Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
by and among
MAF BANCORP, INC.,
a Delaware corporation
and
ST. XXXXXXX CAPITAL CORPORATION,
a Wisconsin corporation
May 20, 2003
TABLE OF CONTENTS
Page
I. THE MERGER ........................................................................................... 1
1.1 Effects of the Merger ....................................................................... 1
1.2 Conversion of Securities .................................................................... 2
1.3 Stock Options ............................................................................... 3
1.4 Consummation of the Merger; Effective Time .................................................. 4
1.5 Exchange of Certificates .................................................................... 4
II. REPRESENTATIONS AND WARRANTIES OF PURCHASER .......................................................... 7
2.1 Organization ................................................................................ 7
2.2 Authorization ............................................................................... 8
2.3 No Conflicts; Required Filings and Consents ................................................. 8
2.4 Capitalization .............................................................................. 9
2.5 Purchaser Financial Statements; Material Changes ............................................ 9
2.6 Purchaser SEC Filings ....................................................................... 10
2.7 Purchaser Reports ........................................................................... 10
2.8 Compliance With Laws ........................................................................ 11
2.9 Litigation .................................................................................. 11
2.10 Defaults .................................................................................... 11
2.11 Absence of Certain Changes or Events ........................................................ 12
2.12 Undisclosed Liabilities ..................................................................... 12
2.13 Licenses .................................................................................... 12
2.14 Government Approvals ........................................................................ 12
2.15 Fairness Opinion ............................................................................ 13
2.16 Fees ........................................................................................ 13
2.17 Tax Matters ................................................................................. 13
2.18 Registration Statement; Proxy Statement/Prospectus .......................................... 13
2.19 Disclosure Schedules; Materiality ........................................................... 13
2.20 Purchaser Benefit Plans ..................................................................... 13
2.21 Environmental Matters ....................................................................... 14
2.22 Advice of Changes ........................................................................... 15
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ........................................................ 15
3.1 Organization ................................................................................ 15
3.2 Authorization ............................................................................... 16
3.3 No Conflicts; Required Filings and Consents ................................................. 16
3.4 Capitalization and Shareholders ............................................................. 17
3.5 Company Financial Statements; Material Changes .............................................. 18
3.6 Company SEC Filings ......................................................................... 18
3.7 Company Reports ............................................................................. 18
3.8 Compliance With Laws ........................................................................ 19
3.9 Litigation .................................................................................. 20
3.10 Defaults .................................................................................... 20
3.11 Absence of Certain Changes or Events ........................................................ 20
3.12 Undisclosed Liabilities ..................................................................... 21
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TABLE OF CONTENTS
(continued)
Page
3.13 Licenses .................................................................................... 21
3.14 Governmental and Shareholder Approvals ...................................................... 21
3.15 Antitakeover Provisions Inapplicable ........................................................ 21
3.16 Proxy Statement/Registration Statement Disclosure ........................................... 21
3.17 Taxes ....................................................................................... 22
3.18 Insurance ................................................................................... 23
3.19 Loans; Investments .......................................................................... 23
3.20 Interest Rate Risk Management Arrangements .................................................. 24
3.21 Allowance for Loan Losses ................................................................... 24
3.22 Company Benefit Plans ....................................................................... 24
3.23 Environmental Matters ....................................................................... 28
3.24 Material Contracts .......................................................................... 28
3.25 Real Property ............................................................................... 29
3.26 Indemnification ............................................................................. 30
3.27 Insider Interests ........................................................................... 30
3.28 Rights Agreement ............................................................................ 30
3.29 Advice of Changes ........................................................................... 30
3.30 Fairness Opinion ............................................................................ 30
3.31 Fees ........................................................................................ 30
3.32 Disclosure Schedules; Materiality ........................................................... 31
IV. COVENANTS ............................................................................................ 31
4.1 Conduct of Business by the Company Until the Effective Time ................................. 31
4.2 Conduct of Business by Purchaser Until the Effective Time ................................... 37
4.3 Certain Actions ............................................................................. 38
V. ADDITIONAL AGREEMENTS ................................................................................ 39
5.1 Inspection of Records; Confidentiality ...................................................... 39
5.2 Meetings of the Company ..................................................................... 39
5.3 Bank Merger ................................................................................. 40
5.4 D&O Indemnification ......................................................................... 40
5.5 Affiliate Letters ........................................................................... 41
5.6 Regulatory Applications ..................................................................... 42
5.7 Financial Statements and Reports ............................................................ 42
5.8 Registration Statement; Shareholder Approval ................................................ 42
5.9 Notice ...................................................................................... 43
5.10 Press Releases .............................................................................. 43
5.11 Delivery of Supplements to Disclosure Schedules ............................................. 43
5.12 Tax Opinion ................................................................................. 44
5.13 Tax Treatment ............................................................................... 44
5.14 Resolution of Company Benefit Plans ......................................................... 45
5.15 Appointment to Purchaser Board of Directors ................................................. 46
5.16 Advisory Board .............................................................................. 47
5.17 Rights Agreement ............................................................................ 47
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TABLE OF CONTENTS
(continued)
Page
5.18 Environmental Investigation ................................................................. 47
5.19 Title to Real Estate ........................................................................ 48
5.20 Conforming Entries .......................................................................... 48
VI. CONDITIONS ........................................................................................... 48
6.1 Conditions to the Obligations of the Parties ................................................ 48
6.2 Conditions to the Obligations of Purchaser .................................................. 49
6.3 Conditions to the Obligations of the Company ................................................ 51
VII. TERMINATION; AMENDMENT; WAIVER ....................................................................... 52
7.1 Termination ................................................................................. 52
7.2 Effect of Termination ....................................................................... 54
7.3 Expenses .................................................................................... 56
7.4 Survival of Agreements ...................................................................... 56
7.5 Amendment ................................................................................... 56
7.6 Waiver ...................................................................................... 56
VIII. GENERAL PROVISIONS ................................................................................... 57
8.1 Survival .................................................................................... 57
8.2 Notice ...................................................................................... 57
8.3 Applicable Law .............................................................................. 58
8.4 Material Adverse Effect ..................................................................... 58
8.5 Headings, Etc ............................................................................... 58
8.6 Severability ................................................................................ 58
8.7 Entire Agreement; Binding Effect; Nonassignment; Counterparts ............................... 58
EXHIBITS
Exhibit A-1 Form of Conversion Agreement*
Exhibit A-2 Form of Cancellation Agreement*
Exhibit B Form of Certificate of Merger*
Exhibit C Form of Bank Merger Agreement*
Exhibit D Form of Affiliate Letter
Exhibit E Forms of Letter of Understanding*
Exhibit F Form of Legal Opinion (Company)*
Exhibit G Form of Legal Opinion (Purchaser)*
Exhibit H Index
*Intentionally omitted.
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") is made and entered
into as of the 20/th/ day of May, 2003, by and among MAF Bancorp, Inc., a
Delaware corporation ("Purchaser"), and St. Xxxxxxx Capital Corporation, a
Wisconsin corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Purchaser and the Company deem it
advisable and in the best interests of their respective shareholders that the
Company be merged with and into Purchaser (the "Merger") in accordance with the
Delaware General Corporation Law ("DGCL"), the Wisconsin Business Corporation
Law ("WBCL") and this Agreement;
WHEREAS, the respective Boards of Directors of Purchaser and the Company
have each approved the Merger upon the terms and conditions set forth herein;
WHEREAS, immediately following the Merger, Purchaser and the Company intend
that St. Xxxxxxx Bank, F.S.B., a wholly-owned subsidiary of the Company (the
"Bank"), shall merge (the "Bank Merger") with and into Mid America Bank, fsb, a
wholly-owned subsidiary of Purchaser ("Mid America"); and
WHEREAS, Purchaser and the Company intend the Merger to qualify as a
tax-free reorganization under Section 368(a) of the Internal Revenue Code of
1986, as amended ("Code").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties hereto agree as follows:
I.
THE MERGER
1.1 Effects of the Merger.
(a) Surviving Corporation. Subject to the terms and conditions of this
Agreement, the Company shall be merged with and into Purchaser at the Effective
Time (as defined in Section 1.4 below) in accordance with the DGCL and the WBCL.
As a result of the Merger, the separate corporate existence of the Company shall
cease and the Purchaser shall continue as the surviving corporation (the
"Surviving Corporation").
At the Effective Time, the effects of the Merger shall be as provided
in this Agreement and the applicable provisions of the DGCL and WBCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, all the property, rights, privileges,
powers and franchises of Purchaser and the Company shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Purchaser and the Company
shall become the debts, liabilities and duties of the Surviving Corporation.
(b) Certificate of Incorporation. The Certificate of Incorporation of
Purchaser in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until amended in
accordance with the provisions thereof and the DGCL.
(c) By-laws. The By-laws of Purchaser in effect immediately prior to
the Effective Time shall be the By-laws of the Surviving Corporation until
altered, amended or repealed as provided therein, or in accordance with the
Certificate of Incorporation of the Surviving Corporation and the DGCL.
(d) Directors and Officers. The directors of the Surviving Corporation
shall be the persons who were directors of Purchaser immediately prior to the
Effective Time; provided, however, that certain members of the Company's Board
of Directors shall be appointed to the Board of Directors of each of the
Surviving Corporation and Mid America pursuant to Section 5.15. The officers of
the Surviving Corporation shall be the persons who were officers of Purchaser
immediately prior to the Effective Time.
1.2 Conversion of Securities. Subject to Section 1.5(d) regarding
fractional shares, at the Effective Time, by virtue of the Merger and without
any action on the part of Purchaser, the Company or the holders of Purchaser
Common Stock (as defined below) or Company Common Stock (as defined below), the
following shall occur:
(a) Purchaser Common Stock. Each share of the common stock, par value
$0.01 per share, of Purchaser ("Purchaser Common Stock") issued and outstanding
immediately prior to the Effective Time shall remain outstanding and shall be
unchanged following the Merger.
(b) Company Common Stock. Subject to Section 1.2(c) below, each share
of the common stock, par value $0.01 per share, of the Company ("Company Common
Stock") issued and outstanding immediately prior to the Effective Time shall
cease to be outstanding and shall be converted into the right to receive 0.79
(the "Exchange Ratio") fully paid and nonassessable shares of Purchaser Common
Stock (the value of which is referred to herein as the "Merger Consideration").
(c) Stock Held by the Company or Purchaser. All shares of Company
Common Stock (other than shares of Company Common Stock held directly or
indirectly in trust accounts, managed accounts and the like or otherwise held in
a fiduciary capacity that are beneficially owned by third parties) that are (i)
owned by the Company as treasury stock, (ii) owned directly or indirectly by the
Company or any of its wholly-owned subsidiaries or (iii) owned directly or
indirectly by Purchaser or any of its wholly-owned subsidiaries, shall be
cancelled and shall constitute authorized but unissued Company Common Stock and
no shares of Purchaser Common Stock or other consideration shall be delivered in
exchange therefor.
(d) Adjustments for Dilution and Other Matters. If subsequent to the
date of this Agreement but prior to the Effective Time, (a) the Company shall
declare a stock dividend or distribution upon or subdivide, split up, reclassify
or combine the Company Common Stock, or declare a dividend or make a
distribution of Company Common Stock or any security convertible into Company
Common Stock, or (b) Purchaser shall declare a stock dividend or
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distribution upon or subdivide, split up, reclassify or combine Purchaser Common
Stock or declare a dividend or make a distribution of Purchaser Common Stock or
any security convertible into Purchaser Common Stock, an appropriate adjustment
or adjustments shall be made to the Exchange Ratio.
1.3 Stock Options. (a) At the Effective Time, each option granted by the
Company to purchase shares of Company Common Stock (each an "Option," and
collectively, "Options"), which is outstanding and unexercised immediately prior
to the Effective Time, shall, at the option of the holder of such Option, be
converted pursuant to either Section 1.3(a)(i) or (ii) below:
(i) each Option held by a holder of an Option who, prior to the
Effective Time, delivers an agreement in the form of Exhibit A-1 attached
("Conversion Agreement"), shall be converted into an option to purchase
shares of Purchaser Common Stock in such number and at such exercise price
as set forth herein and otherwise having the same terms and conditions as
in effect immediately prior to the Effective Time (except to the extent
that such terms, conditions and restrictions may be altered in accordance
with their terms as a result of the Merger contemplated hereby or to the
extent of any limited rights granted with respect thereto, which limited
rights shall be cancelled and of no further force or effect): (x) the
number of shares of Purchaser Common Stock to be subject to the converted
Option shall be equal to the product of (A) the number of shares of Company
Common Stock subject to the original Option and (B) the Exchange Ratio; (y)
the exercise price per share of Purchaser Common Stock under the converted
Option shall be equal to (A) the exercise price per share of Company Common
Stock under the original Option divided by (B) the Exchange Ratio; and (z)
upon exercise of each Option by a holder thereof, the aggregate number of
shares of Purchaser Common Stock deliverable upon such exercise shall be
rounded down, if necessary, to the nearest whole share and the aggregate
exercise price shall be rounded up, if necessary, to the nearest cent; or
(ii) each Option not converted pursuant to Section 1.3(a)(i)
above, shall be, immediately prior to the Effective Time, subject to the
consent of Purchaser (in its sole discretion), converted to the right to
receive cash; provided, prior to the Effective Time, the Company delivered
to Purchaser a cancellation agreement, substantially in the form of Exhibit
A-2 hereto ("Cancellation Agreement"), executed by the holder of such
Option. All Options converted pursuant to this Section 1.3(a)(ii) shall
terminate effective immediately prior to the Effective Time. In
consideration of the foregoing, Purchaser shall make or shall cause to be
made a cash payment to the holder of each Option, at the time provided in
the final sentence of this Section 1.3(a)(ii), in an amount (less any
applicable withholding taxes) equal to the number of Company Common Stock
shares covered by such Option multiplied by the amount which the Merger
Consideration exceeds the exercise price per share of Company Common Stock
under the Option held by such holder. A holder of an Option who has
delivered a Cancellation Agreement (x) prior to the Effective Time shall be
paid the amount to be paid pursuant to this Section 1.3(a)(ii) within three
(3) business days following the Effective Time, and (y) after the Effective
Time shall be paid the amount to be paid pursuant to this
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Section 1.3(a)(ii) within five (5) business days of Purchaser's receipt of
such Cancellation Agreement.
The adjustments provided herein with respect to any Options which are "incentive
stock options" (as defined in Section 422 of the Code) shall be effected in a
manner consistent with the requirements of Section 424(a) of the Code.
(b) The Company shall amend each Company Stock Option Plan (as defined
herein) to provide for the conversion or cancellation of Options in accordance
with this Section 1.3. The Company shall also provide to Purchaser the
conversion option selected, pursuant to this Section 1.3, by holders of the
Options not less than five (5) business days prior to the Effective Time. Such
notice shall provide: (i) the name of the holder of such Option; (ii) the number
of shares of Company Common Stock subject to such Option; (iii) the exercise
price of such Option; and (iv) the method of conversion selected by the holder
of such Option. In the event the Company fails to provide a conversion method
for an Option pursuant to this Section 1.3, such Option shall be converted
pursuant to Section 1.3(a)(ii).
(c) Purchaser shall file, simultaneous with the Registration Statement
(as defined herein), with the Securities and Exchange Commission ("SEC") a
registration statement on an appropriate form under the Securities Act of 1933,
as amended (the "Securities Act") with respect to the shares of Purchaser Common
Stock subject to options to acquire Purchaser Common Stock issued pursuant to
Section 1.3(a)(i) hereof, and shall use its reasonable best efforts to maintain
the current status of the prospectus contained therein, as well as comply with
applicable state securities or "blue sky" laws, for so long as such options
remain outstanding.
