STOCK PURCHASE AGREEMENT
BY AND AMONG
PRIVATEBANCORP, INC.
AND
XXXXXXX INTERNATIONAL, INC.
AND
XXXXXXX BANK ILLINOIS
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS..........................................................1
ARTICLE 2 PURCHASE PRICE, PAYMENT AND CERTAIN COVENANTS OF THE PARTIES.........6
Section 2.1 Purchase and Sale of XXXXXXX BANK Stock; the Closing......6
Section 2.2 Payment of Purchase Price.................................6
Section 2.3 Subordinated Debt.........................................7
Section 2.4 Section 338(h)(10) Election...............................7
Section 2.5 Regulatory Approvals......................................8
Section 2.6 Actions and Deliveries by XXXXXXX INTERNATIONAL
and/or XXXXXXX BANK at Closing............................8
Section 2.7 Actions and Deliveries by PRIVATE at Closing..............9
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PRIVATE...........................10
Section 3.1 Organization; Corporate Power; Etc.......................10
Section 3.2 Authorization of Agreement; No Conflicts.................10
Section 3.3 Brokerage Fees...........................................10
Section 3.4 Litigation...............................................11
Section 3.5 Consents and Approvals...................................11
Section 3.6 Approvals................................................11
Section 3.7 Financing................................................11
Section 3.8 Subordinated Debt Note...................................11
Section 3.9 True and Complete Information............................11
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF XXXXXXX
INTERNATIONAL AND XXXXXXX BANK......................................12
Section 4.1 Organization; Corporate Power; Etc.......................12
Section 4.2 Licenses and Permits.....................................12
Section 4.3 Subsidiaries.............................................12
Section 4.4 Authorization of Agreement; No Conflicts.................13
Section 4.5 Capital Structure........................................13
Section 4.6 Filings..................................................14
Section 4.7 Financial Statements.....................................14
Section 4.8 Compliance with Applicable Laws..........................14
Section 4.9 Litigation...............................................15
Section 4.10 Agreements with Banking Authorities......................15
Section 4.11 Insurance................................................15
Section 4.12 Title to Assets Other Than Real Property.................15
Section 4.13 Real Property............................................16
Section 4.14 Taxes....................................................16
Section 4.15 Certain Contracts........................................18
Section 4.16 Loans and Investments....................................18
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Section 4.17 Investment Securities....................................19
Section 4.18 Undisclosed Liabilities..................................20
Section 4.19 Employees; Employee Benefit Plans; ERISA.................20
Section 4.20 Intellectual Property Rights.............................24
Section 4.21 Hazardous Substances.....................................24
Section 4.22 Disclosure in Schedules..................................25
Section 4.23 Corporate Records........................................26
Section 4.24 Insider Interests........................................26
Section 4.25 Labor Arrangements.......................................26
Section 4.26 Loan Loss Reserves.......................................26
Section 4.27 Examinations.............................................26
Section 4.28 XXXXXXX BANK Facilities..................................27
Section 4.29 Material Adverse Changes.................................27
Section 4.30 Approvals................................................27
Section 4.31 Year 2000................................................27
Section 4.32 Related Matters..........................................28
Section 4.33 Brokerage Fees...........................................28
Section 4.34 Investment Representations...............................28
Section 4.35 True and Complete Information............................29
ARTICLE 5 ADDITIONAL AGREEMENTS...............................................29
Section 5.1 Conduct of XXXXXXX BANK's Business Pending Closing.......29
Section 5.2 Negative Covenants of XXXXXXX INTERNATIONAL
and XXXXXXX BANK.........................................30
Section 5.3 Conduct of PRIVATE.......................................32
Section 5.4 Access; Due Diligence; Data Processing; Trust Powers.....32
Section 5.5 Consents.................................................34
Section 5.6 Publicity................................................34
Section 5.7 Taking of Necessary Regulatory Action; SEC Reporting.....35
Section 5.8 Expenses.................................................36
Section 5.9 Notification of Certain Events...........................36
Section 5.10 Sharing of Data..........................................37
Section 5.11 Covenant Not to Compete..................................37
Section 5.12 Employee Matters.........................................37
Section 5.13 Use of Name..............................................39
Section 5.14 Tax Matters..............................................39
Section 5.15 Certain Actions..........................................41
Section 5.16 Title to Real Estate.....................................43
Section 5.17 Participations...........................................43
Section 5.18 Merger of XXXXXXX BANK with and into PRIVATEBANK.........43
Section 5.19 Retained Loans...........................................43
Section 5.20 Additional Loan Participations...........................43
Section 5.21 Certain Credits..........................................44
Section 5.22 Brokerage/Trust Customers................................44
Section 5.23 Termination of Agreements................................44
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Section 5.24 Best Efforts.............................................44
ARTICLE 6 CONDITIONS PRECEDENT TO CLOSING.....................................44
Section 6.1 Conditions to the Parties' Obligations...................44
Section 6.2 Conditions to PRIVATE's Obligations......................45
Section 6.3 Conditions to XXXXXXX INTERNATIONAL's or
XXXXXXX BANK's Obligations...............................46
ARTICLE 7 TERMINATION, AMENDMENTS AND WAIVERS.................................47
Section 7.1 Termination..............................................47
Section 7.2 Effects of Termination...................................47
Section 7.3 Waiver...................................................48
ARTICLE 8 INDEMNIFICATION.....................................................48
Section 8.1 Indemnification by Both Parties..........................48
Section 8.2 Indemnification by XXXXXXX INTERNATIONAL.................48
Section 8.3 Indemnification by PRIVATE...............................49
Section 8.4 Limitation on Claims.....................................49
Section 8.5 Notice and Defense of Claims.............................49
Section 8.6 Limited Survival.........................................50
Section 8.7 Mitigation of Indemnity Losses...........................51
ARTICLE 9 MISCELLANEOUS.......................................................51
Section 9.1 Books and Records........................................51
Section 9.2 Notices..................................................51
Section 9.3 Counterparts.............................................52
Section 9.4 Entire Agreement; No Third Party Rights; Assignment......52
Section 9.5 Governing Law............................................52
Section 9.6 Headings/Table of Contents...............................52
Section 9.7 Enforcement of Agreement.................................52
Section 9.8 Severability.............................................52
Section 9.9 Consent to Jurisdiction; Service of Process..............52
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INDEX OF EXHIBITS
Exhibit 2.3 Form of Subordinated Debt Note
Exhibit 2.6.3 Form of Opinion of Counsel to XXXXXXX INTERNATIONAL and
XXXXXXX BANK
Exhibit 2.7.4 Form of Opinion of Counsel to PRIVATE
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INDEX TO XXXXXXX INTERNATIONAL'S DISCLOSURE SCHEDULE
Schedule 1 Retained Assets
Schedule 1A Retained Loans
Schedule 1B List of Officers and Directors of XXXXXXX INTERNATIONAL and
XXXXXXX BANK
Schedule 4.4 Required Consents
Schedule 4.7 Financial Statements
Schedule 4.9 Litigation
Schedule 4.10 Agreements with Banking Authorities
Schedule 4.11 Insurance Policies
Schedule 4.12 Title to Assets other than Real Property
Schedule 4.13 Real Estate
Schedule 4.14 Tax Matters
Schedule 4.15 Certain Contracts
Schedule 4.16 Loans and Investments
Schedule 4.17 Investment Securities
Schedule 4.18 Undisclosed Liabilities
Schedule 4.19 Employees; Employee Benefit Plans
Schedule 4.20.1 Intellectual Property Being Retained
Schedule 4.20.2 Intellectual Property Being Licensed
Schedule 4.21 Environmental Matters
Schedule 4.24 Insider Interests
Schedule 4.27 Examinations
Schedule 4.29 Material Adverse Changes
Schedule 4.31 Year 2000
Schedule 5.7.3 Intercompany Indebtedness
Schedule 5.12.1 List of Employees on Short- or Long-Term Disability or Other
Leave of Absence
Schedule 5.17 Participations
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into as of
October 4, 1999 by and among Xxxxxxx International, Inc., a Wisconsin
corporation and a registered bank holding company ("XXXXXXX INTERNATIONAL"),
which is the sole shareholder of Xxxxxxx Bank Illinois ("XXXXXXX BANK"), an
Illinois state bank, and XXXXXXX BANK, jointly and severally, and
PrivateBancorp, Inc., a Delaware corporation and a registered bank holding
company ("PRIVATE").
WHEREAS, XXXXXXX INTERNATIONAL owns 8,000 shares of the issued and
outstanding common stock, par value $25 per share, of XXXXXXX BANK
(collectively, the "Shares"), which represents all of the issued and outstanding
shares of the capital stock of XXXXXXX BANK;
WHEREAS, PRIVATE desires to acquire XXXXXXX BANK through the purchase
of all the issued and outstanding shares of capital stock of XXXXXXX BANK and
XXXXXXX INTERNATIONAL desires to transfer the Shares for the consideration set
forth below and subject to the terms and conditions of this Agreement (the
"Transaction"); and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Transaction and also to prescribe certain
conditions to the consummation of such transaction.
NOW, THEREFORE, in consideration of the parties' respective
representations, warranties and covenants hereinafter set forth and other good
and valuable consideration, the receipt of which is hereby acknowledged, and
intending to be legally bound, the parties agree as follows:
ARTICLE 1 DEFINITIONS
"Alternative Transaction" shall have the meaning given such term in
Section 5.15.2.
"ADA" shall mean the Americans with Disabilities Act and the
regulations promulgated thereunder.
"ADAAG" shall mean the ATBCB Accessibility Guidelines for Buildings
and Facilities.
"Agreement" shall have the meaning set forth in the preamble of this
Agreement.
"Affiliate" or "affiliate" shall mean, with respect to any person,
any person that, directly or indirectly, controls or is controlled by or is
under common control with such person.
"Benefit Arrangement" shall have the meaning given such term in
Section 4.19.4.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"Business Day" shall mean any day, other than a Saturday, Sunday or
legal holiday, on which national banks are open for substantially all their
banking business in Illinois.
"Claim" shall have the meaning given such term in Section 8.5.1.
"Classified Credits" shall mean loans, leases or other extensions of
credit that have been classified by any bank regulatory authority or by XXXXXXX
BANK as "Specially Mentioned," "Renegotiated," "Substandard," "Doubtful," "Loss"
or any comparable classification.
"Closing" shall have the meaning given such term in Section 2.1.
"Closing Date" shall have the meaning given such term in Section 2.1.
"Closing Date Employees" shall have the meaning given such term in
Section 5.12.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Conversion" shall have the meaning given such term in Section 5.4.5.
"Default" shall mean, as to any party to this Agreement, the material
breach of or failure to perform, in any material respect, by such party any
covenant or agreement contained herein or in any schedule or document delivered
pursuant hereto, which breach or failure to perform continues for a period of
twenty (20) Business Days after notice from the non-breaching or non-failing
party and which breach or failure to perform would result in the failure to
satisfy the conditions precedent to the Closing of the non-breaching or
non-failing party set forth in Article VI hereof.
"Employee Plan" shall have the meaning given such term in
Section 4.19.3.
"Employees" shall have the meaning given such term in Section 4.19.2
(a).
"Environmental Laws" shall mean and include any and all laws, statutes,
ordinances, decrees, rules, regulations, orders, or determinations of any
Governmental Entity, including common law and decisional law, that (i) regulate
air, water, soil and solid waste management, including the generation,
discharge, emission, manufacture, use, recycling, treatment, control, release,
containment, storage, handling, transportation, disposition or management of any
Hazardous Substances; (ii) regulate or prescribe requirements for air, water or
soil quality; (iii) are intended to protect public health or the environment; or
(iv) establish responsibility or liability for the investigation, removal,
remediation, reporting, or cleanup of, or damage caused by, any Hazardous
Substances, including, without limitation, the Clean Air Act, as amended, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Federal Water Pollution Control Act Amendments, the
Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), the Hazardous
Materials Transportation Act of 1975, as amended, the Safe Drinking Water Act,
as
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amended, and the Toxic Substances Control Act, as amended, and any similar or
implementing law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean, with respect to any other person, any
person that is a member of a controlled group of corporations within the meaning
of Section 414(b) of the Code, a group of corporations or entities under common
control under Section 414(c) of the Code, an affiliated service group under
Section 414(m) of the Code, or is otherwise aggregated under Section 414(o) of
the Code with such person.
"Expenses" shall mean all reasonable out-of-pocket expenses (including
all fees and expenses of counsel, accountants, investment bankers, experts and
consultants to a party and its affiliates) incurred by such party or on its
behalf in connection with the consummation of the transactions contemplated by
this Agreement.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
"Filings" shall have the meaning given such term in Section 4.6.
"Financial Statements" shall have the meaning given such term in
Section 4.7.
"Governmental Entity" shall mean any court, federal, state, local or
foreign government or any administrative agency or commission or other
governmental authority or instrumentality whatsoever.
"Hazardous Substances" shall have the meaning given such term in
Section 4.21.5.
"Illinois Bank Act" shall mean the Illinois Banking Act, as amended 205
ILCS 5/1 et seq.
"Indemnified Party" shall have the meaning given such term in
Section 8.5.
"Indemnifying Party" shall have the meaning given such term in
Section 8.5.1.
"Intellectual Property" shall mean all (i) patents, patent
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
computer software, data, databases and documentation thereof, (vi) trade secrets
and other confidential information (including, without limitation, ideas,
formulas, compositions, inventions (whether patentable or unpatentable and
whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data,
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copyrightable works, financial and marketing plans), (vii) other intellectual
property rights, and (viii) copies and tangible embodiments thereof (in whatever
form or medium).
"XXXXXXX BANK" shall have the meaning set forth in the Preamble of this
Agreement.
"XXXXXXX BANK Facilities" shall have the meaning given such term in
Section 4.28.
"XXXXXXX BANK Property" shall have the meaning given such term in
Section 4.21.1.
"XXXXXXX INTERNATIONAL" shall have the meaning set forth in the
preamble of this Agreement.
"Xxxxxxx International Disclosure Schedule" shall mean the disclosure
schedules delivered by XXXXXXX INTERNATIONAL and XXXXXXX BANK, jointly and
severally, to PRIVATE prior to the date hereof.
"Knowledge" shall mean, with respect to any representation or warranty
contained in this Agreement the knowledge, actual and deemed, of those
individuals set forth on Schedule 1B.
"LIBOR" shall mean London Inter-Bank Offered Rate.
"Losses" shall have the meaning given such term in Section 8.1.
"Material Adverse Effect" shall mean a material adverse effect: (i) on
the business, results of operations or financial condition of a Person and its
Subsidiaries, if any, taken as a whole (except (A) for XXXXXXX BANK as to which
Material Adverse Effect shall refer solely to its business, results of
operations or financial condition and (B) as specifically indicated otherwise);
or (ii) on the ability of a Person to perform its obligations under this
Agreement or to consummate the transactions contemplated by this Agreement.
"MCIF" shall have the meaning set forth in Section 5.4.5.
"Non-Performing Assets" shall mean the sum of the book value of XXXXXXX
BANK's (i) loans (other than consumer loans) 90 days past due, or with respect
to consumer loans, 180 days past due, as to either principal or interest which
are not both well-secured and in the process of collection, (ii) loans as to
which there is significant doubt as to the continued timely payment of interest
or full repayment of principal, (iii) loans on which interest is being or has
been renegotiated to lower than market rates due to the adverse financial
condition of the borrower, and (iv) other real estate owned.
"OREO" shall have the meaning given such term in Section 4.16.2.
"Permitted Liens" shall mean: (i) liens for current Taxes not yet due
or being contested in good faith and for which appropriate reserves have been
established on the books and records of the taxpayer; (ii) liens imposed by law
and incurred in the ordinary course of business for obligations
4
not yet due to carriers, warehousemen, laborers, materialmen and the like; (iii)
liens in respect of pledges or deposits under workers' compensation laws or
similar legislation; (iv) minor defects in title which do not, individually or
in the aggregate, interfere with the use, transferability or value of the
property subject thereto; and (v) liens reflected on the face of the instrument
evidencing title to such assets.
"Person" or "person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, trust or unincorporated
organization, Governmental Entity or any other legal entity whatsoever.
"PRIVATE" shall have the meaning set forth in the preamble of this
Agreement.
"PRIVATEBANK" shall mean PrivateBank & Trust Company, a wholly-owned
subsidiary of PRIVATE.
"Purchase Price" shall have the meaning given such term in Section 2.1.
"Representatives" shall have the meaning set forth in Section 5.4.1.
"Requisite Regulatory Approvals" shall have the meaning set forth in
Section 6.1.1.
"Retained Assets" shall mean the assets set forth on Schedule 1 and the
Intellectual Property set forth in Schedule 4.20.1 of the Xxxxxxx International
Disclosure Schedule.
"Retained Loans" shall mean the loans listed on Schedule 1A of the
Xxxxxxx International Disclosure Schedule.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares" shall have the meaning set forth in the preamble of this
Agreement.
"Significant Subsidiary" shall have the meaning given such term in
Section 5.15.2.
"Stockholder Equity" shall mean the capital stock, capital surplus and
retained earnings (excluding any FASB 115 adjustments to stockholder equity) as
determined under generally acceptable accounting principles, but shall under no
circumstances include any loan loss reserves.
"Subsidiary" or "subsidiary" shall mean, with respect to any
corporation (the "parent"), any other corporation, association or other business
entity of which more than 50% of the shares of the voting stock are owned or
controlled, directly or indirectly, by the parent or by one or more Subsidiaries
of the parent, or by the parent and one or more of its Subsidiaries; provided,
however, that with respect to XXXXXXX BANK, "Subsidiary" or "subsidiary" shall
mean any Person of which 5% or more of the voting stock is owned or controlled,
directly or indirectly, by XXXXXXX BANK, other than in a fiduciary capacity.
5
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Taxes" shall mean all federal, state, local, foreign and other taxes,
including without limitation net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease, service, service
use, withholding, payroll, employment, estimated, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties, or other
taxes, together with any interest and any penalties, additions to tax, or
additional amounts with respect thereto, and any liability for Taxes of another
person (i) as a transferee, (ii) as a member of an affiliated or combined group,
(iii) by contract, or (iv) otherwise, and the term "Tax" means any one of the
foregoing Taxes.
"Trust Assets" shall mean and include: (a) all right, title and
interest of XXXXXXX BANK in and to and under any and all trusts, xxxxx, agency
agreements, decedents' estates and other representative or fiduciary
appointments in favor of, or services by, XXXXXXX BANK and all other trusts,
xxxxx, agency agreements and the like similar to the foregoing under which
XXXXXXX BANK has been named in some representative or fiduciary capacity to take
effect at some time in the future; and (b) all properties, rights, documents,
instruments, interests and other tangible and intangible assets owned by,
governed or administered under, arising under or with respect to or pertaining
to any of the foregoing.
ARTICLE 2 PURCHASE PRICE, PAYMENT AND CERTAIN COVENANTS OF THE
PARTIES
Section 2.1 Purchase and Sale of XXXXXXX BANK Stock; the Closing.
