EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF REORGANIZATION
by and between
MAF Bancorp, Inc.,
a Delaware corporation
and
EFC Bancorp, Inc.,
a Delaware corporation
June 29, 2005
TABLE OF CONTENTS
PAGE
I. THE MERGER..............................................................................................1
1.1 Effects of the Merger..........................................................................1
1.2 Conversion of Shares upon the Merger...........................................................2
1.3 Stock Options..................................................................................2
1.4 Consummation of the Merger; Effective Time.....................................................4
1.5 Merger Consideration...........................................................................4
1.6 Exchange of Company Common Stock...............................................................8
II. REPRESENTATIONS AND WARRANTIES OF PURCHASER............................................................10
2.1 Organization..................................................................................10
2.2 Authorization.................................................................................11
2.3 Conflicts.....................................................................................11
2.4 Capitalization................................................................................11
2.5 Purchaser Financial Statements; Material Changes..............................................12
2.6 Purchaser SEC Filings.........................................................................12
2.7 Purchaser Reports.............................................................................13
2.8 Compliance With Laws..........................................................................13
2.9 Litigation....................................................................................14
2.10 Defaults......................................................................................14
2.11 Absence of Purchaser Material Adverse Change..................................................14
2.12 Undisclosed Liabilities.......................................................................14
2.13 Licenses......................................................................................14
2.14 Government Approvals..........................................................................14
2.15 Fees..........................................................................................14
2.16 Disclosure....................................................................................15
2.17 Availability of Funds.........................................................................15
2.18 Controls and Procedures.......................................................................15
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................................16
3.1 Organization..................................................................................16
3.2 Authorization.................................................................................17
3.3 Conflicts.....................................................................................17
3.4 Capitalization and Stockholders...............................................................18
3.5 Company Financial Statements; Material Changes................................................19
i
TABLE OF CONTENTS
(continued)
PAGE
3.6 Company SEC Filings...........................................................................19
3.7 Company Reports...............................................................................19
3.8 Compliance With Laws..........................................................................20
3.9 Litigation....................................................................................20
3.10 Defaults......................................................................................21
3.11 Absence of Company Material Adverse Change....................................................21
3.12 Undisclosed Liabilities.......................................................................21
3.13 Licenses......................................................................................21
3.14 Governmental and Stockholder Approvals........................................................21
3.15 Antitakeover Provisions Inapplicable..........................................................21
3.16 Disclosure....................................................................................22
3.17 Taxes.........................................................................................22
3.18 Insurance.....................................................................................23
3.19 Loans; Investments............................................................................23
3.20 Interest Rate Risk Management Arrangements....................................................25
3.21 Allowance for Loan Losses.....................................................................25
3.22 Company Benefit Plans.........................................................................25
3.23 Environmental Matters.........................................................................28
3.24 Material Contracts............................................................................29
3.25 Real Property.................................................................................30
3.26 Indemnification...............................................................................31
3.27 Insider Interests.............................................................................31
3.28 Fairness Opinion..............................................................................31
3.29 Fees..........................................................................................31
3.30 Controls and Procedures.......................................................................32
IV. COVENANTS..............................................................................................33
4.1 Conduct of Business by the Company Until the Effective Time...................................33
4.2 Conduct of Business by Purchaser Until the Effective Time.....................................38
4.3 Certain Actions...............................................................................39
V. ADDITIONAL AGREEMENTS..................................................................................40
5.1 Inspection of Records; Confidentiality........................................................40
5.2 Meetings of the Company.......................................................................40
ii
TABLE OF CONTENTS
(continued)
PAGE
5.3 Bank Merger...................................................................................41
5.4 D&O Indemnification...........................................................................41
5.5 Affiliate Letters.............................................................................42
5.6 Regulatory Applications.......................................................................42
5.7 Financial Statements and Reports..............................................................43
5.8 Registration Statement; Stockholder Approval..................................................43
5.9 Notice........................................................................................43
5.10 Press Releases................................................................................44
5.11 Delivery of Supplements to Disclosure Schedules...............................................44
5.12 Tax Opinion...................................................................................45
5.13 Tax Treatment.................................................................................45
5.14 Resolution of Company Benefit Plans...........................................................45
5.15 Appointment to Purchaser Board of Directors...................................................47
5.16 Advisory Board................................................................................48
5.17 Environmental Investigation...................................................................48
5.18 Title to Real Estate..........................................................................49
5.19 Cooperation...................................................................................49
5.20 Disclosure Controls...........................................................................49
VI. CONDITIONS.............................................................................................50
6.1 Conditions to the Obligations of the Parties..................................................50
6.2 Conditions to the Obligations of Purchaser....................................................50
6.3 Conditions to the Obligations of the Company..................................................52
VII. TERMINATION; AMENDMENT; WAIVER.........................................................................53
7.1 Termination...................................................................................53
7.2 Termination Fee...............................................................................54
7.3 Expenses......................................................................................55
7.4 Survival of Agreements........................................................................56
7.5 Amendment.....................................................................................56
7.6 Waiver........................................................................................56
VIII. GENERAL PROVISIONS.....................................................................................56
8.1 Survival......................................................................................56
8.2 Notice........................................................................................57
iii
TABLE OF CONTENTS
(continued)
PAGE
8.3 Applicable Law................................................................................57
8.4 Headings, Etc.................................................................................57
8.5 Severability..................................................................................57
8.6 Entire Agreement; Binding Effect; Nonassignment; Counterparts.................................58
8.7 Definitions...................................................................................58
EXHIBITS
Exhibit A-1 Form of Conversion Agreement
Exhibit A-2 Form of Cancellation Agreement
Exhibit B Form of Certificate of Merger
Exhibit C Form of Bank Merger Agreement
Exhibit D Form of Affiliate Letter
Exhibit E Form of Legal Opinion (Company)
Exhibit F Form of Legal Opinion (Purchaser)
iv
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") is made and
entered into as of the 29th day of June, 2005, by and between MAF Bancorp, Inc.,
a Delaware corporation ("Purchaser"), and EFC Bancorp, Inc., a Delaware
corporation (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Boards of Directors of Purchaser and the Company deem it
advisable and in the best interests of their respective stockholders that the
Company be merged with and into Purchaser in accordance with the Delaware
General Corporation Law ("DGCL") and this Agreement;
WHEREAS, immediately following the merger of the Company with and into
Purchaser (the "Merger"), Purchaser and the Company intend that EFS Bank, an
Illinois state-chartered savings bank and a wholly-owned subsidiary of the
Company (the "Bank"), shall merge (the "Bank Merger") with and into Mid America
Bank, fsb, a federal savings bank and a wholly-owned subsidiary of Purchaser
("Mid America"); and
WHEREAS, Purchaser and the Company intend the Merger to qualify as a
tax-free reorganization under Section 368(a) of the Internal Revenue Code of
1986, as amended ("Code").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties hereto agree as follows:
I.
THE MERGER
1.1 Effects of the Merger. (a) Surviving Corporation. Subject to the
terms and conditions of this Agreement, the separate existence of the Company
shall cease and the Company shall be merged with and into Purchaser at the
Effective Time (as defined below) in accordance with the DGCL, with Purchaser
being the continuing and surviving corporation (the "Surviving Corporation").
(b) Certificate of Incorporation. The Certificate of Incorporation of
Purchaser shall be the Certificate of Incorporation of the Surviving Corporation
until amended in accordance with the provisions thereof and the DGCL.
(c) By-laws. The By-laws of Purchaser in effect immediately prior to
the Effective Time shall be the By-laws of the Surviving Corporation until
altered, amended or repealed as provided therein, or in accordance with the
Certificate of Incorporation of the Surviving Corporation and the DGCL.
(d) Directors and Officers. The directors of the Surviving Corporation
shall be the persons who were directors of Purchaser immediately prior to the
Effective Time, plus the current member of the Company's Board of Directors
appointed to Purchaser's Board of
Directors pursuant to Section 5.15. The officers of the Surviving Corporation
shall be the persons who were officers of Purchaser immediately prior to the
Effective Time.
1.2 Conversion of Shares upon the Merger. At the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of Purchaser Common Stock (as defined below) or Company
Common Stock (as defined below), the following shall occur:
(a) Purchaser Common Stock. Each share of the common stock, par value
$0.01 per share, of Purchaser ("Purchaser Common Stock") issued and outstanding
or held in treasury immediately prior to the Effective Time shall remain issued
and outstanding or treasury shares of Purchaser Common Stock and shall be
unchanged following the Merger.
(b) Company Common Stock. Subject to Section 1.2(c), Section 1.2(d) and
Section 1.6(c), each share of the common stock, par value $0.01 per share, of
the Company ("Company Common Stock") issued and outstanding immediately prior to
the Effective Time shall be converted into the right to receive the Merger
Consideration, as defined and pursuant to Section 1.5.
(c) Company Common Stock Held by the Company or Purchaser. All shares
of Company Common Stock (other than shares of Company Common Stock held directly
or indirectly in trust accounts, managed accounts and the like or otherwise held
in a fiduciary capacity that are beneficially owned by third parties) that are
(i) owned by the Company as treasury stock, (ii) owned directly or indirectly by
the Company or any of its wholly-owned subsidiaries, or (iii) owned directly or
indirectly by Purchaser or any of its wholly-owned subsidiaries, shall be
cancelled and no Merger Consideration or other consideration shall be delivered
in exchange therefore.
(d) Dissenting Shares. Each outstanding share of Company Common Stock
the holder of which has perfected appraisal rights under Section 262 of the DGCL
and has not effectively withdrawn or lost such rights as of the Effective Time
(the "Dissenting Shares") shall not be converted into or represent a right to
receive the Merger Consideration hereunder, and the holder thereof shall be
entitled only to such rights as are granted by the DGCL. The Company shall give
Purchaser prompt notice upon receipt by the Company of any such demands for
payment of the fair value of such shares of Company Common Stock and of
withdrawals of such notice and any other instruments provided pursuant to
applicable law (any stockholder duly making such demand being hereinafter called
a "Dissenting Stockholder"), and Purchaser shall have the right to participate
in all negotiations and proceedings with respect to any such demands. The
Company shall not, except with the prior written consent of Purchaser,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment, or waive any failure to timely deliver a written demand
for appraisal or the taking of any other action by such Dissenting Stockholder
as may be necessary to perfect appraisal rights under the DGCL. Any payments
made in respect of Dissenting Shares shall be made by the Surviving Corporation.
1.3 Stock Options. (a) At the Effective Time, each option granted by
the Company to purchase shares of Company Common Stock (each an "Option," and
collectively, "Options"),
- 2 -
which is outstanding and unexercised immediately prior to the Effective Time,
shall, at the option of the holder of such Option, be converted pursuant to
either Section 1.3(a)(i) or (ii) below:
(i) each Option held by a holder of an Option who, prior to
the Effective Time, delivers a conversion agreement in the form of
Exhibit A-1 attached hereto ("Conversion Agreement") shall be converted
into an option to purchase shares of Purchaser Common Stock in such
number and at such exercise price as set forth herein and otherwise
having the same terms and conditions as in effect immediately prior to
the Effective Time (except to the extent that such terms, conditions
and restrictions may be altered in accordance with their terms as a
result of the Merger contemplated hereby, and except that any limited
rights related to such Option shall be cancelled and of no further
force or effect): (x) the number of shares of Purchaser Common Stock to
be subject to the converted Option shall be equal to the product of (A)
the number of shares of Company Common Stock subject to the original
Option and (B) the Exchange Ratio; (y) the exercise price per share of
Purchaser Common Stock under the converted Option shall be equal to (A)
the exercise price per share of Company Common Stock under the original
Option divided by (B) the Exchange Ratio; and (z) upon exercise of each
Option by a holder thereof, the aggregate number of shares of Purchaser
Common Stock deliverable upon such exercise shall be rounded down, if
necessary, to the nearest whole share and the aggregate exercise price
shall be rounded up, if necessary, to the nearest cent; or
(ii) each Option not converted pursuant to Section 1.3(a)(i)
above, shall be converted into the right to receive cash, to be paid in
accordance with this Section 1.3(a)(ii). All Options converted to cash
pursuant to this Section 1.3(a)(ii) shall terminate effective
immediately prior to the Effective Time. In consideration of the
foregoing, Purchaser shall make or shall cause to be made a cash
payment to the holder of each Option, at the time provided in the final
sentence of this Section 1.3(a)(ii), in an amount (less any applicable
withholding taxes) equal to the number of shares of Company Common
Stock covered by such Option multiplied by the amount by which the Cash
Consideration exceeds the exercise price per share of Company Common
Stock under the Option converted by such holder. A holder of an Option
who has executed a cancellation agreement, substantially in the form of
Exhibit A-2 attached hereto ("Cancellation Agreement"), that is
delivered by the Company to Purchaser (x) prior to the Effective Time
shall be paid the amount to be paid pursuant to this Section 1.3(a)(ii)
within three (3) business days following the Effective Time, and (y)
after the Effective Time shall be paid the amount to be paid pursuant
to this Section 1.3(a)(ii) within five (5) business days of Purchaser's
receipt of such Cancellation Agreement.
The adjustments provided in Section 1.3(a)(i) above shall be effected in a
manner consistent with the requirements of Section 424(a) of the Code.
(b) The Company shall amend each Company Stock Option Plan (as defined
below) to provide for the conversion or cancellation of Options in accordance
with this Section 1.3 (such amendments may be referred to herein together as the
"Plan Amendments"). The Company shall also provide to Purchaser a notice
identifying the conversion option
- 3 -
applicable to holders of the Options under Section 1.3(a) not less than five (5)
business days prior to the Effective Time. Such notice shall provide: (i) the
name of the holder of such Option; (ii) the number of shares of Company Common
Stock subject to such Option; (iii) the exercise price of such Option; and (iv)
whether such Option shall be converted or cancelled as selected by the holder of
such Option. In the event the Company fails to provide a conversion method for
an Option pursuant to this Section 1.3, such Option shall be cancelled and paid
pursuant to Section 1.3(a)(ii).
1.4 Consummation of the Merger; Effective Time. Subject to the terms
and conditions of this Agreement, the transactions contemplated by this
Agreement shall be consummated (the "Closing") at the offices of Vedder, Price,
Xxxxxxx & Kammholz, P.C., 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, on such
date and time as shall be fixed by mutual agreement of Purchaser and the Company
as promptly as practicable on or after the second business day of January 2006,
but not later than ten (10) business days thereafter, or, if later, ten (10)
business days (unless otherwise agreed to by the parties, such agreement not to
be unreasonably withheld) after all of the conditions set forth in Article VI
(other than the receipt of closing certificates and legal opinions) have first
been fulfilled or waived, provided such conditions shall continue, on such tenth
business day, to be fulfilled or waived, including the conditions which, by
their terms, are to be satisfied on the Closing Date and/or at the Effective
Time (the date of such closing being, the "Closing Date"). At the Closing,
Purchaser and the Company shall cause the Merger to become effective by causing
a certificate of merger substantially in the form set forth in Exhibit B (the
"Certificate of Merger") to be executed in accordance with the DGCL and to be
filed with the Secretary of State of the State of Delaware. The time at which
the Merger becomes effective shall be referred to as the "Effective Time."
1.5 Merger Consideration. (a) Subject to adjustment pursuant to Section
5.17(b) and the provisions of this Section 1.5, each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time (excluding
shares to be cancelled pursuant to Section 1.2(c) and Dissenting Shares) shall
be converted at the election of the holder thereof, subject to and in accordance
with the procedures set forth in this Agreement, into either:
(i) the right to receive in cash from Purchaser, without
interest, an amount equal to $34.69 (the "Cash Consideration"); or
(ii) the right to receive from Purchaser that number of shares
of Purchaser Common Stock equal to the Exchange Ratio (as defined
below) (the "Stock Consideration"). The "Exchange Ratio" shall be equal
to .8082; or
(iii) the right to receive a combination of the foregoing in
accordance with the procedures set forth in this Agreement.
"Merger Consideration" means the Stock Consideration, the Cash
Consideration or any combination thereof, in each case subject to adjustment
pursuant to Section 5.17(b) and as determined in accordance with the election
and proration procedures set forth in this Section 1.5.
(b) Maximum Conversion Numbers. Subject to adjustment pursuant to
Section 5.17(b): (i) the total number of shares of Company Common Stock to be
converted into
- 4 -
the right to receive Cash Consideration for such shares (including any such
shares subject to the cash portion of a Combination Election (as defined
below)), shall be 40.07% of the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time (excluding shares to be
cancelled pursuant to Section 1.2(c) and Dissenting Shares) (the "Cash
Conversion Number"); (ii) the total number of shares of Company Common Stock to
be converted into the right to receive Stock Consideration for such shares
(including any such shares subject to the stock portion of a Combination
Election) shall be 59.93% of the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time (excluding shares to be
cancelled pursuant to Section 1.2(c) and Dissenting Shares) (the "Stock
Conversion Number"); and (iii) the maximum number of shares of Purchaser Common
Stock which may be issued as Stock Consideration will be equal to the Exchange
Ratio multiplied by Stock Conversion Number and the maximum amount of cash which
will be paid as Cash Consideration will be equal to the Cash Consideration
multiplied by Cash Conversion Number.
(c) Adjustments for Dilution and Other Matters. If, between the date of
this Agreement and the Effective Time, each of the outstanding shares of
Purchaser Common Stock shall have been changed into a different number of shares
or into a different class by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Exchange Ratio shall be adjusted appropriately to provide the holders of
Company Common Stock the same economic effect as contemplated by this Agreement
prior to such event.
(d) Election Procedures.
(i) All elections contemplated by Section 1.5(a) shall be made
on a form designed for that purpose prepared by the Company and
reasonably acceptable to Purchaser (an "Election Form"). Holders of
record of shares of Company Common Stock who hold such shares as
nominees, trustees or in other representative capacities
("Representatives") may submit multiple Election Forms, provided that
such Representative certifies that each such Election Form covers all
the shares of Company Common Stock held by each such Representative for
a particular beneficial owner.
(ii) The Election Form shall be mailed on the same date as the
date on which the Proxy Statement is mailed to all holders of record of
shares of Company Common Stock as of the record date of the
Stockholders' Meeting (as defined below). Thereafter the Company and
Purchaser shall each use its reasonable and diligent efforts to (i)
mail the Election Form to all persons who become record holders of
shares of Company Common Stock during the period between the record
date for the Stockholders' Meeting and 5:00 p.m., Chicago Time, on the
day five (5) business days prior to the date of the Stockholders'
Meeting and (ii) make the Election Form available to all persons who
become holders of shares of Company Common Stock subsequent to such day
and no later than the close of business on the day prior to the
Stockholders' Meeting. In order to be effective, an Election Form must
be received by the Exchange Agent (as defined below), on or before 5:00
p.m., Chicago Time, on the business day prior to the Stockholders'
Meeting (the "Election Deadline"). An election shall have been properly
made only if the Exchange Agent shall have actually received a properly
completed Election Form by the Election Deadline. An Election Form
shall be deemed properly
- 5 -
completed only if accompanied by one or more certificates theretofore
representing Company Common Stock ("Certificate(s)") (or customary
affidavits and, if required by Purchaser pursuant to Section 1.6(a),
indemnification regarding the loss or destruction of such Certificates
or the guaranteed delivery of such Certificates) representing all
shares of Company Common Stock covered by such Election Form, together
with duly executed transmittal materials included with the Election
Form. Subject to the terms of this Agreement and the Election Form, the
Exchange Agent shall have reasonable discretion to determine whether
any election has been properly or timely made and to disregard
immaterial defects in any Election Form, and any good faith decisions
of the Exchange Agent regarding such matters shall be binding and
conclusive. All elections will be revocable until the Election Deadline
and thereafter shall be irrevocable.