1.4 Consummation of the Merger; Effective Time. Subject to the terms and
conditions of this Agreement, the transactions contemplated by this Agreement
shall be consummated (the "Closing") at the offices of Vedder, Price, Xxxxxxx &
Kammholz, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, on such date and time as
shall be fixed by mutual agreement of Purchaser and the Company as promptly as
practicable but not later than ten (10) business days (unless otherwise agreed
to by the parties, such agreement not to be unreasonably withheld) after all of
the conditions set forth in Article VI (other than the receipt of closing
certificates and legal opinions) have first been fulfilled or waived; provided
such conditions shall continue, on such tenth business day, to be fulfilled or
waived, including the conditions which, by their terms, are to be satisfied on
the Closing Date and/or at the Effective Time (the date of such closing being,
the "Closing Date"). At the Closing, Purchaser and the Company shall cause the
Merger to become effective by causing a certificate of merger and an articles of
merger substantially in the forms set forth in Exhibit B (collectively, the
"Certificate of Merger") to be executed in accordance with the DGCL and WBCL and
to be filed with the Secretary of State of the State of Delaware and the
Secretary of State of the State of Wisconsin. The time at which the Merger
becomes effective shall be referred to as the "Effective Time."
1.5 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Purchaser shall deposit,
or shall cause to be deposited with Computershare Investor Services LLP (the
"Exchange Agent"), for the benefit of the holders of shares of the Company
Common Stock, for exchange in
4
accordance with this Article I, certificates representing the shares of
Purchaser Common Stock and cash in lieu of fractional shares.
(b) Surrender of Certificates. As soon as practicable after the
Effective Time but in no event later than three (3) business days following the
Effective Time, the Exchange Agent shall deliver to each holder of record of a
certificate or certificates which, as of the Effective Time, represented
outstanding shares of Company Common Stock (each, a "Certificate"): (i) a form
letter of transmittal which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates (or a lost certificate affidavit and bond in a form reasonably
acceptable to the Exchange Agent) to the Exchange Agent; and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for the
Merger Consideration. The foregoing letter of transmittal and instructions shall
be subject to prior approval of the Company. Upon surrender of a Certificate for
cancellation to the Exchange Agent (or a lost certificate affidavit and bond in
a form reasonably acceptable to the Exchange Agent), together with such letter
of transmittal, duly executed, the holder of such Certificate shall be entitled
to receive, in exchange therefor, a certificate evidencing the number of shares
of Purchaser Common Stock into which the shares of Company Common Stock,
theretofore represented by the Certificate so surrendered, shall have been
converted pursuant to the provisions of Section 1.2 (and, where applicable, cash
in lieu of fractional shares, also pursuant to the provisions of Section 1.2)
and the Certificate so surrendered shall be cancelled. Purchaser shall direct
the Exchange Agent to make such deliveries within three (3) business days of the
receipt of all required documentation. If any Purchaser Common Stock to be
exchanged for shares of Company Common Stock is to be delivered in a name other
than that in which the Certificate surrendered for exchange is registered, it
shall be a condition to the exchange that the Certificate so surrendered shall
be properly endorsed or otherwise in proper form for transfer, that all
signatures shall be guaranteed by a member firm of any national securities
exchange in the United States or the National Association of Securities Dealers,
Inc., or by a commercial bank or trust company or other financial institution
acceptable to Purchaser having an office in the United States, and that the
person requesting the payment shall either (a) pay to the Exchange Agent any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of the certificate surrendered, or (b) establish to the
satisfaction of the Exchange Agent that such taxes have been paid or are not
payable. From and after the Effective Time, there shall be no transfers on the
stock transfer books of the Company of any shares of Company Common Stock
outstanding immediately prior to the Effective Time and any such shares of
Company Common Stock presented to the Exchange Agent shall be cancelled in
exchange for the Merger Consideration payable with respect thereto as provided
in Section 1.2 above.
(c) Failure to Exchange Company Common Stock. No dividends or other
distributions declared after the Effective Time with respect to Purchaser Common
Stock payable to the holders of record thereof after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to Purchaser
Common Stock represented thereby and no cash payment in lieu of fractional
shares shall be paid to any holder until the holder of record shall surrender
such Certificate. Subject to the effect, if any, of applicable law, after the
subsequent surrender and exchange of a Certificate, the holder thereof shall be
entitled to receive any such dividends or distributions, without interest
thereon, which theretofore became payable with respect to the Purchaser Common
Stock represented by such Certificate. All dividends or
5
other distributions declared on or after the Effective Time with respect to the
Purchaser Common Stock and payable to the holders of record thereof on or after
the Effective Time which are payable to the holder of a Certificate not
theretofore surrendered and exchanged for Purchaser Common Stock pursuant to
this Section 1.5(c) shall be paid or delivered by Purchaser to the Exchange
Agent, in trust, for the benefit of such holders. All such dividends and
distributions held by the Exchange Agent for payment or delivery to the holders
of unsurrendered Certificates unclaimed at the end of one (1) year from the
Effective Time shall be repaid or redelivered by the Exchange Agent to Purchaser
after which time any holder of Certificates who has not theretofore surrendered
such Certificates to the Exchange Agent, subject to applicable law, shall look
only to Purchaser for payment or delivery of such dividends or distributions, as
the case may be. Any shares of Purchaser Common Stock or other consideration
delivered or made available to the Exchange Agent pursuant to this Section
1.5(c) and not exchanged for Certificates within one (1) year after the
Effective Time shall be returned by the Exchange Agent to Purchaser which shall
thereafter act as exchange agent subject to the rights of holders of
unsurrendered Certificates hereunder.
(d) Fractional Shares. No certificates or scrip representing
fractional shares of Purchaser Common Stock shall be issued upon the surrender
or exchange of Certificates, no dividend or distribution of Purchaser shall
relate to any fractional share, and such fractional share interests will not
entitle the owner thereof to vote or assert any rights of a stockholder of
Purchaser. In lieu of any fractional share, Purchaser shall cause to be paid to
each holder of shares of Company Common Stock who otherwise would be entitled to
receive a fractional share of Purchaser Common Stock an amount of cash (without
interest) equal to the product achieved when such fraction is multiplied by the
closing price of Purchaser Common Stock on The Nasdaq Stock Market ("Nasdaq") on
the Closing Date.
(e) Escheat. Notwithstanding anything in this Agreement to the
contrary, neither the Exchange Agent nor any party hereto shall be liable to a
former holder of Company Common Stock for any consideration delivered to a
public official pursuant to applicable escheat or abandoned property laws.
(f) Withholding Rights. Purchaser shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any former holder of shares of Company Common Stock such amounts as Purchaser is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by Purchaser, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the former
holder of the shares in respect of which such deduction and withholding were
made by Purchaser.
(g) Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further registration
of transfers of shares of Company Common Stock thereafter on the records of the
Company. From and after the Effective Time, the holders of Certificates shall
cease to have any rights with respect to such shares except as otherwise
provided herein or by law.
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II.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as set forth in the Disclosure Schedule delivered by Purchaser to
the Company prior to execution of this Agreement ("Purchaser Disclosure
Schedule"), Purchaser represents and warrants to the Company that:
2.1 Organization.
(a) Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
power and authority, corporate and otherwise, to own, operate and lease its
assets, properties and businesses, and to carry on its businesses substantially
as they have been and are now being conducted. Purchaser is duly qualified to do
business and is in good standing in each jurisdiction where the character of the
properties owned or leased by it or the nature of the business transacted by it
requires that it be so qualified, except where the failure to so qualify would
not have a Material Adverse Effect (as defined in Section 8.4) on the business
of Purchaser and its subsidiaries, taken as a whole. Purchaser has all requisite
corporate power and authority to enter into this Agreement, and, upon the
approval of the Governmental Authorities (as defined herein) and the
stockholders of Purchaser, to consummate the transactions contemplated hereby.
Purchaser is duly registered as a unitary savings and loan holding company under
the Home Owners' Loan Act, as amended ("HOLA").
(b) Mid America is a federally-chartered stock savings bank duly
organized and in existence under the laws of the United States. Mid America is
an "insured depository institution" as defined in the Federal Deposit Insurance
Act (the "FDI Act") and applicable regulations thereunder, the deposits of which
are insured by the Federal Deposit Insurance Corporation ("FDIC") through the
Savings Association Insurance Fund ("SAIF") to the full extent permitted under
applicable laws.
(c) Except as set forth on Schedule 2.1(c) to the Purchaser
Disclosure Schedule, Purchaser has no direct or indirect subsidiaries other than
MAF Developments, Inc., N.W. Financial Corporation, Mid America Investment
Services, Inc., Mid America Finance Corporation, Mid America Insurance Agency,
Inc., Centre Point Title Services, Inc., MAF Realty Co., L.L.C.-III, MAF Realty
Co., L.L.C.-IV, Mid America Mortgage Securities, Inc., Ambria Development
Corporation, Xxxxxxx Road Development Corporation, Reigate Xxxxx Development
Corporation, Mid America Re, Inc., Mid Town Development Corporation and
Equitable Finance Corporation (the "Purchaser Corporate Subsidiaries") and Mid
America (collectively, the "Purchaser Subsidiaries"). Except as set forth on
Schedule 2.1(c) to the Purchaser Disclosure Schedule, each of the Purchaser
Corporate Subsidiaries is either wholly-owned by Purchaser or Mid America or by
wholly-owned subsidiaries of Mid America, and is a duly organized and validly
existing corporation or limited liability company, as applicable, in good
standing under the laws of the State of Illinois, Delaware or Vermont, with
corporate power and authority to own, operate and lease its assets and
properties and carry on its business substantially as it has been and is now
being conducted. Each Purchaser Subsidiary holds all licenses, certificates,
permits, franchises and rights from all appropriate federal, state or other
7
public authorities necessary for the conduct of its respective businesses,
except where the failure to so hold would not have a Material Adverse Effect on
the business of Purchaser and the Purchaser Subsidiaries, taken as a whole.
2.2 Authorization. The execution, delivery and performance of this
Agreement, the Certificate of Merger and the consummation of the transactions
contemplated hereby and thereby have been duly approved and authorized by
Purchaser's Board of Directors, and all necessary corporate action (except for
the requisite stockholder approval) on the part of Purchaser has been taken.
This Agreement has been, and the Certificate of Merger will be, duly executed
and delivered by Purchaser and, subject to the approval of all requisite state
and federal regulatory agencies and the stockholders of Purchaser, will
constitute the valid and binding obligations of Purchaser, except to the extent
that enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles and
doctrines.
2.3 No Conflicts; Required Filings and Consents.
(a) The execution and delivery of this Agreement and the Certificate
of Merger do not, and the consummation of the transactions contemplated hereby
and thereby will not, (i) conflict with or result in any violation of the
Certificate of Incorporation or By-laws of Purchaser or organizational documents
of any Purchaser Subsidiary; (ii) conflict with or result in any violation,
breach or termination of, or default or loss of a material benefit under, or
permit the acceleration of, any obligation or result in the creation of any
material lien, charge or encumbrance on any of the property or assets under any
provision of any mortgage, indenture, lease, agreement or other instrument,
permit, concession, grant, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Purchaser or any Purchaser
Subsidiary or their respective properties; or (iii) conflict with or violate any
domestic (federal, state or local) or foreign law, statute, ordinance,
regulation or order (collectively "Laws") applicable to the Purchaser or
Purchaser Subsidiaries, other than any such conflicts, violations or defaults
which (A) individually or in the aggregate do not have a Material Adverse Effect
on Purchaser and the Purchaser Subsidiaries, taken as a whole, or (B) will be
cured or waived prior to the Effective Time.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Federal or state governmental authority is
required by or with respect to Purchaser in connection with the execution and
delivery of this Agreement, the Certificate of Merger or the consummation by
Purchaser of the transactions contemplated hereby or thereby, the absence of
which would have a Material Adverse Effect upon Purchaser, except for those
relating to: (i) any application or notice with the Office of Thrift Supervision
("OTS"), the FDIC, and any other federal or state regulatory authorities having
jurisdiction over the transactions contemplated hereby (collectively, the
"Governmental Authorities"); (ii) the Registration Statement to be filed by
Purchaser relating to the Purchaser Common Stock to be issued pursuant to this
Agreement (the "Registration Statement") with the SEC and various blue sky
authorities, which Registration Statement shall include the proxy statement for
use in connection with the meetings of the stockholders of Purchaser and the
Company (the "Proxy Statement") to be called pursuant to Section 5.8 hereof;
(iii) the Certificate of Merger to be filed with the Secretary of State of the
State of Delaware and the Wisconsin Department of Financial
8
Institutions; (iv) any filings, approvals or no-action letters with or from
state securities authorities; and (v) any antitrust filings, consents, waivers
or approvals.
2.4 Capitalization.
(a) As of May 1, 2003, the capital stock of Purchaser consists of the
following:
Class of
Stock Par Value Authorized Issued Outstanding Treasury
--------- --------- ---------- ---------- ----------- ----------
Common $ .01 80,000,000 25,420,650 23,316,374 2,104,276
Preferred $ .01 5,000,000 0 0 0
All of the issued and outstanding shares of Purchaser Common Stock have been,
and all of the shares of Purchaser Common Stock to be issued in the Merger will
be, at the Effective Time, duly and validly authorized and issued, and are, or
upon issuance in the Merger will be, as the case may be, fully paid and
nonassessable. None of the outstanding shares of Purchaser Common Stock have
been issued in violation of any preemptive rights and none of the outstanding
shares of Purchaser Common Stock is or will be entitled to any preemptive rights
in respect of the Merger or any of the other transactions contemplated by this
Agreement. Purchaser has reserved, and will at the Effective Time have, a number
of authorized but unissued shares of Purchaser Common Stock or shares of
Purchaser Common Stock held in treasury sufficient to pay the Merger
Consideration in accordance with Section 1.2 hereof. There are no obligations,
contingent or otherwise, of Purchaser to repurchase, redeem or otherwise acquire
any shares of Purchaser Common Stock or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other entity, except for investments in Purchaser Subsidiaries, loan commitments
and other funding obligations entered into in the ordinary course of business.
(b) As of May 1, 2003, Purchaser had reserved 3,394,776 shares of
Purchaser Common Stock for issuance under stock option plans (the "Purchaser
Stock Options Plans") for the benefit of directors, employees and former
directors and employees of Purchaser and the Purchaser Subsidiaries pursuant to
which options covering 2,850,653 shares of Purchaser Common Stock were
outstanding as of May 1, 2003. Except as set forth on Schedule 2.4(b) to the
Purchaser Disclosure Schedule, and except for the Purchaser Stock Option Plans,
and other compensatory arrangements or employee benefit plans disclosed in the
Purchaser Reports (as defined in Section 2.7), there are no shares of capital
stock of Purchaser subject to options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of
Purchaser, or contracts, commitments, understandings, or arrangements by which
Purchaser is or may be bound to issue additional shares of its capital stock or
options, warrants, or rights to purchase or acquire any additional shares of its
capital stock.