In reliance upon the representatives, warranties, covenants and agreements set
forth herein and upon the terms and subject to the conditions herein set forth,
on the Closing Date (as hereinafter defined), XXXXXXX INTERNATIONAL shall sell,
convey, assign, transfer and deliver to PRIVATE, and PRIVATE shall purchase,
accept and acquire from XXXXXXX INTERNATIONAL, all the issued and outstanding
shares of XXXXXXX BANK for an aggregate purchase price of Twenty Million dollars
(the "Purchase Price"). The Purchase Price shall consist of Fifteen Million
dollars in cash ($15,000,000), and Five Million dollars ($5,000,000) in
Subordinated Debt (as hereinafter defined). Upon satisfaction or waiver of all
conditions precedent to the consummation of the transactions contemplated by
this Agreement, the closing of the Transaction (the "Closing") shall take place
on the last Business Day of the month in which all Requisite Regulatory
Approvals have been obtained (provided, however, the Closing shall take place no
sooner than three (3) days following the receipt of the Requisite Regulatory
Approvals), or at such other time as the parties shall mutually agree (the
"Closing Date") at the offices of Vedder, Price, Xxxxxxx & Kammholz, 000 Xxxxx
XxXxxxx, Xxxxxxx, Xxxxxxxx 00000.
Section 2.2 Payment of Purchase Price. PRIVATE shall pay to XXXXXXX
INTERNATIONAL, by wire at Closing, Fifteen Million dollars ($15,000,000). In
addition, PRIVATE shall pay XXXXXXX INTERNATIONAL Five Million dollars
($5,000,000) as evidenced by a subordinated note pursuant to Section 2.3.
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Section 2.3 Subordinated Debt. Pursuant to Section 2.1, the
Purchase Price shall include Five Million dollars in subordinated debt (the
"Subordinated Debt"). A note evidencing the Subordinated Debt shall otherwise be
in the form attached hereto as Exhibit 2.3 and shall provide for a seven (7)
year maturity, with a bullet payment of principal (the "Subordinated Debt
Note"). The Subordinated Debt Note shall provide for interest based on a 365 day
year, paid in arrears quarterly and at an interest rate consisting of the
following terms: (i) during years one (1) and two (2), the interest rate on the
Subordinated Debt shall be the 90-day LIBOR plus fifty (50) basis points; (ii)
during years three (3) and four (4), the interest rate on the Subordinated Debt
shall be the 90-day LIBOR plus two hundred (200) basis points; and (iii) during
years five (5), six (6) and seven (7), the interest rate on the Subordinated
Debt shall be the 90-day LIBOR plus three hundred and fifty (350) basis points.
The Subordinated Debt Note shall be prepayable at anytime without penalty.
Should PRIVATE prepay the Subordinated Debt Note during the first twelve (12)
months in which the Subordinated Debt is outstanding, XXXXXXX INTERNATIONAL
shall pay PRIVATE Five Thousand dollars ($5,000). The terms of the Subordinated
Debt shall be structured so as to afford Tier II capital treatment under
applicable Federal Reserve Board guidelines.
Section 2.4 Section 338(h)(10) Election.
2.4.1 With respect to the acquisition of the Shares
hereunder, (i) at PRIVATE's option, XXXXXXX INTERNATIONAL and PRIVATE shall
jointly make a timely election under Section 338(h)(10) of the Code and any
corresponding elections under state and local tax laws (collectively, the
"Election"), (ii) XXXXXXX INTERNATIONAL and PRIVATE shall, as promptly as
practical following the Closing Date, cooperate with each other to take all
actions necessary and appropriate (including filing such forms, Tax Returns,
elections, schedules and other documents as may be required) to effect and
preserve a timely Election in accordance with Section 338 of the Code,
applicable state and local laws, and any successor provisions and (iii) XXXXXXX
INTERNATIONAL and PRIVATE shall report the sale and acquisition of the Shares
consistently with the Election. XXXXXXX INTERNATIONAL will pay any income Tax
attributable to the making of the Election (or which results from the making of
an Election) and will indemnify PRIVATE, XXXXXXX BANK, and its Subsidiaries
against any Losses arising out of any failure to pay such Tax.
2.4.2 In connection with the Election, XXXXXXX INTERNATIONAL
and PRIVATE shall cooperate in preparing an allocation among the assets of
XXXXXXX BANK calculated with reference to the Purchase Price ("Allocation
Schedule"). Such allocation shall be made in accordance with Section 338(b) of
the Code and the applicable Treasury Regulations, provided, however, PRIVATE
shall be entitled to add its transaction costs to the "adjusted grossed-up
basis" of the Shares for purposes of allocating such adjusted grossed-up basis
among the assets of XXXXXXX BANK, and XXXXXXX INTERNATIONAL will be entitled to
take into account its transaction costs when calculating its gain or loss on the
deemed sale of XXXXXXX BANK's assets. PRIVATE shall provide XXXXXXX
INTERNATIONAL the Allocation Schedule within thirty (30) business days of the
Closing Date. If the parties are unable to resolve any disputes within ten (10)
business days after the delivery of the Allocation Schedule to XXXXXXX
INTERNATIONAL, the parties shall jointly request KPMG to resolve any issue in
dispute as promptly as possible, with one-half of the costs of such resolution
to be borne by each of XXXXXXX INTERNATIONAL and
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PRIVATE. The determination made by KPMG shall be final and binding upon the
parties hereto. If KPMG is unable to make a determination with respect to any
dispute prior to the due date for the filing of any Tax Return for which such
determination is necessary, XXXXXXX INTERNATIONAL and PRIVATE shall file such
Tax Return without such determination having been made, subject, however, to the
parties' obligation thereunder to file amended Tax Returns reflecting the final
decision of KPMG.
2.4.3 XXXXXXX INTERNATIONAL represents and warrants to
PRIVATE that XXXXXXX INTERNATIONAL and XXXXXXX BANK are, for federal income Tax
purposes, members of an "affiliated group", as such term is defined in Section
1504 of the Code, of which XXXXXXX INTERNATIONAL is the common parent, which
will file a consolidated federal income Tax Return for the period which includes
the Closing Date, provided, however, XXXXXXX INTERNATIONAL will not include
XXXXXXX BANK in its "affiliated group" for the period beginning the day
following the Closing Date. XXXXXXX INTERNATIONAL further represents and
warrants to PRIVATE that XXXXXXX BANK has not filed any Illinois income Tax
Returns on a unitary, combined or combined apportionment basis and that it will
file a separate, non-unitary return for the period ending on the Closing Date.
Section 2.5 Regulatory Approvals. As promptly as practicable after
the date of execution of this Agreement (but in no event later than thirty (30)
days), PRIVATE shall submit and file all applications with the appropriate
regulatory authorities necessary for the consummation of the transactions
contemplated by this Agreement, as further described in Section 5.7.1.
Section 2.6 Actions and Deliveries by XXXXXXX INTERNATIONAL and/or
XXXXXXX BANK at Closing. At Closing, XXXXXXX INTERNATIONAL and/or XXXXXXX BANK
shall deliver to PRIVATE the following agreements, documents and instruments, in
form and substance reasonably satisfactory to PRIVATE and its counsel:
2.6.1 a certificate or certificates representing the Shares,
registered in the name of XXXXXXX INTERNATIONAL, duly endorsed by XXXXXXX
INTERNATIONAL for transfer or accompanied by an assignment of the Shares duly
executed by XXXXXXX INTERNATIONAL or endorsed in blank;
2.6.2 a certificate of the Secretary or an Assistant
Secretary of XXXXXXX INTERNATIONAL certifying copies of resolutions duly adopted
by XXXXXXX INTERNATIONAL acting as the sole shareholder of XXXXXXX BANK, and by
the Board of Directors of XXXXXXX INTERNATIONAL and the Board of Directors of
XXXXXXX BANK, authorizing the Transaction and the execution, delivery and
performance of this Agreement, the Election, and the transactions contemplated
hereby and attesting that such resolutions are in full force and effect without
amendment or modification at Closing, and a Certificate of Secretary or an
Assistant Secretary of each of XXXXXXX INTERNATIONAL and XXXXXXX BANK certifying
the incumbency and the authority of the officers of XXXXXXX INTERNATIONAL and
XXXXXXX BANK, respectively, who execute this Agreement or any document or
instrument to be delivered pursuant hereto;
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2.6.3 an opinion of counsel to each of XXXXXXX INTERNATIONAL
and XXXXXXX BANK, in the form annexed hereto as Exhibit 2.6.3;
2.6.4 an Officer's certificate of each of XXXXXXX
INTERNATIONAL and XXXXXXX BANK pursuant to Section 6.2.1;
2.6.5 consents or approvals in writing of each Person whose
consent or approval shall be required in order to permit the succession by
PRIVATE and/or PRIVATEBANK pursuant hereto to any obligation, right or interest
of XXXXXXX INTERNATIONAL and/or XXXXXXX BANK under any loan or credit agreement,
note, mortgage, indenture, lease, zoning variance, license or regulatory
approval, trust agreement or other agreement, license, or instrument, except for
those for which the failure to obtain such consents and approvals would not have
a Material Adverse Effect on XXXXXXX BANK or PRIVATE and/or PRIVATEBANK, whether
prior to or following the consummation of the transactions contemplated hereby;
2.6.6 evidence of action taken by XXXXXXX INTERNATIONAL and
XXXXXXX BANK with respect to employees and employee benefit plan matters
pursuant to Section 5.12 in form and substance satisfactory to PRIVATE;
2.6.7 updated Xxxxxxx International Disclosure Schedule
pursuant to Section 5.4.4 below; and
2.6.8 approval of the lessor for each and every parcel of
real estate leased by XXXXXXX BANK, wherever located, subject only to Permitted
Liens, easements, covenants, conditions and restrictions of record as described
in Schedule 4.13.
2.6.9 certification of good standing for XXXXXXX BANK from
the Illinois Office of Banks and Real Estate, dated within ten (10) days of the
Closing Date.
Section 2.7 Actions and Deliveries by PRIVATE at Closing. At
Closing, PRIVATE shall deliver to XXXXXXX INTERNATIONAL the following
agreements, documents and instruments, in form and substance reasonably
satisfactory to XXXXXXX INTERNATIONAL and its counsel:
2.7.1 the Purchase Price by wire transfer as required by
Section 2.2 and physical delivery as required by Section 2.3.
2.7.2 a certificate of the Secretary or an Assistant
Secretary of PRIVATE certifying (i) a copy of resolutions duly adopted by the
Board of Directors of PRIVATE authorizing the Transaction and the execution,
delivery and performance of this Agreement, the Election, the obtainment of all
Requisite Regulatory Approvals, and the transactions contemplated hereby and
that such resolutions are in full force and effect without amendment or
modification at Closing; (ii) incumbency and authority of the officers of
PRIVATE who execute this Agreement or any document or instrument to be delivered
pursuant hereto; and (iii) a copy of all Requisite Regulatory Approvals;
9
2.7.3 an Officer's certificate pursuant to Section 6.3.1; and
2.7.4 an opinion of Counsel to PRIVATE, in the form annexed
hereto as Exhibit 2.7.4.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PRIVATE
PRIVATE represents and warrants to XXXXXXX INTERNATIONAL and XXXXXXX
BANK as follows:
Section 3.1 Organization; Corporate Power; Etc. PRIVATE is a bank
holding company registered under the BHCA. PRIVATE is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, operate and
lease its properties and to carry on its business substantially as it is being
conducted on the date of this Agreement. PRIVATE has all requisite corporate
power and authority to enter into this Agreement and, subject to the obtaining
of all Requisite Regulatory Approvals, to consummate the transactions
contemplated hereby.
Section 3.2 Authorization of Agreement; No Conflicts.
3.2.1 The execution and delivery of this Agreement,
the issuance of the Subordinated Debt Note by PRIVATE, and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of PRIVATE. This Agreement has been duly executed
and delivered by PRIVATE and constitutes a valid and binding obligation of
PRIVATE, enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting the rights of Delaware corporations or bank holding companies
and, in any case, by general equitable principles.
3.2.2 The execution and delivery of this Agreement, the
issuance of the Subordinated Debt Note, and the consummation of the transactions
contemplated hereby do not and will not conflict with, or result in any
violation of or default or loss of a material benefit under, any provision of
the Certificate of Incorporation or bylaws of PRIVATE or, except for the
necessity of obtaining the Requisite Regulatory Approvals, any mortgage,
indenture, lease, agreement or other instrument or any permit, concession,
grant, franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to PRIVATE or its respective properties. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental authority is required in connection with the
execution and delivery of this Agreement by PRIVATE or the consummation by it of
the transactions contemplated hereby, except for (a) filings required in order
to obtain the Requisite Regulatory Approvals, and (b) any other governmental
approval required for the execution and delivery of this Agreement.
Section 3.3 Brokerage Fees. PRIVATE is not a party to, or obligated
under, any agreement with any broker or finder relating to the transactions
contemplated hereby other than with EVEREN Securities, Inc.
10
Section 3.4 Litigation. PRIVATE is not a party to any litigation,
action, suit or other legal, administrative or arbitration proceeding or
investigation of a legal nature or group of related such proceedings or
investigations in any court or before any governmental or regulatory body
pending or, to the best knowledge of PRIVATE, threatened, which, if determined
adversely to PRIVATE, would prohibit the execution and delivery of this
Agreement or prevent the consummation of the transactions contemplated hereby.
Section 3.5 Consents and Approvals. Except for the filing of
applications and notices, as applicable, with, among others, the Federal Reserve
Board under the BHCA, the FDIC, and the Office of Banks and Real Estate under
Illinois law, and the approval of, or expiration of waiting periods relating to,
such applications and notices, as the case may be, no consents or approvals of
or filings or registrations with any Governmental Entity or with any third party
are necessary in connection with the execution and delivery by PRIVATE of this
Agreement and the consummation by PRIVATE of the transactions contemplated
hereby except, in each case, for consents, approvals, filings or registrations
the failure of which to obtain or make, either individually or in the aggregate,
would not prevent or materially delay PRIVATE from performing its obligations
hereunder.
Section 3.6 Approvals. As of the date of this Agreement, PRIVATE
does not know of any reason why all of the Requisite Regulatory Approvals shall
not be obtained.
Section 3.7 Financing. PRIVATE has current assets or other
financial arrangements such that at the Closing, PRIVATE will have funds
sufficient to enable it to carry out its obligations under this Agreement.
PRIVATE shall, so long as the Subordinated Debt Note is outstanding, provide
XXXXXXX INTERNATIONAL with copies of any document filed with the Securities and
Exchange Commission ("SEC") concerning financial information of PRIVATE.
Section 3.8 Subordinated Debt Note. The Subordinated Debt Note has
been duly authorized by PRIVATE and, when issued and delivered by PRIVATE in the
manner contemplated by this Agreement, will be a valid and binding obligation of
PRIVATE, enforceable against PRIVATE in accordance with its terms, subject to
the effects of bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, and general
equitable principles (whether considered in a proceeding in equity or at law).
Section 3.9 True and Complete Information. No representation or
warranty made by PRIVATE contained in this Agreement and no statement contained
in any certificate, schedule, list, exhibit, or other instrument specified in
this Agreement, whether heretofore furnished to XXXXXXX INTERNATIONAL or XXXXXXX
BANK or hereinafter required to be furnished to XXXXXXX INTERNATIONAL or XXXXXXX
BANK, contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary to make the statements contained
therein not misleading.
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ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF XXXXXXX
INTERNATIONAL AND XXXXXXX BANK
XXXXXXX INTERNATIONAL and XXXXXXX BANK represent and warrant, jointly
and severally, to PRIVATE as follows:
Section 4.1 Organization; Corporate Power; Etc.
4.1.1 XXXXXXX INTERNATIONAL is a bank holding company
registered under the BHCA. XXXXXXX INTERNATIONAL is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Wisconsin and has all requisite corporate power and authority to own, operate
and lease its properties and to carry on its business substantially as it is
being conducted on the date of this Agreement including, but not limited to,
owning one hundred percent (100%) of the issued and outstanding shares of
XXXXXXX BANK. Each subsidiary of XXXXXXX INTERNATIONAL has all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business substantially as it is being conducted on the date of this
Agreement, except where the failure to have such power or authority would not
have a Material Adverse Effect on XXXXXXX INTERNATIONAL. XXXXXXX INTERNATIONAL
has all requisite corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby.
4.1.2 XXXXXXX BANK is a bank duly organized, validly
existing and in good standing under the laws of the State of Illinois, and a
member bank of the Federal Reserve System, and has all requisite corporate power
and authority to own, operate and lease its properties and to carry on its
business substantially as it is being conducted on the date of this Agreement.
The deposit accounts of XXXXXXX BANK are insured by the FDIC through the Bank
Insurance Fund to the extent required by law and all premiums and assessments
required to be paid in connection therewith have been paid by XXXXXXX BANK.
XXXXXXX BANK has all requisite corporate power and authority to enter into this
Agreement and, subject to the obtaining of all Requisite Regulatory Approvals,
to consummate the transactions contemplated hereby. Neither the scope of
business of XXXXXXX BANK nor the location of any of its properties requires that
XXXXXXX BANK be licensed to conduct business in any jurisdiction other than
those jurisdictions in which it is licensed or qualified to do business as a
foreign corporation.
Section 4.2 Licenses and Permits. XXXXXXX BANK has all material
licenses, certificates, franchises, rights and permits that are necessary from
Governmental Entities for the conduct of its business, and such licenses are in
full force and effect. The properties, assets, operations and business of
XXXXXXX BANK are and have been maintained and conducted, in all material
respects, in compliance with all applicable licenses, zoning variances,
certificates, franchises, rights and permits.
Section 4.3 Subsidiaries. XXXXXXX BANK does not own, directly or
indirectly, any Subsidiary (except as pledgee pursuant to loans or stock or
other interest held as the result of or in lieu of foreclosure pursuant to
pledge or other security arrangement), or any equity position or other voting
interest in any Person.
12
Section 4.4 Authorization of Agreement; No Conflicts.
4.4.1 The execution and delivery of this Agreement by XXXXXXX
INTERNATIONAL and XXXXXXX BANK and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of each of XXXXXXX INTERNATIONAL and XXXXXXX BANK.
This Agreement has been duly executed and delivered by each of XXXXXXX
INTERNATIONAL and XXXXXXX BANK as parties thereto and constitute legal, valid
and binding obligations of XXXXXXX INTERNATIONAL and XXXXXXX BANK, enforceable
in accordance with their respective terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting the rights of Wisconsin corporations, bank holding companies or
Illinois banks, as the case may be, and in any case, by general equitable
principles.
4.4.2 Except as disclosed in Schedule 4.4 of the Xxxxxxx
International Disclosure Schedule (delivered pursuant to this Agreement and
certified as true and correct by XXXXXXX INTERNATIONAL and XXXXXXX BANK, the
receipt thereof having been acknowledged by PRIVATE's executing a copy thereof,
that identifies as to each matter disclosed therein, the section of this
Agreement to which the matter relates), the consummation of the transactions
contemplated hereby and thereby do not and will not conflict with, or result in
any violation of or default or loss of a material benefit under, any provision
of the Certificate of Incorporation, Articles of Incorporation, articles of
association, bylaws or other constituent documents of XXXXXXX INTERNATIONAL or
XXXXXXX BANK or, except for the necessity of obtaining the Requisite Regulatory
Approvals, any mortgage, indenture, lease, agreement or other instrument or any
permit, zoning variance, concession, grant, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to XXXXXXX
INTERNATIONAL or XXXXXXX BANK or their respective properties. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required in connection with the execution and
delivery of this Agreement by XXXXXXX INTERNATIONAL or XXXXXXX BANK or the
consummation by them of the transactions contemplated hereby, except for (a)
filings required in order to obtain the Requisite Regulatory Approvals; and (b)
any other governmental approval required for the execution and delivery of this
Agreement.