(iii) Each Election Form shall entitle the holder of shares of
Company Common Stock (or the beneficial owner through appropriate and
customary documentation and instructions) to (i) elect to receive the
Cash Consideration for all of such holder's shares (a "Cash Election"),
(ii) elect to receive the Stock Consideration for all of such holder's
shares (a "Stock Election"), (iii) elect to receive the Cash
Consideration with respect to some of such holder's shares and the
Stock Consideration with respect to such holder's remaining shares (a
"Mixed Election"), or (iv) make no election or indicate that such
holder has no preference as to the receipt of the Cash Consideration or
the Stock Consideration (a "Non-Election"). Shares of Company Common
Stock as to which a valid Cash Election has been made (including
pursuant to a Mixed Election) are referred to herein as "Cash Election
Shares." The aggregate number of shares of Company Common Stock as to
which a valid Cash Election is made is referred to herein as the "Cash
Election Number." Shares of Company Common Stock as to which a valid
Stock Election has been made (including pursuant to a Mixed Election)
are referred to herein as "Stock Election Shares." The aggregate number
of shares of Company Common Stock as to which a valid Stock Election is
made is referred to herein as the "Stock Election Number." Shares of
Company Common Stock as to which a Non-Election is deemed in effect are
referred to as "Non-Election Shares." All shares of Company Common
Stock of a holder whose properly completed Election Form is not
received by the Exchange Agent prior to the Election Deadline shall be
deemed to be Non-Election Shares. If the Exchange Agent shall have
determined that any purported election was not properly made, such
purported election shall be deemed to be of no force and effect and the
shares of Company Common Stock subject to such purported election shall
for purposes hereof be deemed to be Non-Election Shares.
(e) Proration Procedures. As soon as practicable after the Election
Deadline, Purchaser shall cause the Exchange Agent to effect the allocation
among holders of Company Common Stock of rights to receive the Cash
Consideration and the Stock Consideration as follows:
(i) If the Stock Election Number exceeds the Stock Conversion
Number, then:
(A) all Cash Election Shares and all Non-Election
Shares shall be converted into the right to receive the Cash
Consideration, and
- 6 -
(B) each holder of Stock Election Shares shall have
the right to receive:
(1) the number of shares of Purchaser Common
Stock equal to the product obtained by multiplying
(a) the number of Stock Election Shares held by such
holder by (b) the Exchange Ratio by (c) a fraction
(rounded to four decimal places) the numerator of
which is the Stock Conversion Number and the
denominator of which is the Stock Election Number
(the "Stock Proration Factor"), and
(2) cash in an amount equal to the product
obtained by multiplying (a) the number of Stock
Election Shares held by such holder by (b) the Cash
Consideration by (c) one minus the Stock Proration
Factor.
(ii) If the Stock Election Number is less than the Stock
Conversion Number (the amount by which the Stock Conversion Number
exceeds the Stock Election Number being referred to herein as the
"Shortfall Number"), then all Stock Election Shares shall be converted
into the right to receive the Stock Consideration and the Non-Election
Shares and Cash Election Shares shall be treated in the following
manner:
(A) if the Shortfall Number is less than or equal to
the number of Non-Election Shares, then:
(1) all Cash Election Shares shall be
converted into the right to receive the Cash
Consideration; and
(2) each holder of Non-Election Shares shall
have the right to receive (a) the number of shares of
Purchaser Common Stock equal to the product obtained
by multiplying (x) the number of Non-Election Shares
held by such holder by (y) the Exchange Ratio by (z)
a fraction (rounded to four decimal places) the
numerator of which is the Shortfall Number and the
denominator of which is the total number of
Non-Election Shares (the "Non-Election Proration
Factor") and (b) cash in an amount equal to the
product obtained by multiplying (x) the number of
Non-Election Shares held by such holder by (y) the
Cash Consideration by (z) one minus the Non-Election
Proration Factor; or
(B) if the Shortfall Number exceeds the number of
Non-Election Shares, then:
(1) all Non-Election Shares shall be
converted into the right to receive the Stock
Consideration; and
(2) each holder of Cash Election Shares
shall have the right to receive (a) the number of
shares of Purchaser Common Stock equal to the product
obtained by multiplying (x) the number of Cash
Election Shares held by such holder by (y) the
Exchange Ratio by (z) a
- 7 -
fraction (rounded to four decimal places) the
numerator of which is the amount by which the
Shortfall Number exceeds the number of Non-Election
Shares and the denominator of which is the Cash
Election Number (the "Cash Proration Factor") and (b)
cash in an amount equal to the product obtained by
multiplying (x) the number of Cash Election Shares
held by such holder by (y) the Cash Consideration by
(z) one minus the Cash Proration Factor.
(iii) Notwithstanding the foregoing, but subject to Section
5.13, Purchaser may, in its sole discretion, direct at any time prior
to the Effective Time that the proration procedures provided in this
subsection (d) not be implemented.
1.6 Exchange of Company Common Stock. (a) Surrender of Certificates. As
soon as practicable after the Effective Time but in no event later than five (5)
business days following the Effective Time, Computershare Investor Services LLP
or such other firm selected by Purchaser and reasonably acceptable to the
Company (the "Exchange Agent"), pursuant to documentation reasonably acceptable
to Purchaser and the Company consistent with the terms hereof, shall mail to
each holder of record of a Certificate who did not previously submit a properly
completed Election Form together with duly executed transmittal materials prior
to the Election Deadline: (i) a form letter of transmittal which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates (or a lost certificate
affidavit and bond in a form reasonably acceptable to the Exchange Agent) to the
Exchange Agent; and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration (in the form or forms
determined in accordance with the provisions of Section 1.5). Upon surrender of
a Certificate for cancellation to the Exchange Agent (or a lost certificate
affidavit and bond in a form reasonably acceptable to the Exchange Agent),
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive, in exchange therefor, (i) a
certificate evidencing the whole number of shares of Purchaser Common Stock into
which the shares of Company Common Stock, theretofore represented by the
Certificate so surrendered, shall have been converted pursuant to the provisions
of Section 1.5, if any, plus (ii) a check for the aggregate amount of cash,
without interest, which such holder would be entitled to receive pursuant to
Section 1.5, if any, including any cash amount payable in lieu of fractional
shares in accordance with Section 1.6(c). Certificates so surrendered shall be
cancelled. Purchaser shall direct the Exchange Agent to make such deliveries
within five (5) business days of the receipt of all required documentation. If
any Purchaser Common Stock to be exchanged for shares of Company Common Stock is
to be delivered in a name other than that in which the Certificate surrendered
for exchange is registered, it shall be a condition to the exchange that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer, that all signatures shall be guaranteed by a member firm of
any national securities exchange in the United States or the National
Association of Securities Dealers, Inc., or by a commercial bank or trust
company or other financial institution acceptable to Purchaser having an office
in the United States, and that the person requesting the payment shall either
(a) pay to the Exchange Agent any transfer or other taxes required by reason of
the payment to a person other than the registered holder of the Certificate
surrendered, or (b) establish to the satisfaction of the Exchange Agent that
such taxes have been paid or are not payable. From and after the Effective Time,
there shall be no transfers on the stock transfer books of the Company of any
shares of Company Common Stock
- 8 -
outstanding immediately prior to the Effective Time and any such shares of
Company Common Stock presented to the Exchange Agent shall be cancelled in
exchange for the Merger Consideration payable with respect thereto as provided
in Section 1.5 above.
(b) Failure to Exchange Company Common Stock. No dividends or other
distributions declared after the Effective Time with respect to Purchaser Common
Stock payable to the holders of record thereof after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to Purchaser
Common Stock represented thereby and no cash payment in lieu of fractional
shares shall be paid to any holder until the holder of record shall surrender
such Certificate. Subject to the effect, if any, of applicable law, after the
subsequent surrender and exchange of a Certificate, the holder thereof shall be
entitled to receive any such dividends or distributions, without interest
thereon, which theretofore became payable with respect to the Purchaser Common
Stock represented by such Certificate. All dividends or other distributions
declared on or after the Effective Time with respect to the Purchaser Common
Stock and payable to the holders of record thereof on or after the Effective
Time which are payable to the holder of a Certificate not theretofore
surrendered and exchanged for Purchaser Common Stock pursuant to this Section
1.6(b) shall be paid or delivered by Purchaser to the Exchange Agent, in trust,
for the benefit of such holders. All such dividends and distributions held by
the Exchange Agent for payment or delivery to the holders of unsurrendered
Certificates unclaimed at the end of one (1) year from the Effective Time shall
be repaid or redelivered by the Exchange Agent to Purchaser after which time any
holder of Certificates who has not theretofore surrendered such Certificates to
the Exchange Agent, subject to applicable law, shall look only to Purchaser for
payment or delivery of such dividends or distributions, as the case may be. Any
shares of Purchaser Common Stock or other consideration delivered or made
available to the Exchange Agent pursuant to this Section 1.6(b) and not
exchanged for Certificates within one (1) year after the Effective Time shall be
returned by the Exchange Agent to Purchaser which shall thereafter act as
exchange agent subject to the rights of holders of unsurrendered Certificates
hereunder.
(c) Fractional Shares. No certificates or scrip representing fractional
shares of Purchaser Common Stock shall be issued upon the surrender or exchange
of Certificates, no dividend or distribution of Purchaser shall relate to any
fractional share, and such fractional share interests will not entitle the owner
thereof to vote or assert any rights of a stockholder of Purchaser. In lieu of
any fractional share of Purchaser Common Stock, Purchaser shall cause to be paid
to each holder of shares of Company Common Stock who otherwise would be entitled
to receive a fractional share of Purchaser Common Stock an amount of cash,
rounded to the nearest cent (without interest), equal to the product of such
fraction multiplied by the Cash Consideration.
(d) Escheat. Notwithstanding anything in this Agreement to the
contrary, neither the Exchange Agent nor any party hereto shall be liable to a
former holder of Company Common Stock for any consideration delivered to a
public official pursuant to applicable escheat or abandoned property laws.
(e) Exchange Fund. On the date the Effective Time occurs, Purchaser
shall deposit, or cause to be deposited, with the Exchange Agent for the benefit
of the holders of Company Common Stock, for exchange in accordance with the
terms of this Agreement, an
- 9 -
aggregate amount of cash, sufficient to pay the aggregate Cash Consideration
payable pursuant to Section 1.5 of this Agreement (plus an additional amount of
cash sufficient to cover amounts payable in lieu of any fractional shares of
Company Common Stock).
II.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company that:
2.1 Organization. (a) Purchaser 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
business substantially as it has been and is now being conducted. Purchaser 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 Purchaser Material Adverse Effect (as
defined below). Purchaser has all requisite corporate power and authority to
enter into this Agreement, and, upon the approval of the Governmental
Authorities (as defined below), to consummate the transactions contemplated
hereby. Purchaser is duly registered as a unitary savings and loan holding
company under the Home Owners' Loan Act, as amended ("HOLA").
(b) Mid America is a federally-chartered stock savings bank duly
organized and in existence under the laws of the United States. Mid America is
an "insured depository institution" as defined in the Federal Deposit Insurance
Act (the "FDI Act") and applicable regulations thereunder, the deposits of which
are insured by the Federal Deposit Insurance Corporation ("FDIC") through the
Savings Association Insurance Fund ("SAIF") to the full extent permitted under
applicable laws.
(c) Purchaser has no direct or indirect subsidiaries other than MAF
Developments, Inc., Mid America Investment Services, Inc., Mid America Finance
Corporation, Mid America Insurance Agency, Inc., Center Point Title Services,
Inc., MAF Realty Co., L.L.C.-III, MAF Realty Co., L.L.C.-IV, Mid America
Mortgage Securities, Inc., N.W. Financial Corporation, Mid Town Development
Corporation, Xxxxxxx Road Development Corporation, Mid America Re, Inc., Reigate
Xxxxx Development Corporation, Equitable Finance Corp., SF Investment
Corporation, SF Insurance Services Corporation, St. Xxxxxxx Equity Properties,
Inc. and MAF Bancorp Capital Trust I (the "Purchaser Corporate Subsidiaries")
and Mid America (collectively, the "Purchaser Subsidiaries"). Except as set
forth on Schedule 2.1(c) to the Purchaser Disclosure Schedule, each of the
Purchaser Corporate Subsidiaries is either wholly-owned by Purchaser or Mid
America or by wholly-owned subsidiaries of Mid America, and is a duly organized
and validly existing corporation, limited liability company or statutory trust,
as applicable, 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 be so qualified
does not have a Purchaser Material Adverse Effect, 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.
- 10 -
2.2 Authorization. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly approved and authorized by Purchaser's Board of Directors, and all
necessary corporate action on the part of Purchaser has been taken. This
Agreement has been duly executed and delivered by Purchaser and, subject to the
approval of the Governmental Authorities, will constitute the valid and binding
obligations of Purchaser, except to the extent that enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principles and doctrines.
2.3 Conflicts. The execution and delivery of this Agreement by
Purchaser do not, and the consummation of the transactions contemplated hereby
will not, conflict with or result in any violation of the Certificate of
Incorporation or By-laws of Purchaser or organizational documents of any
Purchaser Subsidiary. The execution and delivery of this Agreement by Purchaser
do not, and the consummation of the transactions contemplated hereby will not,
conflict with or result in any violation, breach or termination of, or default
or loss of a material benefit under, or permit the acceleration of, any
obligation or result in the creation of any material lien, charge or encumbrance
on any 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, statute, law, ordinance, rule or regulation
applicable to Purchaser or any Purchaser Subsidiary or their respective
properties, other than any such conflicts, violations or defaults which (i)
individually or in the aggregate do not have a Purchaser Material Adverse
Effect, or (ii) will be cured or waived prior to the Effective Time. 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 Purchaser in connection with the execution and delivery of this Agreement or
the consummation by Purchaser of the transactions contemplated hereby, the
absence of which would have a Purchaser Material Adverse Effect, except for
those relating to: any application or notice with the Office of Thrift
Supervision ("OTS"), the FDIC, the Illinois Department of Financial and
Professional Regulation ("IDFPR") and any other Federal or state regulatory
authorities having jurisdiction over the transactions contemplated hereby
(collectively, the "Governmental Authorities"); the Registration Statement to be
filed by Purchaser relating to the Purchaser Common Stock to be issued pursuant
to this Agreement (the "Registration Statement") with the Securities and
Exchange Commission (the "SEC"), which Registration Statement shall include the
proxy statement for use in connection with the Stockholders' Meeting (the "Proxy
Statement") to be called pursuant to Section 5.8 hereof; the Certificate of
Merger to be filed with the Secretary of State of the State of Delaware; the
listing on the Nasdaq National Market of the shares of Purchaser Common Stock to
be issued in exchange of shares of Company Common Stock and any filings,
approvals or no-action letters with or from state securities authorities; and
any antitrust filings, consents, waivers or approvals.
2.4 Capitalization. (a) As of the date hereof, the capital stock of
Purchaser consists of the following:
CLASS OF STOCK PAR VALUE AUTHORIZED ISSUED OUTSTANDING TREASURY
-------------- --------- ---------- ------ ----------- --------
Common $ 0.01 80,000,000 33,634,642 31,973,984 1,660,658
Preferred $ 0.01 5,000,000 0 0 0
- 11 -
All of the issued and outstanding shares of Purchaser Common Stock have been,
and all of the shares of Purchaser Common Stock to be issued in the Merger will
be at the Effective Time, duly and validly authorized and issued, and are, or
upon issuance in the Merger will be, as the case may be, fully paid and
nonassessable. None of the outstanding shares of Purchaser Common Stock has been
issued in violation of any preemptive rights and none of the outstanding shares
of Purchaser Common Stock is or will be entitled to any preemptive rights in
respect of the Merger or any of the other transactions contemplated by this
Agreement. Purchaser has reserved, and will at the Effective Time have, a number
of authorized but unissued shares of Purchaser Common Stock or shares of
Purchaser Common Stock held in treasury sufficient to pay the aggregate Merger
Consideration in accordance with Section 1.5 hereof.
(b) As of the date hereof, Purchaser had reserved 3,685,764 shares of
Purchaser Common Stock for issuance under incentive compensation plans (the
"Purchaser Incentive Plans") for the benefit of directors, employees and former
directors and employees of Purchaser and the Purchaser Subsidiaries pursuant to
which options covering 3,172,113 shares of Purchaser Common Stock were
outstanding as of the date hereof and restricted stock units covering 39,203
shares of Purchaser Common Stock were outstanding as of the date hereof. Except
for the Purchaser Incentive Plans and other compensatory arrangements or
employee benefit plans disclosed in the Purchaser Reports (as defined below),
there are no shares of capital stock of Purchaser subject to 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 Purchaser, or contracts, commitments,
understandings, or arrangements by which Purchaser is or may be bound to issue
additional shares of its capital stock or options, warrants, or rights to
purchase or acquire any additional shares of its capital stock.
2.5 Purchaser Financial Statements; Material Changes. Purchaser has
previously delivered to the Company its audited consolidated financial
statements for the years ended December 31, 2004, 2003 and 2002, and the
unaudited consolidated financial statements for the three months ended March 31,
2005 (collectively, the "Purchaser Financial Statements"). The Purchaser
Financial Statements (x) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis ("GAAP") during the
periods involved (except as may be indicated in the notes thereto and, in the
case of the unaudited consolidated financial statements, except for the absence
of footnotes and for normal and recurring year-end adjustments which are not
material); and (y) fairly present in all material respects the consolidated
financial condition of Purchaser as of the dates thereof and the related results
of operations, changes in stockholders' equity and cash flows for the periods
then ended.
2.6 Purchaser SEC Filings. Purchaser has previously made available to
the Company true and complete copies of (a) its proxy statements as filed with
the SEC relating to all meetings of stockholders (whether special or annual)
during the calendar years 2002, 2003 and 2004, and (b) all other reports, as
amended, or filings, as amended, filed under the Securities and Exchange Act of
1934, as amended, and the rules and regulations thereunder (collectively, the
"Securities Exchange Act"), by Purchaser with the SEC since January 1, 2002,
including without limitation, reports on Forms 10-K, 10-Q and 8-K, and filings
with the SEC under the Securities Act of 1933, as amended, and the rules and
regulations thereunder (collectively, the "Securities Act") since January 1,
2002.
- 12 -
2.7 Purchaser Reports. (a) Since January 1, 2002, each of Purchaser and
the Purchaser Subsidiaries has timely filed all reports and statements, together
with any amendments required to be made with respect thereto, that were required
to be filed since such date with (a) the SEC, (b) the OTS, (c) the FDIC, (d) any
applicable state banking, insurance, securities, or other regulatory authorities
(except filings which are not material), and (e) Nasdaq (collectively, the
"Purchaser Reports"). Purchaser has previously made available to the Company
true and complete copies of the Purchaser Reports requested by the Company. As
of their respective filing dates, each of such reports and documents (after
giving effect to any amendments thereto), including the financial statements,
exhibits, and schedules thereto, complied in all material respects with the
applicable provisions of the statutes, rules, and regulations enforced or
promulgated by the authority with which they were filed and did not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
(b) Except as set forth on Schedule 2.7(b) to the Purchaser Disclosure
Schedule and except for examinations or reviews conducted in the regular course
of the business of Purchaser or the Purchaser Subsidiaries by the SEC, Internal
Revenue Service, Department of Labor, state, and local taxing authorities, OTS
or the FDIC, no Federal, state or local governmental agency, commission or other
entity has initiated any proceeding or, to the best knowledge of Purchaser,
investigation into the business or operations of Purchaser or the Purchaser
Subsidiaries within the past three years. None of Purchaser or any Purchaser
Subsidiary is subject to a written agreement (as such term is defined pursuant
to 12 U.S.C. ss.1818) with the OTS or the FDIC. There is no unresolved
violation, criticism or exception by the SEC, OTS or FDIC, or other agency,
commission or entity with respect to any Purchaser Report that would constitute
a Purchaser Material Adverse Effect.