2.5 Purchaser Financial Statements; Material Changes. Purchaser has
previously delivered to the Company its audited consolidated financial
statements for the years ended
9
December 31, 2002, 2001 and 2000, and the unaudited consolidated financial
statements for the three months ended March 31, 2003 (collectively, the
"Purchaser Financial Statements"). The Purchaser Financial Statements (x) are
true and correct in all material respects; (y) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
("GAAP") during the periods involved (except as may be indicated in the notes
thereto and, in the case of the unaudited consolidated financial statements,
except for the absence of footnotes and for normal and recurring year end
adjustments which are not material); and (z) fairly present the consolidated
statement of financial condition of Purchaser as of the dates thereof and the
related consolidated statement of operations, changes in stockholders' equity
and cash flows for the periods then ended. Except for events and developments
referred to herein (including the Purchaser Disclosure Schedule) or Purchaser
Reports, since December 31, 2002 to the date hereof, Purchaser and the Purchaser
Subsidiaries, taken as a whole, have not undergone or suffered any changes in
their condition (financial or otherwise), properties, assets, liabilities,
business or operations which have been, in any case or in the aggregate,
materially adverse to Purchaser on a consolidated basis.
2.6 Purchaser SEC Filings. Purchaser has previously made available to the
Company true and complete copies of (a) its proxy statements on Schedule 14A of
the Securities Exchange Act relating to all meetings of stockholders (whether
special or annual) during the calendar years 2000, 2001, 2002 and 2003, and (b)
all other reports, as amended, or filings, as amended, filed under the
Securities and Exchange Act of 1934, as amended, and the rules and regulations
thereunder (collectively, the "Exchange Act"), by Purchaser with the SEC since
January 1, 2000, including without limitation, reports on Forms 10-K, 10-Q and
8-K, and filings with the SEC under the Securities Act. Purchaser has taken, or
will take, any and all actions as necessary to comply with the Xxxxxxxx-Xxxxx
Act of 2002 and all rules and regulations promulgated thereunder.
2.7 Purchaser Reports. (a) Since January 1, 2000, each of Purchaser and
the Purchaser Subsidiaries has timely filed all reports and statements, together
with any amendments required to be made with respect thereto, that were required
to be filed with (a) the SEC, (b) the OTS, (c) the FDIC, (d) any applicable
state banking, insurance, securities, or other regulatory authorities (except
filings which are not material), and (e) Nasdaq (collectively, the "Purchaser
Reports"). Purchaser has previously made available to the Company true and
complete copies of the Purchaser Reports requested by the Company. As of their
respective filing dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with the applicable provisions of the statutes, rules, and regulations
enforced or promulgated by the authority with which they were filed and did not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(b) Except as disclosed in Purchaser Reports or set forth in Schedule
2.7(b) to the Purchaser Disclosure Schedule, and except for examinations or
reviews conducted in the regular course of the business of Purchaser or the
Purchaser Subsidiaries by the SEC, Internal Revenue Service, Department of
Labor, state, and local taxing authorities, OTS or the FDIC, no federal, state
or local governmental agency, commission or other entity has initiated any
proceeding or, to the best knowledge of Purchaser, investigation into the
business or operations
10
of Purchaser or the Purchaser Subsidiaries within the past three years. None of
Purchaser or any Purchaser Subsidiary is subject to a written agreement (as such
term is defined pursuant to 12 U.S.C. (S)1818) with the OTS or the FDIC. There
is no unresolved violation, criticism or exception by the SEC, OTS or FDIC, or
other agency, commission or entity with respect to any report or statement
referred to herein that has had or is expected to have a Material Adverse Effect
on Purchaser and the Purchaser Subsidiaries, taken as a whole.
2.8 Compliance With Laws. (a) Except as disclosed on Schedule 2.7(b) to
the Purchaser Disclosure Schedule and except for any conflicts, defaults or
violations which would not insofar as can reasonably be foreseen in the future,
individually or in the aggregate, have a Material Adverse Effect on Purchaser or
the Purchaser Subsidiaries, taken as a whole, neither Purchaser nor any
Purchaser Subsidiary is in conflict with, or in default or violation of, (i) any
law applicable to Purchaser or any Purchaser Subsidiary or by which its or any
of their respective properties is bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Purchaser or any Purchaser Subsidiary is
a party or by which Purchaser or any Purchaser Subsidiary or any of its or any
of their respective properties is bound or affected.
(b) The policies, programs, and practices of Purchaser and each
Purchaser Subsidiary relating to wages, hours of work, and other terms and
conditions of employment are in compliance in all material respects with
applicable laws, orders, regulations, public policies and ordinances governing
employment and terms and conditions of employment. Except as disclosed on
Schedule 2.8(b) to the Purchaser Disclosure Schedule, there are no disputes,
claims, or charges pending or, to Purchaser's best knowledge, threatened in
writing against Purchaser or any Purchaser Subsidiary alleging breach of any
express or implied employment contract or commitment, or material breach of any
applicable law, order, regulation, public policy or ordinance relating to
employment or terms and conditions of employment, and, to the best knowledge of
Purchaser, there is no basis for any valid claim or charge with regard to such
matters.
2.9 Litigation. (a) Except as set forth on Schedule 2.7(b) to the
Purchaser Disclosure Schedule, there is no suit, action, investigation or
proceeding, legal, quasi-judicial, administrative or otherwise, pending or, to
the best knowledge of Purchaser, threatened against or affecting Purchaser or
any Purchaser Subsidiary, or any of their respective officers, directors,
employees or agents, in their capacities as such, which, if adversely
determined, would have a Material Adverse Effect on Purchaser and the Purchaser
Subsidiaries, taken as a whole, or which is seeking to enjoin consummation of
the transactions provided for herein or to obtain other relief in connection
with this Agreement or the transactions contemplated hereby or thereby.
(b) Except as set forth on Schedule 2.7(b) to the Purchaser Disclosure
Schedule, there is no injunction, order, judgment, or decree, judicial or
regulatory, imposed on Purchaser or any of the Purchaser Subsidiaries or the
assets of Purchaser or any of the Purchaser Subsidiaries which has had a
Material Adverse Effect on Purchaser and the Purchaser Subsidiaries, taken as a
whole.
2.10 Defaults. There has not been any default, or the occurrence of an
event which with notice or lapse of time or both would constitute a default, in
any obligation to be performed
11
by Purchaser or any Purchaser Subsidiary under any contract, commitment, or
other material obligation to which Purchaser, any Purchaser Subsidiary or their
respective properties is subject, and neither Purchaser nor any Purchaser
Subsidiary has waived any right under any contract or commitment, except in each
case where any such default or waiver, singly or in the aggregate with any other
such defaults or waivers, would not have a Material Adverse Effect on Purchaser
and the Purchaser Subsidiaries, taken as a whole. To the best knowledge of
Purchaser, except as disclosed in Purchaser Reports, no other party to any such
material contract or commitment is in default in any material obligation to be
performed by such party.
2.11 Absence of Certain Changes or Events. Except as disclosed in the
Purchaser Reports filed with the SEC prior to the date of this Agreement and
except for transactions contemplated by this Agreement, since December 31, 2002,
Purchaser and the Purchaser Subsidiaries have conducted their respective
businesses only in the ordinary course of business and in a manner consistent
with past practice and, since December 31, 2002, there has not been (a) any
change in the financial condition, results of operations or business of
Purchaser and any of the Purchaser Subsidiaries having a Material Adverse Effect
on Purchaser and the Purchaser Subsidiaries taken as a whole, (b) any damage,
destruction or loss (whether or not covered by insurance) with respect to any of
the assets of Purchaser or any of the Purchaser Subsidiaries having a Material
Adverse Effect on Purchaser or the Purchaser Subsidiaries taken as a whole, (c)
any change by Purchaser in its accounting methods, principles or practices,
except as required by the applicable regulatory or governmental agency, or (d)
except for regular quarterly cash dividends on Purchaser Common Stock with usual
record and payment dates, to the date of this Agreement, any declaration,
setting aside or payment of any dividends or distributions in respect of shares
of Purchaser Common Stock or any redemption, purchase or other acquisition of
the securities of any Purchaser Subsidiary.
2.12 Undisclosed Liabilities. All of the obligations or liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise, whether due
or becoming due, and regardless of when asserted) arising out of transactions or
events heretofore entered into, or any action or inaction, including taxes with
respect to or based upon transactions or events heretofore occurring, that are
required to be reflected, disclosed or reserved against in the audited
consolidated financial statements in accordance with GAAP ("Liabilities") have,
in the case of Purchaser and the Purchaser Subsidiaries, been so reflected,
disclosed or reserved against in the audited consolidated financial statements
of Purchaser as of December 31, 2002 or in the notes thereto, and Purchaser and
the Purchaser Subsidiaries have no other Liabilities except Liabilities incurred
since December 31, 2002, in the ordinary course of business or disclosed on
Schedule 2.7(b) to the Purchaser Disclosure Schedule.
2.13 Licenses. To Purchaser's best knowledge, Purchaser and each Purchaser
Subsidiary, respectively, hold all governmental registrations, licenses, permits
or franchises (each a "Purchaser Permit") required to be held by it and which
are material with respect to the operation of their respective businesses,
except for such Purchaser Permits which, the failure to hold, would not have a
Material Adverse Effect on Purchaser and the Purchaser Subsidiaries, taken as a
whole.
2.14 Government Approvals. To Purchaser's best knowledge, no fact or
condition exists with respect to Purchaser or any Purchaser Subsidiary which
Purchaser has reason to
12
believe will prevent it from obtaining approval of the Merger, the Bank Merger
and other transactions contemplated by this Agreement by any Governmental
Authority.
2.15 Fairness Opinion. Purchaser has received an opinion, dated the date of
this Agreement, from Sandler X'Xxxxx & Partners, L.P. that, subject to the
terms, conditions and qualifications set forth therein, the Exchange Ratio is
fair to Purchaser's stockholders from a financial point of view.
2.16 Fees. Other than the financial advisory services performed for
Purchaser by Sandler X'Xxxxx & Partners, L.P. neither Purchaser nor any of the
Purchaser Subsidiaries, nor any of their respective officers, directors,
employees or agents, has employed a broker or finder or incurred any liability
for any financial advisory fees, brokerage fees, commissions, or finder's fees,
and no broker or finder has acted directly or indirectly for Purchaser or any
Purchaser Subsidiary in connection with this Agreement or the transactions
contemplated hereby.
2.17 Tax Matters. Neither Purchaser nor any of its affiliates has, through
the date of this Agreement taken or agreed to take or omit to take any action
that would prevent the Merger from qualifying as a reorganization under Section
368 of the Code.
2.18 Registration Statement; Proxy Statement/Prospectus. The information
supplied by Purchaser for inclusion in the Registration Statement shall not, at
the time the Registration Statement is declared effective by the SEC, contain
any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If at any time prior to the Effective Time any event relating to
Purchaser or any of its affiliates, officers or directors should be discovered
by Purchaser which would be required to be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement/Prospectus,
Purchaser shall promptly inform the Company.
2.19 Disclosure Schedules; Materiality. The inclusion of any matters or
items on the Purchaser Disclosure Schedule shall not constitute an
acknowledgement by Purchaser (or evidence) as to the materiality or Material
Adverse Effect of any matter or item so disclosed.
2.20 Purchaser Benefit Plans. (a) Set forth on Schedule 2.20 to the
Purchaser Disclosure Schedule are any retirement, stock option, stock purchase,
stock ownership, savings, stock appreciation right, profit sharing, deferred
compensation, bonus, group insurance, severance and other employee benefit plans
which Purchaser or any Purchaser Subsidiary has in effect as of the date hereof
(the Purchaser Benefit Plans), and true and correct copies (or detailed
summaries) of each such plan are attached to and made a part of Schedule 2.20 to
the Purchaser Disclosure Schedule (except for such employee benefit plans
identified on Schedule 2.20 to the Purchaser Disclosure Schedule, true and
correct copies of which are filed as exhibits to a filing made by Purchaser with
the SEC).
(b) Each of the Purchaser Benefit Plans that is intended to be a
pension, profit sharing, stock bonus, thrift, savings or employee stock
ownership plan that is qualified under Section 401(a) of the Code (the
"Purchaser Qualified Plans") has been determined by the Internal Revenue Service
to qualify under Section 401(a) of the Code, and to the best knowledge of the
13
Purchaser, there exist no circumstances likely to materially adverse affect the
qualified status of any such Purchaser Qualified Plan.
(c) Except as set forth on Schedule 2.20(c) to the Purchaser
Disclosure Schedule, no Purchaser Qualified Plan is a defined benefit pension
plan.
(d) Each Purchaser Benefit Plan is, and has been since the inception
of such Purchaser Benefit Plan, in substantial compliance with, and each such
Purchaser Benefit Plan is and has been operated in substantial accordance with,
its provisions and in substantial compliance with the applicable material laws,
rules and regulations governing such Purchaser Qualified Plan.
2.21 Environmental Matters. (a) For purposes of this Section 2.21, (i)
"Purchaser Properties" means (i) real estate owned or leased by Purchaser and
the Purchaser Subsidiaries and used as a banking related facility, (ii) other
real estate owned by Purchaser or the Purchaser Subsidiaries as defined by any
federal or state financial institution regulatory agency with regulatory
authority for Purchaser and the Purchaser Subsidiaries, and (iii) real estate
owned or leased by a partnership or joint venture in which Purchaser or a
Purchaser Subsidiary has an ownership interest:
(b) Except as set forth on Schedule 2.21 to the Purchaser Disclosure
Schedule, to the best knowledge of Purchaser after such inquiry and
investigation as Purchaser deems appropriate, there are no present or past
conditions on the Purchaser Properties, other than past conditions which have
been remediated, involving or resulting from a past or present storage, spill,
discharge, leak, emission, injection, escape, dumping or release of any kind
whatsoever of any material or substance: (i) which is or becomes defined as a
"hazardous substance", "pollutant" or "contaminant" pursuant to CERCLA, or other
law, regulation, rule, ordinance or similar requirement that governs or protects
the environment enacted by the United States, any state, or any county, city or
agency or subdivision of the United States or any state, and amendments thereto
and regulations promulgated thereunder (collectively, "Environmental Laws");
(ii) containing gasoline, oil, diesel fuel or other petroleum products, or
fractions thereof; (iii) which is or becomes defined as a "hazardous waste"
pursuant to RCRA and amendments thereto and regulations promulgated thereunder;
(iv) containing polychlorinated biphenyls; (v) containing asbestos; (vi) which
is radioactive; (vii) which is biologically hazardous; (viii) the presence of
which requires investigation or remediation under any Environmental Laws; (ix)
which is defined as a "hazardous waste", "hazardous substance", "pollutant" or
"contaminant" or other such term used to defined a substance having an adverse
effect on the environment under Environmental Laws; or (x) any toxic, explosive,
dangerous corrosive or otherwise hazardous substance, material or waste, which
is regulated by any federal, state or local governmental authority
(collectively, "Hazardous Materials") or from any generation, transportation,
treatment, storage, disposal, use or handling of any Hazardous Materials.
(c) Purchaser and each Purchaser Subsidiary are in compliance in all
material respects with all Environmental Laws. Neither Purchaser nor any
Purchaser Subsidiary has received notice of, or to the best knowledge of
Purchaser, are there outstanding or pending, any public or private claims,
lawsuits, citations, penalties, unsatisfied abatement obligations or notices or
orders of non-compliance relating to the environmental condition of the
Purchaser
14
Properties which have or may reasonably be expected to result in a Material
Adverse Effect on Purchaser and the Purchaser Subsidiaries, taken as a whole.