Section 4.5 Capital Structure. The authorized capital stock of
XXXXXXX BANK consists solely of 8,000 shares of common stock, par value $25 per
share, of which 8,000 are issued and outstanding. XXXXXXX INTERNATIONAL owns all
of the issued and outstanding Shares free and clear of all liens, pledges,
charges and other encumbrances of any nature whatsoever. All Shares are validly
issued, fully paid and nonassessable, and do not possess any preemptive rights.
There are no options, warrants, calls, rights, commitments, securities or
agreements of any character to which XXXXXXX INTERNATIONAL or XXXXXXX BANK is a
party or by which it is bound obligating XXXXXXX INTERNATIONAL or XXXXXXX BANK
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of XXXXXXX BANK, or by which it is bound obligating
XXXXXXX INTERNATIONAL or XXXXXXX BANK to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement. There are no obligations,
contingent or otherwise, of XXXXXXX INTERNATIONAL or XXXXXXX BANK to repurchase,
redeem or otherwise acquire any Shares, or of XXXXXXX BANK to repurchase, redeem
or otherwise acquire
13
any shares of capital stock of any Person or to provide funds or make any
investment (in the form of a loan, capital contribution or otherwise) in XXXXXXX
BANK or any other Person (other than pursuant to commercial loan arrangements
and similar obligations arising in the ordinary course of business of XXXXXXX
BANK).
Section 4.6 Filings. Since January 1, 1996, XXXXXXX BANK and
XXXXXXX INTERNATIONAL have filed all material reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that were required to be filed regarding XXXXXXX BANK with any federal,
state or local governmental or regulatory authority. All such reports,
registrations and filings are collectively referred to as the "Filings." As of
their respective filing dates, each of the Filings complied in all material
respects with all of the statutes, rules and regulations enforced or promulgated
by the governmental or regulatory authority with which it was filed and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
Section 4.7 Financial Statements. XXXXXXX INTERNATIONAL has
provided to PRIVATE, in Schedule 4.7 of the Xxxxxxx International Disclosure,
copies of (i) the call reports of XXXXXXX BANK as of December 31, 1996, 1997 and
1998, and the related statements of income and shareholders' equity for the
years then ended; and (ii) the balance sheet of XXXXXXX BANK as of June 30, 1999
and the related statement of income and shareholders' equity for the
period then ended ((i) and (ii) are collectively referred to herein as the
"Financial Statements"). The Financial Statements have been prepared in
accordance with applicable regulatory accounting principles consistently
followed throughout the periods covered by such statements, and present fairly
the financial position of XXXXXXX BANK as of the respective dates indicated and
the results of its operations and changes in financial position at the
respective dates and for the respective periods covered by such financial
statements. Since December 31, 1998 to the date hereof, XXXXXXX BANK has not
undergone or suffered any changes in its condition (financial or otherwise),
properties, assets, liabilities, business or operations which have been, in any
case or in the aggregate, materially adverse to XXXXXXX BANK except as disclosed
on Schedule 4.7 to the Xxxxxxx International Disclosure Schedule. No facts or
circumstances have been discovered from which it reasonably appears that there
is a significant risk and reasonable probability that XXXXXXX BANK will suffer
or experience a Material Adverse Effect, except for such facts or circumstances
as may occur as a consequence of the transactions contemplated by this
Agreement.
Section 4.8 Compliance with Applicable Laws. The business of
XXXXXXX BANK is not being conducted in violation of any law, ordinance or
regulation including, without limitation, Regulation O of the Federal Reserve
Board, except for violations which individually or in the aggregate do not and,
insofar as reasonably can be foreseen, in the future will not have a Material
Adverse Effect on XXXXXXX BANK. Except for examinations conducted by a
Governmental Entity in the regular course of XXXXXXX BANK's business, no
Governmental Entity has initiated any proceeding against XXXXXXX BANK or, to the
Knowledge of XXXXXXX INTERNATIONAL and XXXXXXX BANK, formal investigation into
the business or operations of XXXXXXX BANK since January 1, 1996.
14
Section 4.9 Litigation. Except as listed in Schedule 4.9 of the
Xxxxxxx International Disclosure Schedule, there are no suits, actions or
proceedings pending or, to XXXXXXX INTERNATIONAL's and XXXXXXX BANK's Knowledge,
threatened against or affecting, as of the date of this Agreement, XXXXXXX BANK
or any director, officer, employee or agent of XXXXXXX BANK in his or her
capacity as such, and there are no judgments, decrees, injunctions, rules or
orders of any Governmental Entity or arbitrator outstanding against XXXXXXX BANK
as to which there is a reasonable likelihood of an adverse determination, which,
if adversely determined, would have a Material Adverse Effect on XXXXXXX BANK.
To XXXXXXX BANK's and XXXXXXX INTERNATIONAL's Knowledge, no claim for
indemnification has been made with respect to any legal, administrative,
arbitral or other proceeding, claim, suit, action or governmental investigation
by any director, officer, employee or agent of XXXXXXX BANK in his or her
capacity as director, officer, employee or agent.
Section 4.10 Agreements with Banking Authorities. Except as set
forth in Schedule 4.10 of the Xxxxxxx International Disclosure Schedule, neither
XXXXXXX INTERNATIONAL, nor XXXXXXX BANK is a party to any written agreement,
memorandum of understanding, order or directive with any Governmental Entity
which restricts any conduct of XXXXXXX BANK's business or which relates to its
capital adequacy, credit policies, operations or management or otherwise.
Section 4.11 Insurance. XXXXXXX BANK, thru XXXXXXX INTERNATIONAL,
has in full force and effect policies of insurance with respect to its assets
and business against such casualties and contingencies, including directors' and
officers' indemnification, and in such amounts, types and forms as are
reasonable and customarily appropriate for its businesses, operations,
properties and assets. Schedule 4.11 of the Xxxxxxx International Disclosure
Schedule contains a list of all policies of insurance and bonds carried and
owned by XXXXXXX INTERNATIONAL on behalf of XXXXXXX BANK. XXXXXXX BANK is not in
default under any such policy of insurance or bond such that it can be canceled
and all material claims thereunder have been filed in timely fashion. XXXXXXX
BANK has filed claims with, or given notice of claim to, its insurers or bonding
companies in timely fashion, with respect to all material matters and
occurrences for which it believes it has coverage. XXXXXXX BANK makes no
representation as to whether any such insurance will continue past the Closing
Date, provided, however, XXXXXXX INTERNATIONAL shall maintain tail or
continuation coverage on any policy of insurance covering XXXXXXX BANK, and the
officers and directors of XXXXXXX BANK, for a period of at least five (5) years.
No written notice, and to XXXXXXX INTERNATIONAL's or XXXXXXX BANK's Knowledge,
verbal notice, of termination or cancellation has been made with respect to any
such policy.
Section 4.12 Title to Assets Other Than Real Property. Except as
disclosed in Schedule 4.12 of the Xxxxxxx International Disclosure Schedule and
other than Permitted Liens, XXXXXXX BANK has good and valid title to all its
properties and assets reflected in the Financial Statements, except such
personal property which has been disposed of in the ordinary course of business
and, other than real property which is the subject of Section 4.13, such
properties and assets are owned or leased by XXXXXXX BANK, free and clear of all
mortgages, liens, encumbrances, pledges or charges of any kind or nature. To the
Knowledge of XXXXXXX BANK and XXXXXXX INTERNATIONAL, substantially all of
XXXXXXX BANK's buildings and equipment in regular
15
use have been well maintained and are in good and serviceable condition,
reasonable wear and tear excepted.
Section 4.13 Real Property. Schedule 4.13 of the Xxxxxxx
International Disclosure Schedule is an accurate list and general description of
all real property owned or leased by XXXXXXX BANK, including the applicable
title commitment for each such property owned or leased (such title commitments
to be provided no later than ten (10) days prior to the Closing Date, pursuant
to Section 5.16), but excluding other real estate owned. Except as set forth in
Schedule 4.13 of the Xxxxxxx International Disclosure Schedule and except for
Permitted Liens and except as would not have a Material Adverse Effect on
XXXXXXX BANK, XXXXXXX BANK has good and valid title to the real property and
good and valid leasehold interests in the leaseholds. To XXXXXXX INTERNATIONAL's
and XXXXXXX BANK's Knowledge, XXXXXXX BANK enjoys peaceful and undisturbed
possession under all leases to which it is the lessee and all of such leases are
valid and in full force and effect absent, to the Knowledge of XXXXXXX
INTERNATIONAL and XXXXXXX BANK, any existing defaults. Any and all zoning
variances received by XXXXXXX INTERNATIONAL or XXXXXXX BANK, or the owners of
any material real property leased to either XXXXXXX INTERNATIONAL or XXXXXXX
BANK in connection with the operation of XXXXXXX BANK, concerning the real
property leased by XXXXXXX BANK are fully transferable to PRIVATE.
Section 4.14 Taxes.
4.14.1 Except as disclosed in Schedule 4.14 of the Xxxxxxx
International Disclosure Schedule, XXXXXXX BANK has timely filed all Tax Returns
(including but not limited to all required Internal Revenue Service Forms 1099,
1098, 5498 and 5500) required to be filed by it, all such Tax Returns being
accurate and complete in all material respects, and has paid, or has accrued on
its books and set up an adequate reserve for the payment of, all Taxes, current
or deferred, whether or not shown on any Tax Returns. XXXXXXX BANK is not
currently the beneficiary of any extension of time within which to file any Tax
Return. All Taxes of XXXXXXX BANK attributable to all periods ending on or
before the Closing Date, to the extent not required to have been previously
paid, whether or not disputed, will be fully and adequately reserved for in
accordance with generally accepted accounting principles. XXXXXXX BANK is not
delinquent in the payment of any Tax, assessment or governmental charge. Except
as set forth on Schedule 4.14 to the Xxxxxxx International Disclosure Schedule,
no deficiencies for any Taxes have been proposed, asserted or assessed against
XXXXXXX BANK that have not been resolved or settled and no requests for waivers
of the time to assess any such Tax are pending or have been agreed to. Except as
set forth on Schedule 4.14 to the Xxxxxxx International Disclosure Schedule,
XXXXXXX BANK does not have in effect any power of attorney or authorization to
anyone to represent it with respect to any Taxes, and there are no Tax audits of
any Tax Returns of XXXXXXX BANK that are in progress. Except as set forth on
Schedule 4.14 to the Xxxxxxx International Disclosure Schedule, the income Tax
Returns of XXXXXXX BANK have not been audited by either the Internal Revenue
Service, the Illinois Department of Revenue, or any other state or local taxing
authorities, for any of the last five (5) years. Except as set forth on Schedule
4.14 to the Xxxxxxx International Disclosure Schedule, XXXXXXX BANK is not
currently a party to any action or proceeding by any governmental
16
authority for the assessment or the collection of taxes. Deferred taxes of
XXXXXXX BANK have been accounted for in accordance with generally accepted
accounting principles.
4.14.2 Except as set forth on Schedule 4.14 of the Xxxxxxx
International Disclosure Schedule, XXXXXXX BANK has not filed any consolidated
federal income Tax Return with an "affiliated group" (within the meaning of
Section 1504 of the Code) where XXXXXXX INTERNATIONAL was not the common parent
of the group. Except as set forth on Schedule 4.14 of the Xxxxxxx International
Disclosure Schedule, XXXXXXX BANK neither is nor 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 XXXXXXX INTERNATIONAL, which
agreement with XXXXXXX INTERNATIONAL will be terminated pursuant to Section
5.14.3 hereof.
4.14.3 XXXXXXX BANK has withheld amounts from its employees,
shareholders, holders of deposit accounts, and others in compliance with the Tax
withholding provisions of applicable federal, state and local laws, filed all
Tax Returns and reports for all years for which any such Tax 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, other than those not yet due, have been timely made.
4.14.4 XXXXXXX BANK has not filed a consent under
Section 341(f) of the Code. XXXXXXX BANK has provided to PRIVATE, or its
representatives, complete (as filed, with any filed amendments thereto) copies
of its federal, state, local or foreign Tax Returns requested by PRIVATE and
which have been filed on or subsequent to January 1, 1996 and all examination
reports, if any, relating to the audit of such Tax Returns by the Internal
Revenue Service or other tax authority. XXXXXXX BANK has neither agreed to nor,
to XXXXXXX INTERNATIONAL's Knowledge, is required to, make any adjustments under
Section 481(a) of the Code by reason of a change in accounting method or
otherwise. XXXXXXX BANK is not a "United States real property holding
corporation" as defined in Section 897 of the Code.
4.14.5 XXXXXXX BANK has not made any payments, is not
obligated to make any payments, nor is a party to any agreement that could
obligate it or PRIVATE to make any payment that would constitute a "parachute
payment" under Section 280G of the Code.
4.14.6 Each member of the affiliated group (within the meaning
of Section 1504 of the Code) of which XXXXXXX INTERNATIONAL is the common parent
(the "Affiliated Group") has filed all federal income Tax Returns that it was
required to file for each taxable period during which any of XXXXXXX BANK and
its Subsidiaries was a member of such Affiliated Group. All such Tax Returns
were correct and complete in all respects. All federal income Taxes owed by any
member of the Affiliated Group (whether or not shown on any Tax Return) have
been paid for each taxable period during which any of XXXXXXX BANK and its
Subsidiaries was a member of the Affiliated Group.
4.14.7 There is no dispute or claim concerning any Federal
income Tax liability of any member of the Affiliated Group for any taxable
period during which any of XXXXXXX BANK and its Subsidiaries was a member of the
Affiliated Group either (i) claimed or
17
raised by any authority in writing or (ii) as to which any of XXXXXXX
INTERNATIONAL, its Controller, and its Chief Financial Officer has Knowledge
based upon personal contact with any agent of such authority. Except as
disclosed on Schedule 4.14, no member of the Affiliated Group has waived any
statute of limitations in respect of any federal income Taxes or agreed to any
extension of time with respect to an federal income Tax assessment or deficiency
for any taxable period during which any of XXXXXXX BANK or its Subsidiaries was
a member of the Affiliated Group.
4.14.8 None of XXXXXXX BANK and its Subsidiaries has any
liability for the Taxes of any Person other than XXXXXXX BANK and its
Subsidiaries (i) under Treasury Regulation ss.1.1502-6 (or any similar provision
of state, local, or foreign law), except Taxes referred to in Section 4.14.6
hereof, (ii) as a transferee or successor, (iii) by contract, or (iv) otherwise.
Section 4.15 Certain Contracts. Schedule 4.15 of the Xxxxxxx
International Disclosure Schedule sets forth as of the date hereof all contracts
of XXXXXXX BANK which are executory material contracts (as defined in Item
601(b)(10) of Regulation S-K of the SEC) to be performed after the date of this
Agreement and any other written, or to the Knowledge of XXXXXXX BANK or XXXXXXX
INTERNATIONAL, oral, (i) consulting agreement not terminable on 60 days' or less
notice or employment agreement or other agreement providing any term of
employment, compensation guarantee, or severance or supplemental retirement
benefit, (ii) union, guild or collective bargaining agreement, (iii) agreement
or plan, including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan, any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of the
transactions contemplated by this Agreement, (iv) contract containing covenants
which limit the ability of XXXXXXX BANK to compete in any line of business or
with any person or which involve any restriction of the geographical area in
which, or method by which, XXXXXXX BANK may carry on its business (other than as
may be required by law or applicable regulatory authorities), and (v) any
contract, agreement or other instrument or undertaking which is not terminable
by XXXXXXX BANK without additional payment or penalty within 60 days and
obligates XXXXXXX BANK for payments or other consideration with a value in
excess of $25,000. XXXXXXX BANK has performed in all material respects and is
not in default under or in breach of any material term or provision of any such
agreement or any loan agreement or credit agreement, note, mortgage, indenture
or other agreement, obligation or instrument applicable to XXXXXXX BANK, and no
event has occurred that, with the giving of notice or the passage of time or
both, would constitute such default or breach.
Section 4.16 Loans and Investments.
4.16.1 Except for the Retained Assets, and as disclosed in
Schedule 4.16 of the Xxxxxxx International Disclosure Schedule or where the
failure to be true would not, individually or in the aggregate, have a Material
Adverse Effect on XXXXXXX BANK, as of June 30, 1999, or the date of any update
to Schedule 4.16, no loans or investments held by XXXXXXX BANK are (i) more than
ninety (90) days past due with respect to any scheduled payment of principal or
18
interest; (ii) Classified Credits; or (iii) on a non-accrual status in
accordance with XXXXXXX BANK's loan review procedures.
4.16.2 Except as otherwise disclosed in Schedule 4.16 to the
Xxxxxxx International Disclosure Schedule, each material loan reflected as an
asset on the Financial Statements is evidenced by appropriate and sufficient
documentation and constitutes, to the Knowledge of XXXXXXX BANK and XXXXXXX
INTERNATIONAL, the legal, valid and binding obligation of the obligor named
therein, enforceable in accordance with its terms except to the extent that the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles or doctrines; to the
Knowledge of XXXXXXX BANK and XXXXXXX INTERNATIONAL, 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 XXXXXXX BANK, and all such
loans purchased by XXXXXXX BANK, were made or purchased in accordance with
customary lending standards of XXXXXXX BANK and in the ordinary course of
business of XXXXXXX BANK. Except as set forth in Schedule 4.16 to the Xxxxxxx
International Disclosure Schedule, all such loans are, and on the Closing Date
will be, free and clear of any material security interest, lien, encumbrance or
other charge, and XXXXXXX BANK has complied, and on the Closing Date will have
complied, in all material respects, with all laws and regulations relating to
such loans. Set forth on Schedule 4.16 to the Xxxxxxx International Disclosure
Schedule is a complete list of XXXXXXX BANK's Other Real Estate Owned ("OREO")
as of June 30, 1999.
4.16.3 All guarantees of indebtedness owed to XXXXXXX BANK,
including, but not limited to, those of the Federal Housing Administration, the
Small Business Administration, and other state and federal agencies, are, to the
Knowledge of XXXXXXX BANK and XXXXXXX INTERNATIONAL, legal, valid and
enforceable, except to the extent enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles or doctrines and except as would not have a Material
Adverse Effect on XXXXXXX BANK.
4.16.4 In originating, underwriting, servicing, and
discharging loans, mortgages, land contracts, and contractual obligations
relating thereto, either for its own account or for the accounts of others,
XXXXXXX BANK has complied with all applicable terms and conditions of such
obligations and with all applicable laws, regulations, rules, contractual
requirements, and procedures with respect to such servicing, except where the
failure to comply would not have a Material Adverse Effect on XXXXXXX BANK.
Section 4.17 Investment Securities.
4.17.1 Schedule 4.17 of the Xxxxxxx International Disclosure
Schedule sets forth a complete and accurate list of (i) the book and estimated
market values as of June 30, 1999 of the investment securities, mortgage-backed
securities and securities held for sale of XXXXXXX BANK and (ii) an investment
securities report as of such date which includes security descriptions, CUSIP
numbers, pool face values, book values and coupon rates.
