other agreement contained herein);
(f) by Bancorp, if (i) Bancorp has complied with the
provisions of Section 5.4, (ii) any corporation, partnership, person, other
entity or group, as defined in the Securities Exchange Act (other than Buyer or
any affiliate of Buyer (a "Bancorp Suitor"), shall have commenced, made or
proposed an Acquisition Transaction, (iii) Bancorp's board of directors shall
have determined, in its good faith judgment, after consultation with its
independent financial advisors, that such offer is more favorable to Bancorp's
stockholders than the Reorganization, and (iv) Bancorp's board of directors
shall have determined upon taking into account the written advice of its legal
counsel, that if it failed to recommend such offer or accept such proposal then
such failure would be determined to result in a breach of the directors'
fiduciary duties; provided, however, that Bancorp may not terminate this
Agreement pursuant to this Section 9.1(f) until the expiration of five (5)
Business Days after written notice of any such offer or proposal referenced in
this Section 9.1(f) has been delivered to Buyer, together with a summary of the
terms of any such offer or proposal;
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(g) by Buyer, if, after the date hereof, any Bancorp Suitor
shall have commenced, made or prepared an Acquisition Transaction, and
thereafter the board of directors of Bancorp shall have withdrawn, or materially
and adversely modified or changed its recommendation of this Agreement or any
aspect of the Reorganization;
(h) by either party if the other party commits a willful
material breach of its obligations under this Agreement and if such willful
material breach is not cured within ten (10) days after receipt by the breaching
party of written demand for cure by the non-breaching party. For purposes of
this Agreement, a "willful material breach" means a knowing and intentional
violation by a party of any of its material covenants, agreements or obligations
under this Agreement;
(i) by Buyer pursuant to the provisions of Section 7.3 hereof
relating to the inability of the parties to agree on a course of action
regarding certain environmental matters;
(j) by Bancorp if within ten (10) days after Buyer receives
written notice from Bancorp that any application or notice required to be filed
by the Buyer in connection with any Regulatory Approval (i) was not filed in
accordance with the requirements of this Agreement or (ii) is not pending or has
been denied (Buyer having notified Bancorp promptly of any such event) and is
not subject to further appeal or an appeal is not then being diligently pursued
in good faith. For purposes of this paragraph, "pending" shall mean an
application, notice, procedure or process with an Applicable Governmental
Authority which Buyer has initiated and is diligently pursuing in good faith.
9.2 TERMINATION FEE. (a) In the event this Agreement is terminated (i) by
Bancorp as provided in Sections 9.1(c) or 9.1(f), or as provided in Section
9.1(b) due to the failure to satisfy the conditions of Section 8.3(b); or (ii)
by Buyer as provided in any of Sections 9.1(c) or 9.1(g), then Bancorp shall pay
to Buyer, in immediately available funds, an amount equal to $1,250,000 within
ten (10) Business Days after demand for payment by Buyer following such
termination.
(b) (i) If this Agreement is terminated by Buyer pursuant to
Section 9.1(b) due to the failure of any condition under Section 8.1, Bancorp
shall pay to Buyer in immediately available funds, an amount equal to $350,000
within ten (10) Business Days after demand for payment by Buyer following such
termination.
(ii) In the event this Agreement is terminated under
the circumstances set forth in the first sentence of this Section 9.2(b)
and both of the following conditions are satisfied:
(A) Bancorp has received a proposal for, or a
third party has commenced, an Acquisition Transaction after the date
hereof and prior to the termination of this Agreement; and
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(B) Bancorp and such third party or an Affiliate
of such third party enter into an agreement (the "Signing Event")
within eighteen (18) months following the termination of this
Agreement,
then Bancorp shall pay to Buyer, in immediately available funds, an amount equal
to an additional $1,250,000 within ten (10) Business Days after demand for
payment by Buyer following the Signing Event.
(c) In the event this Agreement is terminated by Bancorp
pursuant to Section 9.1(b) due to the failure of a condition under Sections 8.2
or 8.3(c), Buyer shall pay to Bancorp, in immediately available funds, an amount
equal to $350,000 within ten (10) Business Days after demand for payment by
Bancorp following such termination.
(d) In the event this Agreement is terminated by either party
pursuant to Section 9.1(h), then the breaching party shall pay the terminating
party an amount equal to $1,250,000 within ten (10) Business Days after demand
for payment by the terminating party following such termination. In the event of
a termination by Buyer under this Section 9.2(d), Buyer shall be entitled to the
payments contemplated in Section 9.2(b)(ii) above in addition to the amount
provided for in this Section 9.2(d), if, and only if, both of the conditions of
Section 9.2(b)(ii) occur.