2.8 Compliance With Laws. (a) The businesses of Purchaser and each
Purchaser Subsidiary are being conducted in compliance with all applicable
Federal and state laws, ordinances and regulations of any governmental entity,
including, without limitation, HOLA, the FDI Act, any laws affecting financial
institutions (including those pertaining to the Bank Secrecy Act, the USA
Patriot 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 Purchaser
or any Purchaser Subsidiary, except for any violations which either singly or in
the aggregate do not have a Purchaser Material Adverse Effect.
(b) Except as set forth on Schedule 2.8(b) to the Purchaser Disclosure
Schedule, no investigation or review by any governmental entity with respect to
Purchaser or any Purchaser Subsidiary is pending or, to the best knowledge of
the Company, threatened, nor has any governmental entity indicated to Purchaser
an intention to conduct the same, other than normal bank regulatory
examinations.
- 13 -
2.9 Litigation. There is no suit, action, investigation or proceeding,
legal, quasi-judicial, administrative or otherwise, pending or, to the best
knowledge of Purchaser, threatened against or affecting Purchaser or any
Purchaser Subsidiary, or any of their respective officers, directors, employees
or agents, in their capacities as such, which, if adversely determined, would
reasonably be expected to have a Purchaser Material Adverse Effect, or which is
seeking to enjoin consummation of the transactions provided for herein or to
obtain other relief in connection with this Agreement or the transactions
contemplated hereby, having, or which could reasonably be foreseen to have in
the future, any such effect.
2.10 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 Purchaser or any Purchaser Subsidiary under
any contract, commitment, or other material obligation to which Purchaser, any
Purchaser Subsidiary or their respective properties is subject, and neither
Purchaser nor any Purchaser Subsidiary has waived any right under any contract
or commitment, except in each case where any such default or waiver, singly or
in the aggregate with any other such defaults or waivers, would not have a
Purchaser Material Adverse Effect. To the best knowledge of Purchaser, no other
party to any such material contract or commitment is in default in any material
obligation to be performed by such party.
2.11 Absence of Purchaser Material Adverse Change. Except as may be
disclosed in Purchaser Reports, since December 31, 2004, there has not occurred
a Purchaser Material Adverse Change.
2.12 Undisclosed Liabilities. All of the obligations or liabilities
(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 the audited
consolidated financial statements in accordance with GAAP ("Liabilities") have,
in the case of Purchaser and the Purchaser Subsidiaries, been so reflected,
disclosed or reserved against in the audited consolidated financial statements
of Purchaser as of December 31, 2004 or in the notes thereto, and Purchaser and
the Purchaser Subsidiaries have no other Liabilities, except Liabilities
incurred since December 31, 2004 in the ordinary course of business.
2.13 Licenses. To the best knowledge Purchaser, Purchaser and each
Purchaser Subsidiary, respectively, hold all governmental registrations,
licenses, permits or franchises (each a "Purchaser Permit") required to be held
by it and which are material with respect to the operation of their respective
businesses, except for such Purchaser Permits which the failure to hold would
not have a Purchaser Material Adverse Effect.
2.14 Government Approvals. To the best knowledge of Purchaser, no fact
or condition exists with respect to Purchaser or any Purchaser Subsidiary that
Purchaser has reason to believe will prevent it from obtaining approval of the
Merger, the Bank Merger and other transactions contemplated by this Agreement by
any Governmental Authority.
2.15 Fees. Other than the financial advisory services performed for
Purchaser by Xxxxx, Xxxxxxxx & Xxxxx, Inc., neither Purchaser nor any
- 14 -
of the Purchaser Subsidiaries, nor any of their respective officers, directors,
employees or agents, has employed a broker or finder or incurred any liability
for any financial advisory fees, brokerage fees, commissions, or finder's fees,
and no broker or finder has acted directly or indirectly for Purchaser or any
Purchaser Subsidiary in connection with this Agreement or the transactions
contemplated hereby.
2.16 Disclosure. None of the information to be supplied by Purchaser
for inclusion or to be incorporated by reference in the Proxy Statement or the
information relating to Purchaser and the Purchaser Subsidiaries in the
Registration Statement, will, in the case of the Proxy Statement after giving
effect to any amendments thereof or supplements thereto, 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 or, in the
case of the Registration Statement, at the time it becomes effective, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein not misleading. The portions
of the Forms 10-K, 10-Q and 8-K and any other document filed by Purchaser under
the Securities Exchange Act which are included with or incorporated by reference
in the Registration Statement and Proxy Statement relating to Purchaser comply
or will comply as to form in all material respects with the provisions of the
Securities Exchange Act.
2.17 Availability of Funds. Purchaser has or will have available to it
at the Effective Time, sources of capital sufficient to pay the aggregate Cash
Consideration and to pay any other amounts payable pursuant to this Agreement
and to effect the transactions contemplated hereby.
2.18 Controls and Procedures. (a) Each of the principal executive
officer and the principal financial officer of Purchaser has made all
certifications required under Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act of
2002 and the related rules and regulations promulgated thereunder and under the
Exchange Act (collectively, the "Xxxxxxxx-Xxxxx Act") with respect to Purchaser
Reports, and Purchaser has made available to the Company a summary of any
disclosure made by management to Purchaser's auditors and audit committee since
January 1, 2002 referred to in such certifications. For purposes of the
preceding sentence, "principal executive officer" and "principal financial
officer" shall have the meanings given to such terms in the Xxxxxxxx-Xxxxx Act.
(b) Purchaser has (i) designed and maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act) to
ensure that material information required to be disclosed by Purchaser in the
reports it files or submits under the Securities Exchange Act is communicated to
its management by others within those entities as appropriate to allow timely
decisions regarding required disclosure, and (ii) disclosed, based on its most
recent evaluation of internal control over financial reporting, to Purchaser's
auditors and the audit committee of its Board of Directors (A) any significant
deficiencies or material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect
Purchaser's ability to record, process, summarize and report financial
information and (B) any fraud, whether or not material, that involves management
or other employees who have a significant role in Purchaser's internal control
over financial reporting. Purchaser has made available to the Company true and
correct copies of any of the foregoing disclosures to the auditors or audit
committee that have been made in writing from
- 15 -
January 1, 2004 through the date hereof, and will promptly provide to the
Company true and correct copies of any such disclosure that is made after the
date hereof.
(c) Purchaser has designed and maintains a system of internal control
over financial reporting (as defined in Rule 13a-15(f) under the Securities
Exchange Act) sufficient to provide reasonable assurance concerning the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP, including reasonable assurance
(i) that transactions are executed in accordance with management's general or
specific authorizations and recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
accountability, (ii) access to assets is permitted only in accordance with
management's general or specific authorizations, and (iii) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any difference.
(d) Since December 31, 2004, (i) neither Purchaser nor any Purchaser
Subsidiary nor, to the best knowledge of Purchaser, any director, officer,
employee, auditor, accountant or representative of Purchaser or any of the
Purchaser Subsidiaries has received any written complaint, allegation,
assertion, or claim that Purchaser or any Purchaser Subsidiary has engaged in
improper or illegal accounting or auditing practices or maintains improper or
inadequate internal accounting controls and (ii) no attorney representing
Purchaser or any Purchaser Subsidiary, whether or not employed by the Purchaser
or any Purchaser Subsidiary, has reported evidence of a material violation of
U.S. federal or state securities laws, a material breach of fiduciary duty or
similar material violation by Purchaser, any of the Purchaser Subsidiaries or
any of their respective officers, director, employees or agents to any officer
of Purchaser, the Board of Directors of Purchaser or any member or committee
thereof.
III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser that:
3.1 Organization. (a) The Company 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. The
Company 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 be so qualified does not have a Company Material Adverse
Effect (as defined below). The Company has all requisite corporate power and
authority to enter into this Agreement, and, upon the approval of the
Governmental Authorities and the stockholders of the Company, to consummate the
transactions contemplated hereby. The Company is duly registered as a unitary
savings and loan holding company under HOLA.
(b) The Bank is an Illinois state-chartered stock savings bank duly
organized and in existence under the laws of the State of Illinois. The Bank is
an "insured depository
- 16 -
institution" as defined in the FDI Act and applicable regulations thereunder,
the deposits of which are insured by FDIC through SAIF to the full extent
permitted under applicable laws.
(c) The Company has no direct or indirect subsidiaries other than EFS
Service Corporation, EFS Financial Services, Inc. and Computer Dynamics Group,
Inc. (the "Company Corporate Subsidiaries") and the Bank (collectively, the
"Company Subsidiaries"). Each of the Company Corporate Subsidiaries is either
wholly-owned by the Company or the Bank, and is a duly organized and validly
existing corporation, in good standing under the laws of its state of
incorporation, 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. Each Company Subsidiary 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 be so qualified
does not have a Company Material Adverse Effect. Each Company Subsidiary holds
all licenses, certificates, permits, franchises and rights from all appropriate
Federal, state or other public authorities necessary for the conduct of its and
their respective businesses, except where the failure to so hold does not have a
Company Material Adverse Effect.
3.2 Authorization. The execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions contemplated
hereby have been duly approved and authorized by the Company's Board of
Directors, and all necessary corporate action on the part of the Company (except
for the requisite stockholder approval) has been taken. This Agreement has been
duly executed and delivered by the Company and, subject to the approval of the
stockholders of the Company and of the Governmental Authorities, will constitute
the valid and binding obligations of the Company, 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 Certificate of Incorporation nor the By-laws of the
Company will need to be amended to effectuate the transactions contemplated by
this Agreement.
3.3 Conflicts. The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby will not, conflict with
or result in any violation of the Certificate of Incorporation or By-laws of the
Company or organizational documents of any Company Subsidiary. Except as set
forth on Schedule 3.3 to the Company Disclosure Schedule, the execution and
delivery of this Agreement by the Company do not, and the consummation of the
transactions contemplated hereby will not, conflict with or result in any
violation, breach or termination of, or default or loss of a material benefit
under, or permit the acceleration of, any obligation or result in the creation
of any material lien, charge or encumbrance on any of the property or assets
under any provision of any mortgage, indenture, lease, Material Agreement (as
defined below) or permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or any Company Subsidiary or their respective properties, other than any
such conflicts, violations or defaults which will be cured or waived by the
counter-party prior to the Effective Time. Except as set forth on Schedule 3.3
to the Company Disclosure Schedule, 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 the Company in
connection with the execution and delivery of this Agreement or the consummation
by the Company of the
- 17 -
transactions contemplated hereby, the absence of which would have a Company
Material Adverse Effect, except for those relating to: any application or notice
with the Governmental Authorities; Purchaser's Registration Statement and Proxy
Statement to be filed with the SEC; the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware; and any antitrust filings,
consents, waivers or approvals.
3.4 Capitalization and Stockholders. (a) As of the date hereof, except
as set forth on Schedule 3.4(a) to the Company Disclosure Schedule, the capital
---------------
stock of the Company consists of the following:
CLASS OF STOCK PAR VALUE AUTHORIZED ISSUED OUTSTANDING TREASURY
-------------- --------- ---------- ------ ----------- --------
Common $0.01 25,000,000 7,491,434 4,817,669 2,673,765
Preferred $0.01 2,000,000 0 0 0
All of the issued and outstanding shares of Company Common Stock have been duly
and validly authorized and issued, and are fully paid and non-assessable. None
of the outstanding shares of Company Common Stock were issued in violation of
any preemptive rights of the current or past stockholders of the Company, and,
to the best knowledge of the Company, there exist no prior rights of any party
to acquire such shares. All of the issued and outstanding shares of Company
Common Stock as of the relevant record date will be entitled to vote to approve
the Agreement.
(b) As of the date hereof, the Company has 521,922 shares of Company
Common Stock reserved for issuance under the stock option plans for the benefit
of employees and directors of the Company or Company Subsidiaries ("Company
Stock Option Plans") pursuant to which options covering an aggregate of 469,523
shares of Company Common Stock are outstanding as of the date hereof. Except as
set forth in this Section 3.4(b) or Schedule 3.4(b) to the Company Disclosure
Schedule and except for the transactions contemplated herein, there are no
shares of capital stock or other equity securities of the Company 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 the
Company, or contracts, commitments, understandings, or arrangements by which the
Company 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 option is exercisable or will be exercisable as of the date
set forth in Schedule 3.4(b) to the Company Disclosure Schedule (as defined
below) and has an exercise price in the amount set forth on Schedule 3.4(b) to
the Company Disclosure Schedule.
(c) Schedule 3.4(c) to the Company Disclosure Schedule accurately
identifies the names and addresses of all of the stockholders who, to the best
knowledge of the Company, beneficially own more than 5% of the shares of Company
Common Stock and the number of shares of Company Common Stock held by each such
stockholder and by each director and senior officer of the Company. From the
date hereof until the Effective Time, the Company shall, upon request, provide
Purchaser with (i) a complete list of all of its stockholders of record and
non-objecting shareholders, including the names, addresses and number of shares
of Company Common Stock held by each stockholder, and (ii) any correspondence
between the Company and any stockholder of the Company.
- 18 -
(d) No capital stock of any of the Company Subsidiaries is or may
become required to be issued (other than to the Company) 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 Company Subsidiary. The
former minority shareholder of Computer Dynamics Group, Inc has no continuing
equity interest in such company and, to the best knowledge of the Company, there
is no dispute threatened with respect to such former equity ownership position.
There are no contracts, commitments, understandings or arrangements relating to
the rights of the Company to vote or to dispose of shares of the capital stock
of any Company Subsidiary. All of the shares of capital stock of each Company
Subsidiary held by the Company or the Bank are fully paid and non-assessable and
are owned by the Company or the Bank free and clear of any claim, lien or
encumbrance.
3.5 Company Financial Statements; Material Changes. The Company has
previously delivered to Purchaser its audited consolidated financial statements
for the years ended December 31, 2004, 2003 and 2002, and the unaudited
consolidated financial statements for the three (3) months ended March 31, 2005
(collectively, the "Company Financial Statements"). The Company Financial
Statements (x) have been prepared in accordance with GAAP (except as may be
indicated in the notes thereto and, in the case of the unaudited consolidated
financial statements, except for the absence of footnotes and for normal and
recurring year-end adjustments which are not material); and (y) fairly present
in all material respects the consolidated financial condition of the Company as
of the dates thereof and the related results of operations, changes in
stockholders' equity and cash flows for the periods then ended.
3.6 Company SEC Filings. The Company has previously made available to
Purchaser true and complete copies of (a) its proxy statements on Schedule 14A
to the Securities Exchange Act relating to all meetings of stockholders (whether
special or annual) during the calendar years 2003, 2004 and 2005, (b) all other
reports or filings, as amended, filed under the Securities Exchange Act by the
Company with the SEC since January 1, 2002, including, without limitation,
reports on Forms 10-K, 10-Q and 8-K, and filings with the SEC under the
Securities Act, and (c) beneficial ownership reports or filings relating to the
Company Common Stock furnished to the Company since January 1, 2002.
3.7 Company Reports. (a) Since January 1, 2002, each of the Company and
the Company Subsidiaries has timely filed all reports and statements, together
with any amendments required to be made with respect thereto, that were required
to be filed since such date with (a) the SEC, (b) the IDFPR, (c) the FDIC, (d)
any applicable state banking, insurance, securities, or other regulatory
authorities (except filings which are not material), and (e) American Stock
Exchange (collectively, the "Company Reports"). The Company has previously made
available to Purchaser true and complete copies of the Company Reports requested
by Purchaser. As of their respective filing dates, each of such reports and
documents (after giving effect to any amendments thereto), including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with the applicable provisions of the statutes, rules, and regulations
enforced or promulgated by the authority with which they were filed and did not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
- 19 -
(b) Except for examinations or reviews conducted by the IDFPR or the
FDIC in the regular course of the business of the Company or the Company
Subsidiaries, no Federal, state or local governmental agency, commission or
other entity has initiated any proceeding or, to the best knowledge of the
Company, investigation into the business or operations of the Company or the
Company Subsidiaries within the past three years. None of the Company or any
Company Subsidiary is subject to a written agreement (as such term is defined
pursuant to 12 U.S.C. ss.1818) with the IDFPR or the FDIC. There is no
unresolved violation, criticism or exception by the SEC, IDFPR or FDIC, or other
agency, commission or entity that would have a Company Material Adverse Effect.
3.8 Compliance With Laws. (a) The businesses of the Company and each
Company Subsidiary are being conducted in compliance with all applicable Federal
and state laws, ordinances and regulations of any governmental entity,
including, without limitation, HOLA, the FDI Act, any laws affecting financial
institutions (including those pertaining to the Bank Secrecy Act, the USA
Patriot 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 the
Company or any Company Subsidiary, except for possible violations which either
singly or in the aggregate do not have a Company Material Adverse Effect, and
which would not interfere with the consummation of the transactions contemplated
hereby.
(b) The policies, programs and practices of the Company and each
Company Subsidiary relating to wages, hours of work, and other terms and
conditions of employment are in compliance in all material respects with
applicable laws, orders, regulations, public policies and ordinances governing
employment and terms and conditions of employment. There are no disputes,
claims, or charges, pending or, to the best knowledge of Company, threatened,
against the Company or any Company Subsidiary alleging breach of any express or
implied employment contract or commitment, or material breach of any applicable
law, order, regulation, public policy or ordinance relating to employment or
terms and conditions of employment, and, to the best knowledge of the Company,
there is no basis for any valid claim or charge with regard to such matters.
(c) Except as set forth on Schedule 3.8(c) to the Company Disclosure
Schedule, no investigation or review by any governmental entity with respect to
the Company or any Company Subsidiary is pending or, to the best knowledge of
the Company, threatened, nor has any governmental entity indicated to the
Company an intention to conduct the same, other than normal bank regulatory
examinations.
3.9 Litigation. Except as set forth on Schedule 3.9 to the Company
Disclosure Schedule, there is no suit, action, investigation or proceeding,
legal, quasi-judicial, administrative or otherwise, pending or, to the best
knowledge of the Company, threatened against or affecting the Company or any
Company Subsidiary, or any of their respective officers, directors, employees or
agents, in their capacities as such, which is seeking damages against the
Company, any Company Subsidiary, or any of their respective officers, directors,
employees or
- 20 -
agents, in their capacities as such, in excess of $50,000, or which would
reasonably be expected to have a Company Material Adverse Effect or which is
seeking to enjoin consummation of the transactions provided for herein or to
obtain other relief in connection with this Agreement or the transactions
contemplated hereby, having, or which could reasonably be foreseen to have in
the future, any such effect.
3.10 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 the Company or any Company Subsidiary under
any contract, commitment, or other material obligation to which the Company, any
Company Subsidiary or their respective properties is subject, and neither the
Company nor any Company Subsidiary has waived any right under any contract or
commitment, except in each case where any such default or waiver, singly or in
the aggregate with any other such defaults or waivers, would not have a Company
Material Adverse Effect. Except as set forth on Schedule 3.10 to the Company
Disclosure Schedules, to the best knowledge of the Company, no other party to
any such material contract or commitment is in default in any material
obligation to be performed by such party.