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4.17.2 Except as set forth in Schedule 4.17 to the Xxxxxxx
International Disclosure Schedule and except for pledges to secure public and
trust deposits, none of the investments reflected in the Financial Statements
under the heading "Investment Securities," and none of the investments made by
XXXXXXX BANK since December 31, 1995, are subject to any restriction, whether
contractual or statutory, which materially impairs the ability of XXXXXXX BANK
freely to dispose of any of such investments at any time. With respect to all
material repurchase agreements to which XXXXXXX BANK is a party, XXXXXXX BANK
has a valid, perfected first lien or security interest in the government
securities or other collateral securing each such repurchase agreement, and the
value of the collateral securing each such repurchase agreement equals or
exceeds the amount of the debt secured by such collateral under such agreement.
Except as set forth in Schedule 4.17 of the Xxxxxxx International Disclosure
Schedule and except for transactions aggregating less than $50,000, XXXXXXX BANK
has neither sold nor 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 XXXXXXX BANK to repurchase or otherwise reacquire any
such assets. Schedule 4.17 also discloses all secured borrowings by XXXXXXX
BANK, from the Federal Home Loan Bank of Chicago ("FHLBC") or otherwise.
4.17.3 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" and "available for sale" held by
XXXXXXX BANK, as reflected in the Financial Statements, were classified and
accounted for in accordance with F.A.S.B. 115 and the intentions of management.
Section 4.18 Undisclosed Liabilities. Except (a) as set forth in
Schedule 4.18 of the Xxxxxxx International Disclosure Schedule, (b) for those
liabilities of XXXXXXX BANK that are specifically itemized and reflected or
reserved against as such on the balance sheet of XXXXXXX BANK for the period
ended December 31, 1998, and (c) for liabilities incurred in the ordinary course
of business consistent with past practice since December 31, 1998, to XXXXXXX
INTERNATIONAL's and XXXXXXX BANK's Knowledge, XXXXXXX BANK has incurred no
liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due).
Section 4.19 Employees; Employee Benefit Plans; ERISA.
4.19.1 All of XXXXXXX BANK's obligations for payment to trusts
or other funds or to any Governmental Entity or to any individual, director,
officer, employee or agent (or his or her heirs, legatees or legal
representatives) with respect to unemployment compensation benefits,
profit-sharing, pension or retirement benefits, social security benefits,
medical, dental, life, disability and other insurance or welfare benefits,
whether arising by operation of law, by contract or by past custom, including,
but not limited to obligations under any Employee Plan or any Benefit
Arrangement have been properly accrued for the periods covered thereby on the
Financial Statements and paid when due. All of XXXXXXX BANK's obligations,
whether arising by operation of law, by contract or by past custom for vacation
or holiday pay (which vacation or holiday pay is or may become payable in lieu
of time off or carried over to future periods), bonuses and other forms of
compensation which are payable to XXXXXXX BANK's directors, officers, employees
or agents
20
have been properly accrued on the Financial Statements for the periods covered
thereby and paid when due. Except as set forth in Schedule 4.19 of the Xxxxxxx
International Disclosure Schedule, there are no unfair labor practice
complaints, strikes, slowdowns, stoppages, attempts to unionize or other
controversies pending or, to XXXXXXX INTERNATIONAL's and XXXXXXX BANK's
Knowledge, threatened against XXXXXXX BANK that are likely to have a Material
Adverse Effect on XXXXXXX BANK. XXXXXXX BANK is not a party to any collective
bargaining agreement with respect to any of its employees and, except as set
forth in Schedule 4.19 of the Xxxxxxx International Disclosure Schedule, XXXXXXX
BANK is not a party to a written employment contract with any of its employees
and there are no understandings with respect to the employment of any officer or
employee of XXXXXXX BANK which is not terminable by XXXXXXX BANK without
liability on not more than thirty (30) days' notice. Except as disclosed in the
Financial Statements for the periods covered thereby, all sums due for employee
compensation have been paid and all employer contributions for employee
benefits, including deferred compensation obligations, and any benefits under
any Employee Plan (as defined in Section 4.19.3 hereof) or any Benefit
Arrangement (as defined in Section 4.19.4 hereof) have been duly and adequately
paid or provided for in accordance with plan documents. Other than as set forth
in Schedule 4.19 of the Xxxxxxx International Disclosure Schedule, no director,
officer or employee of XXXXXXX BANK is entitled to receive any payment of any
amount under any existing agreement, severance plan or other benefit plan as a
result of the consummation of any transaction contemplated by this Agreement. In
the event any director, officer or employee of XXXXXXX BANK is entitled to
receive any payment of any amount under any existing agreement, severance plan
or other benefit plan as a result of the consummation of any transaction
contemplated by this Agreement, XXXXXXX INTERNATIONAL, except as provided in
Section 6.2.9, shall pay any and all amounts deemed to be owed to any such
director, officer or employee. To XXXXXXX INTERNATIONAL's and XXXXXXX BANK's
Knowledge, XXXXXXX BANK has materially complied with all applicable federal and
state statutes and regulations which govern workers' compensation, equal
employment opportunity and equal pay.
4.19.2 Schedule 4.19 of the Xxxxxxx International Disclosure
Schedule is a complete list of:
a. all current employees of XXXXXXX BANK, together
with title or job classifications, and the current annual rate of
compensation paid to each such employee ("Employees"); and
b. all Employee Plans and Benefit Arrangements as
they relate to employees of XXXXXXX BANK, including all plans or
practices providing for current compensation or accruals for active
Employees, including, but not limited to, all employee benefit plans,
all pension, profit-sharing, retirement, bonus, stock option,
incentive, deferred compensation, severance, long-term disability,
medical, dental, health, hospitalization, life insurance or other
insurance plans or related benefits.
4.19.3 Except as disclosed in Schedule 4.19 of the Xxxxxxx
International Disclosure Schedule, none of XXXXXXX INTERNATIONAL, XXXXXXX BANK
or any ERISA Affiliate maintain, administer or otherwise contribute to any
"employee benefit plan," as defined in Section 3(3) of ERISA, which is subject
to any provisions of ERISA and covers any employee,
21
whether active or retired, of XXXXXXX BANK (any such plan being herein referred
to as an "Employee Plan"). Copies of each such Employee Plan, including
amendments thereto, will, upon PRIVATE's request, be delivered to PRIVATE,
together with (i) all agreements regarding plan assets with respect to such
Employee Plans, (ii) copies of the annual reports for the most recent three
years (Form 5500 Series including all schedules attached thereto) prepared in
connection with any such Employee Plan, (iii) copies of the actuarial valuation
reports for the most recent three years, if any, prepared in connection with any
such Employee Plan covering any active employee of XXXXXXX BANK, (iv) a copy of
the most recent summary plan description of each such Employee Plan, together
with any modifications thereto, and (v) a copy of the most recent favorable
determination letter (if applicable) from the Internal Revenue Service for each
Employee Plan. None of the Employee Plans is a "multiemployer plan" as defined
in Section 3(37) of ERISA or a "multiple employer plan" as covered in Section
412(c) of the Code, and XXXXXXX BANK has not been obligated to make a
contribution to any such multiemployer or multiple employer plan within the past
five years. Each Employee Plan which is intended to be qualified under Section
401(a) of the Code is so qualified and each trust maintained pursuant thereto is
exempt from income tax under Section 501(a) of the Code, and each of XXXXXXX
INTERNATIONAL and XXXXXXX BANK has no Knowledge of any fact which has occurred
which would cause the loss of such qualification or exemption.
4.19.4 Except as disclosed in Schedule 4.19 of the Xxxxxxx
International Disclosure Schedule and exclusive of any Employee Plan, neither
XXXXXXX INTERNATIONAL, XXXXXXX BANK nor any ERISA Affiliate maintains (other
than base-salary and base wages) any form of current or deferred compensation,
bonus, stock option, stock appreciation right, severance pay, salary
continuation, retirement or incentive plan or arrangement for the benefit of any
director, officer or employee, whether active or retired, of XXXXXXX BANK or for
any class or classes of such directors, officers or employees (any such plan or
arrangement being herein referred to as a "Benefit Arrangement"). Except as
disclosed in Schedule 4.19 of the Xxxxxxx International Disclosure Schedule and
other than any Employee Plan, none of XXXXXXX INTERNATIONAL, XXXXXXX BANK or any
ERISA Affiliate maintain any group or individual health or insurance, welfare or
similar plan or arrangement for the benefit of any director, officer or employee
of XXXXXXX BANK whether active or retired, or for any class or classes of such
directors, officers or employees. Copies or descriptions of each Benefit
Arrangement, including all amendments thereto, will, upon PRIVATE's request, be
delivered to PRIVATE.
4.19.5 All Employee Plans and Benefit Arrangements are
operated in material compliance with the requirements prescribed by any and all
statutes, governmental or court orders, or governmental rules or regulations
currently in effect, including but not limited to ERISA and the Code, applicable
to such plans or arrangements, and plan documents relating to any such plans or
arrangements comply with or will be amended to comply with applicable legal
requirements. Except as disclosed in Schedule 4.19 of the Xxxxxxx International
Disclosure Schedule, within the past 5 years no Employee Plan which is subject
to Title IV of ERISA has been completely or partially terminated and no
condition exists that could constitute grounds for the termination of any
Employee Plan pursuant to Subtitle C of Title IV of ERISA, nor has XXXXXXX
INTERNATIONAL, XXXXXXX BANK or any ERISA Affiliate incurred or been subject to
within the past 5 years, nor does any of them reasonably expect to incur or
become subject to, any liability to or lien in favor of
22
the Pension Benefit Guaranty Corporation, except for required premium payments
which have been paid when due; except as disclosed in Schedule 4.19 of the
Xxxxxxx International Disclosure Schedule, none of the Employee Plans which are
employee pension benefit plans within the meaning of Section 3(2) of ERISA has
engaged in a merger or consolidation with any other plan or transferred assets
or liabilities from any other plan within the past 5 years; with respect to each
Employee Plan, to XXXXXXX INTERNATIONAL's and XXXXXXX BANK's Knowledge, none of
XXXXXXX INTERNATIONAL, XXXXXXX BANK or any ERISA Affiliate nor any Employee
Plan, nor any trusts created thereunder, nor any trustee or administrator nor
any other fiduciary thereof, has engaged in a "prohibited transaction," as
defined in Section 406 of ERISA and Section 4975 of the Code, that could subject
any of them or PRIVATE to liability under Section 409 or 502(i) of ERISA or
Section 4975 of the Code or that would adversely affect the qualified status of
such plans; each "plan official" within the meaning of Section 412 of ERISA of
each Employee Plan is bonded to the extent required by such Section 412; with
respect to each Employee Plan, to XXXXXXX INTERNATIONAL's and XXXXXXX BANK's
Knowledge, no employee of XXXXXXX INTERNATIONAL, XXXXXXX BANK or any ERISA
Affiliate nor any fiduciary of any Employee Plan has engaged in any breach of
fiduciary duty as defined in Part 4 of Subtitle B of Title I of ERISA which
could subject XXXXXXX BANK to liability if XXXXXXX BANK is obligated to
indemnify such person against liability. No Employee Plan that is subject to
Title IV of ERISA or Section 412 of the Code incurred any "accumulated funding
deficiency" (as defined in ERISA), whether or not waived, taking into account
contributions made within the period described in Section 412(c)(10) of the Code
and each Employee Benefit Plan that is a defined benefit plan is fully funded as
determined on the basis of the actuarial assumptions used for the most recent
actuarial evaluation of such plan. Except as disclosed in Schedule 4.19 of the
Xxxxxxx International Disclosure Schedule, none of XXXXXXX INTERNATIONAL,
XXXXXXX BANK or any ERISA Affiliate has failed to make any contribution or pay
any amount due and owing as required by law or the terms of any Employee Plan or
Benefit Arrangement.
4.19.6 Except as set forth in Schedule 4.19 of the Xxxxxxx
International Disclosure Schedule, to XXXXXXX INTERNATIONAL's and XXXXXXX BANK's
Knowledge, no Employee Plan or Benefit Arrangement has any material liability of
any nature, accrued or contingent, including, without limitation, liabilities
for federal, state, local or foreign taxes, interest or penalty other than
liability for claims arising in the course of the administration of each such
plan. There is no pending or, to XXXXXXX INTERNATIONAL's and XXXXXXX BANK's
Knowledge, threatened legal action, proceeding or investigation against any
Employee Plan, other than routine claims for benefits, which could result in any
material liability to XXXXXXX BANK and there is no basis for any such legal
action or proceeding.
4.19.7 Each Benefit Arrangement which is a group health plan
(within the meaning of such term under Section 4980B(g)(2)) of the Code
materially complies and has materially complied with the requirements of Section
601 through 608 of ERISA or Section 4980B of the Code governing continuation
coverage requirements for employer-provided group health plans and Section 701
of ERISA relating to certifications of creditable coverage under such health
plans..
23
4.19.8 Except as disclosed in Schedule 4.19 of the Xxxxxxx
International Disclosure Schedule, none of XXXXXXX INTERNATIONAL, XXXXXXX BANK
or any ERISA Affiliate maintain any Employee Plan or Benefit Arrangement
pursuant to which any benefit or other payment will be required to be made by
XXXXXXX BANK or pursuant to which any other benefit will accrue or vest in any
director, officer or employee of XXXXXXX BANK, in either case as a result of the
consummation of the transactions contemplated by this Agreement.
4.19.9 No "reportable event," as defined in ERISA, has
occurred with respect to any of the Employee Plans.
Section 4.20 Intellectual Property Rights. Schedule 4.20.1 of the
Xxxxxxx International Disclosure Schedule is a list of XXXXXXX BANK's
Intellectual Property which is being retained by XXXXXXX INTERNATIONAL. Schedule
4.20.2 of the Xxxxxxx International Disclosure Schedule is a list of XXXXXXX
BANK's Intellectual Property for which PRIVATE is hereby granted a non exclusive
license by XXXXXXX INTERNATIONAL at no additional consideration (other than the
Purchase Price) to use such Intellectual Property for the period of time
following the Closing Date as indicated on Schedule 4.20.2.
Section 4.21 Hazardous Substances.
4.21.1 Except for ordinary and necessary quantities of
cleaning, pest control and office supplies, and other small quantities of
Hazardous Substances used in the ordinary course of XXXXXXX BANK's business, all
of which have been used, stored, and disposed of in compliance with applicable
Environmental Laws, or ordinary rubbish, debris and nonhazardous solid waste
stored in garbage cans or bins for regular disposal off-site, in compliance with
applicable Environmental Laws, or petroleum contained in de minimis quantities
discharged from motor vehicles in their ordinary operation on the XXXXXXX BANK
Property (as defined below), XXXXXXX INTERNATIONAL and XXXXXXX BANK have not
engaged in the generation, use, manufacture, treatment, transportation, storage
(in tanks or otherwise), or disposal, or other handling, of Hazardous
Substances. Except as disclosed in Schedule 4.21 of the Xxxxxxx International
Disclosure Schedule, no Hazardous Substances have been released, emitted or
disposed of, or otherwise deposited, on, in, or from any of the following real
property: (i) all real property previously owned, operated or leased by XXXXXXX
BANK, (ii) all real estate owned by XXXXXXX BANK, and (iii) all OREO of XXXXXXX
BANK (collectively, the "XXXXXXX BANK Property"). No activity has been
undertaken on or from the XXXXXXX BANK Property during XXXXXXX BANK's period of
occupancy, operation, or ownership of the XXXXXXX BANK Property that has caused
or contributed to or would cause or contribute to:
a. the XXXXXXX BANK Property being deemed a
treatment, storage or disposal facility within the meaning of RCRA or
any similar state law or local ordinance;
b. a release or threatened release of any
Hazardous Substances on or from any property; or
24
c. the discharge of Hazardous Substances into any
soil, subsurface water or ground water or into the air, or the
dredging or filling of any waters, that would require a permit or any
other approval under the Federal Water Pollution Control Act, 33
U.S.C. ss.1251 et seq., the Clean Air Act, as amended, 42 U.S.C. ss.
7401 et seq., or any similar federal or state law or local ordinance.
4.21.2 Except as disclosed in Schedule 4.21 of the Xxxxxxx
International Disclosure Schedule, there are no storage tanks used for the
storage of Hazardous Substances located in, on, or under the XXXXXXX BANK
Property.
4.21.3 Except as disclosed in Schedule 4.21 of the Xxxxxxx
International Disclosure Schedule, neither XXXXXXX INTERNATIONAL nor XXXXXXX
BANK has received any written notice or to XXXXXXX BANK or XXXXXXX
INTERNATIONAL's Knowledge, oral notice, of any pending or threatened claims,
investigations, administrative proceedings, litigation, regulatory hearings or
requests or demands for information, investigation, remedial or response actions
or for compensation, with respect to the XXXXXXX BANK Property, alleging
noncompliance with or violation of any Environmental Law or seeking relief under
any Environmental Law, and the XXXXXXX BANK Property is not listed on the United
States Environmental Protection Agency's National Priorities List of Hazardous
Waste Sites, or to XXXXXXX BANK's and XXXXXXX INTERNATIONAL's Knowledge, with
respect to which XXXXXXX INTERNATIONAL and XXXXXXX BANK have made reasonable
inquiry, any other list, schedule, log, inventory or record of hazardous waste
sites maintained by any federal, state or local agency; nor to XXXXXXX
INTERNATIONAL's or XXXXXXX BANK's Knowledge is any XXXXXXX BANK Property
proposed, considered, or under investigation for such listing.
4.21.4 Except as set forth in Schedule 4.21 of the Xxxxxxx
International Disclosure Schedule and delivered to PRIVATE, to XXXXXXX
INTERNATIONAL's and XXXXXXX BANK's Knowledge, there are no environmental reports
regarding the XXXXXXX BANK Property.
4.21.5 "Hazardous Substances" shall mean (i) any petroleum or
petroleum products, flammable explosives, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid containing levels
of polychlorinated biphenyls (PCBs); (ii) any chemicals or other materials or
substances which are defined, governed or regulated as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants" or words of similar import, under any Environmental Law; and
(iii) any other chemical or other material or substance, exposure to which is
prohibited, limited or regulated by any Governmental Entity under any
Environmental Laws.
Section 4.22 Disclosure in Schedules. Anything disclosed by XXXXXXX
INTERNATIONAL or XXXXXXX BANK in the Schedules to this Agreement shall be
considered to have been disclosed for purposes of all representations,
warranties and covenants of such party under this Agreement.
25
Section 4.23 Corporate Records. The corporate record books, transfer
books and stock ledgers of XXXXXXX BANK are complete and accurate in all
material respects and reflect all meetings, consents and other material actions
of the organizers, incorporators, stockholders, Boards of Directors and
committees of the Boards of Directors of XXXXXXX BANK and each such Subsidiary,
and all transactions in their respective capital stocks, since their respective
inceptions; provided, however, that for periods prior to January 1, 1995, the
foregoing representation is limited to the Knowledge of XXXXXXX BANK and XXXXXXX
INTERNATIONAL.
Section 4.24 Insider Interests. All outstanding loans and other
contractual arrangements (including deposit relationships) between (i) XXXXXXX
INTERNATIONAL and XXXXXXX BANK and (ii) XXXXXXX BANK or any XXXXXXX
INTERNATIONAL Subsidiary and any officer, director or employee of XXXXXXX BANK
or any XXXXXXX INTERNATIONAL Subsidiary conform in all material respects 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. The amount and nature of loans and indebtedness between (i)
XXXXXXX BANK and XXXXXXX INTERNATIONAL and (ii) XXXXXXX BANK and any XXXXXXX
INTERNATIONAL Subsidiary or Affiliate or executive officer (pursuant to
Regulation O) or director are set forth on Schedule 4.24 of the Xxxxxxx
International Disclosure Schedule. No officer, director or employee of XXXXXXX
BANK has any material interest in any property, real or personal, tangible or
intangible, used in or pertaining to the business of XXXXXXX BANK.