2.22 Advice of Changes. Between the date hereof and the Effective Time,
Purchaser shall promptly advise the Company in writing of any fact which, if
existing or known as of the date hereof, would have been required to be set
forth or disclosed pursuant to this Agreement or of any fact which, if existing
or known as of the date hereof, would have made any of the representations
contained herein untrue.
III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule delivered by the Company to
Purchaser prior to the execution of this Agreement (the "Company Disclosure
Schedule"), the Company represents and warrants to Purchaser that:
3.1 Organization. (a) The Company is a corporation duly organized and
validly existing under the laws of the State of Wisconsin. The Company is
current in all of its filings necessary to maintain its corporate existence
under Wisconsin law. The Company has all requisite power and authority,
corporate and otherwise, to own, operate and lease its assets, properties and
businesses and to carry on its businesses substantially as they have been and
are now being conducted. The Company is duly qualified to do business and is in
good standing in each jurisdiction where the character of the properties owned
or leased by it or the nature of the business transacted by it requires that it
be so qualified, except where the failure to so qualify would not have a
Material Adverse Effect on the Company and its subsidiaries, taken as a whole.
The Company has all requisite corporate power and authority to enter into this
Agreement, and, upon the approval of the Governmental Authorities and the
shareholders of the Company, to consummate the transactions contemplated hereby
and thereby. The Company is duly registered as a unitary savings and loan
holding company under HOLA.
(b) The Bank is a federally-chartered stock savings bank duly
organized and in existence under the laws of the United States. The Bank is an
"insured depository institution" as defined in the FDI Act and applicable
regulations thereunder, the deposits of which are insured by FDIC through SAIF
to the full extent permitted under applicable laws.
(c) Except as set forth on Schedule 3.1(c) of the Company Disclosure
Schedule, the Company has no direct or indirect subsidiaries other than St.
Xxxxxxx Equity Properties, Inc., SF Insurance Services, SF Investment
Corporation and St. Xxxxxxx Mortgage Corporation (inclusive of the entities set
forth on Schedule 3.1(c) of the Company Disclosure Schedule, the "Company
Corporate Subsidiaries") and the Bank (collectively, the "Company
Subsidiaries"). Except as set forth on Schedule 3.1(c) of the Company Disclosure
Schedule, each of the Company Corporate Subsidiaries is either wholly-owned by
the Company or the Bank, and is a duly organized and validly existing
corporation, in good standing under the laws of the State of Wisconsin or the
State of Nevada, with corporate power and authority to own, operate and lease
its assets and properties and carry on its business substantially as it has been
and is now being conducted. Each Company Subsidiary is duly qualified to do
business and is in
15
good standing in each jurisdiction where the character of the properties owned
or leased by it or the nature of the business transacted by it requires that it
be so qualified, except where the failure to so qualify would not have a
Material Adverse Effect on the Company and the Company, taken as a whole. Each
Company Subsidiary holds all licenses, certificates, permits, franchises and
rights from all appropriate federal, state or other public authorities necessary
for the conduct of its and their respective businesses, except where the failure
to so hold would not have a Material Adverse Effect on the business of the
Company and the Company Subsidiaries, taken as a whole.
3.2 Authorization. The execution, delivery and performance of this
Agreement, the Certificate of Merger, and the consummation of the transactions
contemplated hereby and thereby have been duly approved and authorized by the
Company's Board of Directors, and all necessary corporate action on the part of
the Company (except for the requisite shareholder approval) has been taken. This
Agreement has been, and the Certificate of Merger will be, duly executed and
delivered by the Company and, subject to the approval of the shareholders of the
Company, and all requisite, state and federal regulatory agencies, will
constitute the valid and binding obligations of the Company, except to the
extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles
and doctrines. Neither the Articles of Incorporation nor the By-laws of the
Company will need to be amended to effectuate the transactions contemplated by
this Agreement.
3.3 No Conflicts; Required Filings and Consents. (a) The execution and
delivery of this Agreement and the Certificate of Merger do not, and the
consummation of the transactions contemplated hereby and thereby will not, (i)
conflict with or result in any violation of the Articles of Incorporation or
By-laws of the Company or organizational documents of any Company Subsidiary;
(ii) conflict with or result in any violation, breach or termination of, or
default or loss of a material benefit under, or permit the acceleration of, any
obligation or result in the creation of any material lien, charge or encumbrance
on any of the property or assets under any provision of any mortgage, indenture,
lease, agreement or other instrument, permit, concession, grant, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any Company Subsidiary or their respective
properties; or (iii) conflict with or violate any Laws applicable to the Company
or the Company Subsidiaries other than any such conflicts, violations or
defaults which (A) individually or in the aggregate do not have a Material
Adverse Effect on the Company and the Company Subsidiaries, taken as a whole, or
(B) will be cured, by valid amendment or otherwise, or waived prior to the
Effective Time.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any federal or state governmental authority is
required by or with respect to the Company in connection with the execution and
delivery of this Agreement or the Certificate of Merger or the consummation by
the Company of the transactions contemplated hereby or thereby, the absence of
which would have a Material Adverse Effect upon the Company, except for those
relating to: (i) any application or notice with the Governmental Authorities;
(ii) the Registration Statement and Proxy Statement with the SEC; (iii) the
Certificate of Merger with the Secretary of State of the State of Delaware and
the Wisconsin Department of Financial Institutions; (iv) any filings, approvals
or no-action letters with or from state securities authorities; and (v) any
antitrust filings, consents, waivers or approvals.
16
3.4 Capitalization and Shareholders. (a) As of the date hereof, the
capital stock of the Company consists of the following:
Class of Par
Stock Value Authorized Issued Outstanding Treasury
-------------- ----- ---------- ------ ----------- --------
Common $0.01 24,000,000 14,579,240 9,398,531 5,180,709
Preferred $0.01 6,000,000 0 0 0
All of the issued and outstanding shares of Company Common Stock have been duly
and validly authorized and issued, and are fully paid and non-assessable, except
as provided by Section 180.0622(2)(b) of the WBCL (such section, including
judicial interpretations thereof and Section 180.40(6), its predecessor statute,
are referred to herein as "Section 180.0622(2)(b) of the WBCL"). None of the
outstanding shares of Company Common Stock were issued in violation of any
preemptive rights of the current or past shareholders of the Company, and, to
the best knowledge of the Company, there exist no prior rights of any party to
acquire such shares. All of the issued and outstanding shares of Company Common
Stock will be entitled to vote to approve the Agreement. Except for the
transactions contemplated herein and as provided for under the Company Stock
Option Plans (as defined herein), and the Rights Agreement, dated September 25,
1997, by and between the Company and U.S. Bancorp (f/k/a Firstar Trust Company,
N.A.) (the "Rights Agreement"), there are no outstanding warrants, options,
rights, calls or other commitments of any nature relating to the issuance or
sale of Company Common Stock or any other equity securities of the Company.
(b) As of the date hereof, the Company has 1,441,500 shares of
Company Common Stock available for issuance out of treasury shares pursuant to
stock option plans for the benefit of employees and directors of the Company or
the Company Subsidiaries ("Company Stock Option Plans"). Pursuant to such plans,
options covering an aggregate of 1,380,850 shares of Company Common Stock are
outstanding as of the date hereof. No limited rights have been granted under the
Company Stock Option Plans. As of the date hereof, all of the shares of Company
Common Stock authorized to be issued under the Company's Recognition and
Retention Plan ("RRP Plan") have been awarded, vested and distributed. Except as
set forth in this Section 3.4(b) and except for the transactions contemplated
herein, there are no shares of capital stock or other equity securities of the
Company outstanding and no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the capital
stock of the Company, or contracts, commitments, understandings, or arrangements
by which the Company is or may be bound to issue additional shares of its
capital stock or options, warrants, or rights to purchase or acquire any
additional shares of its capital stock. Each option is exercisable or will be
exercisable as of the date set forth in Schedule 3.4(b) to the Company
Disclosure Schedule and has an exercise price in the amount set forth in
Schedule 3.4(b) to the Company Disclosure Schedule.
(c) Schedule 3.4(c) to the Company Disclosure Schedule accurately
identifies the names and addresses of all of the shareholders who, to the
Company's best knowledge, beneficially own more than 5% of the shares of Company
Common Stock and the number of shares of common stock of the Company held by
each such shareholder and by each director and
17
senior officer of the Company. From the date hereof until the Effective Time,
the Company shall, upon request, provide Purchaser with (i) a complete list of
all of its shareholders of record and non-objecting shareholders, including the
names, addresses and number of shares of Company Common Stock held by each
shareholder, and (ii) any correspondence between the Company and any shareholder
of the Company.
(d) Except as set forth on Schedule 3.4(d) to the Company Disclosure
Schedule, no capital stock of any of the Company Subsidiaries is or may become
required to be issued (other than to the Company) by reason of any options,
warrants, script, rights to subscribe to, calls, or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of any Company Subsidiary. There are no
contracts, commitments, understandings or arrangements relating to the rights of
the Company to vote or to dispose of shares of the capital stock of any Company
Subsidiary. All of the shares of the capital stock of each Company Subsidiary
held by the Company are fully paid and non-assessable and, except as set forth
on Schedule 3.4(d) to the Company Disclosure Schedule, are owned by the Company
free and clear of any claim, lien or encumbrance.
3.5 Company Financial Statements; Material Changes. The Company has
previously delivered to Purchaser its audited consolidated financial statements
for the years ended September 30, 2002, 2001 and 2000, and the unaudited
consolidated financial statements for the six months ended March 31, 2003
(collectively, the "Company Financial Statements"). The Company Financial
Statements (x) are true and correct in all material respects; (y) have been
prepared in accordance with GAAP (except as may be indicated in the notes
thereto and, in the case of the unaudited consolidated financial statements,
except for the absence of footnotes and for normal and recurring year-end
adjustments which are not material); and (z) fairly present the consolidated
statement of financial condition of the Company as of the dates thereof and the
related consolidated statement of operations, changes in stockholders' equity
and cash flows for the periods then ended. Since September 30, 2002 to the date
hereof, the Company and the Company Subsidiaries, taken as a whole, have not
undergone or suffered any changes in their condition (financial or otherwise),
properties, assets, liabilities, business or operations which have been, in any
case or in the aggregate, materially adverse to the Company on a consolidated
basis.
3.6 Company SEC Filings. The Company has previously made available to
Purchaser true and complete copies of (a) its proxy statements on Schedule 14A
of the Exchange Act relating to all meetings of shareholders (whether special or
annual) during the calendar years 2000, 2001, 2002 and 2003, (b) all other
reports or filings, as amended, filed under the Exchange Act by the Company with
the SEC since January 1, 2000, including without limitation, reports on Forms
10-K, 10-Q and 8-K, and filings with the SEC under the Securities Act, and (c)
beneficial ownership reports or filings relating to the Company Common Stock
furnished to the Company since January 1, 2000. The Company has taken, or will
take, any and all actions necessary to comply with the provisions of the
Xxxxxxxx-Xxxxx Act of 2002, and all rules and regulations promulgated
thereunder, that are currently in effect or that become effective prior to
Closing and are required to be complied with prior to Closing.
3.7 Company Reports. (a) Since January 1, 2000, each of the Company and
the Company Subsidiaries has timely filed all reports and statements, together
with any amendments
18
required to be made with respect thereto, that were required to be filed with
(a) the SEC, (b) the OTS, (c) the FDIC, (d) any applicable state banking,
insurance, securities, or other regulatory authorities (except filings which are
not material), and (e) Nasdaq (collectively, the "Company Reports"). The Company
has previously made available to Purchaser true and complete copies of the
Company Reports requested by Purchaser. As of their respective filing dates,
each of such reports and documents, including the financial statements,
exhibits, and schedules thereto, complied in all material respects with the
applicable provisions of the statutes, rules, and regulations enforced or
promulgated by the authority with which they were filed and did not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
(b) Except as set forth on Schedule 3.7(b) to the Company Disclosure
Schedule and except for examinations or reviews conducted by the OTS or the FDIC
in the regular course of the business of the Company or the Company
Subsidiaries, no federal, state or local governmental agency, commission or
other entity has initiated any proceeding or, to the best knowledge of the
Company, investigation into the business or operations of the Company or the
Company Subsidiaries within the past three years. None of the Company or any
Company Subsidiary is subject to a written agreement (as such term is defined
pursuant to 12 U.S.C. ss.1818) with the OTS or the FDIC. There is no unresolved
violation, criticism or exception by the SEC, OTS or FDIC, or other agency,
commission or entity with respect to any report or statement referred to herein
that has had or is expected to have a Material Adverse Effect on the Company and
the Company Subsidiaries, taken as a whole.
3.8 Compliance With Laws. (a) The businesses of the Company and each
Company Subsidiary are being conducted in compliance with all applicable federal
and state laws, ordinances and regulations of any governmental entity,
including, without limitation, HOLA, the FDI Act, any laws affecting financial
institutions (including those pertaining to the Bank Secrecy Act, the investment
of funds, the lending of money, the collection of interest and the extension of
credit), federal and state securities laws, laws and regulations relating to
financial statements and reports, truth-in-lending, truth-in-savings, fair debt
collection practices, usury, fair credit reporting, consumer protection,
occupational safety, fair employment practices, fair labor standards and laws
and regulations relating to employee benefits, and any statutes or ordinances
relating to the properties occupied or used by the Company or any Company
Subsidiary, except for possible violations which either singly or in the
aggregate do not and, insofar as reasonably can be foreseen in the future, will
not, have a Material Adverse Effect on the Company or any Company Subsidiary,
taken as a whole.
(b) The policies, programs and practices of the Company and each
Company Subsidiary relating to wages, hours of work, and other terms and
conditions of employment are in compliance in all material respects with
applicable laws, orders, regulations, public policies and ordinances governing
employment and terms and conditions of employment. There are no disputes,
claims, or charges, pending or, to the Company's best knowledge, threatened,
against the Company or any Company Subsidiary alleging breach of any express or
implied employment contract or commitment, or material breach of any applicable
law, order, regulation, public policy or ordinance relating to employment or
terms and conditions of employment, and, to the
19
best knowledge of the Company, there is no basis for any valid claim or charge
with regard to such matters.
3.9 Litigation. (a) Except as set forth on Schedule 3.9(a) to the Company
Disclosure Schedule, there is no suit, action, investigation or proceeding,
legal, quasi-judicial, administrative or otherwise, pending or, to the best
knowledge of the Company, threatened against or affecting the Company or any
Company Subsidiary, or any of their respective officers, directors, employees or
agents, in their capacities as such, which is seeking damages against the
Company, any Company Subsidiary, or any of their respective officers, directors,
employees or agents, in their capacities as such, in excess of $100,000, or
which would materially affect the ability of the Company to consummate the
transactions contemplated herein or which is seeking to enjoin consummation of
the transactions provided for herein or to obtain other relief in connection
with this Agreement or the transactions contemplated hereby or thereby, having,
or which could reasonably be foreseen to have in the future, any such effect.
(b) There is no injunction, order, decree or regulatory restriction
imposed on the Company or any of the Company Subsidiaries or the assets of the
Company or any of the Company Subsidiaries which has had a Material Adverse
Effect on the Company and the Company Subsidiaries, taken as a whole.
3.10 Defaults. There has not been any default, or the occurrence of an
event which with notice or lapse of time or both would constitute a default, in
any obligation to be performed by the Company or any Company Subsidiary under
any contract, commitment, or other material obligation to which the Company, any
Company Subsidiary or their respective properties is subject, and neither the
Company nor any Company Subsidiary has waived any right under any contract or
commitment, except in each case where any such default or waiver, singly or in
the aggregate with any other such defaults or waivers, would not have a Material
Adverse Effect on the Company and the Company Subsidiaries, taken as a whole. To
the best knowledge of the Company, no other party to any such material contract
or commitment is in default in any material obligation to be performed by such
party.