3.11 Absence of Company Material Adverse Change. Since December 31,
2004, there has not been, except for the transactions as contemplated herein or
matters related thereto, a Company Material Adverse Change.
3.12 Undisclosed Liabilities. All of the obligations or Liabilities
have, in the case of the Company and the Company Subsidiaries, been so
reflected, disclosed or reserved against in the audited consolidated financial
statements of the Company as of December 31, 2004 or in the notes thereto, and
the Company and the Company Subsidiaries have no other Liabilities except (i)
Liabilities incurred since December 31, 2004 in the ordinary course of business
consistent with past practice that either alone or when combined with all
similar Liabilities, have not had, and would not reasonably be expected to have,
a Company Material Adverse Effect and (ii) Liabilities (including legal,
accounting, financial advising fees and out-of-pocket expenses) incurred in
connection with the transactions contemplated by this Agreement.
3.13 Licenses. The Company and each Company Subsidiary, respectively,
hold all governmental registrations, licenses, permits or franchises (each a
"Company Permit") required to be held by it and which are material with respect
to the operation of their respective businesses as presently conducted.
3.14 Governmental and Stockholder Approvals. To the best knowledge of
the Company, no fact or condition exists which the Company has reason to believe
will prevent the parties from obtaining approval of the Merger, the Bank Merger
and other transactions contemplated by this Agreement by any Governmental
Authority or the stockholders of the Company.
3.15 Antitakeover Provisions Inapplicable. Other than Section 203 of
the DGCL, no "business combination," "moratorium," "control share" or other
state antitakeover statute or regulation, nor any provision in the Company's
Certificate of Incorporation or By-laws, (i) prohibits or restricts the
Company's ability to perform its obligations under this Agreement, or its
ability to consummate the transactions contemplated hereby, (ii) would have the
effect of
- 21 -
invalidating or voiding this Agreement, or any provision hereof or thereof, or
(iii) would subject Purchaser to any impediment or condition in connection with
the exercise of any of its rights under this Agreement. The Company has taken
all steps necessary to cause the restrictions on "business combinations" (as
defined in Section 203 of the DGCL) set forth in Section 203 of the DGCL to be
inapplicable to this Agreement and the transactions contemplated hereby.
3.16 Disclosure. None of the information to be supplied by the Company
for inclusion or to be incorporated by reference in the Proxy Statement or the
information relating to the Company and the Company Subsidiaries in the
Registration Statement, will, in the case of the Proxy Statement after giving
effect to any amendments thereof or supplements thereto, 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 or, in the
case of the Registration Statement, at the time it becomes effective and at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein not
misleading. The portions of the Forms 10-K, 10-Q and 8-K filed by the Company
under the Securities Exchange Act which are included with or incorporated by
reference in the Proxy Statement relating to the Company comply and will comply
as to form in all material respects with the provisions of the Securities
Exchange Act.
3.17 Taxes. (a) Except as set forth on Schedule 3.17 to the Company
Disclosure Schedules, the Company, each Company Subsidiary and each other
company or joint venture where the Company or a Company Subsidiary owns 50% or
more of the equity interest of such entity measured by either vote or value (a
"Tax Subsidiary") have each timely filed all tax and information returns,
including but not limited to all required Forms 1099, 1098 and 5498, required to
be filed (all such returns being correct and complete in all material respects)
and have paid (or the Company has paid on behalf of each Company Subsidiary and
Tax Subsidiary), or have accrued on their respective books and set up an
adequate reserve for the payment of, all taxes, interest and penalties required
to be paid in respect of the periods covered by such returns and have accrued on
their respective books and set up an adequate reserve for the payment of all
income and other taxes anticipated to be payable in respect of periods through
the end of the calendar month next preceding the date hereof. Neither the
Company nor any Company Subsidiary or Tax Subsidiary is delinquent in the
payment of any tax, assessment or governmental charge. No deficiencies for any
taxes have been proposed, asserted or assessed against the Company, any Company
Subsidiary or Tax Subsidiary that have not been resolved or settled and no
requests for waivers of the time to assess any such tax are pending or have been
agreed to. Except as set forth on Schedule 3.17 to the Company Disclosure
Schedule, the income tax returns of the Company and each Company Subsidiary and
Tax Subsidiary have not been audited by either the Internal Revenue Service, or
any state or local taxing authorities, for any of the last ten years. Neither
the Company nor any Company Subsidiary or Tax Subsidiary is a party to any
action or proceeding by any governmental authority for the assessment or the
collection of taxes. Deferred taxes of the Company and each Company Subsidiary
have been accounted for in accordance with GAAP. Except as set forth on Schedule
3.17 to the Company Disclosure Schedule, the Company and each Company Subsidiary
have delivered or made available to Purchaser correct and complete copies of all
Federal and state income tax returns and supporting schedules for all tax years
since December 31, 2000.
- 22 -
(b) The Company has not filed any consolidated Federal income tax
return with an "affiliated group" (within the meaning of Section 1504 of the
Code) where the Company was not the common parent of the group. Neither the
Company nor any Company Subsidiary or Tax 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 the Company, any
Company Subsidiary or Tax Subsidiary.
(c) The Company, each Company Subsidiary and each Tax Subsidiary have
each withheld amounts from its employees, stockholders or holders of deposit
accounts in compliance with the tax withholding provisions of applicable
Federal, state and local laws, 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, have notified all employees, stockholders and holders
of public deposit accounts of their obligations to file all forms, statements or
reports with it in accordance with applicable Federal, state and local tax laws
and have taken reasonable steps to insure that such employees, stockholders and
holders of public deposit accounts have filed all such forms, statements and
reports with it.
3.18 Insurance. The Company and each Company Subsidiary maintain
insurance with an insurer which in the best judgment of management of the
Company is sound and reputable, on their respective assets, and upon their
respective businesses and operations, against loss or damage, risks, hazards and
liabilities of the kinds customarily insured against by prudent corporations
engaged in the same or similar businesses. The Company and each Company
Subsidiary maintain in effect all insurance required to be carried by law or by
any agreement by which they are bound. All material claims under all policies of
insurance maintained by the Company and the Bank have been filed in due and
timely fashion. Neither the Company nor any Company Subsidiary has had an
insurance policy cancelled by the issuer of the policy within the past five (5)
years.
3.19 Loans; Investments. (a) Each loan reflected as an asset on the
Company Financial Statements is evidenced by appropriate and sufficient
documentation in all material respects and constitutes, 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 the knowledge of the Company, no obligor named
therein is seeking to avoid the enforceability of the terms of any loan under
any such laws or equitable principles or doctrines and no loan is subject to any
defense, offset or counterclaim. All such loans originated by the Company or any
Company Subsidiary and all such loans purchased by the Company or any Company
Subsidiary, were made or purchased in accordance with customary lending
standards of the Company and any Company Subsidiary and in the ordinary course
of business of the Company and each Company Subsidiary. Set forth on Schedule
3.19(a)(i) is a complete list of all outstanding commitments under which the
Company or any Company Subsidiary is obligated to purchase loans or loan
participations. Set forth on Schedule 3.19(a)(ii) to the Company Disclosure
Schedule is a complete list of the Company REO (as defined below) as of March
31, 2005.
- 23 -
(b) All guarantees of indebtedness owed to the Company or any Company
Subsidiary, including but not limited to 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.
(c) In originating, purchasing, underwriting, servicing, and
discharging loans, mortgages, land contracts, and contractual obligations
relating thereto, either for their own account or for the account of others, the
Company and each Company Subsidiary have complied in all material respects with
all applicable terms and conditions of such obligations and with all applicable
laws, regulations, rules, contractual requirements, and procedures with respect
to such servicing.
(d) None of the investments reflected in the Company Financial
Statements and none of the investments made by the Company since December 31,
2004, is subject to any restriction, whether contractual or statutory, which
materially impairs the ability of the Company freely to dispose of such
investment at any time. With respect to all material repurchase agreements to
which the Company or any Company Subsidiary is a party, the Company or such
Company Subsidiary has a valid, perfected first lien or security interest in the
government securities or other collateral securing each such repurchase
agreement, and the value of the collateral securing each such repurchase
agreement equals or exceeds the amount of the debt secured by such collateral
under such agreement. Neither the Company nor any Company Subsidiary has sold or
otherwise disposed of any assets in a transaction in which the acquiror of such
assets or other person has the right, either conditionally or absolutely, to
require the Company or any Company Subsidiary to repurchase or otherwise
reacquire any such assets. Except as set forth on Schedule 3.19(d)(i) to the
Company Disclosure Schedule, neither the Company nor any Company Subsidiary has
purchased or otherwise acquired any loans or other assets in a transaction in
which the seller of such loans or other assets, or other person, has the right,
either conditionally or absolutely, to repurchase such loans or other assets
from the Company or any Company Subsidiary as a result of the occurrence of the
transactions contemplated herein or otherwise. Set forth on Schedule 3.19(d)(ii)
to the Company Disclosure Schedule is a complete and accurate list of each
investment and debt security, mortgage-backed and related securities, marketable
equity securities and securities purchased under agreements to resell owned by
the Company or any Company Subsidiary, showing as of May 31, 2005, 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 cost and estimated fair value of the marketable equity
securities.
(e) All United States Treasury securities, obligations of other United
States Government agencies and corporations, obligations of States of the United
States and their political subdivisions, and other investment securities
classified as "held to maturity," "available for sale" and "trading" held by the
Company or any Company Subsidiary, as reflected in the Company Financial
Statements were classified and accounted for in accordance with F.A.S.B. 115 and
the intentions of management.
- 24 -
3.20 Interest Rate Risk Management Arrangements. Neither the Company
nor any Company Subsidiary is a party to any, nor is any property bound by, any
interest rate swaps, caps, floors and option agreements or other interest rate
risk management arrangements.
3.21 Allowance for Loan Losses. The allowance for loan losses shown on
the Company Financial Statements, as of such date was (and will be as of such
subsequent financial statement dates) in the reasonable judgment of the Company,
adequate in all respects to provide for possible or specific losses, net of
recoveries relating to loans previously charged off, on loans outstanding, and
contained an additional amount of unallocated reserves for unanticipated future
losses at a level considered adequate under the standards applied by applicable
Federal and/or state regulatory authorities and based upon generally accepted
practices applicable to financial institutions and based upon GAAP.
3.22 Company Benefit Plans. (a) Schedule 3.22(a)(i) to the Company
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 each compensation,
consulting, employment, termination or collective bargaining agreement, and each
stock option, stock purchase, stock appreciation right, recognition and
retention, life, health, accident or other insurance, bonus, deferred or
incentive compensation, severance or separation agreement or any agreement
providing any payment or benefit resulting from a change in control, profit
sharing, retirement, or other employee benefit plan, practice, policy or
arrangement of any kind, oral or written, covering employees, former employees,
directors or former directors of the Company or each Company Subsidiary or their
respective beneficiaries, including, but not limited to, any employee benefit
plans within the meaning of Section 3(3) of ERISA, which the Company or any
Company Subsidiary maintains, to which the Company or any Company Subsidiary
contributes, or under which any employee, former employee, director or former
director of the Company or any Company Subsidiary is covered or has benefit
rights and pursuant to which any liability of the Company or any Company
Subsidiary exists or is reasonably likely to occur (the "Company Benefit
Plans"), and current summary plan descriptions, trust agreements, and insurance
contracts and Internal Revenue Service Form 5500 or 5500-C/R (for the three most
recently completed plan years) with respect thereto. Except as set forth on
Schedule 3.22(a)(ii) to the Company Disclosure Schedule, the Company neither
maintains nor has entered into any Company 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 the Company or any Company Subsidiary or their respective
beneficiaries, or other provisions, which would cause an increase in the
liability of the Company or any Company Subsidiary or to Purchaser as a result
of the transactions contemplated by this Agreement or any related action
thereafter (a "Change in Control Benefit"). The term "Company Benefit Plans" as
used herein refers to all plans contemplated under the preceding sentences of
this Section 3.22, 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 Company Benefit Plan is a multiemployer plan within the
meaning of Section 3(37) of ERISA. Neither the Company nor any Company
Subsidiary has been notified by any Governmental Authority to amend any payments
or other compensation paid or payable by the Company or any Company Subsidiary
under this Agreement, any Company Benefit Plan or otherwise, to or for the
benefit of any employee or director of the Company or
- 25 -
any Company Subsidiary and, to the best knowledge of the Company, all such
payments are in compliance with all applicable rules, regulations and bulletins
promulgated by the Governmental Authorities.
(b) Each of the Company 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 ("Company Qualified Plans")
has been determined by the Internal Revenue Service to qualify under Section
401(a) of the Code and an application for determination of such qualification
has been timely made to the Internal Revenue Service prior to the end of the
applicable remedial amendment period under Section 401(b) of the Code (a copy of
each such determination letter and each pending application is included in
Schedule 3.22(b) to the Company Disclosure Schedule), and, to the best knowledge
of the Company, there exist no circumstances likely to materially adversely
affect the qualified status of any such Company Qualified Plan. All such Company
Qualified Plans established or maintained by the Company or each Company
Subsidiary or to which the Company or any Company 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 Company Qualified Plans. No Company Qualified Plan
is a defined benefit pension plan which is subject to Title IV of ERISA. All
accrued contributions and other payments required to be made by the Company or
each Company Subsidiary to any Company 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 the Company Financial Statements.
Neither the Company nor any Company Subsidiary has accumulated any funding
deficiency under Section 412 of the Code. Neither the Company nor any Company
Subsidiary is in material default in performing any of its respective
contractual obligations under any of the Company 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) There is no pending or, to the best knowledge of the Company,
threatened litigation or pending claim (other than individual benefit claims
made in the ordinary course) by or on behalf of or against any of the Company
Benefit Plans (or with respect to the administration of any of such Plans) now
or heretofore maintained by the Company or any Company Subsidiary which allege
violations of applicable state or Federal law or the terms of the Plan which are
reasonably likely to result in a liability on the part of Company or any Company
Subsidiary or any such Plan.
(d) The Company and each Company Subsidiary and all other persons
having fiduciary or other responsibilities or duties with respect to any Company
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, rules and regulations governing such Plan, including,
without limitation, the rules and regulations promulgated by the Department of
Labor, the Pension Benefit Guaranty Corporation (the "PBGC") and the Internal
Revenue Service under ERISA, the Code or any other applicable law. No
"reportable event" (as defined in
- 26 -
Section 4043(c) of ERISA) has occurred with respect to any Company Benefit Plan.
No Company 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 Section 4975(d) of
the Code. All Company Benefit Plans that are group health plans have been
operated in compliance with the group health plan continuation requirements of
Section 4980B of the Code and Sections 601-609 of ERISA and with the
certification of prior coverage and other requirements of Sections 701-702 of
ERISA.
(e) Neither the Company nor any Company Subsidiary has incurred, nor to
the best knowledge of the Company or such Company Subsidiary is reasonably
likely to incur, any liability under Title IV of ERISA in connection with any
Plan subject to the provisions of Title IV of ERISA now or heretofore maintained
or contributed to by it or by the Bank.
(f) Neither the Company nor any Company Subsidiary has made any
payments, or is or has been a party to any agreement or any Company Benefit
Plan, that under any circumstances could obligate it, any Company Subsidiary, or
any successor of any 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.
(g) Schedule 3.22(g) to the Company Disclosure Schedule describes any
obligation that the Company or any Company 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, their ages, a
description of such health or welfare benefit, the annual cost incurred to
provide such benefits and the portion of such cost that is paid by such retiree
or former employee or director.
(h) Schedule 3.22(h) to the Company Disclosure Schedule lists: (i) each
employee, officer and director of the Company and each Company 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 2005 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 Company or any Company Subsidiary
for each of the calendar years 2000 through 2004 as reported by the Company or
each Company Subsidiary on Form W-2 or Form 1099; (ii) each other employee of
the Company or any Company 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 2005; (iii) a listing of each
Option, showing the holder thereof, the number of shares, the type of option
(incentive or non-statutory), the exercise price per share and a copy of the
option agreements relating thereto; (iv) a listing of each unvested restricted
stock award, showing the holder thereof, the number of shares, the vesting dates
and a copy of the restricted stock award agreements relating thereto; (v) a
listing of the participants in the Employee Stock Ownership Plan ("ESOP"),
showing the number of outstanding shares of Company Common Stock credited to
each participant, the vesting dates thereof, the unpaid balance of any loans
owing by the ESOP to the Company or any party as of the date hereof (the "ESOP
Loan"), and the number of
- 27 -
unallocated shares of Company Common Stock held by such trusts; and (vi) each
employee, 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 Company
Financial Statements with respect thereto.
(i) The Company and each Company 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 Company Benefit Plan with the Internal Revenue
Service, the PBGC, and the Department of Labor, as prescribed by the Code or
ERISA, or regulations issued thereunder. All such filings, as amended, were
complete and accurate in all material respects as of the dates of such filings,
and there were no misstatements or omissions in any such filing which would be
material to the financial condition of the Company on a consolidated basis.
(j) Neither the Company nor any Company Subsidiary is a party to or
bound by any collective bargaining agreement and, to the best of the Company's
knowledge, no labor union claims to or is seeking to represent any employees of
the Company or any Company Subsidiary.
(k) Schedule 3.22(k) of the Company Disclosure Schedule lists (i) each
life insurance policy held by the Bank under its bank-owned life insurance
program (the "BOLI Program") and the cash value, face amount and other
information relating thereto as of March 31, 2005, and (ii) the interest, if
any, of a participant in the Bank's Supplemental Life/Split Dollar Plan, in the
death benefit proceeds thereunder. The Bank has an insurable interest in each
policy held under the BOLI Program and has obtained the consent of the
individual who is the named insured under each policy. Except for the portion of
the death benefit payable to beneficiaries of participants under the
Supplemental Life/Split Dollar Plan, no individual or entity other than the Bank
has any interest in any policy held under the BOLI Program.
3.23 Environmental Matters. (a) For purposes of this Section 3.23,
"Company Properties" means (i) the real estate owned or leased by the Company or
the Bank and/or used as a banking related facility or identified in the
Company's Form 10-K filing for the year ended December 31, 2004 or acquired
since December 31, 2004; (ii) other real estate owned, if any ("Company REO"),
by the Company or any Company Subsidiary as defined by any other Federal or
state financial institution regulatory agency with regulatory authority for the
Company or any Company Subsidiary; (iii) real estate that is in the process of
pending foreclosure or forfeiture proceedings conducted by the Company or any
Company Subsidiary; (iv) real estate that is held in trust for others by the
Bank; and (v) real estate owned or leased by a partnership or joint venture in
which the Company or a Company Subsidiary has an ownership interest, including
any Tax Subsidiary.
(b) To the best knowledge of the Company, there are no present or past
conditions on the Company Properties, involving or resulting from a past or
present storage, spill, discharge, leak, emission, injection, escape, dumping or
release of any kind whatsoever of any material or substance: (i) which is or
becomes defined as a "hazardous substance", "pollutant" or "contaminant"
pursuant to CERCLA, or other Environmental Laws (as defined below); (ii)
containing gasoline, oil, diesel fuel or other petroleum products, or fractions
thereof;
- 28 -
(iii) which is or becomes defined as a "hazardous waste" pursuant to RCRA and
amendments thereto and regulations promulgated thereunder; (iv) containing
polychlorinated biphenyls; (v) containing asbestos; (vi) which is radioactive;
(vii) which is biologically hazardous; (viii) the presence of which requires
investigation or remediation under any Federal, state or local statute,
regulation, ordinance, policy or other Environmental Laws; (ix) which is defined
as a "hazardous waste", "hazardous substance", "pollutant" or "contaminant" or
other such term used to defined a substance having an adverse effect on the
environment under Environmental Laws; or (x) any toxic, explosive, dangerous
corrosive or otherwise hazardous substance, material or waste, which is
regulated by any Federal, state or local governmental authority (collectively,
"Hazardous Materials") or from any generation, transportation, treatment,
storage, disposal, use or handling of any Hazardous Materials.