Section 4.25 Labor Arrangements. To XXXXXXX INTERNATIONAL and
XXXXXXX BANK's Knowledge, no employee of XXXXXXX BANK is represented, for
purposes of collective bargaining, by a labor organization of any type. XXXXXXX
BANK is unaware of any efforts during the past five years to unionize or
organize any employees of XXXXXXX BANK and no claim related to such employees
under the Fair Labor Standards Act, National Labor Relations Act, Civil Rights
Act of 1964, Xxxxx-Xxxxx Act, Xxxxx Xxxxx Act, Civil Rights Act of 1968, Age
Discrimination in Employment Act, Equal Pay Act of 1963, Executive Order No.
11246, Federal Unemployment Tax Act, Vietnam Era Veterans Readjustment Act,
Occupational Safety and Health Act, or any state or local employment-related
law, order, ordinance or regulation, and no unfair labor practice discrimination
or wage-and-hour claim is pending or, to XXXXXXX BANK's and XXXXXXX
INTERNATIONAL's Knowledge, threatened against XXXXXXX BANK, which claim has had
or is reasonably likely to have a Material Adverse Effect on XXXXXXX BANK.
Section 4.26 Loan Loss Reserves. The reserve for possible loan and
lease losses shown on XXXXXXX BANK's balance sheet as of June 30, 1999 complied
with XXXXXXX BANK's reserve policies and past practices.
Section 4.27 Examinations. The last examinations of XXXXXXX BANK by
the Illinois Office of Banks and Real Estate, the Federal Reserve Board and the
FDIC prior to the date of this Agreement were performed as of the dates
described on Schedule 4.27 of the Xxxxxxx International Disclosure Schedule, and
true, correct and complete copies of the reports of examination related thereto
are maintained in XXXXXXX BANK's examination files. If XXXXXXX BANK or XXXXXXX
INTERNATIONAL were notified of any deficiencies as a result of said examinations
or any prior examinations of XXXXXXX BANK by the Illinois Office of Banks and
Real Estate, the
26
Federal Reserve Board or the FDIC, XXXXXXX BANK has taken action to correct each
such deficiency, which action XXXXXXX BANK to its Knowledge believes is to the
satisfaction of the appropriate agency, and XXXXXXX BANK has not received notice
of any kind that such action is inadequate, and if any changes in operating
methods or organization were required by reason of such examinations, or other
examinations, such changes have been made.
Section 4.28 XXXXXXX BANK Facilities. All "alterations" (as such
term is defined in ADA) to the business of XXXXXXX BANK including, without
limitation, automatic teller machines (collectively, the "XXXXXXX BANK
Facilities") undertaken after January 26, 1992 comply with ADA and ADAAG.
Effective January 26, 1992, all plans and designs for new construction to be
utilized by XXXXXXX BANK comply with ADA and ADAAG. XXXXXXX BANK warrants that
there are no material investigations, proceedings, or complaints, formal or
informal, pending or overtly threatened against XXXXXXX BANK in connection with
XXXXXXX BANK Facilities under ADA, ADAAG, or any other local, state or federal
law concerning accessibility for individuals with disabilities.
Section 4.29 Material Adverse Changes. Except as disclosed in
Schedule 4.29 of the Xxxxxxx International Disclosure Schedule delivered on the
date of execution of this Agreement, since December 31, 1998, there has been no
material adverse change in the financial condition, results of operation or
business of XXXXXXX INTERNATIONAL (as it relates to XXXXXXX BANK) or XXXXXXX
BANK, taken as a whole, other than any changes resulting primarily by reason of
changes in banking laws or regulations, changes in the level of interest rates
and changes in economic, financial or market conditions affecting the banking
industry generally in the regions in which XXXXXXX BANK operates.
Section 4.30 Approvals. As of the date of this Agreement, neither
XXXXXXX INTERNATIONAL nor XXXXXXX BANK knows of any reason why all Requisite
Regulatory Approvals shall not be obtained.
Section 4.31 Year 2000. XXXXXXX INTERNATIONAL and/or XXXXXXX BANK
have conducted an inventory and/or investigation of any and all computer systems
used or held for use by XXXXXXX BANK and its affiliates in order to determine
which parts are not Year 2000 Compliant and to estimate the cost of rendering
such computer systems Year 2000 Compliant prior to January 1, 2000. A true and
correct copy of any written report or other documentation resulting from such
inventory and/or investigation has been provided to PRIVATE. XXXXXXX
INTERNATIONAL and/or XXXXXXX BANK agrees to make available this documentation as
well as all documentation relating to XXXXXXX BANK, including but not limited to
its project plan, test plans, test results and contingency plans to PRIVATE.
Except as provided for in Schedule 4.31 of the Xxxxxxx International Disclosure
Schedule, the computer systems of XXXXXXX BANK and its affiliates are either
Year 2000 Compliant or will be Year 2000 Compliant by the Closing Date, which
specific indemnification right is separate and apart from any Article VIII
indemnification rights relating to the representations and warranties of the
parties (including this Section 4.31) and the indemnification amount for making
such computer systems Year 2000 Compliant shall not exceed $100,000. XXXXXXX
INTERNATIONAL agrees to indemnify PRIVATE for all costs incurred in order to
make XXXXXXX BANK's computer systems Year 2000 Compliant after the
27
Closing Date. XXXXXXX BANK and its affiliates have made inquiries of and have
received responses from their major suppliers and customers regarding Year 2000
issues. True and correct copies of any correspondence and/or agreement with any
suppliers or customers relating to Year 2000 Compliance shall be made available
to PRIVATE upon request. "Year 2000 Compliant" shall mean that computer
applications used by the Seller and its affiliates will be able to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date on or after December 31, 1999.
Section 4.32 Related Matters.
Section 4.32.1 Neither XXXXXXX INTERNATIONAL nor XXXXXXX BANK
is aware of any existing facts that would constitute a defense for a third party
to a tortious interference claim by PRIVATE if such third party attempts to
interfere with the consummation of the transactions proposed pursuant hereto.
Section 4.32.2 Neither XXXXXXX INTERNATIONAL nor XXXXXXX BANK
has any obligations under law or contract to seek other alternatives,
transactions or bids involving a sale of XXXXXXX BANK. Neither XXXXXXX
INTERNATIONAL nor XXXXXXX BANK has any obligation under law or contract to seek
a price for the shares of capital stock of XXXXXXX BANK in excess of the price
offered by PRIVATE pursuant hereto.
Section 4.33 Brokerage Fees. XXXXXXX INTERNATIONAL is not a party
to, or obligated under, any agreement with any broker or finder relating to the
transactions contemplated hereby other than with Xxxxx, Xxxxxxxx & Xxxxx, Inc.
Under no circumstances shall any fees, costs or other expenses be paid by
XXXXXXX BANK to Xxxxx, Xxxxxxxx & Xxxxx, Inc., or any other broker or finder.
Section 4.34 Investment Representations. XXXXXXX INTERNATIONAL is
acquiring the Subordinated Debt Note for its own account, for investment, and
not with a view toward the resale or distribution thereof. XXXXXXX INTERNATIONAL
understands that it must bear the economic risk of such investment for an
indefinite period of time because the sale and issuance of the Subordinated Debt
Note has not been registered under the Securities Act or any applicable state
securities laws, and may not be resold unless subsequently registered under the
Securities Act and such other laws, or unless an exemption from such
registration is available. XXXXXXX INTERNATIONAL agrees that each certificate
representing the Subordinated Debt Note (or, "Notes", should the Subordinated
Note be transferred in part) will contain a restrictive legend restricting the
sale, transfer or other disposition of the such Notes unless the offer and sale
thereof are registered under the Securities Act and applicable state securities
laws, or exemptions from such registration requirements are available, and in
each case, unless the transfer procedures provided for in the Notes are
satisfied. XXXXXXX INTERNATIONAL further acknowledges that it has received
copies of the Form S-1 Registration Statement filed with the SEC by PRIVATE in
connection with its initial public offering of common stock, which was declared
effective on June 30, 1999, and of PRIVATE's Quarterly Report on Form 10-Q for
the period ended June 30, 1999, filed with the SEC on August 16, 1999, and that
representatives of XXXXXXX INTERNATIONAL have had the opportunity to ask
questions of, and receive answers from, officers of PRIVATE with respect to the
28
business and financial condition of PRIVATE and to request any additional
information it deems necessary to evaluate an investment in PRIVATE or to verify
the information provided, and has obtained the information requested to the
extent PRIVATE possesses such additional information or can acquire it without
unreasonable effort or expense. XXXXXXX INTERNATIONAL further represents that it
is an "accredited investor," as such term is defined in Rule 501 of Regulation D
of the SEC under the Securities Act, experienced in financial and investment
affairs and capable of evaluating the merits and risks of an investment of this
nature.
Section 4.35 True and Complete Information. No representation or
warranty made by XXXXXXX INTERNATIONAL or XXXXXXX BANK contained in this
Agreement and no statement contained in the Xxxxxxx International Disclosure
Schedule or any certificate delivered pursuant to this Agreement, whether
heretofore furnished to PRIVATE or hereinafter required to be furnished to
PRIVATE, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained therein not misleading.
ARTICLE 5 ADDITIONAL AGREEMENTS
Section 5.1 Conduct of XXXXXXX BANK's Business Pending Closing.
During the period from the date of execution of this Agreement through Closing,
XXXXXXX INTERNATIONAL agrees to cause XXXXXXX BANK to, and XXXXXXX BANK agrees
to, carry on its business in the ordinary course in substantially the manner in
which heretofore conducted and in accordance with safe and sound banking
practices, subject to changes in law applicable to all Illinois banks and
Wisconsin bank holding companies and directives from regulators, and use
reasonable efforts to preserve intact XXXXXXX BANK's business organization, keep
available the services of its officers and employees (other than terminations
and resignations in the ordinary course of business and the transfers of
employees from XXXXXXX BANK to Affiliates of XXXXXXX INTERNATIONAL as previously
disclosed in writing to and agreed to by PRIVATE) and preserve XXXXXXX BANK's
relationship with customers, suppliers and others having business dealings with
it, and, to these ends, will fulfill each of the following:
5.1.1 Use their respective best efforts, or cooperate
with others, to expeditiously bring about the satisfaction of the conditions
specified in Article 6 hereof;
5.1.2 Request the prior written approval of PRIVATE (to which
PRIVATE will respond within five (5) Business Days and which approval shall not
be unreasonably withheld) of XXXXXXX BANK's intention to make any capital
expenditures, or commitments with respect thereto, except those in the ordinary
course of business which do not exceed $10,000 individually or $100,000 in the
aggregate;
5.1.3 Provide to PRIVATE any and all reports to the Board of
Directors of XXXXXXX BANK, including information regarding the amounts and
categories of any Classified Credits;
5.1.4 Maintain XXXXXXX BANK's books in accordance with
generally accepted accounting principles;
29
5.1.5 Use their reasonable efforts to obtain (and to
cooperate with PRIVATE in obtaining) any consent, authorization or approval of,
or any exemption by, any Governmental Entity, or other third party, required to
be obtained or made by any of them in connection with taking of any action
contemplated hereby;
5.1.6 Use their reasonable efforts to maintain their
respective properties and assets in their present state of repair, order and
condition, reasonable wear and tear excepted, and use their best efforts to
maintain and keep in full force and effect all policies of insurance presently
in effect, including the insurance of accounts with the FDIC;
5.1.7 Take all requisite action (including, without
limitation, the making of claims and the giving of notices) pursuant to XXXXXXX
BANK's directors' and officers' liability insurance policy or policies in order
to preserve all rights thereunder with respect to all matters known by XXXXXXX
BANK and XXXXXXX INTERNATIONAL which reasonably give rise to a claim prior to
the Closing Date;
5.1.8 Promptly advise PRIVATE orally and in writing of any
event or series of events which has resulted in or is reasonably likely to
result in a Material Adverse Effect on XXXXXXX BANK or which may adversely
affect the satisfaction of any condition precedent to the consummation of the
Merger or the ability of XXXXXXX INTERNATIONAL and XXXXXXX BANK to perform their
respective obligations hereunder; and
5.1.9 Advise PRIVATE orally and in writing prior to entering
into, renewing or increasing any loan or credit commitment (including letters of
credit) to, or investing or agreeing to invest in, any Person or modifying any
of the material provisions or renewing or otherwise extending the maturity date
of any existing loan or credit commitment: (i) with respect to new loans or
credit commitments or the extension of the maturity date of any existing loan or
credit commitment, to any Person in an amount in excess of $100,000 or in any
amount which, when aggregated with any and all loans or credit commitments of
XXXXXXX BANK to such person or entity, would be in excess of $100,000; (ii) with
respect to renewals or increases in any loan or credit commitment, to any Person
in an amount in excess of $100,000; (iii) to any person other than in accordance
with XXXXXXX BANK's lending policies as in effect on the date hereof; or (iv) to
any person or entity any of the loans or other extensions of credit to which or
investments in which are on a "watch list" or similar internal report of XXXXXXX
BANK; provided, however, that nothing in this subsection shall prohibit XXXXXXX
BANK from honoring any contractual obligation, previously disclosed to PRIVATE,
in existence on the date of this Agreement.
Section 5.2 Negative Covenants of XXXXXXX INTERNATIONAL and XXXXXXX
BANK. During the period from the date of execution of this Agreement through
Closing, each of XXXXXXX INTERNATIONAL and XXXXXXX BANK agrees, jointly and
severally (except to the extent PRIVATE shall otherwise consent in writing),
that XXXXXXX BANK shall not:
5.2.1 intentionally take any action that would result in any
of the representations and warranties set forth in the Agreement becoming untrue
in any material respect or in any of the conditions to Closing set forth in
Article 6 not being satisfied, except to the extent
30
such actions are undertaken in accordance with applicable law, regulation or at
the direction of any regulatory authority;
5.2.2 issue, deliver or sell, authorize the issuance,
delivery or sale of or purchase any shares of its capital stock or any class of
securities convertible into capital stock, or rights, warrants or options to
acquire its capital stock or increase or decrease the number of shares of
capital stock by split-up, reclassification, reverse split, stock-dividend or
change in par or stated value;
5.2.3 amend its charter, certificate of incorporation,
articles of incorporation or bylaws, except as required by applicable law or by
the terms of this Agreement;
5.2.4 acquire or agree to acquire by merging, consolidating
with, or purchasing a substantial portion of the assets of, or in any other
manner, any business of any person or otherwise acquire or agree to acquire any
assets, other than assets not exceeding the limitations set forth in Section
5.1.2 above;
5.2.5 other than the Retained Assets, sell, lease or
otherwise dispose of any of its assets which are material, individually or in
the aggregate, to XXXXXXX BANK, except in the ordinary course of business
consistent with prior practice;
5.2.6 incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities of XXXXXXX BANK or
guarantee any debt securities of others other than in the ordinary course of
business consistent with prior practice;
5.2.7 make or enter into a commitment to make any loan or
other extension of credit to any XXXXXXX BANK director, officer or employee
except in accordance with practice or policy in existence on the date of this
Agreement, or change the general lending, investment, liability management and
other material policies concerning the banking business of XXXXXXX BANK (other
than as required by law);
5.2.8 except as otherwise required to correct a prior filing
(in which case XXXXXXX INTERNATIONAL will provide PRIVATE with prior notice of
such correction), compromise or otherwise settle or adjust any assertion or
claim of a deficiency in Taxes or file any appeal from an asserted deficiency
except in a form previously approved by PRIVATE in writing or file or amend any
Tax Return or report or make any Tax election or change any method or period of
accounting unless required by generally accepted accounting principles or
applicable law;
5.2.9 declare or pay any dividends on or make other
distributions in respect of the Shares;
5.2.10 grant to any director, officer, or employee any
increases in compensation or pay any bonuses (except in accordance with past
practices or plans or agreements disclosed in Schedule 4.19 of the Xxxxxxx
International Disclosure Schedule), make contributions to or under any Employee
Plan or Benefit Arrangement (except in accordance with past practices
31
or plans or agreements disclosed in Schedule 4.19 of the Xxxxxxx International
Disclosure Schedule), adopt or amend any Employee Plan or Benefit Arrangement,
or increase any severance or termination pay, enter into or amend any employment
or severance agreement, or, without the prior written consent of PRIVATE, which
consent shall not be unreasonably withheld, hire any new employee with a base
salary in excess of $50,000 or if such hiring would cause the aggregate numbers
of employees of XXXXXXX BANK in any of the classifications set forth in Schedule
4.19 of the Xxxxxxx International Disclosure Schedule to exceed the number set
forth for such classification for XXXXXXX BANK in said Schedule 4.19 of the
Xxxxxxx International Disclosure Schedule;
5.2.11 enter into any material lease, sub-lease or license
with respect to any property, whether real or personal, or any other contract,
agreement or commitment for goods or services which has a term of six (6) months
after the date hereof and involves the payment by XXXXXXX BANK of more than
$25,000 in the aggregate;
5.2.12 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, except for such arrangements that
affect XXXXXXX INTERNATIONAL and its Affiliates generally, in which case XXXXXXX
INTERNATIONAL shall provide PRIVATE with prior written notice of such change;
and
5.2.13 close or relocate the operations of any branch office
location of XXXXXXX BANK.
Section 5.3 Conduct of PRIVATE. During the period from the date of
execution of this Agreement through Closing, PRIVATE agrees (except to the
extent XXXXXXX INTERNATIONAL and XXXXXXX BANK shall otherwise consent in
writing) to use its best efforts, or cooperate with others, to expeditiously
bring about the satisfaction of the conditions specified in Article 6 hereof.
Section 5.4 Access; Due Diligence; Data Processing; Trust Powers.
5.4.1 From the date of this Agreement until Closing, XXXXXXX
INTERNATIONAL and XXXXXXX BANK shall, and XXXXXXX INTERNATIONAL shall cause
XXXXXXX BANK to, after reasonable notice, (i) afford to PRIVATE, its counsel,
employees, accountants and other representatives (collectively, the
"Representatives") reasonable access, during regular business hours, to the
offices, properties, contracts, books and records of XXXXXXX BANK; (ii) make
available to PRIVATE and its Representatives all personnel of XXXXXXX BANK
responsible for management of XXXXXXX BANK, including observation of board and
committee meetings (other than discussions concerning this Agreement and the
transactions contemplated hereby and loan committee presentations concerning
bona fide competing loan customer relationships); (iii) unless otherwise
prohibited by law, make available to PRIVATE and its Representatives a copy of
each report, schedule and other document filed or received by either them during
such period with or from any regulatory authority or the Internal Revenue
Service regarding XXXXXXX BANK; and (iv) furnish such additional financial and
operating data, including a copy
32
of each Filing, and other information, in each case relating to XXXXXXX BANK, as
PRIVATE shall from time to time reasonably request. XXXXXXX BANK shall give
reasonable notice to PRIVATE of board meetings and, if known, the agenda and
board materials for or business to be discussed at such meetings. All
information obtained by PRIVATE at such meetings shall be treated in confidence
pursuant to Section 5.4.2 hereof.