3.11 Absence of Certain Changes or Events. Except as disclosed in the
Company Reports filed with the SEC filed prior to the date of this Agreement or
set forth on Schedule 3.11 to the Company Disclosure Schedule and except for
transactions contemplated by this Agreement, since September 30, 2002 the
Company and the Company Subsidiaries have conducted their respective businesses
only in the ordinary course of business and in a manner consistent with past
practice and, since September 30, 2002, there has not been (a) any change in the
financial condition, results of operations or business of the Company and any of
the Company Subsidiaries having a Material Adverse Effect on the Company and the
Company Subsidiaries taken as a whole, (b) any damage, destruction or loss
(whether or not covered by insurance) with respect to any of the assets of the
Company or any of the Company Subsidiaries having a Material Adverse Effect on
the Company or the Company Subsidiaries taken as a whole, (c) any change by the
Company in its accounting methods, principles or practices, except as required
by the applicable regulatory or government agency, (d) any revaluation by the
Company of any of its assets in any material respect, (e) to the date of this
Agreement, any entry by the Company or any Company Subsidiaries into any
commitment or transactions material to the Company and the Company Subsidiaries
taken as a whole, except in connection with the
20
Merger, or (f) except for regular quarterly cash dividends on Company Common
Stock with usual record and payment dates, to the date of this Agreement, any
declaration, setting aside or payment of any dividends or distributions with
respect to shares of Company Common Stock or any redemption, purchase or other
acquisition of any of the securities of any Company Subsidiary.
3.12 Undisclosed Liabilities. All of the obligations or Liabilities have,
in the case of the Company and the Company Subsidiaries, been so reflected,
disclosed or reserved against in the audited consolidated financial statements
of the Company as of September 30, 2002 or in the notes thereto, and the Company
and the Company Subsidiaries have no other Liabilities except Liabilities
incurred since September 30, 2002, in the ordinary course of business.
3.13 Licenses. The Company and each Company Subsidiary, respectively, hold
all material governmental registrations, licenses, permits or franchises
required to be held by it and which are material with respect to the operation
of their respective businesses.
3.14 Governmental and Shareholder Approvals. To the Company's best
knowledge, no fact or condition exists which the Company has reason to believe
will prevent the parties from obtaining approval of the Merger, the Bank Merger
and other transactions contemplated by this Agreement by any Governmental
Authority or the shareholders of the Company.
3.15 Antitakeover Provisions Inapplicable. The Company has, or will have
prior to the Effective Time, taken all necessary action so that no "business
combination," "moratorium," "control share" or other state antitakeover statute
or regulation, nor any provision in the Company's Articles of Incorporation,
By-laws or Rights Agreement, would (i) prohibit or restrict the Company's
ability to perform its obligations under this Agreement or the Certificate of
Merger or its ability to consummate the transactions contemplated hereby and
thereby, (ii) have the effect of invalidating or voiding this Agreement or the
Certificate of Merger, or any provision hereof or thereof, or (iii) subject
Purchaser to any impediment or condition in connection with the exercise of any
of its rights under this Agreement or the Certificate of Merger.
3.16 Proxy Statement/Registration Statement Disclosure. None of the
information to be supplied by the Company for inclusion or to be incorporated by
reference in the Proxy Statement/Registration Statement or the information
relating to the Company and the Company Subsidiaries in the Registration
Statement, will, in the case of the Proxy Statement or any amendments thereof or
supplements thereto, at the time of the meetings of Purchaser's and the
Company's shareholders to be held for purposes of approving the Merger, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading or, in the case of the Registration
Statement, at the time it becomes effective and at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein not misleading. The portions
of the Proxy Statement relating to the Company which are incorporated by
reference to Forms 10-K, 10-Q and 8-K filed by the Company under the Exchange
Act comply, and will comply, as to form in all material respects with the
provisions of the Exchange Act.
21
3.17 Taxes. (a) The Company and each Company Subsidiary have each timely
filed all tax and information returns, including but not limited to all required
Forms 1099, 1098 and 5498, required to be filed (all such returns being correct
and complete in all material respects) and have paid (or the Company has paid on
behalf of each Company Subsidiary), or have accrued on their respective books
and set up an adequate reserve for the payment of, all taxes, interest and
penalties required to be paid in respect of the periods covered by such returns
and have accrued on their respective books and set up an adequate reserve for
the payment of all income and other taxes anticipated to be payable in respect
of periods through the end of the calendar month next preceding the date hereof.
Neither the Company nor any Company Subsidiary is delinquent in the payment of
any tax, assessment or governmental charge. No deficiencies for any taxes have
been proposed, asserted or assessed against the Company or any Company
Subsidiary that have not been resolved or settled and no requests for waivers of
the time to assess any such tax are pending or have been agreed to. Except as
described in Schedule 3.17 to the Company Disclosure Schedule, the income tax
returns of the Company and each Company Subsidiary have not been audited by
either the Internal Revenue Service, or any state or local taxing authorities,
for any of the last ten years. Neither the Company nor any Company Subsidiary is
a party to any action or proceeding by any governmental authority for the
assessment or the collection of taxes. Deferred taxes of the Company and each
Company Subsidiary have been accounted for in accordance with GAAP. The Company
and each Company Subsidiary have delivered to Purchaser correct and complete
copies of all federal and state income tax returns and supporting schedules for
all tax years since September 30, 1996. Neither the Company nor any Company
Subsidiary has been involved in, or a party to, any transaction described in IRS
Notice 2001-51. To the best of the Company's knowledge, no event has occurred
that could give rise to a denial or recapture of any low income housing tax
credits which are, or were: (i) previously claimed by the Company or a Company
Subsidiary; (ii) projected to be claimed in future years by the Company or a
Company Subsidiary; or (iii) which are attributable to low income housing
projects upon which the Company or a Company Subsidiary has provided financing
(excepting only the loss of tax credit with respect to a single unit located in
the Xxxxxxxx Xxxxxxx LLC tax credit project).
(b) The Company has not filed any consolidated federal income tax
return with an "affiliated group" (within the meaning of Section 1504 of the
Code) where the Company was not the common parent of the group. Neither the
Company nor any Company Subsidiary is, or has been, a party to any tax
allocation agreement or arrangement pursuant to which it has any contingent or
outstanding liability to anyone other than the Company or any Company
Subsidiary.
(c) The Company and each Company Subsidiary have each withheld amounts
from its employees, shareholders or holders of deposit accounts in compliance
with the tax withholding provisions of applicable federal, state and local laws,
has filed all federal, state and local returns and reports for all years for
which any such return or report would be due with respect to employee income tax
withholding, social security, unemployment taxes, income and other taxes and all
payments or deposits with respect to such taxes have been timely made and, has
notified all employees, shareholders and holders of public deposit accounts of
their obligations to file all forms, statements or reports with it in accordance
with applicable federal, state and local tax laws and has taken reasonable steps
to insure that such employees,
22
shareholders and holders of public deposit accounts have filed all such forms,
statements and reports with it.
3.18 Insurance. The Company and each Company Subsidiary maintain insurance
with an insurer which in the best judgment of management of the Company is sound
and reputable, on their respective assets, and upon their respective businesses
and operations, against loss or damage, risks, hazards and liabilities of the
kinds customarily insured against by prudent corporations engaged in the same or
similar businesses. The Company and each Company Subsidiary maintain in effect
all insurance required to be carried by law or by any agreement by which they
are bound. All material claims under all policies of insurance maintained by the
Company and the Bank have been filed in due and timely fashion. Except as
disclosed on Schedule 3.18 to the Company Disclosure Schedule, neither the
Company nor any Company Subsidiary has had an insurance policy cancelled by the
issuer of the policy within the past five (5) years.
3.19 Loans; Investments. (a) Each loan reflected as an asset on the Company
Financial Statements is evidenced by appropriate and sufficient documentation in
all material respects in accordance with customary lending standards and
constitutes, to the best knowledge of the Company, the legal, valid and binding
obligation of the obligor named therein, enforceable in accordance with its
terms except to the extent that the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting the enforcement of creditors rights generally or equitable
principles or doctrines. Except as disclosed on Schedule 3.19 to the Company
Disclosure Schedule, no obligor named therein is seeking to avoid the
enforceability of the terms of any loan under any such laws or equitable
principles or doctrines and no loan is subject to any defense, offset or
counterclaim. All such loans originated by the Company or any Company Subsidiary
and all such loans purchased by the Company or any Company Subsidiary, were made
or purchased in accordance with customary lending standards of the Company and
any Company Subsidiary and in the ordinary course of business of the Company and
each Company Subsidiary. Set forth on Schedule 3.19(a) to the Company Disclosure
Schedule is a complete list of the Company REO (as defined herein) as of April
30, 2003.
(b) All guarantees of indebtedness owed to the Company or any Company
Subsidiary, including but not limited to those of the Federal Housing
Administration, the Small Business Administration, and other state and federal
agencies, are valid and enforceable, except to the extent enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting the enforcement of creditors rights
generally or equitable principles or doctrines.
(c) In originating, purchasing, underwriting, servicing, and
discharging loans, mortgages, land contracts, and contractual obligations
relating thereto, either for their own account or for the account of others, the
Company and each Company Subsidiary have complied in all material respects with
all applicable terms and conditions of such obligations and with all applicable
laws, regulations, rules, contractual requirements, and procedures with respect
to such servicing.
23
(d) Except as set forth on Schedule 3.19(d) to the Company Disclosure
Schedule, none of the investments reflected in the Company Financial Statements
and none of the investments made by the Company since September 30, 2002, is
subject to any restriction, whether contractual or statutory, which materially
impairs the ability of the Company freely to dispose of such investment at any
time. With respect to all material repurchase agreements to which the Company or
any Company Subsidiary is a party, the Company or such Company Subsidiary has a
valid, perfected first lien or security interest in the government securities or
other collateral securing each such repurchase agreement, and the value of the
collateral securing each such repurchase agreement equals or exceeds the amount
of the debt secured by such collateral under such agreement. Except as set forth
on Schedule 3.19(d) to the Company Disclosure Schedule, neither the Company nor
any Company Subsidiary has sold or otherwise disposed of any assets in a
transaction in which the acquiror of such assets or other person has the right,
either conditionally or absolutely, to require the Company or any Company
Subsidiary to repurchase or otherwise reacquire any such assets. Set forth on
Schedule 3.19(d) to the Company Disclosure Schedule is a complete and accurate
list of each investment and debt security, mortgage-backed and related
securities, marketable equity securities and securities purchased under
agreements to resell owned by the Company or any Company Subsidiary, showing as
of March 31, 2003, the carrying values and estimated fair values of investment
and debt securities, the gross carrying value and estimated fair value of the
mortgage-backed and related securities and the cost and estimated fair value of
the marketable equity securities.
(e) All United States Treasury securities, obligations of other United
States Government agencies and corporations, obligations of States of the United
States and their political subdivisions, and other investment securities
classified as "held to maturity," "available for sale" and "trading" held by the
Company or any Company Subsidiary, as reflected in the Company Financial
Statements were classified and accounted for in accordance with S.F.A.S. 115 and
the intentions of management.
3.20 Interest Rate Risk Management Arrangements. Except as set forth on
Schedule 3.20 to the Company Disclosure Schedule, neither the Company nor any
Company Subsidiary is a party to any, nor is any property bound by, any interest
rate swaps, caps, floors and option agreements or other interest rate risk
management arrangements.
3.21 Allowance for Loan Losses. Except as set forth on Schedule 3.21 to the
Company Disclosure Schedule, the allowance for loan losses shown on the Company
Financial Statements, as of such date was (and will be as of such subsequent
financial statement dates) in the reasonable judgment of the Company, adequate
in all material respects, based on past loss experience and reasonably expected
potential losses, to provide for possible or specific losses, net of recoveries
relating to loans previously charged off, on loans outstanding, and contained an
additional amount of unallocated reserves for unanticipated future losses at a
level considered adequate under the standards applied by applicable federal
and/or state regulatory authorities and based upon generally accepted practices
applicable to financial institutions.
3.22 Company Benefit Plans. (a) Schedule 3.22(a)(i) to the Company
Disclosure Schedule contains a list and a true and correct copy (or, a
description with respect to any oral employee benefit plan, practice, policy or
arrangement), including all amendments thereto, of each compensation,
consulting, employment, termination or collective bargaining agreement,
24
and each stock option, stock purchase, stock appreciation right, recognition and
retention, life, health, accident or other insurance, bonus, deferred or
incentive compensation, severance or separation agreement or any agreement
providing any payment or benefit resulting from a change in control, profit
sharing, retirement, or other employee benefit plan, practice, policy or
arrangement of any kind, oral or written, covering employees, former employees,
directors or former directors of the Company or each Company Subsidiary or their
respective beneficiaries, including, but not limited to, any employee benefit
plans within the meaning of Section 3(3) of ERISA, which the Company or any
Company Subsidiary maintains, to which the Company or any Company Subsidiary
contributes, or under which any employee, former employee, director or former
director of the Company or any Company Subsidiary is covered or has benefit
rights and pursuant to which any liability of the Company or any Company
Subsidiary exists or is reasonably likely to occur (the "Company Benefit
Plans"), and current summary plan descriptions, trust agreements, and insurance
contracts and Internal Revenue Service Form 5500 or 5500-C/R (for the three most
recently completed plan years) with respect thereto. Except as set forth on
Schedule 3.22(a)(ii) of the Company Disclosure Schedule, the Company neither
maintains nor has entered into any Company Benefit Plan or other document, plan
or agreement which contains any change in control provisions which would cause
an increase or acceleration of benefits or benefit entitlements to employees or
former employees of the Company or any Company Subsidiary or their respective
beneficiaries, or other provisions, which would cause an increase in the
liability of the Company or any Company Subsidiary or to Purchaser as a result
of the transactions contemplated by this Agreement or any related action
thereafter (a "Change in Control Benefit"). The term "Company Benefit Plans" as
used herein refers to all plans contemplated under the preceding sentences of
this Section 3.22, provided that the term "Plan" or "Plans" is used in this
Agreement for convenience only and does not constitute an acknowledgment that a
particular arrangement is an employee benefit plan within the meaning of Section
3(3) of ERISA. No Company Benefit Plan is a multiemployer plan within the
meaning of Section 3(37) of ERISA. Neither the Company nor any Company
Subsidiary has been notified by any Governmental Authority to amend any payments
or other compensation paid or payable by the Company or any Company Subsidiary
under this Agreement, any Company Benefit Plan or otherwise, to or for the
benefit of any employee or director of the Company or any Company Subsidiary and
to the best knowledge of the Company, all such payments are in compliance with
all applicable rules, regulations and bulletins promulgated by the Governmental
Authorities.