(c) To the best knowledge of the Company, the Company, each Company
Subsidiary and each Tax Subsidiary are in compliance in all material respects
with all Federal, state and local laws relating to pollution or protection of
the environment such as laws relating to emissions, discharges, releases or
threatened releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (together with all regulations and
rules adopted thereunder and amendments thereto) ("Environmental Laws"). Neither
the Company nor any Company Subsidiary or Tax Subsidiary have received notice
of, nor to the best knowledge of the Company 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 the Company Properties.
(d) To the best knowledge of the Company, no Company Properties are
currently undergoing remediation or cleanup of Hazardous Materials or other
environmental conditions.
(e) To the best knowledge of the Company, the Company, each Company
Subsidiary and each Tax Subsidiary have all governmental permits, licenses,
certificates of inspection and other authorizations governing or protecting the
environment necessary to conduct its present business. Further, the Company
warrants and represents that these permits, licenses, certificates of inspection
and other authorizations are fully transferable, to the extent permitted by law,
to Purchaser.
3.24 Material Contracts. Schedule 3.24(i) to the Company Disclosure
Schedule sets forth, each contract, indenture, and other binding commitment and
agreement (including any wholesale broker or loan purchase agreement, but not
including documents evidencing, governing or related to loans or credits by the
Company or any Company Subsidiary or deposits or investments held by the Bank)
that provides for the receipt or expenditure of in excess of $50,000 over the
course of any twelve-month period, or which cannot be terminated without penalty
in excess of $25,000 to which the Company and/or any Company Subsidiary is a
party or to which the Company and/or any Company Subsidiary or any of their
properties are subject (collectively, the "Material Contracts" and each a
"Material Contract"). True copies of each Material Contract are set forth on
Schedule 3.24(i) to the Company Disclosure Schedule, including all material
amendments and supplements thereto. Except as set forth on Schedule 3.24(ii) to
the Company Disclosure Schedule, all of the Material Contracts are binding
- 29 -
upon the Company and/or Company Subsidiaries (as applicable) and, to the
Company's best knowledge, the other parties thereto. The Company and the Company
Subsidiaries have each duly performed in all material respects all of its
obligations under each Material Contract to which they are a party to the extent
that such obligations to perform have accrued. No breach or default under any
Material Contract by the Company or any of the Company Subsidiaries or, to the
Company's knowledge, any other party thereto, has occurred which has a Company
Material Adverse Effect. Except as set forth on Schedule 3.24(iii) to the
Company Disclosure Schedule, none of the Material Contracts contains an express
prohibition against assignment by operation of law or a change of control of the
Company or a Company Subsidiary (or require written consent or notice to the
other party), or contains any other provision which would preclude Purchaser
from exercising and enjoying all of the rights, remedies and obligations of the
Company or a Company Subsidiary, as the case may be, under such Material
Contracts as a result of entering into this Agreement and the consummation of
the Merger.
3.25 Real Property. (a) The Company and each Company Subsidiary and Tax
Subsidiary have good and marketable title to their real properties, including
any leaseholds and ground leases, and their other assets and properties, all as
reflected as owned by the Company or any Company Subsidiary in the Company
Financial Statements dated as of March 31, 2005 except for (i) assets and
properties disposed of since such date in the ordinary course of business and
(ii) such liens, claims, mortgages, security interests, leases, agreements and
tenancies, licenses, options, options to purchase, covenants, conditions,
restrictions, rights of way, easements, judgments, and other matters affecting
the real properties as set forth on Schedule 3.25(a)(i) to the Company
Disclosure Schedule or as identified on the title policies listed on such
Schedule. All buildings, structures, fixtures and appurtenances comprising part
of the real properties of the Company or any Company Subsidiary (whether owned
or leased by the Company or any Company Subsidiary) are in good operating
condition and have been well maintained, ordinary wear and tear excepted. Title
to all real property listed as being owned by the Company or any Company
Subsidiary on the Company Disclosure Schedule is held in fee simple. The Company
and each Company 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, except as set forth on Schedule 3.25(a)(ii) to the
Company Disclosure Schedule, such assets are free, clear and discharged of, from
any and all liens, charges, encumbrances, security interests and/or equities.
Set forth on Schedule 3.25(a)(i) to the Company Disclosure Schedule is evidence
of title to all real property owned by the Company or the Bank.
(b) All leases pursuant to which the Company or any Company Subsidiary,
as lessee, leases real or personal property are, to the best knowledge of the
Company, 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 the Company or any Company
Subsidiary, or to the best knowledge of the Company, the other party. Except as
set forth on Schedule 3.25(b) to the Company Disclosure Schedule, none of such
leases contains a prohibition against assignment by the Company or any Company
Subsidiary, by operation of law or otherwise, or any other provision which in
either case would preclude the Company or any Company Subsidiary from possessing
and using the leased premises for the same purposes and upon the same rental and
other terms upon the consummation of the Merger as are applicable to the
possession and use by the Company or any Company Subsidiary as of the date of
this
- 30 -
Agreement. Neither the Company nor any Company Subsidiary has made a prior
assignment for collateral purposes of any such lease.
3.26 Indemnification. To the best knowledge of the Company, no action
or failure to take action by any director, officer, employee or agent of the
Company or each Company Subsidiary has occurred which would give rise to a claim
or a potential claim by any such person for indemnification from the Company or
any Company Subsidiary under the corporate indemnification provisions of the
Company or any Company Subsidiary in effect on the date of this Agreement.
3.27 Insider Interests. All outstanding loans and other contractual
arrangements (including deposit relationships) between the Company or any
Company Subsidiary and any officer, director or employee of the Company or any
Company Subsidiary conform to the applicable rules and regulations and
requirements of all applicable regulatory agencies which were in effect when
such loans and other contractual arrangements were entered into. Except as set
forth on Schedule 3.27 to the Company Disclosure Schedule, no officer, director
or employee of the Company or any Company Subsidiary has any material interest
in any property, real or personal, tangible or intangible, used in or pertaining
to the business of the Company or any Company Subsidiary. With the exception of
any deposit or lending relationships with any Company Subsidiary, set forth on
Schedule 3.27 to the Company Disclosure Schedule is a description of all
relationships and transactions with the Company or any Company Subsidiary of the
type required to be disclosed by the Company under the Securities Act or the
Securities Exchange Act pursuant to Items 401(d) and 404 of Regulation S-K
promulgated under the Securities Act and the Securities Exchange Act without
regard to any dollar thresholds therein.
3.28 Fairness Opinion. The Board of Directors of the Company has
received an opinion, dated the date of this Agreement, from Xxxxx Financial,
LLC, that, subject to the terms, conditions and qualifications set forth
therein, the Merger Consideration is fair to the Company's stockholders from a
financial point of view.
3.29 Fees. Other than the financial advisory services performed for the
Company by Xxxxx Financial, LLC, neither the Company, nor any of the Company
Subsidiaries, nor any of their respective officers, directors, employees or
agents, has employed a broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions, or finder's fees, and no
broker or finder has acted directly or indirectly for the Company or any Company
Subsidiary in connection with this Agreement or the transactions contemplated
hereby.
3.30 Controls and Procedures. (a) Each of the principal executive
officer and the principal financial officer of the Company has made all
certifications required under Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act
with respect to Company Reports, and the Company has delivered to Purchaser a
summary of any disclosure made by management to the Company's auditors and audit
committee since January 1, 2002 referred to in such certifications. For purposes
of the preceding sentence, "principal executive officer" and "principal
financial officer" shall have the meanings given to such terms in the
Xxxxxxxx-Xxxxx Act.
(b) The Company has (i) designed and maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act) to
ensure that
- 31 -
material information required to be disclosed by the Company in the reports it
files or submits under the Securities Exchange Act is communicated to its
management by others within those entities as appropriate to allow timely
decisions regarding required disclosure, and (ii) disclosed, based on its most
recent evaluation, to its auditors and the audit committee of its Board of
Directors (A) any significant deficiencies or material weaknesses in the design
or operation of internal control over financial reporting which are reasonably
likely to adversely affect the Company's ability to record, process, summarize
and report financial information and (B) any fraud, whether or not material,
that involves management or other employees who have a significant role in the
Company's internal control over financial reporting. The Company has provided to
Purchaser true and correct copies of any of the foregoing disclosures to the
auditors or audit committee that have been made in writing from January 1, 2004
through the date hereof, and will promptly provide to Purchaser true and correct
copies of any such disclosure that is made after the date hereof.
(c) The Company has designed and maintains a system of internal control
over financial reporting (as defined in Rule 13a-15(f) under the Securities
Exchange Act) sufficient to provide reasonable assurance concerning the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP, including reasonable assurance
(i) that transactions are executed in accordance with management's general or
specific authorizations and recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
accountability, (ii) access to assets is permitted only in accordance with
management's general or specific authorizations, and (iii) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any difference.
(d) No personal loan or other extension of credit by the Company or any
Company Subsidiary to any of its or their executive officers or directors has
been made or modified (other than as permitted by Section 13 of the Exchange Act
and Section 402 of the Xxxxxxxx-Xxxxx Act) since July 31, 2002.
(e) Since December 31, 2004, (i) neither the Company nor any of the
Company Subsidiaries nor, to the best knowledge of the Company, any director,
officer, employee, auditor, accountant or representative of the Company or any
of the Company Subsidiaries has received any written complaint, allegation,
assertion, or claim that the Company or any Company Subsidiary has engaged in
improper or illegal accounting or auditing practices or maintains improper or
inadequate internal accounting controls and (ii) no attorney representing the
Company or any Company Subsidiary, whether or not employed by the Company or any
Company Subsidiary, has reported evidence of a material violation of U.S.
federal or state securities laws, a material breach of fiduciary duty or similar
material violation by the Company, any of the Company Subsidiaries or any of
their respective officers, director, employees or agents to any officer of the
Company, the Board of Directors of the Company or any member or committee
thereof.
- 32 -
IV.
COVENANTS
4.1 Conduct of Business by the Company Until the Effective Time. During
the period commencing on the date hereof and continuing until the Effective
Time, the Company agrees (except as expressly contemplated by this Agreement or
to the extent that Purchaser shall otherwise consent in writing which consent
shall not be unreasonably withheld) that:
(a) Except as contemplated by this Agreement, the Company and each
Company Subsidiary will carry on their respective businesses in, the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted (including ongoing review, testing, maintenance and assessment of
disclosure controls and procedures and internal control over financial
reporting), maintain their respective books in accordance with GAAP, conduct
their respective businesses and operations only in accordance with safe and
sound banking and business practices, and, except as set forth on Schedule
4.1(a) of the Company Disclosure Schedule, use all reasonable efforts to (i)
preserve intact their present business organizations, (ii) generally keep
available the services of their present officers and employees, and (iii)
preserve their relationships with customers, suppliers, agents, brokers and
others having business dealings with them to the end that their respective
goodwill and going businesses shall be unimpaired at the Effective Time.
(b) The Company will, and will cause each Company Subsidiary to, use
their best efforts to comply promptly with all requirements which Federal or
state law may impose on any of them with respect to the Merger and will promptly
cooperate with and furnish information to Purchaser in connection with any such
requirements imposed upon any of them in connection with the Merger.
(c) The Company will, and will cause each Company Subsidiary to, use
their best efforts to obtain (and to cooperate with Purchaser in obtaining) any
consent, authorization or approval of, or any exemption by, any governmental
authority or agency, or other third party, required to be obtained or made by
any of them in connection with the Merger or the taking of any action
contemplated hereby. The Company will not, nor will it permit any of the Company
Subsidiaries to, knowingly or willfully take any action that would adversely
affect the ability of such party to perform its obligations under this
Agreement.
(d) The Company will not declare or pay any cash dividends on or make
other distributions with respect to capital stock, except that until the
Effective Date occurs, the Company will be permitted to declare and pay a
regular quarterly cash dividend not exceeding $0.1625 per share, so long as no
dividend would be payable for that quarter on any Purchaser Common Stock to be
issued as a result of the Merger. The Company shall not make any changes in its
normal practice of declaring dividends or establishing dividend record or
dividend payment dates. It is the intent of this Section 4.1(d) that holders of
Company Common Stock receive regular payment of such cash dividends for any
quarter if declared and paid in accordance with normal past practice, on their
shares of Company Common Stock but only if dividends would not be payable during
that quarter to holders of Purchaser Common Stock received in exchange for
- 33 -
the shares of Company Common Stock. The parties shall cooperate to schedule the
Closing to effectuate the foregoing.
(e) The Company will not, and will not permit any Company Subsidiary
to, sell, lease or otherwise dispose of any assets, except in the ordinary
course of business, which are material, individually or in the aggregate, to the
business or financial condition of the Company on a consolidated basis.
(f) The Company will not, and will not permit any Company Subsidiary
to, acquire by merging or consolidating with, purchasing substantially all of
the assets of or otherwise, any business or any corporation, partnership,
association or other business organization or division thereof.
(g) Except as otherwise contemplated by this Agreement or pursuant to
the exercise of outstanding options, the Company will not, and will not permit
any Company Subsidiary to, or enter into any agreement to, issue, sell, grant,
authorize or propose the issuance or sale of, or purchase or propose the
purchase of, permit the conversion of or otherwise acquire or transfer for any
consideration any shares of their respective capital stocks of any class or
securities convertible into, or rights, warrants or options to acquire, any such
shares or other convertible securities, or to increase or decrease the number of
shares of capital stock by split-up, reclassification, reverse split, stock
dividend, stock split or change in par or stated value. No additional shares of
Company Common Stock shall become subject to new grants of employee stock
options, stock appreciation rights, limited rights, stock grants or similar
stock-based employee compensation rights.
(h) The Company will not, and will not permit any Company Subsidiary
to, create or incur any liabilities, in a single transaction or a series of
related transactions, in excess of $50,000 other than the taking of deposits and
other liabilities incurred in the ordinary course of business or consistent with
past practices, or permit or suffer the imposition on any shares of stock held
by it or by any Company Subsidiary of any material lien, charge or encumbrance.
Notwithstanding the foregoing, in no event will the Company or any Company
Subsidiary incur any liabilities or indebtedness relating to (i) brokered
deposits or internet deposits; (ii) borrowed money other than fixed-rate Federal
Home Loan Bank advances in the ordinary course of business with a term not in
excess of two and one-half (2.5) years. In addition, such advances shall not
have embedded options in their terms that are exercisable by the Federal Home
Loan Bank.
(i) The Company will not, and will not permit any Company Subsidiary
to, (i) grant to any director, officer or employee any increase in compensation
(except in accordance with past practices for those employees who are not
executive or senior management), (ii) make contributions to any Company Benefit
Plan (except in accordance with past practices or the terms of such plans or
agreements as currently in effect as of the date of this Agreement provided that
no contributions shall be made to any Company Qualified Plan that is a defined
benefit plan), or (iii) pay any bonus (except in accordance with past practices
or plans or agreements with respect to employees other than executive or senior
management) or increase any severance or termination pay, or enter into or amend
any employment, special termination, change in
- 34 -
control, retention, covenant not to compete, severance, SERP or other
compensation related agreement with any such person except as contemplated in
this Agreement.
(j) Neither the Company, nor any Company Subsidiary, will enter into,
renew, extend, amend or modify any lease or license with respect to any
property, whether real or personal with a term of more than one (1) year or
payments greater than $50,000.
(k) Except as set forth on Schedule 4.1(k) to the Company Disclosure
Schedule, neither the Company, nor any Company Subsidiary, will enter into or
amend any continuing contract or series of related contracts involving in excess
of $50,000 for the purchase of materials, supplies, equipment or services which
cannot be terminated without cause with less than ninety (90) days' notice and
without payment of any amount as a penalty, bonus, premium or other compensation
for such termination except as contemplated or permitted by this Agreement.
(l) The Company will not, and will not permit any Company Subsidiary
to, adopt or amend in any material respect any collective bargaining, employee
pension, profit-sharing, retirement, employee stock ownership, insurance,
incentive compensation, severance, vacation, stock option, or other plan,
agreement, trust, fund or arrangement for the benefit of employees, except as
contemplated herein.
(m) The Company will, and will cause each Company Subsidiary to, use
their best efforts to maintain their respective properties and assets in their
present states of repair, order and condition, reasonable wear and tear
excepted, and to maintain and keep in full force and effect all policies of
insurance presently in effect, including the insurance of accounts with the
FDIC. The Company will, and will cause each Company Subsidiary to, take all
requisite action (including without limitation the making of claims and the
giving of notices) pursuant to their directors' and officers' liability
insurance policies in order to preserve all rights thereunder with respect to
all matters known by Company which could reasonably give rise to a claim prior
to the Effective Time.
(n) The Company will not, and will not permit any Company Subsidiary
to, amend their respective Certificate of Incorporation, Charters, or By-laws,
except as contemplated by this Agreement.
(o) Except as contemplated on Schedule 4.1(o) to the Company Disclosure
Schedule, the Company will not, and will not permit any Company Subsidiary to,
enter into, renew, modify or increase: (i) any loan secured by lease
receivables, (ii) any loan secured by commercial real estate involving an amount
in excess of $500,000, or any amount which, when aggregated with any and all
loans to the same or related borrowers, would be in excess of $1,000,000 (and in
any event only if such loan has an existing debt service coverage ratio of not
less than 1.20 and a loan to value ratio of not greater than 80%), (iii) any
business loan involving an amount in excess of $100,000, or in any amount which,
when aggregated with any and all loans to the same or related borrowers, would
be in excess of $200,000 (and in any event only if such loan has an existing
debt service coverage ratio of not less than 1.20), (iv) any loan or credit
commitment (including letters of credit) which is secured by property located
outside of the six-county Chicago MSA; and (v) any loan or credit commitment
(including letters of credit) to, or
- 35 -
make any investment or agree to make an investment in, any person or entity or
modify any of the material provisions or renew or otherwise extend the maturity
date of any existing loan, credit commitment or investment: (A) to any person or
entity involving an amount in excess of $500,000 or in any amount which, when
aggregated with any and all loans or credit commitments of the Company and Bank
to such person or entity or related entities, would be in excess of $1,000,000
(and in any event only if such loan has a loan to value ratio of not greater
than 80% unless private mortgage insurance is purchased); (B) to any person
other than in accordance with its lending policies as in effect on the date
hereof; or (C) to any person or entity any of the loans or other extensions of
credit to which, or investments in which, are delinquent, non-performing or on a
"watch list" or similar internal report of the Company or the Bank; provided,
however, that nothing in this subsection shall prohibit the Company or the Bank
from honoring any contractual obligation in existence on the date of this
Agreement.
(p) The Company will not, and will not permit any Company Subsidiary to
(i) make any fixed rate loan, loan commitment or renewal or extension with a
term longer than ten (10) years, except on such terms and in such amounts as are
consistent with past practice and in any event no more than $2 million in
aggregate principal amount on average in any month of fixed rate loans with
terms 30 years or longer unless such loans conform to the FNMA/FHLMC standards,
or (ii) purchase any loan or loan participation except the Bank may purchase up
to $5 million per month of adjustable rate loans or loan participations with
initial fixed rate periods of five (5) years or less that are secured by 1-4
family residences and have loan to value ratios of not greater than 80% unless
private mortgage insurance is purchased. Notwithstanding the foregoing, the Bank
may purchase loan participations from Anchor Bank provided Purchaser or Mid
America approves any such transaction in advance, which approval shall not be
unreasonably withheld. In order to facilitate review of any such proposed
transactions, the Bank shall provide Mid America in advance the agenda and all
materials relating to each loan committee meeting and a senior lending officer
of Mid America shall be permitted to attend each such meeting of the Bank.