5.4.2 Any information furnished by one party to the other and
its Representatives pursuant hereto shall be treated as the sole property of
such party and, if the Transaction shall not occur, the receiving party and its
Representatives shall return to such party all of such written information and
all documents, notes, summaries or other materials containing, reflecting or
referring to, or derived from, such information. Each party and its
Representatives shall keep confidential all such information and shall not use
such information for any competitive or other commercial purpose. The obligation
to keep such confidential or proprietary information confidential shall continue
for two years from the date the proposed Transaction is abandoned and shall not
apply to (i) any information which (A) was then generally known to the public,
(B) was already lawfully in a party's possession, (C) became known to the public
through no fault of a party or its Representatives, (D) was disclosed to a party
by a third party not bound by an obligation of confidentiality, and (E) was then
or later known to the banking industry in general; and (ii) disclosures required
to be made to third parties in accordance with this Agreement, any law,
regulation or order of a court or regulatory agency of competent jurisdiction or
authority or information included in publicly available Filings. XXXXXXX
INTERNATIONAL agrees that neither it nor any of its Representatives will
purchase or sell any shares of Common Stock of PRIVATE so long as any of them
possesses confidential or proprietary information about PRIVATE which the
Representatives are obligated to keep confidential under this Section 5.4.2.
5.4.3 XXXXXXX INTERNATIONAL and XXXXXXX BANK will provide
to PRIVATE, as soon as available or immediately upon request, (i) the report of
management of XXXXXXX BANK and any XXXXXXX BANK Subsidiary to the Board of
Directors of XXXXXXX BANK for the prior month including delinquency schedules,
additions to loan loss reserves, minutes of all meetings of the Board of
Directors of XXXXXXX BANK and each committee thereof and (ii) monthly balance
sheet and the related statements of income for the one-month period then ended
prepared by XXXXXXX BANK and certified to as accurate and complete by the
controller of XXXXXXX INTERNATIONAL. XXXXXXX INTERNATIONAL and XXXXXXX BANK will
also promptly deliver to PRIVATE copies of all material reports filed with the
FDIC, Federal Reserve Board, the Illinois Office of Banks and Real Estate or any
other regulatory agency relating to XXXXXXX BANK. XXXXXXX INTERNATIONAL and
XXXXXXX BANK will further provide to PRIVATE on a monthly basis a listing of all
Retained Loans and a description of outstanding balances, interest earned for
the prior month and any related charge-offs with respect thereto.
5.4.4 XXXXXXX INTERNATIONAL and XXXXXXX BANK shall update
the Xxxxxxx International Disclosure Schedule immediately upon the occurrence of
an event that would result in any material change in the Xxxxxxx International
Disclosures Schedule and at Closing by written notice to PRIVATE to reflect any
matters which have occurred from and after the date hereof which, if existing on
the date thereof, would have been required to be described therein; provided,
however, that no such update shall adversely affect the rights of PRIVATE to
assert the
33
conditions to its obligation to consummate the Transaction, and any and all
changes contained in any such update shall be considered in determining whether
such conditions have been satisfied; provided, further, that XXXXXXX
INTERNATIONAL shall provide PRIVATE with written notice from time to time
immediately after XXXXXXX INTERNATIONAL or XXXXXXX BANK learn of an event that
would result in a material change in the Xxxxxxx International Disclosure
Schedule.
5.4.5 During the period from the date of execution of this
Agreement through the Closing Date, XXXXXXX INTERNATIONAL and XXXXXXX BANK shall
cooperate and work with PRIVATE to facilitate, support and promote the prompt
transfer and conversion (the "Conversion") of XXXXXXX BANK's master customer
information files ("MCIFs") to PRIVATE's systems and the establishing of
PRIVATE's operating systems and practices with regard to such MCIFs prior to the
Closing Date. Such tasks include, but are not limited to, providing PRIVATE with
updated cartridges, reports, and other items as are necessary to complete the
Conversion process and related testing procedures; provided, however, that no
such task shall require the payment of XXXXXXX BANK of more than a de minimis
sum. Within ninety (90) calendar days subsequent to the date hereof, XXXXXXX
INTERNATIONAL and XXXXXXX BANK shall provide PRIVATE with initial computer
cartridge reports and related documentation of XXXXXXX BANK's MCIFs, and if
requested by PRIVATE, in a format acceptable to PRIVATE at PRIVATE's expense
(other than de minimis amounts to be paid by XXXXXXX BANK). XXXXXXX
INTERNATIONAL and XXXXXXX BANK agree to reasonably cooperate with PRIVATE in
resolving any Conversion- related issues arising from the Conversion for a
period of sixty (60) calendar days following the date that the Conversion is
completed; provided, further, that in the event such data processing conversion
is not completed on the Closing Date, the parties shall execute a mutually
acceptable servicing agreement, whereby XXXXXXX INTERNATIONAL shall provide data
processing services (i.e., management, computer, record-keeping, data capture
and information retrieval services) for XXXXXXX BANK for a period commencing on
the Closing Date and ending on December 31, 2000, or such earlier date as agreed
upon by the parties.
5.4.6 XXXXXXX INTERNATIONAL and XXXXXXX BANK agree to
reasonably cooperate with PRIVATE in resolving any issues relating to the
serving of trust accounts held by XXXXXXX BANK; provided, further, that in the
event PRIVATE desires to have an Affiliate of XXXXXXX INTERNATIONAL service the
trust accounts, XXXXXXX INTERNATIONAL shall cooperate with PRIVATE in executing
an acceptable trust servicing agreement. Notwithstanding the foregoing, XXXXXXX
INTERNATIONAL's obligation to provide data processing services for PRIVATEBANK
trust customers will not extend after April 30, 2000.
Section 5.5 Consents. Each of the parties hereto shall use its best
efforts to obtain at the earliest practicable date and prior to Closing all
consents of all third parties and Governmental Entities necessary for the
consummation of the transactions contemplated hereby and will provide to the
other party copies of each consent promptly after it is obtained.
Section 5.6 Publicity. No press releases shall be issued, nor shall
the terms of this Agreement be disclosed to third parties other than the parties
Representatives, without the mutual consent of XXXXXXX INTERNATIONAL and PRIVATE
or as required by law or SEC regulation; provided, that, XXXXXXX INTERNATIONAL
and/or PRIVATE may disclose the terms of the
34
Agreement to its investment bankers, and such other individuals who have a
specific need to know such terms in connection with the Transaction.
Section 5.7 Taking of Necessary Regulatory Action; SEC Reporting.
5.7.1 As promptly as practicable (but in no event later than
thirty (30) days) after the date of execution of this Agreement, PRIVATE shall
prepare and file all applications required, necessary or desirable to obtain the
Requisite Regulatory Approvals. PRIVATE will keep XXXXXXX INTERNATIONAL and
XXXXXXX BANK apprised of the status of matters relating to the procurement of
the Requisite Regulatory Approvals and shall furnish XXXXXXX INTERNATIONAL and
XXXXXXX BANK with copies of any such filing (other than information filed as
confidential) as soon as practicable of any such filing. XXXXXXX INTERNATIONAL
and XXXXXXX BANK shall use their reasonable best efforts to supply all necessary
and appropriate information with respect to such Requisite Regulatory Approvals
and shall otherwise cooperate with PRIVATE in obtaining such Requisite
Regulatory Approvals. In addition, XXXXXXX INTERNATIONAL and XXXXXXX BANK shall
use their reasonable best efforts to provide PRIVATE with such financial
statements, financial and other information with respect to XXXXXXX BANK to
permit PRIVATE to fulfill its reporting obligations with respect to the
Transaction, including, if necessary, providing separate audited financial
statements for XXXXXXX BANK for such years and/or periods required by the rules
and regulations of the SEC or other regulatory agency. Any such financial
statements, audit reports and other information shall be prepared in the form
and content required by the rules and regulations of the applicable agency and
shall contain audit reports and consents of accountants required by the
applicable agency for the required years and periods. XXXXXXX INTERNATIONAL
shall hire Xxxxxx Xxxxxxxx - Milwaukee to prepare such financial statements and
other financial information necessary under this Section 5.7.1. XXXXXXX BANK
shall pay all costs incurred in obtaining such financial statements and other
financial information and PRIVATE shall promptly reimburse for same, provided,
however, XXXXXXX INTERNATIONAL shall update PRIVATE as to the cost incurred as
often as is practicable.
5.7.2 Subject to the terms and conditions of this Agreement,
each of the parties hereto agrees, subject to applicable laws, to use its
reasonable best efforts promptly to take or cause to be taken all action and
promptly to do or cause to be done all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement including, without limitation, the
prompt delivery of any certificate or other document reasonably requested by
counsel to a party to this Agreement. Without limiting the foregoing, XXXXXXX
INTERNATIONAL and XXXXXXX BANK will cooperate with PRIVATE to obtain all
consents of Government Entities necessary or, in the reasonable opinion of
XXXXXXX INTERNATIONAL, XXXXXXX BANK or PRIVATE, advisable for the consummation
of the transactions contemplated by this Agreement. In case at any time after
Closing any further action is necessary or desirable to carry out the purposes
of this Agreement, or to vest PRIVATE with full title to all properties, assets,
rights, approvals, immunities and franchises of XXXXXXX BANK, the proper
officers or directors of XXXXXXX INTERNATIONAL and XXXXXXX BANK, as the case may
be, shall take all such necessary action.
35
5.7.3 Prior to the Closing, other than as disclosed in
Schedule 5.7.3 of the Xxxxxxx International Disclosure Schedule, (a) XXXXXXX
BANK shall pay and discharge all amounts of intercompany indebtedness owed by
XXXXXXX BANK to XXXXXXX INTERNATIONAL or any of its Subsidiaries; and (b)
XXXXXXX INTERNATIONAL shall pay and discharge (or cause to be paid and
discharged) all amounts of intercompany indebtedness owed by XXXXXXX
INTERNATIONAL or any XXXXXXX INTERNATIONAL Subsidiaries to XXXXXXX BANK.
5.7.4 Other than as expressly contemplated by this Agreement,
XXXXXXX INTERNATIONAL at its option, after consultation with PRIVATE in good
faith, may terminate or cause each of its Affiliates to terminate, effective at
or prior to Closing, in accordance with their terms, any and all agreements then
in effect as between XXXXXXX BANK and XXXXXXX INTERNATIONAL or any Affiliate of
XXXXXXX INTERNATIONAL or any predecessor thereof, and all rights under any such
agreement shall terminate and all liabilities under any such agreement shall be
paid and discharged in accordance with the provisions of Section 5.7.3.
Notwithstanding the foregoing, the parties shall enter into a mutually
satisfactory arrangement with respect to assets on the books of XXXXXXX BANK
that are currently being serviced by XXXXXXX INTERNATIONAL or its Affiliates.
Section 5.8 Expenses. Except as specifically set forth herein,
whether or not the transactions contemplated hereunder are consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring the same.
Section 5.9 Notification of Certain Events.
5.9.1 XXXXXXX INTERNATIONAL and XXXXXXX BANK shall provide
to PRIVATE, as soon as practicable, written notice of the occurrence or failure
to occur of any of the events, circumstances or conditions that are the subject
of Sections 6.1 and 6.2, which notice shall provide reasonable detail as to the
subject matter thereof.
5.9.2 PRIVATE shall provide to XXXXXXX INTERNATIONAL or
XXXXXXX BANK as soon as practicable written notice of the occurrence or failure
to occur of any of the events, circumstances or conditions that are the subject
of Section 6.1 or 6.3, which notice shall provide reasonable detail as to the
subject matter thereof.
5.9.3 XXXXXXX INTERNATIONAL and XXXXXXX BANK shall promptly
advise PRIVATE in writing of any change or event which could reasonably be
expected to have a Material Adverse Effect on XXXXXXX BANK.
5.9.4 PRIVATE shall promptly advise XXXXXXX INTERNATIONAL or
XXXXXXX BANK in writing of any changes or event which could reasonably be
expected to have a Material Adverse Effect on PRIVATE.
36
Section 5.10 Sharing of Data. XXXXXXX INTERNATIONAL shall have the
right following Closing to have reasonable access to such books, records and
accounts, including financial and Tax information, correspondence, production
records, employment records and other similar information as are transferred to
PRIVATE pursuant to the terms of this Agreement for the purposes of concluding
its involvement in the business of XXXXXXX BANK and for complying with its
obligations under applicable securities, Tax, environmental, employment or other
laws and regulations. PRIVATE shall have the right following Closing to have
reasonable access to those books, records and accounts, including financial and
Tax information, correspondence, production records, employment records and
other records which are retained by XXXXXXX INTERNATIONAL pursuant to the terms
of this Agreement to the extent that any of the foregoing relates to the
business transferred to PRIVATE hereunder or is otherwise needed by PRIVATE in
order to comply with its obligations under applicable securities, Tax,
environmental, employment or other laws and regulations.
Section 5.11 Covenant Not to Compete. From and after the Closing
Date and continuing until the third anniversary thereof:
5.11.1 Except as specifically contemplated by this Agreement,
and except as set forth in Section 5.11.2 and 5.11.3, XXXXXXX INTERNATIONAL
shall not, and shall not permit any of its Subsidiaries, currently existing or
yet to be organized, to: (a) solicit or hire any employee of XXXXXXX BANK, (b)
solicit loans or other banking products or services, including securities
brokerage, insurance and trust and investment management services (except as set
forth below), to any customers of XXXXXXX BANK, or (c) establish a de novo bank
or branch or facility of an existing bank or other financial institution located
anywhere within 25 miles of Lake Forest, Illinois, excluding the State of
Wisconsin;
5.11.2 XXXXXXX INTERNATIONAL, directly or indirectly, may
continue to offer insurance products to XXXXXXX BANK customers who have
purchased insurance products prior to the Closing Date; and
5.11.3 XXXXXXX INTERNATIONAL, directly or indirectly, may
continue to solicit investment management services, which are unrelated to trust
relationships, from customers of XXXXXXX BANK.
Section 5.12 Employee Matters.
5.12.1 The employment of the employees of XXXXXXX BANK who
continue as employees of PRIVATE after the Closing Date (the "Closing Date
Employees") shall be pursuant to the employment policies and practices of
PRIVATE. PRIVATE shall pay, discharge, and be responsible for all salary, wages,
claims and employee benefits arising out of or related to such employment from
and after the Closing Date. XXXXXXX INTERNATIONAL and its Affiliates shall pay,
discharge and be responsible for all salary, wages, claims and employee benefits
relating to the employment of the Closing Date Employees before the Closing Date
(including, but not limited to, accrued vacation or holiday pay payable in lieu
of time off or which may be carried over to future periods, annual or long-term
incentive programs, pension, profit sharing and savings plans, non-
37
qualified deferred compensation plan and group health plan, including group
health plan continuation coverage pursuant to Code Section 4980B(f) arising
under XXXXXXX INTERNATIONAL's Employee Plans and Benefit Arrangements, including
claims incurred prior to the Closing Date but reported thereafter), to the
extent that the liability for such salary, wages, claims and employee benefits
were not paid or accrued on the Financial Statements as of the Closing Date.
PRIVATE shall not be required to provide any benefits to, or assume any
liability with respect to, any former employee of XXXXXXX BANK whose employment
terminated prior to the Closing Date or to any employee of XXXXXXX BANK who, as
of the Closing Date, is on long term disability or other leave of absence.
Schedule 5.12.1 lists those employees who are on short or long term disability
or other leave of absence as of the date hereof. This Schedule 5.12.1 will be
updated as of the Closing Date.
5.12.2 Prior to the Closing, XXXXXXX INTERNATIONAL, XXXXXXX
BANK and their Affiliates shall take such action with respect to the Employee
Plans and Benefit Arrangements to provide that the Closing Date Employees will
cease to be active participants or accrue benefits under the Employee Plans and
Benefit Arrangements as of the Closing Date. By the Closing Date, all Closing
Date Employees will be fully vested by XXXXXXX INTERNATIONAL in its current
401(k) Plan. As soon as practicable after Closing, PRIVATE shall permit the
Closing Date Employees to participate in PRIVATE's group hospitalization,
medical, life and disability insurance plans on the same terms and conditions as
applicable to comparable employees of PRIVATE. In connection therewith, PRIVATE
shall, to such extent practicable, cause to be waived any waiting period or
preexisting condition restriction otherwise applicable under any such plan to
the extent that such period is longer or such restriction imposes a greater
limitation than the period or restriction imposed under similar XXXXXXX
INTERNATIONAL Employee Plans, and shall give effect, in determining any
deductible and maximum out-of-pocket limitations, to claims incurred, amounts
paid by and amounts reimbursed to the Closing Date Employees with respect to
similar XXXXXXX INTERNATIONAL Employee Plans, which PRIVATE has in place,
immediately prior to the Closing Date. As soon as practicable after the Closing
Date, PRIVATE shall permit the Closing Date Employees to participate in
PRIVATE's 401(k) plan, on the same terms and conditions as employees of PRIVATE,
giving effect to years of service with XXXXXXX BANK or any Affiliate of XXXXXXX
BANK as if such service were with PRIVATE, for purposes of eligibility to
participate and vesting, but not for benefit accrual purposes. With respect to
XXXXXXX BANK's Employee Benefit Plans, XXXXXXX INTERNATIONAL shall retain all
liability for the benefits of employees of XXXXXXX BANK up to the Closing Date
and PRIVATE shall assume no such liability. Prior to the Closing Date, XXXXXXX
INTERNATIONAL and XXXXXXX BANK shall terminate and cause to be of no further
force and effect from and after the Closing Date any and all Employee Plans or
Benefit Arrangements which provide for the payment of separation or severance
pay or benefits to any Closing Date Employee. XXXXXXX INTERNATIONAL and XXXXXXX
BANK also agree to take such action as PRIVATE may reasonably request prior to
the Closing Date to ensure that Closing Date Employees cease to participate in
the Employee Plans and Benefit Arrangements as may be required to effect the
provisions of this Section 5.12, which actions may include, but need not be
limited to, amendments to cease the accrual of any benefits thereunder as of the
Closing Date.
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5.12.3 Nothing in this Section 5.12 is intended, nor shall it
be construed, to confer any express or implied third party beneficiary rights in
any person including present or former employees of XXXXXXX BANK, the Employees,
and any beneficiaries or dependents thereof, other than XXXXXXX INTERNATIONAL or
XXXXXXX BANK.
Section 5.13 Use of Name. On and after the Closing Date, PRIVATE
shall change the name of XXXXXXX BANK and PRIVATE shall have no right to
continue to use the name "XXXXXXX INTERNATIONAL," or any derivations thereof, or
"XXXXXXX BANK ILLINOIS."
Section 5.14 Tax Matters.
5.14.1 Neither PRIVATE nor XXXXXXX INTERNATIONAL will take a
position with any federal, state or local taxing authority contrary to any of
the terms and provisions of this Agreement.
5.14.2 Notwithstanding anything herein to the contrary,
XXXXXXX INTERNATIONAL shall have no liability under this Agreement in respect of
Taxes of XXXXXXX BANK attributable to any action of PRIVATE or XXXXXXX BANK that
occurs after the Closing.
5.14.3 Any agreement between XXXXXXX BANK and XXXXXXX
INTERNATIONAL regarding allocation or payment of Taxes or amounts in lieu of
Taxes shall be deemed terminated at and as of the Closing and will have no
further effect for any taxable year (whether current, future, or past).