(e) Notwithstanding anything contained in this Agreement to
the contrary, the payment of the termination fee pursuant to the provisions of
this Section 9.2 is intended by the parties to be, and shall constitute,
liquidated damages and shall be the sole and exclusive remedy and shall be in
lieu of any and all claims that the party entitled to such fee and its officers,
directors and stockholders have, or might have against the other parties and
their respective officers, directors and stockholders for any claims arising
from, or relating in any way to, this Agreement or the Reorganization, and the
party entitled to such termination fee and its officers, directors and
stockholders shall not have any other rights or claims against the other parties
and their respective officers, directors and shareholders. Any termination fee
payable to Buyer hereunder is intended to supplement the rights of Buyer and
shall not affect its rights or the enforceability of its rights, under the Stock
Option Agreement.
9.3 EXPENSES. Except as provided elsewhere herein, Buyer and Bancorp shall
each bear and pay all costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated hereunder, including fees and
expenses of its own financial or other consultants, investment bankers,
accountants and counsel. In the event one of the parties hereto files suit to
enforce this Section 9.3 or a suit seeking to recover costs and expenses or
damages for breach of this Agreement, the costs, fees, charges and expenses
(including attorneys' fees and expenses) of the prevailing party in such
litigation (and any related litigation) shall be borne by the non-prevailing
party.
9.4 SURVIVAL OF AGREEMENT. In the event of termination of this Agreement by
either Buyer or Bancorp as provided in Section 9.1, this Agreement shall
forthwith become void and have no effect except that (i) the agreements
contained in Sections 6.1, 9.2 and 9.3 hereof shall
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survive the termination hereof; (ii) the Confidentiality Agreement shall survive
the termination hereof; and (iii) the Stock Option Agreement shall be governed
by its own termination provisions.
9.5 AMENDMENT. This Agreement may be amended by the parties hereto by
action taken by their respective boards of directors at any time before or after
approval hereof by the stockholders of Bancorp but, after such approval, no
amendment shall be made which changes the form of consideration or adversely
affects or decreases the value of the consideration to be received by the
stockholders of Bancorp without the further approval of such stockholders or
which in any other way adversely affects the rights of stockholders of either
Bancorp or Buyer without the further required approval of the stockholders so
affected. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. Buyer and Bancorp may, without
approval of their respective boards of directors, make such technical changes to
this Agreement, not inconsistent with the purposes hereof and thereof, as may be
required to effect or facilitate any governmental approval or acceptance of the
Merger or of this Agreement or to effect or facilitate any filing or recording
required for the consummation of any aspect of the Reorganization.
9.6 WAIVER. Any term, provision or condition of this Agreement (other than
requirements for stockholders' approval and required approvals of the Applicable
Governmental Authorities) may be waived in writing at any time by the party
which is, or the stockholders of which are, entitled to the benefits hereof.
Each and every right granted to any party hereunder, or under any other document
delivered in connection herewith or therewith, and each and every right allowed
it by law or equity, shall be cumulative and may be exercised from time to time.
The failure of either party at any time or times to require performance of any
provision hereof shall in no manner affect such party's right at a later time to
enforce the same. No waiver by any party of a condition or of the breach of any
term, covenant, representation or warranty contained in this Agreement, whether
by conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach or a
waiver of any other condition or of the breach of any other term, covenant,
representation or warranty of this Agreement. No investigation, review or audit
by Buyer of Bancorp or Bancorp of Buyer prior to or after the date hereof shall
estop or prevent either party from exercising any right hereunder or be deemed
to be a waiver of any such right, or affect the warranties or representations of
either party as set forth herein.
ARTICLE X
GENERAL PROVISIONS
10.1 SURVIVAL. All representations, warranties, covenants and agreements of
the parties in this Agreement or in any instrument delivered by the parties
pursuant to this Agreement (other than the agreements, covenants and obligations
set forth herein which are contemplated to be performed after the Effective
Time) shall not survive the Effective Time except as provided for in Section
9.4.