(b) Each of the Company Benefit Plans that is intended to be a
pension, profit sharing, stock bonus, thrift, savings or employee stock
ownership plan that is qualified under Section 401(a) of the Code ("Company
Qualified Plans") has been determined by the Internal Revenue Service to qualify
under Section 401(a) of the Code, and, except as set forth on Schedule 3.22(b)
to the Company Disclosure Schedule, an application for determination of such
qualification has been timely made to the Internal Revenue Service prior to the
end of the applicable remedial amendment period under Section 401(b) of the Code
(a copy of the most recent determination letter for each such Company Qualified
Plan and each pending application is included in Schedule 3.22(b) of the Company
Disclosure Schedule), and, to the best knowledge of the Company, there exists no
circumstances likely to materially adversely affect the qualified status of any
such Company Qualified Plan. Any Company Qualified Plan that is intended to be a
standardized or nonstandardized prototype has not been amended by the Company or
any Company Subsidiary in any manner that may jeopardize its status as a
25
standardized or nonstandardized prototype. All such Company Qualified Plans
established or maintained by the Company or each Company Subsidiary or to which
the Company or any Company Subsidiary contribute are in compliance in all
material respects with all applicable requirements of ERISA, and are in
compliance in all material respects with all applicable requirements (including
qualification and non-discrimination requirements in effect as of the Effective
Time) of the Code for obtaining the tax benefits the Code thereupon permits with
respect to such Company Qualified Plans. No Company Qualified Plan is a defined
benefit pension plan which is subject to Title IV of ERISA. All accrued
contributions and other payments required to be made by the Company or each
Company Subsidiary to any Company Benefit Plan through the date hereof, have
been made or reserves adequate for such purposes as of the date hereof, have
been set aside therefor and reflected in the Company Financial Statements.
Neither the Company nor any Company Subsidiary has accumulated any funding
deficiency under Section 412 of the Code. Neither the Company nor any Company
Subsidiary is in material default in performing any of its respective
contractual obligations under any of the Company Benefit Plans or any related
trust agreement or insurance contract, and there are no material outstanding
liabilities of any such Plan other than liabilities for benefits to be paid to
participants in such Plan and their beneficiaries in accordance with the terms
of such Plan.
(c) There is no pending or, to the best knowledge of the Company,
threatened litigation or pending claim (other than individual benefit claims
made in the ordinary course) by or on behalf of or against any of the Company
Benefit Plans (or with respect to the administration of any of such Plans) now
or heretofore maintained by the Company or any Company Subsidiary which allege
violations of applicable state or federal law or the terms of the Plan which are
reasonably likely to result in a liability on the part of the Company or any
Company Subsidiary or any such Plan.
(d) The Company and each Company Subsidiary and all other persons
having fiduciary or other responsibilities or duties with respect to any Company
Benefit Plan are, and since the inception of each such Plan have been, in
substantial compliance with, and each such Plan is and has been operated in
substantial accordance with, its provisions and in substantial compliance with
the applicable laws, rules and regulations governing such Plan, including,
without limitation, the rules and regulations promulgated by the Department of
Labor, the PBGC and the Internal Revenue Service under ERISA, the Code or any
other applicable law. No "reportable event" (as defined in Section 4043(c) of
ERISA) has occurred with respect to any Company Benefit Plan. No Company Benefit
Plan has engaged in or been a party to a "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975(c) of the Code) without an exemption
thereto under Section 408 of ERISA or Section 4975(d) of the Code. All Company
Benefit Plans that are group health plans have been operated in substantial
compliance with the group health plan continuation requirements of Section 4980B
of the Code and Sections 601-609 of ERISA and with the certification of prior
coverage and other requirements of Sections 701-702 of ERISA.
(e) Neither the Company nor any Company Subsidiary has incurred, nor
to the best knowledge of the Company or such Company Subsidiary is reasonably
likely to incur, any liability under Title IV of ERISA in connection with any
Plan subject to the provisions of Title IV of ERISA now or heretofore maintained
or contributed to by it or by the Bank.
26
(f) Except as set forth on Schedule 3.22(f) to the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary has made any payments,
or is or has been a party to any agreement or any Company Benefit Plan, that
under any circumstances could obligate it, the Bank, or any successor of either
of them, to make any payment that is not or will not be deductible in full
because of Section 162(m) or 280G of the Code.
(g) Schedule 3.22(g) to the Company Disclosure Schedule describes any
obligation that the Company or any Company Subsidiary has to provide health or
welfare benefits to retirees or other former employees, directors or their
dependents (other than rights under Section 4980B of the Code or Section 601 of
ERISA), including information as to the number of retirees, other former
employees or directors and dependents entitled to such coverages and their ages.
(h) Schedule 3.22(h) to the Company Disclosure Schedule lists: (i)
each employee, officer and director of the Company and each Company Subsidiary
who is eligible to receive a Change in Control Benefit, showing the amount of
each such Change in Control Benefit and the basis of the calculation thereof,
and the individual's rate of salary in effect on the date of this Agreement, the
individual's participation in any bonus or other employee benefit plan, and such
individual's compensation from Company or any Company Subsidiary for each of the
calendar years 1998 through 2002 as reported by the Company or each Company
Subsidiary on Form W-2 or Form 1099; (ii) each other employee of the Company or
any Company Subsidiary who may be eligible for a Change in Control Benefit,
showing the number of years of service of each such employee together with his
or her salary for 2002; (iii) a listing of each Option, showing the holder
thereof, the number of shares, the type of option (incentive or non-statutory),
the exercise price per share and a copy of the option agreements relating
thereto; (iv) a listing of the participants in the Employee Stock Ownership Plan
("ESOP"), showing the number of outstanding shares of Company Common Stock
credited to each participant, the vesting dates thereof, and the unpaid balance
of any loans owing by the ESOP to the Company or any party as of the date hereof
(the "ESOP Loan"), the number of unallocated shares of Company Common Stock held
by such trusts; and (v) each employee, officer or director for whom a
supplemental executive retirement, salary continuation or deferred compensation
plan or agreement is maintained and showing the amounts accrued in the Company
Financial Statements with respect thereto.
(i) The Company and each Company Subsidiary have filed or caused to be
filed, and will continue to file or cause to be filed, in a timely manner all
filings pertaining to each Company Benefit Plan with the Internal Revenue
Service, the PBGC and the Department of Labor, as prescribed by the Code or
ERISA, or regulations issued thereunder. All such filings, as amended, were
complete and accurate in all material respects as of the dates of such filings,
and there were no misstatements or omissions in any such filing which would be
material to the financial condition of the Company on a consolidated basis.
(j) Neither the Company nor any Company Subsidiary is a party to or
bound by any collective bargaining agreement and, to the best of the Company's
knowledge, no labor union claims to or is seeking to represent any employees of
the Company or any Company Subsidiary.
27
3.23 Environmental Matters. (a) For purposes of this Section 3.23, "Company
Properties" means (i) the real estate owned or leased by the Company or the Bank
and used as a banking related facility; (ii) other real estate owned, if any, by
the Company or any Company Subsidiary, as defined by any federal or state
financial institution regulatory agency with regulatory authority for the
Company or any Company Subsidiary ("Company REO"); (iii) real estate that is in
the process of pending foreclosure or forfeiture proceedings conducted by the
Company or any Company Subsidiary; (iv) real estate that is held in trust for
others by the Bank; and (v) real estate owned or leased by a partnership or
joint venture in which the Company or a Company Subsidiary has an ownership
interest.
(b) To the best knowledge of the Company after such inquiry and
investigation as the Company deems appropriate, there are no present or past
conditions on the Company Properties, involving or resulting from a past or
present storage, spill, discharge, leak, emission, injection, escape, dumping or
release of any kind whatsoever of any Hazardous Materials or from any
generation, transportation, treatment, storage, disposal, use or handling of any
Hazardous Materials.
(c) Except as set forth on Schedule 3.23(c) to the Company Disclosure
Schedule, the Company and each Company Subsidiary are in compliance in all
material respects with all federal, state and local laws relating to pollution
or protection of the environment such as laws relating to emissions, discharges,
releases or threatened releases of Hazardous Materials or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (together with all regulations and
rules adopted thereunder). Neither the Company nor any Company Subsidiary have
received notice of, nor to the best knowledge of the Company are there
outstanding or pending, any public or private claims, lawsuits, citations,
penalties, unsatisfied abatement obligations or notices or orders of
non-compliance relating to the environmental condition of the Company
Properties.
(d) Except as set forth on Schedule 3.23(d) to the Company Disclosure
Schedule, to the best knowledge of the Company after such inquiry and
investigation as the Company deems appropriate, no Company Properties are
currently undergoing remediation or cleanup of Hazardous Materials or other
environmental conditions.
(e) To the best knowledge of the Company after such inquiry and
investigation as the Company deems appropriate, the Company and each Company
Subsidiary have all governmental permits, licenses, certificates of inspection
and other authorizations governing or protecting the environment necessary to
conduct its present business. Further, the Company warrants and represents that
these permits, licenses, certificates of inspection and other authorizations are
fully transferable, to the extent permitted by law, to Purchaser.
3.24 Material Contracts. Schedule 3.24 to the Company Disclosure Schedule
sets forth, each contract, indenture, and other binding commitment and agreement
(including any wholesale broker or loan purchase agreement, but not including
documents evidencing, governing or related to loans or credits by the Company or
any Company Subsidiary or deposits or investments held by the Bank) that
provides for the receipt or expenditure of in excess of $100,000 over the course
of any twelve-month period, or which cannot be terminated without penalty in
excess of $50,000 to which the Company and/or any Company Subsidiary is a party
or
28
to which the Company and/or any Company Subsidiary or any of their properties
are subject (collectively, the "Material Contracts" and each a "Material
Contract"). True copies of each Material Contract are set forth on Schedule 3.24
to the Company Disclosure Schedule, including all material amendments and
supplements thereto. Except as disclosed on Schedule 3.24 to the Company
Disclosure Schedule, all of the Material Contracts are binding upon the Company
and/or the Company Subsidiaries (as applicable) and, to the Company's best
knowledge, the other parties thereto. The Company and the Company Subsidiaries
have each duly performed in all material respects all of its obligations under
each Material Contract to which they are a party to the extent that such
obligations to perform have accrued. No breach or default under any Material
Contract by the Company or any of the Company Subsidiaries or, to the Company's
knowledge, any other party thereto, has occurred which has had or which would be
reasonably likely to have a Material Adverse Effect on the Company and the
Company Subsidiaries taken as a whole. Except as disclosed on Schedule 3.24 to
the Company Disclosure Schedule, none of the Material Contracts contains an
express prohibition against assignment by operation of law or a change of
control of the Company or a Company Subsidiary (or require written consent or
notice to the other party), or contains any other provision which would preclude
Purchaser from exercising and enjoying all of the rights, remedies and
obligations of the Company or a Company Subsidiary, as the case may be, under
such Material Contracts.
3.25 Real Property. (a) The Company and each Company Subsidiary and Tax
Subsidiary have good, sufficient and marketable title to their real properties,
including any leaseholds and ground leases, and their other assets and
properties, all as reflected as owned by the Company, any Company Subsidiary or
any Tax Subsidiary in the Company Financial Statements dated as of September 30,
2002 except for (i) assets and properties disposed of since such date in the
ordinary course of business and (ii) such liens as set forth in Schedule
3.25(a)(ii) to the Company Disclosure Schedule. All buildings, structures,
fixtures and appurtenances comprising part of the real properties of the Company
or any Company Subsidiary or Tax Subsidiary (whether owned or leased by the
Company or any Company Subsidiary or Tax Subsidiary) are in good operating
condition and have been well maintained, reasonable wear and tear excepted.
Title to all real property listed as being owned by the Company or any Company
Subsidiary or Tax Subsidiary on the Company Disclosure Schedule is held in fee
simple. The Company and each Company Subsidiary or Tax Subsidiary have title or
other rights to its assets sufficient in all material respects for the conduct
of their respective businesses as presently conducted, and such assets are free,
clear and discharged of, and from any and all liens, charges, encumbrances,
security interests and/or equities. Set forth in Schedule 3.25(a)(ii) to the
Company Disclosure Schedule is a listing of all real property owned by the
Company or any Company Subsidiary and used for banking operations or which
relate to low-income or senior housing real estate investments. The Company's
title to such properties are not subject to any material exceptions or
impairment and evidence of title will be provided by the Company to Purchaser
prior to the Effective Time.
(a) All leases pursuant to which the Company or any Company
Subsidiary, as lessee, leases real or personal property are, to the best
knowledge of the Company, valid, effective, and enforceable against the lessor
in accordance with their respective terms. There is not under any of such leases
any existing default, or any event which with notice or lapse of time or both
would constitute a default, with respect to either the Company or any Company
Subsidiary, or to the best knowledge of the Company, the other party. None of
such leases
29
contains a prohibition against assignment by the Company or any Company
Subsidiary, by operation of law or otherwise, or any other provision which would
preclude Purchaser or any Purchaser Subsidiary from possessing and using the
leased premises for the same purposes and upon the same rental and other terms
upon the consummation of the Merger as are applicable to the possession and use
by the Company or any Company Subsidiary as of the date of this Agreement.
Neither the Company nor any Company Subsidiary has made a prior assignment for
collateral purposes of any such lease.
3.26 Indemnification. To the best knowledge of the Company, no action or
failure to take action by any director, officer, employee or agent of the
Company or each Company Subsidiary has occurred which would give rise to a claim
or a potential claim by any such person for indemnification from the Company or
any Company Subsidiary under the corporate indemnification provisions of the
Company or any Company Subsidiary in effect on the date of this Agreement.
3.27 Insider Interests. All outstanding loans and other contractual
arrangements (including deposit relationships) between the Company or any
Company Subsidiary and any officer, director or employee of the Company or any
Company Subsidiary conform to the applicable rules and regulations and
requirements of all applicable regulatory agencies which were in effect when
such loans and other contractual arrangements were entered into, and there are
no violations of law or applicable regulation relating to such loans or other
contractual arrangements. No officer, director or employee of the Company or any
Company Subsidiary has any material interest in any property, real or personal,
tangible or intangible, used in or pertaining to the business of the Company or
any Company Subsidiary.
3.28 Rights Agreement. The Company and its Board of Directors have or will
have taken all necessary action to (i) render the Rights Agreement inapplicable
with respect to any aspect of the Merger or the transactions contemplated
herein, and (ii) ensure that neither Purchaser nor any of its affiliates will be
deemed to be an "Acquiring Person" (as such term is defined in the Rights
Agreement) and no "Distribution Date" or "Share Acquisition Date" (as such terms
are defined in the Rights Agreement) occurs by reason of announcement, approval,
execution or delivery of any document relating to the Merger or the consummation
of any action contemplated herein.
3.29 Advice of Changes. Between the date hereof and the Effective Time, the
Company shall promptly advise Purchaser in writing of any fact which, if
existing or known as of the date hereof, would have been required to be set
forth or disclosed in or pursuant to this Agreement or of any fact which, if
existing or known as of the date hereof, would have made any of the
representations contained herein untrue.
3.30 Fairness Opinion. The Company has received an opinion, dated the date
of this Agreement, from Xxxxx, Xxxxxxxx & Xxxxx, Inc., that, subject to the
terms, conditions and qualifications set forth therein, the Merger Consideration
is fair to the Company's shareholders from a financial point of view.
3.31 Fees. Other than the financial advisory services performed for the
Company by Xxxxx, Xxxxxxxx & Xxxxx, Inc., neither the Company, nor any of the
Company Subsidiaries, nor
30
any of their respective officers, directors, employees or agents, has employed a
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions, or finder's fees, and no broker or finder has acted
directly or indirectly for the Company or any Company Subsidiary in connection
with this Agreement or the transactions contemplated hereby.
3.32 Disclosure Schedules; Materiality. The inclusion of any matters or
items on the Company Disclosure Schedule shall not constitute an acknowledgement
by the Company (or evidence) as to the materiality or Material Adverse Effect of
any matter or item so disclosed.