5.14.4 XXXXXXX INTERNATIONAL will be responsible for the
preparation and filing of all Tax Returns for XXXXXXX BANK with respect to any
period ending on or before the Closing Date, including but not limited to Tax
Returns for a period ending on or before the Closing Date which are due after
the Closing Date. XXXXXXX INTERNATIONAL will pay all Taxes required with respect
to any such Tax Returns and will indemnify PRIVATE and XXXXXXX BANK for all
such Taxes and any adjustments thereto.
5.14.5 PRIVATE will be responsible for the preparation and
filing of all income Tax Returns for XXXXXXX BANK for all periods as to which
income Tax Returns are due for periods ending after the Closing Date (other than
for Taxes with respect to periods for which the consolidated, unitary, and
combined income Tax Returns of XXXXXXX INTERNATIONAL will include the operations
of XXXXXXX BANK). PRIVATE will be solely liable for and solely responsible to
pay all Taxes and other payments required with respect to any such income Tax
Returns; provided, however, that XXXXXXX INTERNATIONAL will reimburse PRIVATE
concurrently therewith to the extent any payment PRIVATE is making relates to
the operations of XXXXXXX BANK for any period on or before the Closing Date;
provided further however, that refunds of Taxes attributable to a period for
which XXXXXXX INTERNATIONAL is responsible to file Tax Returns and pay Taxes
shall be the property of XXXXXXX INTERNATIONAL and PRIVATE will reimburse
XXXXXXX INTERNATIONAL for any such refund when, and to the extent, such refund
is paid to PRIVATE or its Subsidiaries, provided further, however, that to the
extent such refund is attributable to the carryback of an item from a period
ending after the Closing
39
Date, such refund shall be the property of PRIVATE, and XXXXXXX INTERNATIONAL
and its Subsidiaries will reimburse PRIVATE when, and to the extent, such refund
is paid to XXXXXXX INTERNATIONAL or its Subsidiaries. The income of XXXXXXX BANK
will be determined for the period up to and including the Closing Date by
closing the books of XXXXXXX BANK as of the Closing Date.
5.14.6 The term "period" as used in this Section 5.14 means
any period of time under applicable law with respect to which a Tax liability
arises.
5.14.7 XXXXXXX INTERNATIONAL agrees to indemnify PRIVATE
from and against the entirety of any Losses PRIVATE may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any liability of any
of XXXXXXX BANK and its Subsidiaries for Taxes of any Person other than any of
XXXXXXX BANK and its Subsidiaries relating to all periods (x) ending on or prior
to the Closing Date, or (y) that include the Closing Date, but only as regards
the consolidated federal income Tax Return for the Affiliated Group, (i) under
Treasury Regulation ss.1.1502-6 (or any similar provision of state, local or
foreign law), (ii) as a transferee or successor, (iii) by contract, or
(iv) otherwise.
5.14.8 (i) At least 10 days prior to the Closing Date,
XXXXXXX INTERNATIONAL will prepare and deliver to PRIVATE (A) a calculation of
XXXXXXX BANK'S portion of the XXXXXXX INTERNATIONAL consolidated group's federal
income tax liability for the period which includes the Closing Date and XXXXXXX
BANK'S Illinois income tax liability for the period ending on the Closing Date
(the "Preliminary Tax Calculation") and (B) a schedule of all amounts previously
paid to Tax authorities or distributed or paid by XXXXXXX BANK to XXXXXXX
INTERNATIONAL or its Affiliates with respect to such taxes for such period (the
"Tax Distributions/Payments"). XXXXXXX INTERNATIONAL will prepare such
Preliminary Tax Calculation on a basis consistent with the determination of
XXXXXXX BANK'S portion of the consolidated federal income Tax liability under
the tax sharing agreement and Illinois income Tax liability under the tax
sharing agreement and Illinois income Tax liability for prior tax periods. If
PRIVATE agrees with the amounts of the Preliminary Tax Calculation and the Tax
Distributions/Payments, XXXXXXX BANK will pay to XXXXXXX INTERNATIONAL prior to
Closing the amount of such Preliminary Tax Calculation less the amount of the
Tax Distributions/Payments made on behalf of XXXXXXX BANK.
(ii) Within 30 days prior to (a) the due date
(including any timely filed extensions) of XXXXXXX INTERNATIONAL'S
consolidated federal income tax return with respect to federal income Tax, and
(b) the due date (including any timely filed extensions) of XXXXXXX BANK'S
Illinois income tax return with respect to Illinois income Tax, XXXXXXX
INTERNATIONAL will provide to PRIVATE XXXXXXX BANK'S tax return workpapers, any
consolidation schedules for XXXXXXX INTERNATIONAL'S consolidated tax return and
a copy of XXXXXXX BANK'S proposed Illinois income Tax Return for the period
ending on the Closing Date, together with its calculation of (i) XXXXXXX BANK'S
portion of the XXXXXXX INTERNATIONAL consolidated group's federal income tax
liability for the period which includes the Closing Date and (ii) XXXXXXX BANK'S
Illinois income tax liability for the period ending on the Closing Date, in both
cases prepared on a basis consistent with the determination of XXXXXXX BANK'S
portion of the
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consolidated federal income tax liability under the tax sharing
agreement and Illinois income tax liability for prior tax periods (the "Final
Tax Proposal").
(iii) If PRIVATE in its sole discretion has any
objections to the Final Tax Proposal, it will deliver a detailed statement
describing its objections to XXXXXXX INTERNATIONAL within 10 days after
receiving the Final Tax Proposal. PRIVATE and XXXXXXX INTERNATIONAL will use
reasonable efforts to resolve any such objections themselves. If the Parties do
not obtain a final resolution within 5 days after XXXXXXX INTERNATIONAL has
received the statement of objections, however, XXXXXXX INTERNATIONAL and PRIVATE
will submit the appropriate workpapers, objections and other documents to KPMG
and KPMG shall make its determination as to whether the Final Tax Proposal shall
be adjusted to reflect PRIVATE'S objections and the amounts of any such
adjustments to the Final Tax Proposal. The determination by KPMG will be set
forth in writing and will be final, conclusive and binding upon the parties.
Such determination of KPMG (or, if PRIVATE does not timely deliver any
objections to the Final Tax Proposal, then the Final Tax Proposal itself) shall
be the "Final Tax Calculation."
(iv) In the event the Parties submit any unresolved
objections to KPMG for resolution as provided in (iii) above, PRIVATE and
XXXXXXX INTERNATIONAL will share equally the responsibility for the fees and
expenses of KPMG.
(v) XXXXXXX INTERNATIONAL will make the workpapers
and back-up materials used in preparing the Preliminary Tax Calculation and the
Final Tax Proposal, and the books and records relating to the calculations
necessary in this Section 5.14.8 of XXXXXXX INTERNATIONAL available to PRIVATE
and their accountants and other representatives at reasonable times and upon
reasonable notice at any time during (A) the preparation by XXXXXXX
INTERNATIONAL of the Preliminary Tax Calculation and the Final Tax Proposal, (B)
the review by PRIVATE of the Preliminary Tax Calculation and the Final Tax
Proposal, and (C) the resolution by the parties of any objections thereto.
(vi) If the Final Tax Calculation exceeds the
Preliminary Tax Calculation, PRIVATE will pay to XXXXXXX INTERNATIONAL an amount
equal to such excess by wire transfer or delivery of other immediately available
funds within three business days after the date on which the Final Tax
Calculation is determined; provided, however, that such payment shall be
reduced to the extent that it would cause Stockholder's Equity of XXXXXXX BANK
to be less than the amount required by Section 6.2.7 of this Agreement if such
payment were made immediately prior to the Closing Date.
(vii) If the Final Tax Calculation is less than the
Preliminary Tax Calculation, XXXXXXX INTERNATIONAL will pay to PRIVATE as a
refund of purchase price an amount equal to such deficiency by wire transfer or
delivery of other immediately available funds within three business days after
the date on which the Final Tax Calculation is determined.
41
Section 5.15 Certain Actions.
5.15.1 Neither XXXXXXX INTERNATIONAL nor XXXXXXX BANK
(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 Alternative Transaction (as
defined below) or a potential Alternative Transaction with respect to XXXXXXX
BANK or (ii) shall (A) solicit, initiate, participate in discussions of, or
encourage or take any other action to facilitate any inquiry or proposal, or (B)
enter into any agreement, arrangement, or understanding (whether written or
oral), regarding any proposal or transaction providing for or requiring XXXXXXX
INTERNATIONAL or XXXXXXX BANK to abandon, terminate or fail to consummate this
Agreement, or compensating XXXXXXX INTERNATIONAL or XXXXXXX BANK under any of
the instances described in this clause. XXXXXXX INTERNATIONAL and XXXXXXX BANK
shall immediately instruct and otherwise use their respective best efforts to
cause their respective directors, officers, employees, agents, advisors
(including, without limitation, any investment banker, attorney, or accountant
retained by it), consultants and other representatives to comply with such
prohibitions. XXXXXXX INTERNATIONAL and XXXXXXX BANK shall immediately cease and
cause to be terminated any existing activities, discussions, or negotiations
with any parties conducted heretofore with respect to such activities.
5.15.2 "Alternative Transaction" shall, with respect to
XXXXXXX BANK, mean any of the following, other than the Transaction: (i) a
merger or consolidation, or any similar transaction of any company with either
XXXXXXX BANK or any significant subsidiary (as defined in Rule 1.2 of
Regulation S-X of the SEC) (a "Significant Subsidiary") of XXXXXXX BANK, (ii) a
purchase, lease or other acquisition of all or substantially all the assets of
either XXXXXXX BANK or any Significant Subsidiary of XXXXXXX BANK, (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 10% or more of the voting power of either XXXXXXX
BANK or any Significant Subsidiary of XXXXXXX BANK, but excluding the
acquisition of beneficial ownership by any employee benefit plan maintained or
sponsored by XXXXXXX BANK, or (iv) the filing of an application or notice with
the Federal Reserve Board, the FDIC, or any other federal or state regulatory
authority (which application has been accepted for processing) seeking approval
to engage in one or more of the transactions referenced in clauses (i) through
(iii) above.
5.15.3 In the event XXXXXXX INTERNATIONAL or XXXXXXX BANK
solicit, initiate, participate in discussions of, or encourage any Alternative
Transaction, XXXXXXX INTERNATIONAL shall promptly pay PRIVATE upon demand
$600,000 in recognition of its efforts made, expenses incurred and other
business opportunities not pursued while attempting to accomplish the
Transaction.
5.15.4 If this Agreement is terminated by XXXXXXX
INTERNATIONAL pursuant to Section 7.1.3 or Section 7.1.4, PRIVATE shall pay
XXXXXXX INTERNATIONAL upon
42
demand $600,000 in recognition of its efforts made, expenses incurred and other
business opportunities not pursued while attempting to accomplish the
Transaction.
Section 5.16 Title to Real Estate. No later than ten (10) days prior
to the Closing Date, XXXXXXX BANK, at its own expense, shall obtain and deliver
to PRIVATE, with respect to all real estate owned by or leased to XXXXXXX BANK
an owner's, or tenants, preliminary report of title covering a date no more than
ten (10) days prior to the date thereof issued by a title insurance company as
is reasonably acceptable to PRIVATE, showing fee simple title in XXXXXXX BANK in
such real estate or the appropriate leasehold interest of XXXXXXX BANK subject
only to (i) the standard exceptions to title customarily contained in a policy
on ALTA 1970 Owner's Form B; (ii) liens of current state and local property
taxes which are not delinquent or subject to penalty; and (iii) other liens,
encumbrances, restrictions and conditions of record that do not materially
adversely affect the value or use of such real estate. In addition, XXXXXXX
INTERNATIONAL shall provide and deliver to PRIVATE, as of the Closing Date an
Estoppel Certificate (in a form standard to the industry) from the Landlords of
the properties under lease to XXXXXXX BANK in Xxxxxxxx, Xxxxxxxx xxx Xxxx
Xxxxxx, Xxxxxxxx.
Section 5.17 Participations. PRIVATEBANK shall have the option to
repurchase any and all loans or credits which XXXXXXX BANK have participated to
other financial institutions. In addition, PRIVATEBANK shall have the option to
repurchase certain, as set forth in Schedule 5.17 of the Xxxxxxx International
Disclosure Schedule, loans or credits which XXXXXXX BANK have participated to
any XXXXXXX INTERNATIONAL Affiliate. Any such loans or credits repurchased by
PRIVATEBANK shall be repurchased at their then current book value.
Section 5.18 Merger of XXXXXXX BANK with and into PRIVATEBANK.
PRIVATE, XXXXXXX INTERNATIONAL and XXXXXXX BANK shall take all actions necessary
to permit XXXXXXX BANK to merge with and into PRIVATEBANK, or to undergo any
other extraordinary corporate action deemed appropriate by PRIVATE, upon the
consummation of the Transaction, including, but not limited to, all necessary
corporate approvals, and the filing of any and all applications with the
appropriate regulatory authorities, in all cases conditioned upon the prior
Closing of the Transaction. Any expenses incurred as a result of actions taken
pursuant to this Section 5.18 shall be paid by PRIVATE.
Section 5.19 Retained Loans. XXXXXXX INTERNATIONAL, through a
XXXXXXX INTERNATIONAL Affiliate, shall retain certain loans of XXXXXXX BANK set
forth on Schedule 1A. In addition, PRIVATEBANK shall have the right to purchase
participations in certain loans held by a XXXXXXX INTERNATIONAL Affiliate, in an
amount equal to the loans retained by XXXXXXX INTERNATIONAL set forth on
Schedule 1A, the specific loans to be purchased by PRIVATEBANK shall be
reasonably agreeable to the parties, provided, further, the purchase price of
such loans purchased and sold pursuant to this Section 5.19 shall be the book
value of the loans as determined by the parties hereto on the Closing Date. The
loan participations to be purchased by PRIVATEBANK pursuant to this
Section 5.19, or their replacements, shall have average aggregate outstanding
balances equal to such book value amount for not less than two (2) years. The
parties shall work together to maintain and promote the customer relationships
involved with such loans.
43
Section 5.20 Additional Loan Participations. XXXXXXX INTERNATIONAL,
through a XXXXXXX INTERNATIONAL Affiliate, shall sell, and PRIVATEBANK shall
have the right to purchase, Three Million Dollars ($3,000,000) in additional
loan participations, such participations to be reasonably agreeable to the
parties. Such participations, or their replacements, shall have average
aggregate outstanding balances for not less than one (1) year.
Section 5.21 Certain Credits. XXXXXXX INTERNATIONAL shall retain
certain other loans in such a manner as described in Section 5.19 which are
specifically identified by the parties prior to Closing.
Section 5.22 Brokerage/Trust Customers. Any and all customers of
XXXXXXX BANK which at the Closing Date have accounts with XXXXXXX BANK, or a
XXXXXXX INTERNATIONAL Affiliate, for investment brokerage and/or trust services
shall, as of the Closing Date, become customers of PRIVATE and/or PRIVATEBANK
for such services. XXXXXXX BANK and/or XXXXXXX INTERNATIONAL shall take any and
all actions necessary to assist in the transfer of such customers to PRIVATE.
Section 5.23 Termination of Agreements. XXXXXXX INTERNATIONAL shall,
upon PRIVATE's request, take all actions necessary to terminate any and all
agreements between XXXXXXX BANK and XXXXXXX INTERNATIONAL and/or a XXXXXXX
INTERNATIONAL Affiliate, such terminations of any agreements shall not result in
any expense to either XXXXXXX BANK or PRIVATE.
Section 5.24 Best Efforts. PRIVATE and XXXXXXX INTERNATIONAL shall
use their reasonable best efforts to close the Transaction by December 31, 1999
(subject to Year 2000 considerations).
ARTICLE 6 CONDITIONS PRECEDENT TO CLOSING
Section 6.1 Conditions to the Parties' Obligations. The obligations
of all the parties to this Agreement to effect the Transaction shall be subject
to the fulfillment at the Closing Date of the following conditions (any one or
more of which can be waived by all of the parties, but only in writing):
6.1.1 All material permits, approvals and consents
required to be obtained, and all waiting periods required to expire, prior to
the consummation of the transactions contemplated in this Agreement under the
applicable federal laws of the United States or applicable laws of any state or
local licensing authority having jurisdiction over the transactions contemplated
in this Agreement shall have been obtained (and, with respect to PRIVATE's
rights hereunder only, shall not contain any non-standard term) or shall have
expired, as the case may be (all such permits, approvals and consents and the
lapse of all such waiting periods being referred to as the "Requisite Regulatory
Approvals").
6.1.2 There shall not be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
transactions contemplated by this Agreement, by any Governmental Entity which
makes the consummation of the transactions contemplated by this
44
Agreement, by any Governmental Entity which makes the consummation of the
transactions contemplated by this Agreement illegal.
6.1.3 No legal, administrative, arbitration, investigatory or
other proceeding shall have been instituted by any Governmental Entity and
remain pending to restrain or prohibit the transactions contemplated hereby.
6.1.4 No decision of any federal, state or foreign court
awarding substantial damages or penalty against any of the parties or affiliates
thereof in connection with the Transaction shall have been rendered, and no
action or proceeding before any such court seeking such damages or penalty or a
preliminary or permanent injunction or other order to prevent the consummation
of the Merger shall be pending.
Section 6.2 Conditions to PRIVATE's Obligations. The obligations of
PRIVATE to effect the transactions contemplated under this Agreement shall be
subject to the fulfillment at the Effective Date of the following conditions
(any one or more of which can be waived by PRIVATE, but only in writing):
6.2.1 Except as otherwise provided in this Section 6.2, (a)
the representations and warranties of XXXXXXX INTERNATIONAL and XXXXXXX BANK
contained in Article 4 shall have been true in all material respects on the date
of this Agreement and shall be true in all material respects as of Closing as
though made at and as of Closing (other than Section 4.26); (b) XXXXXXX
INTERNATIONAL and XXXXXXX BANK shall have duly performed and 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 Closing (provided,
however, with respect to any agreement and/or covenant in this Agreement
containing a materiality provision, such agreement and/or representation must be
performed or complied with in all respects); (c) except as provided in any
Xxxxxxx International Disclosure Schedule delivered on or prior to the date of
this Agreement, during the period from December 31, 1998 to the Closing Date,
there shall not have occurred any material adverse change in the business,
assets, prospects, properties, financial condition or results of operations of
XXXXXXX BANK and any XXXXXXX BANK Subsidiaries; (d) none of the events or
conditions entitling PRIVATE to terminate this Agreement under Article 6 shall
have occurred and be continuing; and (e) XXXXXXX INTERNATIONAL and XXXXXXX BANK
shall each have delivered to PRIVATE a certificate dated the date of Closing and
signed by an authorized officer to the effect set forth in subsections 6.2.1
(a), (b), (c) and (d).
6.2.2 Any material consent, approval, waiver, exemption,
amendment and authorization required to be obtained by XXXXXXX INTERNATIONAL or
XXXXXXX BANK prior to the Closing Date shall have been obtained at or prior to
the Closing Date, and all filings, registrations, applications, designations and
declarations required on the part of XXXXXXX BANK or XXXXXXX INTERNATIONAL prior
to the Closing Date shall have been made or effected.
6.2.3 PRIVATE shall have received from XXXXXXX INTERNATIONAL
and XXXXXXX BANK the agreements, documents and instruments listed in Section 2.6
above.
45
6.2.4 PRIVATE shall have received an assignment and
substitution from XXXXXXX INTERNATIONAL and/or XXXXXXX BANK of the principal
facilities in Lake Forest, Illinois and Winnetka, Illinois on the terms and
conditions as were in full force and effect as of September 1, 1999 between the
then existing Landlord and Tenant of the respective properties.