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10.2 NOTICE. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, by facsimile
transmission or by registered or certified mail to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice) and shall be deemed to be delivered on the date so delivered:
(a) if to BankFinancial: BankFinancial Corporation,
0000 Xxxxxxxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000, Attention: X.
Xxxxxx Xxxxxx, Xxxxx X. Xxxxxxx and Xxxx X. Xxxxxxxx, Telephone Number: (630)
000-0000, Facsimile Number: (000) 000-0000, with a required concurrent copy to:
Barack Xxxxxxxxxx Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx, 000 Xxxx Xxxxxx Xxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx X. del Hierro, Telephone Number
(000) 000-0000, Facsimile Number: (000) 000-0000.
(b) if to Bancorp: Success Bancshares, Inc., 0 Xxxxxxxx Xxxxx,
Xxxxxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxx, Telephone Number:
(000) 000-0000, Facsimile Number: (000) 000-0000, with a required concurrent
copy to: Vedder, Price, Xxxxxxx & Kammholz, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000, Attention: Xxxxxx X'Xxxxxx, Esq., Telephone Number: (312)
000-0000, Facsimile Number: (000) 000-0000.
10.3 SPECIFIC ENFORCEABILITY. 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 either of the parties to perform any of the
obligations imposed on it by this Agreement and that in any event damages would
be an inadequate remedy in this instance. Accordingly, if any party should
institute an action or proceeding seeking specific enforcement of the provisions
hereof, the party against which such action or proceeding is brought hereby
waives the claim or defense that the party instituting such action or proceeding
has an adequate remedy at law and hereby agrees not to assert in any such action
or proceeding the claim or defense that such a remedy at law exists and shall
waive or not assert any requirement to post bond in connection with seeking
specific performance. The parties hereto agree that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
10.4 APPLICABLE LAW. This Agreement shall be construed and interpreted in
all respects, including validity, interpretation and effect, by the laws of the
State of Delaware with respect to matters of corporate laws and, with respect to
all other matters, by the laws of the State of Illinois, in both cases excluding
conflicts of law, except to the extent that the federal laws of the United
States apply.
10.5 HEADINGS, ETC. The article headings and Section headings contained in
this Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
10.6 SEVERABILITY. If any term or provision of this Agreement is held by a
final and unappealable order of a court of competent jurisdiction to be invalid,
void, or unenforceable, then the remainder of the terms, provisions, covenants
and restrictions contained in this Agreement shall remain in full force and
effect, and shall in no way be affected, impaired or
70
invalidated unless the effect would be to cause this Agreement to not achieve
its essential purposes.
10.7 ENTIRE AGREEMENT; BINDING EFFECT; NONASSIGNMENT; COUNTERPARTS. Except
as otherwise expressly provided herein, this Agreement, the other Transaction
Documents and the Confidentiality Agreement (including the documents and
instruments referred to herein and therein) (a) constitute the entire agreement
between the parties hereto and supersede all other prior agreements and
undertakings, both written and oral, between the parties, with respect to the
subject matter hereof; and (b) are not intended to confer any rights or remedies
upon any Person except the parties to this Agreement or to confer third party
beneficiary status or rights on any Person. This Agreement shall be binding upon
and inure to the benefit of the parties named herein and their respective
successors. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by either party hereto without the prior
written consent of the other party hereto. This Agreement may be executed in two
or more counterparts that together shall constitute a single agreement.
10.8 TIMING. Timing is of the essence with regard to this Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
71
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the day and year first above written.
BANKFINANCIAL CORPORATION SUCCESS BANCSHARES, INC.
By: /s/ F. Xxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------------ ------------------------------------
X. Xxxxxx Xxxxxx Xxxxxx X. Xxxxxx
Its: Chairman and Chief Executive Officer Its: Chairman and Chief Executive Officer
Attest: /s/ Xxxxx X. Xxxxxxx Attest: /s/ Xxxxxx Xxxxxxxxxxxx
---------------------------------- ----------------------------------
Xxxxx X. Xxxxxxx Xxxxxx Xxxxxxxxxxxx
Its: Secretary Its: Secretary
BFIN ACQUISITION CORPORATION FINANCIAL FEDERAL MHC, INC.
By: /s/ F. Xxxxxx Xxxxxx By: /s/ F. Xxxxxx Xxxxxx
------------------------------------ ------------------------------------
F. Xxxxxx Xxxxxx F. Xxxxxx Xxxxxx
Its: Chairman and Chief Executive Officer Its: Chairman and Chief Executive Officer
Attest:/s/ Xxxxx X. Xxxxxxx Attest: /s/ Xxxxx X. Xxxxxxx
---------------------------------- ---------------------------------
Xxxxx X. Xxxxxxx Xxxxx X. Xxxxxxx
Its: Secretary Its: Secretary
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