(q) The Company will not, and will not permit any Company Subsidiary
to, take any action which would, or fail to take any action contemplated by this
Agreement if such failure would, disqualify the Merger as a tax-free
reorganization under Section 368(a) of the Code.
(r) The Company will not, and will not permit any Company Subsidiary
to, materially restructure or materially change its investment securities
portfolio, through purchases, sales or otherwise, or change the manner in which
the portfolio is classified or reported (in accordance with FAS 115 or
otherwise), or execute individual investment transactions in excess of $50,000,
except that individual investment and mortgage-backed securities purchases will
be limited to $3 million per issue, will be of the two highest investment grade
categories, and no fixed-rate non-mortgage related security should have a final
maturity of more than two (2) years and no fixed-rate mortgage-related security
should have an average life of greater than three (3) years at Bloomberg
consensus prepayment speeds.
(s) Except as required by applicable law or regulation, the Company (i)
will not, and will not permit any Company Subsidiary to, implement or adopt any
material change in its interest rate and other risk management policies,
procedures or practices, and (ii) will, and
- 36 -
will cause each Company Subsidiary to, follow its existing policies and
practices with respect to managing its exposure to interest rate and other risk
and to use commercially reasonable means to avoid any material increase in its
aggregate exposure to interest risk.
(t) The Company will not, and will not permit any Company Subsidiary
to, enter into any new, or modify, amend or extend the terms of any existing,
contracts relating to the purchase or sale of financial or other futures,
derivative or synthetic mortgage product or any put or call option relating to
cash, securities or commodities or any interest rate swap agreements or other
agreements relating to the hedging of interest rate risks.
(u) The Company will not, and will not permit any Company Subsidiary
to, enter into, increase or renew any loan or credit commitment (including
letters of credit) to any executive officer or director of the Company or any
Company Subsidiary, any five percent stockholder of the Company, or any entity
controlled, directly or indirectly, by any of the foregoing or engage in any
transaction with any of the foregoing which is of the type or nature sought to
be regulated in 12 U.S.C. 371c and 12 U.S.C. 371c-1. For purposes of this
Subsection, "control" shall have the meaning associated with that term under 12
U.S.C. 371c.
(v) The Company will promptly advise Purchaser orally and in writing of
any event or series of events which has a Company Material Adverse Effect.
(w) Notwithstanding any of the foregoing, at or immediately prior to
the Effective Time, if and as so requested by Purchaser, the Company and the
Bank (i) shall cause any outstanding inter-company debt to be repaid, and (ii)
cause dividends to be paid to the Company in such amounts as specified by
Purchaser, subject to any regulatory notice or approval requirement.
(x) Neither the Company, nor any Company Subsidiary, will enter into
any contract or agreement to buy, sell, exchange or otherwise deal in any
tangible assets in a single transaction or a series of related transactions in
excess of $50,000 in aggregate value.
(y) Neither the Company, nor any Company Subsidiary, will make any one
capital expenditure or any series of related capital expenditures (other than
emergency repairs and replacements), the amount or aggregate amount of which (as
the case may be) is in excess of $50,000; provided, further, any computer or
network equipment acquired by the Company or the Bank shall satisfy certain
standards and specifications acceptable to Purchaser.
(z) Neither the Company, nor any Company Subsidiary, will file any
application to relocate operations from existing locations.
(aa) Neither the Company, nor any Company Subsidiary, will create or
incur or suffer to exist any mortgage, lien, pledge, or security interest,
against or in respect of any property or right of the Company or any Company
Subsidiary securing any obligation in excess of $50,000, except for any pledge
or security interests given in connection with the acceptance of repurchase
agreements or government deposits or if in the ordinary course of business
consistent with past practice.
- 37 -
(bb) Neither the Company, nor any Company Subsidiary, will discharge or
satisfy any mortgage, lien, charge or encumbrance other than as a result of the
payment of liabilities in accordance with the terms thereof, or except in the
ordinary course of business, if the cost to the Company or any Company
Subsidiary to discharge or satisfy any such mortgage, lien, charge or
encumbrance is in excess of $50,000, unless such discharge or satisfaction is
covered by general or specific reserves.
(cc) Neither the Company, nor any Company Subsidiary, will 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 $50,000.
(dd) Neither the Company, nor any Company Subsidiary, will change in
any material respect any basic policies and practices with respect to liquidity
management and cash flow planning, marketing, deposit origination, lending,
budgeting, profit and tax planning, personnel practices, accounting or any other
material aspect of its business or operations, except for such changes as may be
appropriate in the opinion of the Chief Executive Officer of the Company or Bank
or other appropriate senior management of the Company or the Bank, as the case
may be, in each case to respond to then current business, market or economic
conditions or as may be required by the rules of the AICPA or the FASB or by
Governmental Authorities or by law.
(ee) Neither the Company, nor any Company Subsidiary, will knowingly or
intentionally default under the terms of any agreement to which the Company or
any Company Subsidiary is party.
4.2 Conduct of Business by Purchaser Until the Effective Time. During
the period commencing on the date hereof and continuing until the Effective
Time, Purchaser agrees (except as expressly contemplated by this Agreement or to
the extent that the Company shall otherwise consent in writing, which consent
shall not be unreasonably withheld) that:
(a) Except as contemplated by this Agreement, Purchaser and the
Purchaser Subsidiaries will carry on their respective businesses in
substantially the same manner as heretofore conducted, maintain their respective
books in accordance with GAAP, conduct their respective businesses and
operations only in accordance with safe and sound banking and business
practices, and, to the extent consistent with such businesses, use all
reasonable efforts to preserve intact their present business organizations, to
generally keep available the services of their present officers and employees
and to preserve their relationships with customers, suppliers and others having
business dealings with them to the end that their respective goodwill and going
businesses shall be unimpaired at the Effective Time.
(b) Purchaser will not, nor will it permit any of the Purchaser
Subsidiaries to, knowingly or willfully take any action that would adversely
affect their ability to perform their obligations under this Agreement.
(c) Purchaser will file all documents required to be filed to have the
shares of Purchaser Common Stock to be issued pursuant to this Agreement
included for quotation on
- 38 -
Nasdaq (or such other national securities exchange on which the shares of
Purchaser Common Stock shall be listed as of the date of the closing of the
Merger).
(d) Prior to the Effective Time, Purchaser shall take all such steps as
may be required to cause any acquisitions of Purchaser Common Stock resulting
from the transactions contemplated by this Agreement by each individual who is
subject to the reporting requirements of Section 16(a) of the Exchange Act with
respect to Purchaser to be exempt under Rule 16b-3 promulgated under the
Exchange Act. Company agrees to promptly furnish Purchaser with all requisite
information necessary for Purchaser to take the actions contemplated by this
Section 4.2(d).
4.3 Certain Actions. (a) None of the Company or any Company 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 the Company or any
Company Subsidiary, or (ii) shall enter into any agreement, arrangement, or
understanding (whether written or oral), regarding any Acquisition Transaction
providing for or requiring it to abandon, terminate or fail to consummate this
Agreement, or compensating it or any Company Subsidiary under any of the
instances described in this clause. The Company shall immediately instruct and
otherwise use its best efforts to cause its agents, advisors (including, without
limitation, any investment banker, attorney or accountant retained by the
Company or any Company Subsidiary), consultants and other representatives to
comply with such prohibitions. The Company 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, upon receipt of a bona fide, written proposal or offer
unsolicited after the date hereof made by any Person or group (other than
Purchaser or any of its affiliates) with respect to an Acquisition Transaction
that the Board of Directors of the Company determines, in good faith, could
result in a Superior Proposal (as defined below), the Company may provide
information at the request of, or enter into negotiations with a third party
with respect to such Acquisition Transaction, and provided, further, that the
Company shall provide to Purchaser concurrently any information it provides to
such third party which it has not previously provided to Purchaser. The Company
shall promptly notify Purchaser 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.
(b) "Acquisition Transaction" shall, with respect to the Company, mean
any of the following: (i) a merger or consolidation, or any similar transaction
(other than the Merger) of any company with either the Company or any
significant subsidiary (as defined in Rule 1.2 of Regulation S-X of the SEC) (a
"Significant Subsidiary") of the Company; (ii) a purchase, lease or other
acquisition of all or substantially all the assets of either the Company or any
Significant Subsidiary of the Company; (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 cause such person or
group to become the beneficial owner of securities representing 15% or more of
the voting power of either the Company or any Significant Subsidiary of the
Company; (iv) a tender or exchange offer to acquire securities representing 15%
or more of the
- 39 -
voting power of the Company; (v) a public proxy or consent solicitation made to
stockholders of the Company seeking proxies in opposition to any proposal
relating to any of the transactions contemplated by this Agreement that has been
recommended by the Board of Directors of the Company; (vi) the filing of an
application or notice with the IDFRP, OTS or any other Federal or state
regulatory authority seeking approval to engage in one or more of the
transactions referenced in clauses (i) through (iv) above; or (vii) the making
of a bona fide proposal to the Company 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.
V.
ADDITIONAL AGREEMENTS
5.1 Inspection of Records; Confidentiality. (a) The Company shall
afford to Purchaser and Purchaser's accountants, counsel and other
representatives, upon reasonable notice, such reasonable access as Purchaser may
request, during normal business hours during the period prior to the Effective
Time, to all of its properties, books, contracts, commitments and records,
including all attorneys' responses to auditors' requests for information and
accountants' work papers, developed by the Company or any Company Subsidiary or
their accountants or attorneys, and will permit the Company's representatives to
discuss such information directly with Purchaser's officers, directors,
employees, attorneys and accountants.
(b) In the event that this Agreement is terminated, each party shall
upon request of the other party return all nonpublic documents furnished to it
hereunder or destroy all documents or portions thereof that contain nonpublic
information furnished by the other party pursuant hereto and, in any event,
shall hold all nonpublic information received pursuant hereto in the same degree
of confidence with which it maintains its own like information unless or until
such information is or becomes a matter of public knowledge or is or becomes
known to the party receiving the information through persons other than the
party providing such information.
5.2 Meetings of the Company. The Company shall provide to Purchaser the
agenda for or a summary of the business proposed to be discussed at: (i) all
meetings of the Boards of Directors of the Company and each Company Subsidiary,
and (ii) all meetings of the committees of each such Board of Directors,
including without limitation the audit, executive and loan committees thereof.
The Company shall give reasonable notice to Purchaser of any such meeting;
provided, however, no Purchaser representative shall be entitled to attend any
board meetings or committee meetings other than loan committee meetings as
described in Section 4.1(p). The Company shall provide to Purchaser all
information provided to the directors on all such Boards of Directors and
committees in connection with all such meetings of directors, when the same are
provided to such directors, including minutes of prior meetings, financial
reports and any other analyses prepared by senior management of the Company. All
such information provided to Purchaser shall be treated in confidence as
provided in Section 5.1(b) hereof. Notwithstanding the foregoing, the Company
shall not be required to permit Purchaser (or its representatives) to review
material or attend any portion of a meeting containing any confidential
discussion of this Agreement and the transactions contemplated
- 40 -
hereby or any other matter where the Company's Board of Directors has reasonably
determined such review would result in a violation of Delaware law.
5.3 Bank Merger. The Company and Purchaser intend to take all action
necessary and appropriate to cause to be entered into the Bank Merger Agreement,
substantially on the terms and in the form attached hereto as Exhibit C (the
"Bank Merger Agreement") pursuant to which Mid America and the Bank shall merge
simultaneously with or, if such Bank Merger cannot be effected simultaneously,
immediately after the consummation of the Merger.
5.4 D&O Indemnification. (a) Purchaser hereby agrees to cause to be
maintained in effect for six (6) years after the Effective Time "tail coverage"
under the Company's and the Company Subsidiary's current policy of officers' and
directors' liability insurance with respect to actions and omissions occurring
on or prior to the Effective Date; provided, however, that Purchaser may
substitute therefor policies of at least the same coverage amounts containing
terms and conditions which are no less advantageous to the covered persons
provided that such substitution shall not result in any lapses in coverage with
respect to matters occurring on or prior to the Effective Time; provided,
further, that Purchaser shall not be required to pay a premium amount in excess
of the maximum amount disclosed on Schedule 5.4(a) to the Purchaser Disclosure
Schedule and if Purchaser is unable to obtain the insurance, Purchaser shall
obtain as much comparable insurance as possible for a premium equal to such
maximum amount. Schedule 5.4(a) to the Company Disclosure Schedule sets forth a
copy of the Company's current D&O Insurance Policy, the current premium amount
paid by the Company to obtain such insurance and the period of coverage to which
such premium payment relates.
(b) From and after the Effective Time through the sixth anniversary of
the Effective Time, Purchaser and Mid America (each an "Indemnifying Party" and
together the "Indemnifying Parties") jointly and severally agree to indemnify
and hold harmless each person who is now or has been at any time prior to the
date hereof or who becomes prior to the Effective Time, a director, officer,
employee or agent of the Company or a Company Subsidiary, or trustee of any
benefit plan of the Company or any Company Subsidiary, except for unaffiliated
corporate trustees (the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters involving the Company, and/or any Company
Subsidiary existing or occurring at or prior to the Effective Time, including in
connection with the transaction contemplated by this Agreement, whether asserted
or claimed prior to, at or through the sixth anniversary of the Effective Time,
to the fullest extent to which the Company or the applicable Company Subsidiary
is permitted or required by law or their respective Certificate of Incorporation
(or other chartering document) and By-laws to indemnify such Indemnified Parties
and in the manner to which it could indemnify such parties under the Certificate
of Incorporation (or other chartering document) and By-laws of such entity, in
each case as in effect on the date hereof, or under applicable law.
(c) Any Indemnified Party wishing to claim indemnification under
Section 5.4(b), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the appropriate Indemnifying Party thereof.
In the event of any such claim, action, suit, proceeding or investigation, (i)
the Indemnifying Party shall have the right to
- 41 -
promptly and timely assume the defense thereof with counsel reasonably
acceptable to such Indemnified Party and the Indemnifying Party shall not be
liable to such Indemnified Party for any legal expenses of other counsel or any
other expenses subsequently incurred by such Indemnified Parties in connection
with the defense thereof, except that if the Indemnifying Party elects not to,
or fails to promptly and timely assume such defense, or to appropriately defend
such claim once assumed (except with respect to any settlement contemplated
below), the Indemnified Parties may retain counsel which is reasonably
satisfactory to Purchaser to handle such defense and the Indemnifying Party
shall pay the reasonable fees and expenses to all such counsel for an
Indemnified Party (which may not exceed one firm in any jurisdiction for an
Indemnified Party), and notwithstanding any assumption of such defense by the
Indemnifying Party, an Indemnified Party may retain counsel of its own choosing
to monitor such defense (with the Indemnified Party assuming any and all
expenses as a result of hiring such counsel); (ii) the Indemnified Parties will
cooperate in the defense of any such matter; (iii) the Indemnifying Party shall
not be liable for any settlement effected without its prior written consent and
(iv) the Indemnifying Party shall not make any settlement of any such claim
without prior written consent of an Indemnified Party.
5.5 Affiliate Letters. The Company shall obtain and deliver to
Purchaser on the date hereof a signed representation letter as to certain
restrictions on resale substantially in the form of Exhibit D hereto from each
executive officer and director of the Company and each stockholder of the
Company who may reasonably be deemed an "affiliate" of the Company within the
meaning of such term as used in Rule 145 under the Securities Act, and shall use
best efforts to obtain and deliver to Purchaser a signed representation letter
substantially in the form of Exhibit D from any person who becomes an executive
officer or director of the Company or any stockholder who becomes such an
"affiliate" after the date hereof as promptly as practicable after (and shall
use its reasonable best efforts to obtain and deliver within five (5) business
days after) such person achieves such status. The letter described in this
Section 5.5 shall include certain provisions pursuant to which such individuals
will agree to vote in favor of adopting this Agreement and the Merger.
5.6 Regulatory Applications. Purchaser shall, as soon as practicable,
file applications or notices with the applicable Governmental Authorities, and
shall use its commercially reasonable efforts to respond as promptly as
practicable to all inquiries received concerning said applications; provided,
however, that Purchaser shall have no obligation to accept nonstandard
conditions or restrictions with respect to the aforesaid approvals of
Governmental Authorities if it shall reasonably determine that such conditions
or restrictions would have a Purchaser Material Adverse Effect or would be
materially burdensome to Purchaser and the Purchaser Subsidiaries taken as a
whole. In the event of an adverse or unfavorable determination by any
Governmental Authority with respect to the requisite approvals of the
transactions contemplated by this Agreement, or in the event the Merger is
challenged or opposed by any administrative or legal proceeding, whether by the
United States Department of Justice or otherwise, the determination of whether
and to what extent to seek appeal or review, administrative or otherwise, or
other appropriate remedies shall be made by Purchaser after consultation with
the Company. At least two (2) business days prior to filing, Purchaser shall
deliver a draft of the nonconfidential portions of all regulatory applications
to the Company to enable the Company to have the ability to promptly comment on
such applications prior to filing them. Purchaser shall deliver to the Company
copies of the nonconfidential portions of all responses from or written
communications
- 42 -
from regulatory authorities relating to the Merger or this Agreement, and
Purchaser shall deliver a final copy of the nonconfidential portions of all
regulatory applications to the Company promptly after they are filed with the
appropriate regulatory authority.
5.7 Financial Statements and Reports. From the date of this Agreement
and to the Effective Time: (a) each party will deliver to the other, not later
than ninety days after the end of any fiscal year, its Annual Report on Form
10-K (and all schedules and exhibits thereto) for the fiscal period then ended
as filed with the SEC, which shall be prepared, in all material respects, in
conformity with GAAP and the rules and regulations of the SEC; (b) the Company
will deliver to Purchaser not later than thirty days after the end of any fiscal
quarter, the quarterly reports filed with the FDIC and IDFPR by the Company or
the Bank which shall be prepared, in all material respects, in accordance with
the rules and regulations of the FDIC; (c) each party will deliver to the other
not later than forty-five days after the end of each of its first three (3)
fiscal quarters, its report on Form 10-Q for such quarter as filed with the SEC
which shall be prepared in conformity with GAAP and the rules and regulations of
the SEC; (d) the Company will deliver to Purchaser any and all other material
reports filed with the SEC, the FDIC, the IDFPR or any other regulatory agency
within five (5) business days of the filing of any such report; and (e) the
Company will deliver to Purchaser monthly financial statements which shall
include a summary of the investment securities acquired in the ordinary course
of business.