IV.
COVENANTS
4.1 Conduct of Business by the Company Until the Effective Time. During
the period commencing on the date hereof and continuing until the Effective
Time, the Company agrees (except as expressly contemplated by this Agreement or
to the extent that Purchaser shall otherwise consent in writing, which consent
shall not be unreasonably withheld) that:
(a) Except as contemplated by this Agreement, the Company and each
Company Subsidiary will carry on their respective businesses in, the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted, maintain their respective books in accordance with GAAP, conduct
their respective businesses and operations only in accordance with safe and
sound banking and business practices, and use all reasonable efforts to preserve
intact their present business organizations, to generally keep available the
services of their present officers and employees and to preserve their
relationships with customers, suppliers and others having business dealings with
them to the end that their respective goodwill and going businesses shall be
unimpaired at the Effective Time;
(b) The Company will, and will cause each Company Subsidiary to, use
their best efforts to comply promptly with all requirements which federal or
state law may impose on any of them with respect to the Merger and will promptly
cooperate with and furnish information to Purchaser in connection with any such
requirements imposed upon any of them in connection with the Merger;
(c) The Company will, and will cause each Company Subsidiary to, use
their best efforts to obtain (and to cooperate with Purchaser in obtaining) any
consent, authorization or approval of, or any exemption by, any governmental
authority or agency, or other third party, required to be obtained or made by
any of them in connection with the Merger or the taking of any action
contemplated hereby. The Company will not, nor will it permit any of the Company
Subsidiaries to, knowingly or willfully take any action that would adversely
affect the ability of such party to perform its obligations under this
Agreement;
(d) The Company (i) will not declare or pay any cash dividends on or
make other distributions with respect to capital stock, except that the Company
will be permitted to declare and pay a regular quarterly cash dividend per share
not exceeding $0.20, and (ii) except as provided below, will not declare or pay
any cash dividends or make any distributions on Company Common Stock in the
calendar quarter in which the Effective Time shall occur prior to
31
Purchaser's dividend record date entitling the holders of Company Common Stock
to receive regular quarterly cash dividends on the shares of Purchaser Common
Stock into which the shares of Company Common Stock have been converted. It is
the intent of clause (ii) of this Subsection to provide that the holders of
Company Common Stock will receive either payment of cash dividends on their
shares of Company Common Stock as permitted under (i) of this Subsection or the
payment of cash dividends as the holders of shares of Purchaser Common Stock
received in exchange for the shares of Company Common Stock for the calendar
quarter during which the Effective Time shall occur, but will not receive and
will not become entitled to receive for the same calendar quarter both the
payment of a permitted dividend as shareholders of the Company and the payment
of a cash dividend as the holders of the shares of Purchaser Common Stock
received in exchange for the shares of Company Common Stock, including, for
purposes of this limitation, cash dividends paid by Purchaser within seven (7)
days following the end of such calendar quarter. In the event that the Company
does not declare and pay permitted dividends on Company Common Stock in a
particular calendar quarter because of the Company's expectation that the
Effective Time would occur in said calendar quarter wherein the holders of
Company Common Stock would have become entitled to receive cash dividends for
such calendar quarter on the shares of Purchaser Common Stock to have been
exchanged for the shares of Company Common Stock, and the Effective Time does
not in fact occur in said calendar quarter, then, as a result thereof, the
Company shall be entitled to declare and pay a permitted dividend (within the
limitations of this Section 4.1(d)) on said shares of Company Common Stock for
said calendar quarter as soon as reasonably practicable. The Company shall not
make any changes in its normal practice of establishing dividend record or
dividend payment dates;
(e) The Company will not, and will not permit any Company Subsidiary
to, sell, lease or otherwise dispose of any assets, except in the ordinary
course of business, which are material, individually or in the aggregate, to the
business or financial condition of the Company on a consolidated basis;
(f) The Company will not, and will not permit any Company Subsidiary
to, acquire by merging or consolidating with, purchasing substantially all of
the assets of or otherwise, any business or any corporation, partnership,
association or other business organization or division thereof;
(g) Except as otherwise contemplated by this Agreement or pursuant to
the exercise of outstanding options, the Company will not, and will not permit
any Company Subsidiary to, or enter into any agreement to, issue, sell, grant,
authorize or propose the issuance or sale of, or purchase or propose the
purchase of, permit the conversion of or otherwise acquire or transfer for any
consideration any shares of their respective capital stocks of any class or
securities convertible into, or rights, warrants or options to acquire, any such
shares or other convertible securities, or to increase or decrease the number of
shares of capital stock by split-up, reclassification, reverse split, stock
dividend, stock split or change in par or stated value. No additional shares of
Company Common Stock shall become subject to new grants of employee stock
options, stock appreciation rights, limited rights or similar stock-based
employee compensation rights, including, but not limited to, grants under the
RRP Plan;
(h) The Company will not, and will not permit any Company Subsidiary
to, create or incur any liabilities, in a single transaction or series of
related transactions, in excess of
32
$100,000 other than the taking of deposits and other liabilities incurred in the
ordinary course of business or consistent with past practices, or permit or
suffer the imposition on any shares of stock held by it or by any Company
Subsidiary of any material lien, charge or encumbrance;
(i) The Company will not, and will not permit any Company Subsidiary
to, grant to any director, officer or employee any increase in compensation
(except as provided in this Agreement or in accordance with past practices for
those employees who are not executive or senior management), make contributions
to any Company Benefit Plan (except in accordance with the provisions of the
letter agreement referenced in Section 5.14(g)) or pay any bonus (except in
accordance with past practices or plans or agreements with respect to employees
other than executive or senior management or, with respect to executive or
senior management employees in accordance with past practices or plans and
agreements (calculated without reference to conforming entries under Section
5.20 and similar merger related charges) and provided that the total of such
amounts shall not (i) in the aggregate exceed the lesser of the aggregate amount
(A) accrued by the Company and/or the Bank for such bonuses, or (B) of such
bonuses as paid for the fiscal year ended September 30, 2002, or (ii) exceed on
an individual basis any bonus amount (or prorated amount for a partial fiscal
year) received by such individual for the fiscal year ended September 30, 2002),
or (iii) increase in any severance or termination pay, or enter into or amend
any employment, special termination, retention, covenant not to compete or
severance agreement with any such person except as contemplated in this
Agreement;
(j) Except as set forth on Schedule 4.1(j) to the Company Disclosure
Schedule, neither the Company, nor any Company Subsidiary, will enter into,
renew, extend, amend or modify any material lease or license with respect to any
property, whether real or personal;
(k) Neither the Company, nor any Company Subsidiary, will enter into
or amend any continuing contract or series of related contracts involving in
excess of $100,000 for the purchase of materials, supplies, equipment or
services which cannot be terminated without cause with less than ninety (90)
days' notice and without payment of any amount as a penalty bonus, premium or
other compensation for such termination except as contemplated or permitted by
this Agreement;
(l) The Company will not, and will not permit any Company Subsidiary
to, adopt or amend in any material respect any collective bargaining, employee
pension, profit-sharing, retirement, employee stock ownership, insurance,
incentive compensation, severance, vacation, stock option, or other plan,
agreement, trust, fund or arrangement for the benefit of employees, except as
contemplated herein;
(m) The Company will, and will cause each Company Subsidiary to, use
their best efforts to maintain their respective properties and assets in their
present states of repair, order and condition, reasonable wear and tear
excepted, and to maintain and keep in full force and effect all policies of
insurance presently in effect, including the insurance of accounts with the
FDIC. The Company will, and will cause each Company Subsidiary to, take all
requisite action (including without limitation the making of claims and the
giving of notices) pursuant to their directors' and officers' liability
insurance policies in order to preserve all rights thereunder
33
with respect to all matters known by the Company which could reasonably give
rise to a claim prior to the Effective Time;
(n) The Company will not, and will not permit any Company Subsidiary
to, amend their respective Articles of Incorporation, Charters, or by-laws,
except as contemplated by this Agreement;
(o) Except with approval by the Senior Vice President-Business
Banking of Purchaser upon his review of materials prepared for the Bank's weekly
loan committee meeting, the Company will not, and will not permit any Company
Subsidiary to, enter into, increase or materially modify any (i) loan secured by
lease receivables, (ii) loan secured by commercial real estate in an amount in
excess of $500,000, or in any amount which, when aggregated with any and all
loans to the same borrower, would be in excess of $1,000,000 (and only in the
event such loan has an existing debt service coverage ratio of not less than
1.20), (iii) business loan in an amount in excess of $500,000, or in any amount
which, when aggregated with any and all loans to the same borrower, would be in
excess of $1,000,000 (and only in the event such loan has an existing debt
service coverage ratio of not less than 1.20), (iv) loan or credit commitment to
(including letters of credit and including investments in, or agreements to
invest in) any person or entity who is listed as a borrower on a "watch list" or
similar internal report of the Company or the Bank, (v) syndicated loan, shared
national credit or other loan participation, (vi) loan or credit commitment
secured by low-income or senior-housing properties, (vii) other loan or credit
commitment which is secured by property located outside of the Milwaukee MSA
(except for single family mortgage loans), (viii) speculative construction loan
or credit commitment or (ix) loan or credit commitment in an amount in excess of
$1,000,000, or in any amount which, when aggregated with any and all loans to
the same borrower would be in excess of $2,000,000. Notwithstanding the
foregoing, the Company agrees that for any commercial real estate or business
loan subject to (ii) or (iii) above in excess of $500,000 (or which would if
aggregated with other loans to the same borrower result in loans to that
borrower in excess of $1,000,000), and with respect to any other loan subject to
(ix) above in excess of $1,000,000 (or which if aggregated with other loans to
the same borrower would result in loans to that borrower in excess of
$2,000,000) it will consult with Purchaser regarding the evaluation of such
credit prior to making or renewing the loan. The Company further agrees to
consult with Purchaser prior to renewing or extending the maturity date on any
loan or other extension of credit (including letters of credit and including
investments in, or agreements to invest in) to any person or entity which is on
a "watch list" or similar internal report of the Company or Bank where the
amount of such credit is in excess of $500,000 and not to grant such renewal or
extension without Purchaser's consent where the amount involved exceeds
$1,000,000 unless the Company believes that a failure to renew or extend may
expose it to legal liability. Notwithstanding the foregoing, in no event may the
Company or a Company Subsidiary enter into, renew, increase or materially modify
any loan or credit commitment except in accordance with its lending policies as
in effect on the date hereof, provided, however, that nothing in this subsection
shall prohibit the Company or any Company Subsidiary from honoring any
contractual obligation in existence on the date of this Agreement;
(p) The Company will not, and will not permit any Company Subsidiary
to, take any action which would, or fail to take any action contemplated by this
Agreement if such
34
failure would, disqualify the Merger as a tax-free reorganization under Section
368(a) of the Code;
(q) The Company will not, and will not permit any Company Subsidiary
to: (i) materially restructure or change its investment securities portfolio,
through purchases, sales or otherwise, as defined by the Company's investment
policy, except that individual investment and mortgage-backed securities
purchases will be limited to $10 million per issue, and will only be of the two
highest investment grade categories, and no fixed-rate security should have an
average life of greater than four (4) years. Activity outside of these limits is
permissible only after approval by the Chief Financial Officer of Purchaser;
(ii) have outstanding at any one time more than $150 million of brokered
certificates of deposit, consistent with current policies; and (iii) incur any
indebtedness for borrowed money other than fixed-rate Federal Home Loan Bank
advances in the ordinary course of business with a term not in excess of four
(4) years. In addition, such advances shall not have embedded options in their
terms that are exercisable by the Federal Home Loan Bank. Activity outside of
these limits is permissible only after approval by the Chief Financial Officer
of Purchaser;
(r) Except as required by applicable law or regulation, the Company
will not, and will not permit any Company Subsidiary to: (i) implement or adopt
any material change in its interest rate and other risk management policies,
procedures or practices; (ii) fail to follow its existing policies or practices
with respect to managing its exposure to interest rate and other risk; or (iii)
fail to use commercially reasonable means to avoid any material increase in its
aggregate exposure to interest rate risk;
(s) The Company will not, and will not permit any Company Subsidiary
to, enter into, increase or renew any loan or credit commitment (including
letters of credit) to any executive officer or director of the Company or any
Company Subsidiary, any five percent shareholder of the Company, or any entity
controlled, directly or indirectly, by any of the foregoing or engage in any
transaction with any of the foregoing which is prohibited by 12 U.S.C. 371c and
12 U.S.C. 371c-1 or by applicable regulation. For purposes of this Subsection,
"control" shall have the meaning associated with that term under 12 U.S.C. 371c;
(t) The Company will promptly advise Purchaser orally and in writing
of any event or series of events which has resulted in a Material Adverse Effect
or which may have a Material Adverse Effect on the Company or any Company
Subsidiary or which may adversely affect the satisfaction of any condition to
the consummation of the Merger or the ability of the Company to perform its
obligations under this Agreement;
(u) Notwithstanding any of the foregoing, at or immediately prior to
the Effective Time, if and as so requested by Purchaser, the Company and the
Bank (i) shall cause any outstanding inter-company debt to be repaid, and (ii)
cause dividends to be paid to the Company in such amounts as specified by
Purchaser, to the extent that such actions can be taken, when considering the
immediacy of the Merger, without violating any regulatory requirement or
restriction applicable to either the Bank or the Company;
35
(v) Neither the Company, nor any Company Subsidiary, will enter into
any contract or agreement to buy, sell, exchange or otherwise deal in any
tangible assets in a single transaction or a series of related transactions in
excess of $100,000 in aggregate value;
(w) Neither the Company, nor any Company Subsidiary, will make any
one capital expenditure or any series of related capital expenditures (other
than emergency repairs and replacements), the amount or aggregate amount of
which (as the case may be) is in excess of $100,000; provided, further, any
computer or network equipment acquired by the Company or the Bank shall satisfy
certain standards and specifications acceptable to Purchaser;
(x) Neither the Company, nor any Company Subsidiary, will file any
application to relocate operations from existing locations;
(y) Neither the Company, nor any Company Subsidiary, will create or
incur or suffer to exist any mortgage, lien, pledge, or security interest,
against or in respect of any property or right of the Company or any Company
Subsidiary securing any obligation in excess of $100,000, except for any pledge
or security interests given in connection with the acceptance of repurchase
agreements or government deposits or if in the ordinary course of business
consistent with past practice;
(z) Neither the Company, nor any Company Subsidiary, will discharge
or satisfy any mortgage, lien, charge or encumbrance other than as a result of
the payment of liabilities in accordance with the terms thereof, or except in
the ordinary course of business, if the cost to the Company or any Company
Subsidiary to discharge or satisfy any such mortgage, lien, charge or
encumbrance is in excess of $100,000, unless such discharge or satisfaction is
covered by general or specific reserves;
(aa) Neither the Company, nor any Company Subsidiary, will settle or
agree to settle any claim, action or proceeding, whether or not initiated in a
court of law, involving an expenditure in excess of $100,000;
(bb) Neither the Company, nor any Company Subsidiary, will change in
any material respect any basic policies and practices with respect to liquidity
management and cash flow planning, marketing, deposit origination, lending,
budgeting, profit and tax planning, personnel practices, accounting or any other
material aspect of its business or operations, except for such changes as may be
appropriate in the opinion of the Chief Executive Officer of the Company or the
Bank or other appropriate senior management of the Company or the Bank, as the
case may be, in each case to respond to then current business, market or
economic conditions or as may be required by the rules of the AICPA or the FASB
or by Governmental Authorities or by law;
(cc) Neither the Company, nor any Company Subsidiary, will knowingly
or intentionally default under the terms of any agreement to which the Company
or any Company Subsidiary is party;
(dd) The Company will not take any action that is intended or may
reasonably be expected to result in any of its representations and warranties
being or becoming untrue in any material respect, or in any of the conditions to
the Merger set forth in Article VI not being
36
satisfied, or a violation of any provision of this Agreement, except, in every
case, as may be required by applicable law; and
(ee) The Company will not agree in writing or otherwise to do any of
the foregoing.