6.2.5 To the extent any other material lease, or zoning
variance, license, loan, or financing agreement or other contract or agreement
to which XXXXXXX BANK is a party requires the consent of or waiver from the
other party thereto as a result of the transactions contemplated by this
Agreement, such consent or waiver shall have been obtained, unless the failure
to obtain such consent or waiver would not have a Material Adverse Effect on
XXXXXXX BANK.
6.2.6 PRIVATE shall have reasonably concluded there are no
material matters outstanding concerning Year 2000. PRIVATE may delay the Closing
Date until the earlier of February 28, 2000 or the resolution of all material
Year 2000 matters.
6.2.7 In the event the Closing Date occurs on December 31,
1999, the Stockholders Equity of XXXXXXX BANK shall be Ten Million Two Hundred
Thousand Dollars ($10,200,000). In the event the Closing Date occurs after
December 31, 1999, the Stockholders Equity of XXXXXXX BANK shall be Ten Million
Two Hundred Thousand Dollars ($10,200,000), plus an additional Fifty Thousand
Dollars ($50,000) for each calendar month the Closing Date extends past December
31, l999. In the event the Closing Date extends for a partial month past
December 31, 1999, the additional Stockholder Equity for such month shall be the
pro-rata amount of Fifty Thousand ($50,000).
6.2.8 As of the Closing Date, XXXXXXX BANK shall have a loan
loss reserve of one percent (1%) of total loans of XXXXXXX BANK.
6.2.9 XXXXXXX INTERNATIONAL and/or XXXXXXX BANK shall have
used their best efforts to obtain, for the benefit of PRIVATE and PRIVATEBANK,
non-compete/non-solicitation agreements from certain individuals designated by
PRIVATE prior to the Closing Date.
6.2.10 As of the Closing Date, and contingent upon the Closing
Date, XXXXXXX BANK's consolidated allowance for loan losses after all
anticipated loan losses have been charged off shall not be less than an amount
requested by PRIVATE. The taking of such action shall not, in and of itself,
affect the Purchase Price or the requirement of a minimum amount of Stockholders
Equity of XXXXXXX BANK as set forth in Section 6.2.7.
Section 6.3 Conditions to XXXXXXX INTERNATIONAL's or XXXXXXX BANK's
Obligations. The obligations of XXXXXXX INTERNATIONAL and XXXXXXX BANK under
this Agreement are subject to the fulfillment, at the Closing Date, of the
following conditions precedent (each of which may be waived in writing at the
sole discretion of XXXXXXX INTERNATIONAL and XXXXXXX BANK):
6.3.1 Except as otherwise provided in this Section 6.3, (a)
the representations and warranties of PRIVATE contained in Article 3 shall have
been true in all material respects on the
46
date of this Agreement and shall be true in all material respects as of the
Closing as though made at Closing; (b) PRIVATE shall have duly performed and
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 Closing
(provided, however, with respect to any agreement and/or covenant in this
Agreement containing a materiality provision, such agreement and/or
representation must be performed or complied with in all respects); (c) none of
the events or conditions entitling XXXXXXX INTERNATIONAL or XXXXXXX BANK to
terminate this Agreement under Article 6 shall have occurred and be continuing;
and (d) PRIVATE shall have delivered to XXXXXXX INTERNATIONAL a certificate
dated the date of the Closing and signed by a duly authorized officer to the
effect set forth in subsections 6.3.1 (a), (b) and (c).
6.3.2 XXXXXXX INTERNATIONAL and XXXXXXX BANK, as applicable,
shall have received from PRIVATE the agreements, documents and instruments
listed in Section 2.7 above.
ARTICLE 7 TERMINATION, AMENDMENTS AND WAIVERS
Section 7.1 termination. This Agreement may be terminated at any
time prior to the Effective Time:
7.1.1 by mutual written consent of the respective Boards of
Directors of XXXXXXX INTERNATIONAL and XXXXXXX BANK, on the one hand, and
PRIVATE, on the other hand;
7.1.2 by either of XXXXXXX INTERNATIONAL or PRIVATE if
Closing shall not have occurred by the close of business on June 30, 2000;
provided that the terminating party is not then in material breach or default of
any representation, warranty, covenant or other agreement contained herein;
7.1.3 by either of XXXXXXX INTERNATIONAL or PRIVATE if there
shall have been a material breach of any of the representations or warranties
set forth in this Agreement on the part of the other party, which breach by its
nature cannot be cured prior to Closing with twenty (20) days of notice thereof;
7.1.4 by XXXXXXX INTERNATIONAL after the occurrence of a
Default by PRIVATE;
7.1.5 by PRIVATE after the occurrence of a Default by XXXXXXX
INTERNATIONAL or XXXXXXX BANK; and
7.1.6 by PRIVATE if notice of changes to any of the Xxxxxxx
International Disclosure Schedules is provided by XXXXXXX INTERNATIONAL and/or
XXXXXXX BANK, and PRIVATE reasonably determines that such changes have or would
have a Material Adverse Effect upon XXXXXXX BANK if the transactions
contemplated by this Agreement were consummated.
47
Section 7.2 Effects of Termination. No termination of this
Agreement as provided in Section 7.1 for any reason or in any manner shall
release, or be construed as so releasing, any party hereto from its obligations
pursuant to Sections 5.4.2, 5.8, 5.15.3 and 5.15.4 hereof or from any liability
or damage to any other party hereto arising out of, in connection with or
otherwise relating to, directly or indirectly, said party's material breach,
Default or failure in performance of any of its covenants, agreements, duties or
obligations arising hereunder, or any breaches of any representation or warranty
contained herein arising prior to the date of termination of this Agreement.
Section 7.3 Waiver. Any term or provision of this Agreement may be
waived in writing at any time by the party which is entitled to the benefits
thereof.
ARTICLE 8 INDEMNIFICATION
Section 8.1 Indemnification by Both Parties. In addition to other
specific indemnification obligations of the parties set forth elsewhere in this
Agreement, XXXXXXX INTERNATIONAL and PRIVATE mutually agree to indemnify and
hold each other harmless from, and to reimburse each other promptly for, any and
all losses, liabilities, damages, expenses and other costs (including court
costs, costs of investigation and reasonable attorneys' fees) (collectively,
"Loss" or "Losses") that one party may suffer as the result of the inaccuracy of
the other party's representations or warranties or the material breach of any
term, covenant or agreement contained in this Agreement by the other.
Section 8.2 Indemnification by XXXXXXX INTERNATIONAL.
8.2.1 XXXXXXX INTERNATIONAL shall indemnify, hold harmless
and defend PRIVATE from and against any and all Losses arising out of any
actions, suits, or other proceedings, claims or demands brought by bona fide
third parties, which arise out of, or are in any way related to the violation of
any Environmental Laws by XXXXXXX INTERNATIONAL or XXXXXXX BANK prior to the
Closing, or XXXXXXX INTERNATIONAL's or XXXXXXX BANK's negligence, recklessness
or willful misconduct in, (i) the operation of the business of XXXXXXX BANK or
the administration of any of the deposits, loans, personal property, assumed
contracts, records, or other business by XXXXXXX BANK prior to the Closing, or
(ii) the ownership or operation of any branch office or the condition of the
real or personal property prior to the Closing. XXXXXXX INTERNATIONAL shall
indemnify, hold harmless and defend PRIVATE from and against any and all Losses
from any claim for payment of a broker's or finder's fee or any other commission
or similar fee to any agent, broker, investment banker, person or firm acting on
behalf of or under authority of XXXXXXX INTERNATIONAL, or acting pursuant to any
statement, representation or agreement of XXXXXXX INTERNATIONAL.
8.2.2 XXXXXXX INTERNATIONAL acknowledges the exculpation,
indemnification, advancement of expenses and like obligations of XXXXXXX BANK
contained in its Charter and Bylaws with respect to current and former
directors, officers, employees and agents, and hereby agrees to honor in
accordance with the terms in effect on the date hereof all such obligations
which arise as a result of actions taken prior to the Closing Date.
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8.2.3 XXXXXXX INTERNATIONAL acknowledges the exculpation,
indemnification, advancement of expenses and like obligations of XXXXXXX
INTERNATIONAL contained in its Articles of Incorporation and Bylaws with respect
to current and former directors, officers, employees and agents of XXXXXXX BANK
and hereby agrees, for six (6) years from and after the Closing Date, to honor
in accordance with the terms in effect on the date hereof all such obligations
which arise as a result of actions taken prior to the Closing Date.
Section 8.3 Indemnification by PRIVATE. PRIVATE shall indemnify,
hold harmless and defend XXXXXXX INTERNATIONAL from and against any and all
Losses arising out of any actions, suits or other proceedings, claims or demands
brought by bona fide third parties, which arise out of, or are in any way
related to PRIVATE's negligence, recklessness or willful misconduct in, (i) the
operation of the business of XXXXXXX BANK after the Closing, or the
administration of any of the deposits, loans, personal property, assumed
contracts, records, or other business of the successor by merger to XXXXXXX BANK
after the Closing, (ii) the ownership or occupancy of any branch office or the
condition of the real property or the personal property, or (iii) any claim
arising from the administration of any severance program related to the
Transaction, including claims of discrimination based upon age, gender, race or
any other classification, other than, in each case of (i) or (ii) above, with
respect to actions, suits or other proceedings, claims or demands arising out of
injuries or losses arising from a set of facts existing prior to the Closing.
PRIVATE shall indemnify, hold harmless and defend XXXXXXX INTERNATIONAL from and
against any and all Losses from any claim for payment of a broker's or finders
fee or any other commission or similar fee to any agent, broker, investment
banker, person or firm acting on behalf of or under authority of PRIVATE or
acting pursuant to any statement, representation or agreement of PRIVATE.
Section 8.4 Limitation on Claims. Notwithstanding anything to the
contrary contained in this Agreement, XXXXXXX INTERNATIONAL shall not be
required to indemnify PRIVATE under Article 8 until the aggregate amount of all
Qualifying Claims (as defined below) exceeds Two Hundred Thousand Dollars
($200,000) and then only to the extent of such excess and PRIVATE shall not be
required to indemnify XXXXXXX INTERNATIONAL under Article 8 until the aggregate
amount of all Qualifying Claims (as defined below) exceeds Two Hundred Thousand
Dollars ($200,000) and then only to the extent of such excess. Any Indemnity
Loss that exceeds the amount of Twenty-Five Thousand Dollars ($25,000) for
PRIVATE, or Twenty-Five Thousand Dollars ($25,000) for XXXXXXX INTERNATIONAL,
shall be considered a "Qualifying Claim." Except as set forth in Sections 2.4.1
("Section 338(h)(10) Election"), 4.14 (Taxes), 4.31 ("Year 2000") and 5.14.4,
and 5.14.7 ("Tax Matters"), the indemnification provided in this Article 8 shall
be the sole and exclusive remedy for any breach of this Agreement.
Notwithstanding anything to the contrary contained in this Agreement, XXXXXXX
INTERNATIONAL shall not be required to indemnify PRIVATE in excess of Fifteen
Million dollars ($15,000,000) and PRIVATE shall not be required to indemnify
XXXXXXX INTERNATIONAL in excess of Three Million Dollars ($3,000,000). However,
the limitations set forth in this Section 8.4 shall not apply to any claims for
indemnification made by PRIVATE with respect to Sections 2.4.1, 4.14, 4.31,
5.14.4 and 5.14.7. Furthermore, the limitations set forth in this Section 8.4
shall not apply to any claims for indemnification resulting from any breach of
any representations and warranties of which either the breaching party had
Knowledge at any time prior to the date on which such representation and
warranty is made or any intentional breach by a breaching party of any covenant
or obligation.
49
Section 8.5 Notice and Defense of Claims. The obligations and
liabilities of each party seeking indemnification hereunder (an "Indemnified
Party") with respect to claims resulting from the assertion of liability by any
Indemnified Party or third parties shall be subject to the following terms and
conditions:
8.5.1 The Indemnified Party shall give prompt written notice
to the other party (the "Indemnifying Party") of any claim or event known to it
which does or may give rise to a claim by the Indemnified Party against the
Indemnifying Party for which the Indemnified Party believes it is entitled to
indemnification pursuant to this Agreement (a "Claim"), stating the nature and
basis of said claims or events and the amounts thereof, to the extent known, and
in the case of any claim, action, suit or proceeding brought by any third party,
a copy of any claim, process or legal pleadings with respect thereto promptly
after any such documents are received by the Indemnified Party. Such notice
shall be given in accordance with Section 9.2 hereof.
8.5.2 The Indemnifying Party shall have fifteen (15) days
after receipt of the notice of a Claim to notify the Indemnified Party that it
elects, at its own expense, to assume the defense of, with independent counsel
reasonably satisfactory to the Indemnified Party, any Claim.
8.5.3 If the Indemnifying Party elects to assume control of a
Claim, it will keep the Indemnified Party fully advised as to its conduct of
such defense or settlement, and no compromise or settlement shall be agreed or
made without the consent of the Indemnified Party, which consent shall not be
unreasonably withheld. The Indemnified Party shall have the right to employ its
own counsel and such counsel may participate in such action, but the fees and
expenses of such counsel shall be at the expense of the Indemnified Party, when
and as incurred, unless (a) the employment of counsel by the Indemnified Party
has been authorized in writing by the Indemnifying Party; or (b) the Indemnified
Party shall have reasonably concluded that there may be a conflict of interest
between the Indemnifying Party and the Indemnified Party in the conduct of the
defense of such action.
8.5.4 If the Indemnifying Party does not elect to assume the
defense or settlement of a Claim, the Indemnified Party may engage independent
counsel selected by the Indemnified Party to assume the defense and may contest,
pay, settle or compromise any such Claim on such terms and conditions as the
Indemnified Party may reasonably determine. The fees and disbursements of such
counsel shall constitute Losses hereunder and shall be due and payable to
Indemnified Party promptly as such Losses become due and payable obligations of
such Indemnified Party.
8.5.5 The Indemnified Party shall be kept fully and timely
informed of the status of such claim, action, suit or proceeding at all stages
thereof whether or not such party is represented by its own counsel.
Section 8.6 Limited Survival. The representations and warranties of
XXXXXXX INTERNATIONAL, XXXXXXX BANK and PRIVATE set forth herein shall survive
the Closing for one (1) year; provided that the representations and warranties
of XXXXXXX INTERNATIONAL and XXXXXXX BANK pertaining to Taxes, Environmental
Liability, Year 2000 and ERISA shall
50
survive for the greater of one (1) year or until such time as the statute of
limitations applicable to such matter has expired.
Section 8.7 Mitigation of Indemnity Losses. Each of PRIVATE and
XXXXXXX INTERNATIONAL shall use reasonable efforts to minimize, any Indemnity
Losses for which any other party hereto may be liable pursuant to this
Agreement.
ARTICLE 9 MISCELLANEOUS
Section 9.1 Books and Records. All books and records of XXXXXXX
BANK under the dominion, possession or control of XXXXXXX BANK, including,
without limitation, all minute books and stock ledgers, shall remain at the
XXXXXXX BANK's premises. As soon as practicable following Closing, XXXXXXX
INTERNATIONAL shall deliver or cause to be delivered to XXXXXXX BANK all other
books and records of XXXXXXX BANK in XXXXXXX INTERNATIONAL's possession;
provided, however, that XXXXXXX INTERNATIONAL may retain copies of those books
and records as XXXXXXX INTERNATIONAL may reasonably require.
Section 9.2 Notices. Any notices or other communications required
or permitted hereunder shall be sufficiently given if in writing (including
telecommunications) and delivered personally or sent by telecopy or other wire
transmission (with electronic and verbal confirmation of receipt), overnight air
courier (postage prepaid) or registered or certified mail (postage prepaid with
return receipt requested) addressed as follows or to such other address of which
the parties may have given notice:
PrivateBancorp, Inc.
00 Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
with a copy to:
Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X'Xxxxxx
Xxxxxxx International, Inc.
0000 X. Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
51
with a copy to:
Xxxxxxx & Xxxx, S.C.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
Section 9.3 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
Section 9.4 Entire Agreement; No Third Party Rights; Assignment.
This Agreement (including the documents and instruments referred to herein): (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof; (b) is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder other than pursuant to
Article 7 hereof; (c) shall not be assigned by a party, without the consent of
the other parties; provided that PRIVATE may assign its obligations hereunder to
an Affiliate; and (d) subject to the foregoing, shall be binding upon and shall
inure to the benefit of the parties hereto and their permitted successors and
assigns. In the event of any conflict between this Agreement and the
Confidentiality Agreement, the terms of this Agreement shall govern.
Section 9.5 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Illinois without regard to
any applicable conflicts of law.
Section 9.6 Headings/Table of Contents. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
Section 9.7 Enforcement of Agreement. The parties hereto agree that
irreparable damage will occur in the event that any of the provisions of this
Agreement is not performed in accordance with its specific terms or is otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provision hereof in any court of the United States or
the State of Illinois, this being in addition to any other remedy to which they
are entitled at law or in equity.
Section 9.8 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
52
Section 9.9 Consent to Jurisdiction; Service of Process. THE
PARTIES HERETO HEREBY EXCLUSIVELY AND IRREVOCABLY SUBMIT TO THE JURISDICTION OF
THE STATE COURTS OF ILLINOIS AND THE FEDERAL COURTS LOCATED IN ILLINOIS OVER ANY
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY
OF THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH AND THE PARTIES HEREBY
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH COURTS. THE PARTIES HEREBY
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR ANY DEFENSE OF
INCONVENIENT FORUM FOR THE MAINTENANCE OF SUCH SUIT, ACTION OR PROCEEDING. EACH
OF THE PARTIES HERETO AGREES THAT A JUDGEMENT IN ANY SUCH ACTION, SUIT OR
PROCEEDING MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN
ANY MANNER PROVIDED BY LAW. EACH OF THE PARTIES HERETO HEREBY CONSENTS TO
PROCESS BEING SERVED BY ANY PARTY TO THIS AGREEMENT IN ANY SUIT, ACTION OR
PROCEEDING OF THE NATURE SPECIFIED ABOVE BY THE MAILING OF A COPY THEREOF IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 9.2 OF THIS AGREEMENT.
53
IN WITNESS WHEREOF, XXXXXXX INTERNATIONAL, XXXXXXX BANK and
PRIVATE have caused this Agreement to be signed by their respective officers
thereunto duly authorized, all as of the date first above written.
PRIVATEBANCORP, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Its: Chairman, President & Chief
Executive Officer
By: /s/ Xxxxxx X. Xxxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Its: Chief Financial Officer
XXXXXXX INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxx
Its: Controller
XXXXXXX BANK ILLINOIS
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Its: Chief Financial Officer
54
EXHIBITS
DESCRIPTION
-----------
Exhibit 2.3 Form of Subordinated Debt Note
Exhibit 2.6.3 Form of Opinion of Counsel to XXXXXXX INTERNATIONAL and
XXXXXXX BANK
Exhibit 2.7.4 Form of Opinion of Counsel to PRIVATE
55
EXHIBIT 2.3
FORM OF SUBORDINATED DEBT NOTE
56
EXHIBIT 2.6.3
FORM OF OPINION OF COUNSEL TO XXXXXXX INTERNATIONAL AND XXXXXXX BANK
57
EXHIBIT 2.7.4
FORM OF OPINION OF COUNSEL TO PRIVATE
58