5.8 Registration Statement; Stockholder Approval. As soon as reasonably
practicable after the date hereof, Purchaser shall prepare and file with the SEC
a Registration Statement on Form S-4 covering the Purchaser Common Stock to be
issued to holders of Company Common Stock in the Merger, which Registration
Statement shall include the Proxy Statement for use in soliciting proxies for
the special meeting of stockholders (the "Stockholders' Meeting") to be held by
the Company for purposes of considering this Agreement, and Purchaser and the
Company shall use their reasonable best efforts to cause the Registration
Statement to become effective under the Securities Act. Purchaser will take any
reasonable action required to be taken, if any, under the applicable blue sky or
securities laws in connection with the issuance of the shares of Purchaser
Common Stock in the Merger. Each party shall furnish all information concerning
it and the holders of its capital stock as the other party may reasonably
request in connection with the preparation and filing of the Registration
Statement and Proxy Statement and related actions. The Company shall call the
Stockholders' Meeting to be held as soon as reasonably practicable after the
effective date of the Registration Statement for the purpose of voting upon this
Agreement and the Merger. In connection with the Stockholders' Meeting, (a)
Purchaser and the Company shall jointly prepare the Proxy Statement as part of
the Registration Statement, and the Company shall mail the Proxy Statement to
its stockholders, on a date mutually acceptable to the parties hereto (the
"Mailing Date"); (b) the Board of Directors of the Company shall, subject to the
exercise of its fiduciary duties, unanimously recommend to its stockholders the
adoption of this Agreement, and (c) the Board of Directors of the Company shall
otherwise use its best efforts to the extent consistent with its fiduciary duty
to obtain such stockholder approval.
5.9 Notice. At all times prior to the Effective Time, each party shall
give prompt notice to the other of the occurrence or its knowledge of any event
or condition that would cause any of its representations or warranties set forth
in this Agreement not to be true and correct in all material respects as of the
date of this Agreement or as of the Effective Time, or any of its
- 43 -
obligations set forth in this Agreement required to be performed at or prior to
the Effective Time not to be performed in all material respects at or prior to
the Effective Time, including without limitation, any event, condition, change
or occurrence which individually, or in the aggregate with any other events,
conditions or changes that have occurred after the date hereof, so far as
reasonably can be foreseen at the time of the occurrence, or thereafter, is
reasonably likely to have a Company Material Adverse Effect or a Purchaser
Material Adverse Effect, as the case may be. After receipt of any such notice
disclosing a material breach, the nondisclosing party may, within five (5)
business days thereof, notify the disclosing party of its intent to terminate
this Agreement pursuant to Section 7.1(d); provided, however, that the
disclosing party shall have the right to cure such breach within thirty (30)
days thereof but no later than the Effective Time. In the event the
nondisclosing party fails to notify the disclosing party of its intent to
terminate within five (5) business days after receipt of any notice hereunder,
the nondisclosing party shall be deemed to have waived its right of termination
as to any such breach arising out of or with respect to the events, conditions,
change or occurrence described in such notice; provided, however, that any
particular breach that is deemed to have been waived by the nondisclosing party
may thereafter be considered by the nondisclosing party in determining the
aggregate contribution of all events, conditions, changes and occurrences
described by the disclosing party pursuant to this Section 5.9 toward the
occurrence of a material breach by the disclosing party.
5.10 Press Releases. Purchaser and the Company shall coordinate all
publicity relating to the transactions contemplated by this Agreement and,
except as otherwise required by law, or with respect to employee meetings,
neither party shall issue any press release, publicity statement or other public
notice relating to this Agreement or any of the transactions contemplated hereby
without obtaining the prior consent of the other, which consent shall not be
unreasonably withheld. The Company shall obtain the prior consent of Purchaser
to the content of any communication to its stockholders which consent shall not
be unreasonably withheld or delayed.
5.11 Delivery of Supplements to Disclosure Schedules. Five (5) business
days prior to the Effective Time, the Company will supplement or amend the
Company Disclosure Schedule with respect to any matter hereafter arising which,
if existing or occurring at or prior to the date of this Agreement, would have
been required to be set forth or described in such Disclosure Schedule or which
is necessary to correct any information in the Company Disclosure Schedule or in
any representation and warranty made by the disclosing party which has been
rendered inaccurate thereby. For purposes of determining the accuracy of the
representations and warranties of the Company contained in Article III hereof
and in order to determine the fulfillment of the conditions set forth in Article
VI hereof as of the Effective Time, the Company Disclosure Schedule shall be
deemed to include only the information contained therein on the date hereof and
any information previously disclosed by the Company pursuant to Section 5.9 as
to which Purchaser is deemed to have waived its right of termination; provided,
however, that delivery of such supplements containing information which causes
any representation or warranty of the Company to be false or materially
misleading will not cure any breach hereunder of such representations or
warranties.
5.12 Tax Opinion. Purchaser shall obtain a written opinion ("Tax
Opinion") of Vedder, Price, Xxxxxxx & Kammholz, P.C. addressed to Purchaser,
dated the Closing Date,
- 44 -
subject to customary representations to be made by Purchaser and the Company
relating to the Merger and the Bank Merger and assumptions referred to therein,
and substantially to the effect that (a) the Merger will constitute a tax-free
reorganization within the meaning of Section 368(a) of the Code and Purchaser
and the Company will each be a party to such reorganization; (b) the exchange in
the Merger of Purchaser Common Stock and cash for Company Common Stock will not
give rise to the recognition of any income, gain or loss to Purchaser, the
Company, or the stockholders of the Company with respect to such exchange
except, with respect to the stockholders of the Company, to the extent of any
Cash Consideration received in the Merger and any cash received in lieu of
fractional shares; (c) the adjusted tax basis of the Purchaser Common Stock
received by Company stockholders in the Merger will equal the adjusted tax basis
of the Company Common Stock exchanged therefor decreased by the amount of money
received in the exchange and increased by the amount of gain recognized in the
exchange; (d) the holding period of the Purchaser Common Stock received in the
Merger will include the period during which the shares of Company Common Stock
surrendered in exchange therefor were held, provided such shares of Company
Common Stock were held as a capital asset at the Effective Time; (e) the
adjusted tax basis of the assets of the Company in the hands of Purchaser will
be the same as the adjusted tax basis of such assets in the hands of the Company
immediately prior to the exchange; and (f) the holding period of the assets of
the Company transferred to Purchaser will include the period during which such
assets were held by the Company prior to the exchange.
5.13 Tax Treatment. Neither the Company, the Company Subsidiaries,
Purchaser, the Purchaser Subsidiaries, nor any of their affiliates, shall
voluntarily take any action which would cause the Merger to fail to qualify as a
tax-free reorganization under Section 368(a) of the Code. In addition, Purchaser
and the Company agree to take any and all necessary or advisable steps to
restructure or modify the terms of the transaction contemplated hereby, if such
steps are necessary or advisable to qualify the transaction contemplated hereby
as a tax-free reorganization under Section 368(a) of the Code; provided,
however, nothing contained in this Section 5.13 shall be deemed to require
Purchaser to take any steps which will alter the Merger Consideration provided
for in Section 1.5.
5.14 Resolution of Company Benefit Plans. The Company and Purchaser
shall cooperate in effecting the following treatment of the Company Benefit
Plans, except as mutually agreed upon by Purchaser and the Company prior to the
Effective Time:
(a) At the Effective Time, Purchaser (or a Purchaser Subsidiary) shall
be substituted for the Company as the sponsoring employer under those Company
Benefit Plans with respect to which the Company or the Bank is a sponsoring
employer immediately prior to the Effective Time, and shall assume and be vested
with all of the powers, rights, duties, obligations and liabilities previously
vested in the Company or the Bank with respect to each such plan. Except as
otherwise provided herein, each such plan and any Company Benefit Plan sponsored
by the Company or the Bank shall be continued in effect by Purchaser or any
applicable Purchaser Subsidiary after the Effective Time without a termination
or discontinuance thereof as a result of the Merger, subject to the power
reserved to Purchaser or any applicable Purchaser Subsidiary under each such
plan to subsequently amend or terminate the plan, which amendments or
terminations shall comply with applicable law. The Company, the Bank and
Purchaser will use all reasonable efforts (i) to effect said substitutions and
assumptions, and take
- 45 -
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) Except as contemplated in any Letter of Understanding discussed
below, at or as promptly as practicable after the Effective Time, as Purchaser
shall reasonably determine, Purchaser shall provide, or cause any Purchaser
Subsidiary to provide, to each employee of the Company and the Bank as of the
Effective Time ("Company Employees") the opportunity to participate in each
employee benefit plan and program maintained by Purchaser or the Purchaser
Subsidiaries for similarly situated employees (the "Purchaser Benefit Plans");
provided, however, that with respect to such Purchaser Benefit Plans, Company
Employees shall be given credit for service with the Company or the Bank in
determining eligibility for and vesting in benefits thereunder, but not for
purposes of benefit accrual; provided, further that Company Employees shall not
be subject to any waiting periods or pre-existing condition exclusions under the
Purchaser Benefit Plans to the extent that such periods are longer or
restrictions impose a greater limitation than the periods or limitations imposed
under the Company Benefit Plans; provided, further, that to the extent that the
initial period of coverage for Company Employees under any Purchaser Benefit
Plan that is an "employee welfare benefit plan" as defined in Section 3(1) of
ERISA is not a full 12-month period of coverage, Company Employees shall be
given credit under the applicable Purchaser Benefit Plans for any deductibles
and co-insurance payments made by such Company Employees under the Company
Benefit Plans during the balance of such 12-month period of coverage. Nothing in
the preceding sentence shall obligate Purchaser to provide or cause to be
provided any benefits duplicative of those provided under any Company Benefit
Plan continued pursuant to subparagraph (a) above, including, but not limited
to, extending participation in any Purchaser Benefit Plan which is an "employee
pension benefit plan" under ERISA with respect to any year during which
allocations are made to Company Employees under the Company ESOP or the Company
401(k) Plan. Except as otherwise provided in this Agreement, the power of
Purchaser or any Purchaser Subsidiary to amend or terminate any benefit plan or
program, including any Company Benefit Plan, shall not be altered or affected.
Moreover, this Agreement shall not confer upon any Company Employee any rights
or remedies hereunder and shall not constitute a contract of employment or
create the rights, to be retained or otherwise, in employment with Purchaser or
any Purchaser Subsidiary.
(c) Concurrently with or immediately after the execution of this
Agreement, the Company shall use its best efforts to obtain from each officer of
the Company who is a party to an employment agreement, change in control
agreement, supplemental executive retirement agreement or plan with the Company
or the Bank a Letter of Understanding with the Company and the Bank
substantially in the form heretofore provided (the "Letters of Understanding"),
addressing certain matters pertaining to such executive's employment agreement,
change in control agreement, supplemental executive retirement agreement or plan
and benefits payable thereunder, and where applicable, such executive's
employment after the Effective Time.
(d) Notwithstanding anything in this Agreement to the contrary, all
retention, severance, covenant not to compete, termination payments,
acceleration of benefit vesting, and other compensation paid by the Company or
the Bank, or as provided for in this Agreement, any Letter of Understanding, any
Company Benefit Plan or otherwise, including, but not limited to,
- 46 -
any Change in Control Benefit, shall not violate any prohibitions which are
imposed by any Governmental Authorities, or which any Governmental Authorities
otherwise deem to constitute unsafe and unsound banking practices or
unreasonable compensation giving effect to any obligations of Purchaser or the
Purchaser Subsidiary as provided herein or in any Letter of Understanding.
(e) At the Effective Time, the ESOP shall have been amended to provide
that no further contributions shall be made thereto, all accounts thereunder
shall be fully vested and nonforfeitable and the Purchaser Common Stock issued
upon the conversion of the Company Common Stock in the Merger shall become the
qualifying employee security for purposes of the ESOP. On or as soon as is
reasonably practicable after the Effective Time, the loan balance in the ESOP
shall be paid in full by the ESOP (from the cash portion of the Merger
Consideration relating to the unallocated ESOP shares, to the extent thereof,
and thereafter from the stock portion of the Merger Consideration relating to
the unallocated ESOP shares) and any remaining unallocated amounts shall be
allocated as of the Effective Time to participants pro rata as earnings of the
ESOP, based on the balances of participants' accounts immediately prior to such
allocation. Purchaser shall cause the ESOP to be merged into Purchaser's
employee stock ownership plan in compliance with Section 414(l) of the Code.
(f) Prior to the Effective Time, the Company shall terminate its
Employee Severance Compensation Plan as set forth in the letter agreement of
even date herewith between Purchaser and the Company.
(g) Purchaser and the Company agree to take certain other actions with
respect to the Company Benefit Plans as set forth in the letter agreement of
even date herewith between Purchaser and the Company.
(h) At the Effective Time, each outstanding and unexercised Company
Stock Option with respect to which the holder thereof has timely delivered a
Conversion Agreement pursuant to Section 1.3(a)(i) hereof shall be assumed by
Purchaser as provided in the Conversion Agreement.
(i) Purchaser shall take all corporate action necessary to reserve for
issuance at all times after the Effective Time a sufficient number of shares of
Purchaser Common Stock for delivery upon exercise of Company Stock Options
assumed by Purchaser in accordance with Section 1.3(a)(i). Immediately following
the Effective Time, Purchaser shall file a registration statement on Form S-8
(or any successor or other appropriate form) with respect to the shares of
Purchaser Common Stock subject to such options and shall use its best efforts to
maintain the effectiveness of the registration statement (and maintain the
current status of the prospectus contained therein) for so long as such options
remain outstanding.
5.15 Appointment to Purchaser Board of Directors. Purchaser shall, as
of the Effective Time, cause Xxx Xxxxxxxx to be appointed: (i) to the Board of
Directors of the Surviving Corporation and (ii) the Board of Directors of Mid
America; provided, however, that Xx. Xxxxxxxx shall qualify as an independent
director of Purchaser under applicable Nasdaq rules.
- 47 -
5.16 Advisory Board. Purchaser shall cause Mid America to create an
advisory board (the "Advisory Board") to (a) assist in and advise with respect
to integration of the operations of the Bank with and into those of Mid America,
and (b) advise with respect to the operations of Mid America. Other than the
director identified in Section 5.15 above, Mid America will invite all current
members of the Board of Directors of the Company who are members of such Board
of Directors as of the Effective Time to serve on the Advisory Board, each of
whom shall be entitled to receive per meeting fees (without reimbursement for
travel expenses) equal to the per meeting fee currently paid by Mid America to
each of its directors, which amount is set forth on Schedule 5.16 to the
Purchaser Disclosure Schedule; provided, that the Advisory Board shall meet at
least quarterly, and may meet more frequently at the request of Purchaser. The
Board of Directors of Purchaser shall review the Advisory Board function
annually to consider its continuation.
5.17 Environmental Investigation. (a) Purchaser may engage a mutually
acceptable environmental consultant to conduct a preliminary ("Phase I")
environmental assessment of each of the parcels of owned real estate used in the
operation of the businesses of the Company, the Bank or any Company Subsidiary
or Tax Subsidiary and any other real estate owned by the Company, the Bank or
any Company Subsidiary or Tax Subsidiary. The fees and expenses of the
consultant with respect to the Phase I assessments shall be paid by Purchaser or
Mid America. The Company shall fully cooperate with Purchaser to provide the
consultant reasonable access to the premises under assessment. The consultant
shall complete and deliver the Phase I assessments not later than sixty (60)
days after the date of this Agreement. If any 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 the Company set forth
herein, without regard to any knowledge qualifiers or exceptions that may be
contained in the Company 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 mutually determine 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
Purchaser), all work plans for any post-Phase I assessments or remediation and
any removal or remediation actions that may be performed shall be satisfactory
to Purchaser subject to the consent of the Company (such consent not to be
unreasonably withheld). The Company shall act promptly to complete, at its cost,
all work plans for any post-Phase I assessments or remediation and any removal
or remediation actions. If the work plans or removal or remediation actions cost
more than $500,000 (individually or in the aggregate) to complete, Purchaser and
the Company agree that the cost of the work plans, removal and remediation
actions shall be deducted from the cash portion of the aggregate Merger
Consideration due under the Agreement and each component of the Merger
Consideration, and the Cash Conversion Number and Stock Conversion Number, shall
be adjusted proportionately.
- 48 -
5.18 Title to Real Estate. As soon as practical after the date hereof,
but in any event no later than thirty (30) days after the date hereof, the
Company, at its own expense, shall obtain and deliver to Purchaser, with respect
to all real estate owned or held pursuant to a ground lease by the Company, or
any Company Subsidiary or Tax Subsidiary, either (i) an owner's preliminary
report of title covering a date subsequent to the date hereof, issued by Chicago
Title Insurance Company or such other title insurance company accepted by
Purchaser (such acceptance not to be unreasonably withheld), showing fee simple
title in the Company or such Company Subsidiary or Tax Subsidiary, in such real
estate or the appropriate leasehold interest of the Company or such Company
Subsidiary or Tax Subsidiary, subject only to (A) the standard exceptions to
title customarily contained in a policy on ALTA 1970 Owner's Form B; (B) liens
of current state and local property taxes which are not delinquent or subject to
penalty; and (C) liens and encumbrances as disclosed on Schedule 3.25(a) to the
Company Disclosure Schedule, and restrictions and conditions of record that do
not materially adversely affect the value or use of such real estate, or (ii) a
commitment by the title insurance company currently insuring Company or Company
Subsidiary's or Tax Subsidiary's title to the real estate owned or held pursuant
to a ground lease to provide an endorsement to the current title policies
changing the name of the insured to Purchaser at Closing; provided, however, (a)
such commitments and title policies are subject only to the matters set forth in
this Section 5.18; and (b) the effective date of such endorsement shall be
subsequent to or contemporaneous with the Effective Time.
5.19 Cooperation. Subject to applicable law and regulation and after
receipt of stockholder approval and all required regulatory approvals, the
Company and the Company Subsidiaries shall at such times as are reasonably
requested by Purchaser prior to Closing (i) consult and cooperate with Purchaser
with respect to conforming the loan, classification, accrual and reserve
policies of the Company and the Company Subsidiaries to those policies of
Purchaser and the Purchaser Subsidiaries, and (ii) establish and take such
accruals, reserves and changes to conform the loan, accrual and reserves
policies of the Company and the Company Subsidiaries to the differing policies
of Purchaser and the Purchaser Subsidiaries and to implement the same; provided,
however, that the Company and the Company Subsidiaries shall not be required to
take any such action that is not consistent with GAAP.
5.20 Disclosure Controls. (a) Between the date of this Agreement and
the Effective Time, the Company shall maintain disclosure controls and
procedures that are effective to ensure that material information relating to
the Company and the Company Subsidiaries is made known to the President and
Chief Executive Officer and Chief Financial Officer of the Company to permit the
Company to record, process, summarize and report financial data in a timely and
accurate manner; (ii) such officers shall promptly disclose to the Company's
auditors and audit committee any significant deficiencies in the design or
operation of internal controls which could adversely affect the Company's
ability to record, process, summarize and report financial data, any material
weaknesses identified in internal controls, and any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company's internal controls; and (iii) the Company shall take
appropriate corrective actions to address any such significant deficiencies or
material weaknesses identified in the internal controls.
(b) Between the date of this Agreement and the Effective Time, Company
shall, upon reasonable notice during normal business hours, permit Purchaser (a)
to meet with the officers of the Company and any Company Subsidiary responsible
for the financial
- 49 -
statements of the Company and each Company Subsidiary and the internal control
over financial reporting of the Company and each Company Subsidiary to discuss
such matters as Purchaser may deem reasonably necessary or appropriate
concerning Purchaser's obligations under Sections 302 and 906 of the
Xxxxxxxx-Xxxxx Act; and (b) to meet with officers of the Company and the Company
Subsidiaries to discuss the integration of appropriate disclosure controls and
procedures and internal control over financial reporting relating to the
Company's and each Company Subsidiary's operations with the controls and
procedures and internal control over financial reporting of Purchaser for
purposes of assisting Purchaser in compliance with the applicable provisions of
the Xxxxxxxx-Xxxxx Act following the Effective Time. The Company shall, and
shall cause its and each Company Subsidiary's respective employees and
accountants to, fully cooperate with Purchaser in the preparation,
documentation, review, testing and all other actions Purchaser deems reasonably
necessary to satisfy the internal control certification requirements of Section
404 of the Xxxxxxxx-Xxxxx Act.
VI.
CONDITIONS
6.1 Conditions to the Obligations of the Parties. Notwithstanding any
other provision of this Agreement, the obligations of Purchaser on the one hand,
and the Company 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 which prevents the consummation of the Merger or the Bank
Merger shall have been issued and shall remain in effect.
(b) This Agreement shall have been duly adopted by the requisite vote
of the stockholders of the Company at the Stockholders' Meeting.
(c) Purchaser shall have received approvals of the Governmental
Authorities to acquire the Company and to consummate the transactions
contemplated hereby and all required waiting periods relating thereto shall have
expired.
(d) The Registration Statement shall have been declared effective under
the Securities Act and no stop orders shall be in effect and no proceedings for
such purpose shall be pending or threatened by the SEC.
(e) Purchaser shall have received the Tax Opinion (as contemplated in
Section 5.12 above).
(f) The shares of Purchaser Common Stock which shall be issued to the
stockholders of the Company upon consummation of the Merger shall have been
authorized for listing on Nasdaq, subject to official notice of issuance.
6.2 Conditions to the Obligations of Purchaser. Notwithstanding any
other provision of this Agreement, the obligations of Purchaser to consummate
the Merger are subject to the following conditions precedent:
- 50 -
(a) All of the representations and warranties made by the Company in
this Agreement and in any documents or certificates provided by the Company (i)
shall have been true and correct in all material respects as of the date of this
Agreement and (ii) shall be true and correct as of the Effective Time as though
made at and as of the Effective Time, provided, however, that if any
representation or warranty (other than the representations contained in Sections
3.1, 3.2, 3.3, 3.4(a), 3.4(b) and 3.4(d)) is not true or correct as of the
Effective Time, the condition in this clause (ii) shall nonetheless be deemed
satisfied unless the facts or circumstances causing any representation or
warranty not to be true or correct, either individually or in the aggregate, and
without giving effect to any materiality qualifier set forth in any such
representation or warranty, have a Company Material Adverse Effect.
(b) The Company shall have performed in all material respects all
obligations and shall have complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with by it
prior to or at the Effective Time.
(c) Except as specifically contemplated herein, there shall not have
been any action taken, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the Merger by any Federal or state
government or governmental agency or instrumentality or court, which would
prohibit Purchaser's ownership or operation of all or a material portion of the
Company's business or assets, whether immediately at the Effective Time or as of
some future date, whether specified or to be specified, or would compel
Purchaser to dispose of or hold separate all or a material portion of the
Company's business or assets, whether immediately at the Effective Time or as of
some future date, whether specified or to be specified as a result of this
Agreement, or which would render Purchaser or the Company unable to consummate
the transactions contemplated by this Agreement.
(d) To the extent any material lease, license, loan or financing
agreement or other contract or agreement to which the Company or any Company
Subsidiary, as the case may be, is a party requires the consent of, waiver from,
or notice to, the other party thereto as a result of the transactions
contemplated by this Agreement, such consent, waiver or notice shall have been
obtained or given, including, but not limited to, the prior written consent with
respect to all leases set forth on Schedule 3.25(b) of the Company Disclosure
Schedule.
(e) As of the Closing Date, there shall have been no Company Material
Adverse Change from that which was represented and warranted on the date of this
Agreement pursuant to this Agreement and the Company Disclosure Schedule
provided on the date of this Agreement, it being understood that any updates
provided pursuant to Section 5.11 hereof do not constitute a waiver or other
consent to any such Company Material Adverse Change, except in accordance with
Section 5.9.
(f) Purchaser shall have received a certificate signed by each of the
Chairman, Chief Executive Officer and Chief Operating Officer of the Company,
dated as of the Effective Time, certifying that based upon his knowledge, the
conditions set forth in Sections 6.2(a), (b) and (e) hereto have been satisfied.
(g) Neither the Company nor any Company Subsidiary shall be made a
party to, or to the knowledge of the Company, threatened by, any actions, suits,
proceedings, litigation
- 51 -
or legal proceedings which, if adversely determined, would in the reasonable
opinion of Purchaser, have or are likely to have a Company Material Adverse
Effect, nor shall any director or officer or former director or officer of the
Company or any Company Subsidiary be made a party to, or threatened by, any
actions, suits, proceedings, litigation or legal proceedings relating to the
performance or nonperformance of their legal or fiduciary duties as directors
and officers of the Company or any Company Subsidiary which in the reasonable
opinion of Purchaser is likely to have a Company Material Adverse Effect. No
action, suit, proceeding or claim shall have been instituted, made or threatened
by any person relating to the Merger or the validity or propriety of the
transactions contemplated by this Agreement or the Bank Merger Agreement which
would make consummation of the Merger inadvisable in the reasonable opinion of
Purchaser.
(h) The Bank Merger Agreement shall have been duly authorized and
approved by the Company 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.
(i) All action required to be taken by or on the part of the Company to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by the Board of Directors and the stockholders of the Company, and
Purchaser shall have received certified copies of the resolutions evidencing
such authorization.
(j) The Company shall have procured and delivered to Purchaser the
resignations of each of the directors and executive officers of the Company and
the Company Subsidiaries, effective as of the Effective Time, in form and
substance reasonably acceptable to Purchaser.
(k) Purchaser shall have received an opinion of Xxxxxxx Xxxxxx &
Aguggia LLP, counsel for the Company, substantially in the form of Exhibit E
hereto.
(l) The Company shall have delivered to Purchaser applicable titles
with respect to any and all real property owned by the Company or the Company
Subsidiaries, pursuant to Section 5.18.
6.3 Conditions to the Obligations of the Company. Notwithstanding any
other provision of this Agreement, the obligations of Company to consummate the
Merger are subject to the following conditions precedent:
(a) All of the representations and warranties made by Purchaser in this
Agreement and in any documents or certificates provided by Purchaser (i) shall
have been true and correct in all material respects as of the date of this
Agreement and (ii) shall be true and correct as of the Effective Time as though
made at and as of the Effective Time, provided, however, that if any
representation or warranty (other than the representations contained in Sections
2.1(a), 2.1(b), 2.2 and 2.3) is not true or correct as of the Effective Time,
the condition in this clause (ii) shall nonetheless be deemed satisfied unless
the facts or circumstances causing any representation or warranty not to be true
or correct, either individually or in the aggregate,
- 52 -
and without giving effect to any materiality qualifier set forth in any such
representation or warranty, have a Purchaser Material Adverse Effect.
(b) Purchaser shall have performed in all material respects all
obligations and shall have complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with by it
prior to or at the Effective Time.
(c) As of the Closing Date, there shall have been no Purchaser Material
Adverse Change from that which was represented and warranted on the date of this
Agreement pursuant to this Agreement.
(d) The Company shall have received a certificate signed by each of the
Chairman, Chief Executive Officer and Chief Financial Officer of Purchaser,
dated as of the Effective Time, that based upon such Chief Executive Officer's
knowledge, the conditions set forth in Sections 6.3(a), (b) and (c) have been
satisfied.
(e) The Company shall have received an opinion from the General Counsel
of Purchaser, substantially in the form of Exhibit F hereto.
(f) All action required to be taken by or on the part of Purchaser to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by the Board of Directors of Purchaser, and Company shall have
received certified copies of the resolutions evidencing such authorization.
VII.
TERMINATION; AMENDMENT; WAIVER
7.1 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 Purchaser
and the Board of Directors of the Company.
(b) At any time prior to the Effective Time, by Purchaser or the
Company if there shall have been a final judicial or regulatory determination
(as to which all periods for appeal shall have expired and no appeal shall be
pending) that any material provision of this Agreement is illegal, invalid or
unenforceable (unless the enforcement thereof is waived by the affected party)
or denying any regulatory application, the approval of which is a condition
precedent to either party's obligations hereunder.
(c) By either party at any time after the stockholders of the Company
fail to approve this Agreement and the Merger in a vote taken at a meeting duly
convened for that purpose; provided, however, the Company shall have no right to
terminate pursuant to this Section 7.1(c) if the Company has taken any action,
or failed to take any action, as applicable, as prescribed by Section 7.2(a)(i),
(ii) or (iii).
- 53 -
(d) By Purchaser or the Company in the event of the material breach by
the other party of any representation, warranty, covenant or agreement contained
herein or in any schedule or document delivered pursuant hereto, which breach
would result in the failure to satisfy the closing conditions set forth in
Section 6.2 hereof, in the case of Purchaser, or Section 6.3 hereof, in the case
of the Company, except in each case, for any such breach which has been
disclosed pursuant to Section 5.9 and waived by the non-disclosing party
pursuant to Section 5.9 or cured by the disclosing party prior to the Effective
Time and within the time period specified in Section 5.9.
(e) By either party on or after March 31, 2006, in the event the Merger
has not been consummated by such date (provided that the terminating party is
not then in material breach of any representation, warranty, covenant or other
agreement contained herein).
(f) By the Company, if (i) the Company has complied with the provisions
of Section 4.3, (ii) any corporation, partnership, person, other entity or
group, as defined in the Securities Exchange Act (other than Purchaser or any
affiliate of Purchaser), shall have commenced, made or proposed an Acquisition
Transaction, (iii) the Company'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 the Company's stockholders than
the Reorganization (as defined below), and (iv) the Company's Board of Directors
shall have determined, in good faith, 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 (a "Superior Proposal"); provided,
however, that the Company may not terminate this Agreement pursuant to this
Section 7.1(f) until the expiration of five (5) business days after written
notice of any such offer or proposal referenced in this Section 7.1(f) has been
delivered to Purchaser, together with a summary of the terms and conditions of
any such offer or proposal (and including a copy thereof with all accompanying
documentation, if in writing). After providing such notice, the Company shall
provide a reasonable opportunity to Purchaser during the five-day period to make
such adjustments in the terms and conditions of this Agreement as would enable
the Company to proceed with the Merger on such adjusted terms.
(g) By the Board of Directors of Purchaser if the Company has received
a Superior Proposal, and the Board of Directors of the Company has entered into
an acquisition agreement with respect to the Superior Proposal, terminated this
Agreement, or withdraws, modifies or amends in any respect adverse to Purchaser
its approval of this Agreement or the transactions contemplated hereby, or
withdraws or fails to make a unanimous recommendation that stockholders of the
Company vote in favor of the Merger, or modifies or qualifies such
recommendation in a manner adverse to Purchaser, or the Board of Directors of
the Company has resolved to do any of the foregoing.
7.2 Termination Fee. (a) In consideration of the expenses and forgone
opportunities of Purchaser, as a condition and inducement to Purchaser's
willingness to enter into and perform this Agreement, provided that the Company
has not validly terminated this Agreement pursuant to Section 7.1(d), the
Company shall pay to Purchaser immediately upon demand a fee of $9,000,000 (the
"Termination Fee") upon the earliest to occur of the following:
- 54 -
(i) Purchaser terminates this Agreement pursuant to Section
7.1(c) or (d) and (A) the Board of Directors of the Company (1) shall
have withdrawn, modified or amended in any respect its approval or
recommendation of this Agreement or the transactions contemplated
hereby, (2) shall not at the appropriate time have unanimously
recommended or shall have withdrawn, modified or amended in any respect
its recommendation that its stockholders vote in favor of the adoption
of this Agreement, or (3) shall not have included such recommendation
in the Proxy Statement, or (B) the Board of Directors of the Company
shall have resolved to do any of the foregoing; or
(ii) Purchaser terminates this Agreement pursuant to Section
7.1(g);
(iii) the Company shall have (A) terminated this Agreement
pursuant to Section 7.1(f), (B) entered into an agreement with a party
other than Purchaser or an affiliate of Purchaser providing for an
Acquisition Transaction described in Section 4.3(b)(i) through (iv)
prior to the termination date of this Agreement, or (C) terminated this
Agreement pursuant to Section 7.1(c) and any action or inaction
described in Section 7.2(a)(i)(A) or (B) shall have occurred; or
(iv) a tender or exchange offer for 15% or more of the
outstanding shares of Company Common Stock is commenced (other than by
Purchaser or an affiliate thereof) and the Company's Board of Directors
recommends that shareholders of the Company tender their shares in such
tender offer or fails to recommend that shareholders reject such tender
offer within the ten (10) business day period specified in Rule
14e-2(a) under the Exchange Act.
(b) In the event this Agreement is terminated prior to the Effective
Time for any reason other than (i) mutual agreement of the parties pursuant to
Section 7.1(a), (ii) a valid termination by either party pursuant to Section
7.1(b), (iii) a valid termination by Company pursuant to Section 7.1(d), or (iv)
a valid termination by Purchaser pursuant to Section 7.1(d) for a non-willfull
breach, the Termination Fee, unless previously paid pursuant to Section 7.2(a),
shall continue to be payable by the Company to Purchaser upon the consummation
of any Acquisition Transaction that is entered into or announced during the
18-month period from and after the date hereof; provided, however, that if the
termination is pursuant to Section 7.1(e), the Termination Fee shall be payable
only if such Acquisition Transaction is with a party (or an affiliate of a
party) that had delivered a written proposal for, or otherwise engaged in
activities relating to, an Acquisition Transaction prior to the termination date
of this Agreement.
7.3 Expenses. Except as otherwise provided elsewhere herein, Purchaser
and the Company 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 7.3 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 losing party.
- 55 -
7.4 Survival of Agreements. In the event of termination of this
Agreement by either Purchaser or the Company as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, except that (i) the
agreements contained in Sections 5.1(b), 5.10, 7.2 and 7.3 hereof shall survive
the termination hereof; and (ii) a termination pursuant to Section 7.1(d) hereof
shall not relieve a breaching party from any liability for any breach giving
rise to such termination.
7.5 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 the Company 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 the Company without the further approval of such stockholders or
which in any other way adversely affects the rights of the stockholders of the
Company 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. Purchaser and the Company 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 of the transactions contemplated hereby.
7.6 Waiver. Any term, provision or condition of this Agreement (other
than requirements for stockholder approval and required approvals of the
Governmental Authorities) may be waived in writing at any time by the party
which is 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, except as
provided in Section 5.9. 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 Purchaser of the Company or the Company of Purchaser 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.
VIII.
GENERAL PROVISIONS
8.1 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
7.4.
- 56 -
8.2 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 Purchaser: MAF Bancorp, Inc.
00xx Xxxxxx & Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Senior Vice President
and General Counsel
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
copy to: Vedder, Price, Xxxxxxx & Kammholz, P.C.
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
(b) if to the Company: EFC Bancorp, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxxxx
Chairman of the Board
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
copy to: Xxxxxxx Xxxxxx & Xxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx Xxxxxxx, Esq.
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
8.3 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, except to
the extent that the Federal laws of the United States apply.
8.4 Headings, Etc. The article headings and section headings contained
in this Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.
8.5 Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a final and unappealable order of a court
of competent jurisdiction to be
- 57 -
invalid, void, or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions contained in this Agreement shall remain in full
force and effect, and shall in no way be affected, impaired or invalidated
unless the effect would be to cause this Agreement to not achieve its essential
purposes.
8.6 Entire Agreement; Binding Effect; Nonassignment; Counterparts.
Except as otherwise expressly provided herein, this Agreement (including the
documents and instruments referred to herein) (a) constitutes the entire
agreement between the parties hereto and supersedes all other prior agreements
and undertakings, both written and oral, between the parties, with respect to
the subject matter hereof; and (b) is not intended to confer upon any other
person any rights or remedies hereunder except as specifically provided herein.
This Agreement shall be binding upon and inure to the benefit of the parties
named herein and their respective successors. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by either party
hereto without the prior written consent of the other party hereto. This
Agreement may be executed in two or more counterparts which together shall
constitute a single agreement.
8.7 Definitions. In addition to the capitalized terms otherwise defined
herein, as used in this Agreement, the following capitalized terms shall have
the meanings provided in this Section 8.7:
"business day" means any day that the New York Stock Exchange or Nasdaq
are open for trading.
"Company Disclosure Schedule" and "Purchaser Disclosure Schedule" shall
mean and refer to all of the disclosures, agreements, lists, instruments and
other documentation described or referred to in this Agreement as constituting a
numbered schedule to the Company Disclosure Schedule and Purchaser Disclosure
Schedule, respectively.
"Company Material Adverse Change" shall mean any occurrence or change
that results in a Company Material Adverse Effect, but excluding any effect or
change attributable to or resulting from: (i) changes in economic conditions or
financial market conditions affecting similarly situated savings banks and/or
savings and loan holding companies; (ii) changes in laws, regulations,
interpretations or laws or regulations, GAAP or regulatory accounting
requirements applicable to savings banks and/or savings and loan holding
companies; (iii) expenses or expenditures incurred in connection with the
negotiation and execution of this Agreement and any cost incurred solely at the
request of Purchaser other than in the usual course consistent with the
Company's past practices; or (iv) an event or development specifically disclosed
to Purchaser and waived pursuant to Section 5.9.
"Company Material Adverse Effect" shall mean any effect that is or
would reasonably be expected to be material and adverse to the financial
condition or results of operations of the Company and the Company Subsidiaries,
taken as a whole, or that would reasonably be expected to materially and
adversely affect (i) the ability of the Company to consummate the transactions
contemplated in this Agreement, including without limitation, the transactions
resulting in the Merger or the Bank Merger (collectively, the "Reorganization"),
or (ii) the ability of the
- 58 -
Company or the Company Subsidiaries to perform their material obligations
(including timeliness) hereunder.
"knowledge" shall mean (unless otherwise expressly provided herein),
with respect to the Company and the Company Subsidiaries, information known to
any member of the Boards of Directors of the Company or the Bank or any of the
officers of the Company of the Bank set forth on Schedule 8.7 to the Company
Disclosure Schedule, and, in the case of Purchaser and the Purchaser
Subsidiaries, information known to any member of the board of directors of
Purchaser or Mid America or any officer of Purchaser or Mid America set forth on
Schedule 8.7 to the Purchaser Disclosure Schedule, and, in each case, any facts
of which any of them is aware.
"Purchaser Material Adverse Change" shall mean any occurrence or change
that results in a Purchase Material Adverse Effect, but excluding any effect or
change attributable to or resulting from (i) changes in economic conditions or
financial market conditions affecting similarly situated savings banks and/or
savings and loan holding companies, and (ii) changes in laws, regulations,
interpretations or laws or regulations, GAAP or regulatory accounting
requirements applicable to savings banks and/or savings and loan holding
companies.
"Purchaser Material Adverse Effect" shall mean any effect that is or
would reasonably be expected to be material and adverse to the financial
condition or results of operations of Purchaser and the Purchaser Subsidiaries,
taken as a whole, or that would reasonably be expected to materially and
adversely affect (i) the ability of Purchaser to consummate the transactions
contemplated in this Agreement, including without limitation, the
Reorganization, or (ii) the ability of Purchaser or the Purchaser Subsidiaries
to perform their material obligations (including timeliness) hereunder.
[SIGNATURE PAGE FOLLOWS]
- 59 -
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first above written.
MAF BANCORP, INC.
/s/ Xxxxx X. Xxxxxxx
-----------------------------------------
By: Xxxxx X. Xxxxxxx
Its: Chairman and Chief Executive Officer
EFC BANCORP, INC.
/s/ Xxx Xxxxxxxx
-----------------------------------------
By: Xxx Xxxxxxxx
Its: Chairman of the Board
- 60 -