4.2 Conduct of Business by Purchaser Until the Effective Time. During the
period commencing on the date hereof and continuing until the Effective Time,
Purchaser agrees (except as expressly contemplated by this Agreement or to the
extent that the Company shall otherwise consent in writing, which consent shall
not be unreasonably withheld) that:
(a) Except as contemplated by this Agreement, Purchaser and the
Purchaser Subsidiaries will carry on their respective businesses in
substantially the same manner as heretofore conducted, maintain their respective
books in accordance with GAAP, conduct their respective businesses and
operations only in accordance with safe and sound banking and business
practices, and, to the extent consistent with such businesses, use all
reasonable efforts to preserve intact their present business organizations, to
generally keep available the services of their present officers and employees
and to preserve their relationships with customers, suppliers and others having
business dealings with them to the end that their respective goodwill and going
businesses shall be unimpaired at the Effective Time;
(b) Purchaser will, and will cause the Purchaser Subsidiaries to, use
their best efforts to comply promptly with all requirements which federal or
state law may impose on any of them with respect to the Merger and will promptly
cooperate with and furnish information to the Company in connection with any
such requirements imposed upon any of them in connection with the Merger;
(c) Purchaser will, and will cause the Purchaser Subsidiaries to, use
their reasonable best efforts to obtain (and to cooperate with the Company in
obtaining) any consent, authorization or approval of, or any exemption by, any
governmental authority or agency, or other third party, required to be obtained
or made by any of them in connection with the Merger or the taking of any action
contemplated hereby. Purchaser will not, nor will it permit any of the Purchaser
Subsidiaries to, knowingly or willfully take any action that would adversely
affect their ability to perform their obligations under this Agreement;
(d) Purchaser shall cooperate with Company to coordinate the record
and payment dates of their cash dividends for the quarter the Merger is
consummated as provided in Section 4.1(d) hereof;
(e) Purchaser will not declare or pay any extraordinary or special
dividends or special distributions with respect to its capital stock unless an
appropriate adjustment or adjustments are made to the Exchange Ratio;
(f) Purchaser will not take any action that is intended or may
reasonably be expected to result in any of its representations or warranties
being or becoming untrue in any material respect, or in any of the conditions to
the Merger set forth in Article VI not being satisfied or a violation of any
provision of this Agreement, except, in every case, as may be required by
applicable law;
37
(g) Purchaser will not take or cause to be taken any action or omit
to take any action which action or omission would disqualify the Merger as a
tax-free reorganization under Section 368 of the Code;
(h) Purchaser will not amend its Certificate of Incorporation or
By-laws or other governing instrument in a manner which would adversely affect
in any respect the terms of the Purchaser Common Stock or the ability of the
Purchaser to consummate the transactions contemplated hereby;
(i) Purchaser will not enter into any agreement providing for, or
otherwise participate in, any merger, consolidation or other transaction in
which Purchaser or the Surviving Corporation would be required to not consummate
the Merger or Bank Merger or any of the other transactions or agreements
contemplated hereby in accordance with this Agreement; and
(j) Purchaser will not agree in writing or otherwise to do any of the
foregoing.
4.3 Certain Actions. (a) None of the Company or any Company Subsidiary or
their directors, officers or employees (i) shall solicit, initiate, participate
in discussions of, or encourage or take any other action to facilitate
(including by way of the disclosing or furnishing of any information that is not
legally obligated to be disclosed or furnished) any inquiry or the making of any
proposal relating to an Acquisition Transaction (as defined below) or a
potential Acquisition Transaction with respect to the Company or any Company
Subsidiary, or (ii) shall enter into any agreement, arrangement, or
understanding (whether written or oral), regarding any proposal or transaction
providing for or requiring it to abandon, terminate or fail to consummate this
Agreement, or compensating it or any Company Subsidiary under any of the
instances described in this clause. The Company shall immediately instruct and
otherwise use its best efforts to cause its agents, advisors (including, without
limitation, any investment banker, attorney or accountant retained by the
Company or any Company Subsidiary), consultants and other representatives to
comply with such prohibitions. The Company shall immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to such activities. The Company shall
promptly notify Purchaser orally and in writing in the event it receives any
such inquiry or proposal and shall provide reasonable detail of all relevant
facts relating to such inquiries.
(b) "Acquisition Transaction" shall, with respect to the Company,
mean any of the following: (i) a merger or consolidation, or any similar
transaction (other than the Merger) of any company with either the Company or
any significant subsidiary (as defined in Rule 1.2 of Regulation S-X of the SEC)
(a "Significant Subsidiary") of the Company; (ii) a purchase, lease or other
acquisition of all or substantially all the assets of either the Company or any
Significant Subsidiary of the Company; (iii) a purchase or other acquisition of
"beneficial ownership" by any "person" or "group" (as such terms are defined in
Section 13(d)(3) of the 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 the Company or any Significant Subsidiary of the
Company; (iv) a tender or exchange offer to acquire securities representing 10%
or more of the voting power of the Company; (v) a public proxy or consent
solicitation made to shareholders of the Company seeking proxies in opposition
to any proposal relating to any of the transactions contemplated by
38
this Agreement that has been recommended by the Board of Directors of the
Company; (vi) the filing of an application or notice with the OTS or any other
federal or state regulatory authority seeking approval to engage in one or more
of the transactions referenced in clauses (i) through (iv) above; or (vii) the
making of a bona fide proposal to the Company or its shareholders, by public
announcement or written communication, that is or becomes the subject of public
disclosure, to engage in one or more of the transactions referenced in clauses
(i) through (v) above.
V.
ADDITIONAL AGREEMENTS
5.1 Inspection of Records; Confidentiality. (a) The Company shall afford
to Purchaser and Purchaser's accountants, counsel and other representatives full
access, during normal business hours during the period prior to the Effective
Time, to all of its properties, books, contracts, commitments and records,
including all attorneys' responses to auditors' requests for information and
accountants' work papers, developed by the Company or any Company Subsidiary or
their accountants or attorneys, and will permit the Company's representatives to
discuss such information directly with Purchaser's officers, directors,
employees, attorneys and accountants.
(b) In the event that this Agreement is terminated, each party shall
upon request of the other party return all nonpublic documents (and any copies
made of such documents) furnished to it hereunder, shall destroy all documents
or portions thereof that contain nonpublic information (and any copies made of
such documents) furnished by the other party pursuant hereto and, in any event,
shall hold all nonpublic information received pursuant hereto in the same degree
of confidence with which it maintains its own like information unless or until
such information is or becomes a matter of public knowledge or is or becomes
known to the party receiving the information through persons other than the
party providing such information.
5.2 Meetings of the Company. The Company shall provide to Purchaser the
agenda for or a summary of the business proposed to be discussed at: (i) all
meetings of the Boards of Directors of the Company and each Company Subsidiary,
and (ii) all meetings of the committees of each such Board of Directors,
including without limitation the audit and executive committees thereof. The
Company shall give reasonable notice to Purchaser of any such meeting, and
(except as provided below) allow a member of Purchaser's Board of Directors to
attend such meeting. The Company shall provide to Purchaser all information
provided to the directors on all such Boards of Directors and committees in
connection with all such meetings of directors, when the same are provided to
such directors, including minutes of prior meetings, financial reports and any
other analyses prepared by senior management of the Company. Notwithstanding the
foregoing, the Company shall not be required to permit Purchaser to attend any
portion of a meeting or to provide Purchaser with any materials that would be in
violation of applicable law or that relates to an Acquisition Transaction
(except for information to be provided as required by Section 4.3 hereof) or
which pertain to the evaluation of the Merger. All information provided to
Purchaser pursuant to this Section 5.2 shall be treated in confidence as
provided in Section 5.1(b) hereof.
39
5.3 Bank Merger. The Company and Purchaser intend to take all action
necessary and appropriate to cause to be entered into the Bank Merger Agreement,
substantially on the terms and in the form attached hereto as Exhibit C pursuant
to which Mid America and the Bank shall merge simultaneously with or, if such
Bank Merger cannot be effected simultaneously, immediately after the
consummation of the Merger.
5.4 D&O Indemnification.
(a) Purchaser hereby agrees that for six (6) years after the
Effective Time, Purchaser shall cause to be maintained in effect the Company's
and the Company Subsidiary's current policy of officers' and directors'
liability insurance with respect to actions and omissions occurring on or prior
to the Effective Date; provided, however, that Purchaser may substitute therefor
policies of at least the same coverage amounts containing terms and conditions
which are no less advantageous to the covered persons provided that such
substitution shall not result in any lapses in coverage with respect to matters
occurring on or prior to the Effective Time; provided, further, that Purchaser
shall not be required to pay an annual premium in excess of 150% of the last
annual premium paid by the Company and/or the Company Subsidiaries prior to the
date hereof (which premium is disclosed in Schedule 5.4 to the Company
Disclosure Schedule) and if Purchaser is unable to obtain the insurance required
by this Section 5.4, Purchaser shall obtain as much comparable insurance as
possible for an annual premium equal to such maximum amount.
(b) From and after the Effective Time through the sixth anniversary
of the Effective Time, Purchaser and Mid America (each an "Indemnifying Party"
and together the "Indemnifying Parties") jointly and severally agree to
indemnify and hold harmless each person who is now or has been at any time prior
to the date hereof or who becomes prior to the Effective Time, a director,
officer, employee or agent of the Company or a Company Subsidiary, or trustee of
any benefit plan of the Company or any Company Subsidiary, except for
unaffiliated corporate trustees (the "Indemnified Parties"), against any costs
or expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages or liabilities incurred in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters involving the Company, and/or any Company
Subsidiary existing or occurring at or prior to the Effective Time, including in
connection with the transaction contemplated by this Agreement, whether asserted
or claimed prior to, at or through the sixth anniversary of the Effective Time,
to the fullest extent to which the Company or the applicable Company Subsidiary
is permitted or required by law or their respective Articles of Incorporation
(or other chartering document) and Bylaws to indemnify such Indemnified Parties
and in the manner to which it could indemnify such parties under the Articles of
Incorporation (or other chartering document) and Bylaws of such entity, in each
case as in effect on the date hereof, or under applicable law. All rights to
indemnification in respect of or related to any cause or matter subject to
indemnification asserted or claimed within such period shall continue until
final disposition of such cause or matter.
(c) Following the sixth anniversary of the Effective Time, the
Indemnifying Parties jointly and severally agree that they shall, for an
additional six (6) years, indemnify and hold harmless each of the Indemnified
Parties against any costs or expenses, including reasonable attorneys fees, in
connection with any claim, action, suit, proceeding or investigation,
40
whether civil, criminal, administrative or investigative, arising out of matters
involving the Company, and/or any Company Subsidiary existing or occurring at or
prior to the Effective Time, including in connection with the transaction
contemplated by this Agreement, asserted or claimed after the sixth anniversary
of the Effective Time and at or prior to the twelfth anniversary thereof;
provided, however; such indemnification described in this Section 5.4(c) shall
not exceed $500,000 in the aggregate (and the Indemnifying Parties shall not be
responsible for any costs or expenses in excess of such amount) provided,
further, that the Indemnifying Parties shall not be responsible to indemnify for
the amount of any judgments, fines, losses, claims, damages or liabilities for
which an Indemnified Party is held liable as a result of a claim, action, suit,
proceeding or investigation, whether civil or criminal, administrative or
investigative, asserted or claimed subsequent to the sixth anniversary of the
Effective Time. All rights to indemnification in respect of or related to any
cause or matter subject to indemnification asserted or claimed within such
period shall continue until final disposition of such cause or matter.
(d) Any Indemnified Party wishing to claim indemnification under
Section 5.4(b) or (c), upon learning of any such claim, action, suit, proceeding
or investigation, shall promptly notify the appropriate Indemnifying Party
thereof. In the event of any such claim, action, suit, proceeding or
investigation, (i) the Indemnifying Party shall have the right to promptly and
timely assume the defense thereof with counsel reasonably acceptable to such
Indemnified Party and the Indemnifying Party shall not be liable to such
Indemnified Party for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof, except that if the Indemnifying Party elects not to, or fails to
promptly and timely assume such defense, or to appropriately defend such claim
once assumed (except with respect to any settlement contemplated below), the
Indemnified Party may retain counsel which is reasonably satisfactory to
Purchaser to handle such defense and the Indemnifying Party shall pay the
reasonable fees and expenses to all such counsel for an Indemnified Party (which
may not exceed one firm in any jurisdiction for an Indemnified Party), and
notwithstanding any assumption of such defense by the Indemnifying Party, an
Indemnified Party may retain counsel of its own choosing to monitor such defense
(with the Indemnified Party assuming any and all expenses as a result of hiring
such counsel); (ii) the Indemnified Party will cooperate in the defense of any
such matter; (iii) the Indemnifying Party shall not be liable for any settlement
effected without its prior written consent and (iv) the Indemnifying Party shall
not make any settlement of any such claim without prior written consent of an
Indemnified Party.
5.5 Affiliate Letters. The Company shall obtain and deliver to
Purchaser on the date hereof a signed representation letter as to certain
restrictions on resale substantially in the form of Exhibit D hereto from each
executive officer and director of the Company and each shareholder of the
Company who may reasonably be deemed an "affiliate" of the Company within the
meaning of such term as used in Rule 145 under the Securities Act, and shall
obtain and deliver to Purchaser a signed representation letter substantially in
the form of Exhibit D from any person who becomes an executive officer or
director of the Company or any shareholder who becomes such an "affiliate" after
the date hereof as promptly as practicable after (and shall use its reasonable
best efforts to obtain and deliver within five (5) business days after) such
person achieves such status. The letter described in this Section 5.5 shall
include certain provisions pursuant to which such individuals will agree to vote
in favor of the Merger.
41
5.6 Regulatory Applications. Purchaser shall, as soon as practicable,
file applications or notices with the applicable Governmental Authorities, and
shall use its commercially reasonable efforts to respond as promptly as
practicable to all inquiries received concerning said applications; provided,
however, that Purchaser shall have no obligation to accept nonstandard
conditions or restrictions with respect to the aforesaid approvals of
Governmental Authorities if it shall reasonably determine that such conditions
or restrictions would have a Material Adverse Effect on Purchaser. In the event
of an adverse or unfavorable determination by any Governmental Authority, or in
the event the Merger is challenged or opposed by any administrative or legal
proceeding, whether by the United States Department of Justice or otherwise, the
determination of whether and to what extent to seek appeal or review,
administrative or otherwise, or other appropriate remedies shall be made by
Purchaser after consultation with the Company. Except for confidential portions
reflecting pro forma financial information prepared by Purchaser, Purchaser
shall deliver a draft of regulatory applications relating to the Merger or this
Agreement to the Company prior to filing them, and copies of responses from or
written communications from regulatory authorities relating thereto, and
Purchaser shall deliver a final copy of all regulatory applications to the
Company promptly after they are filed with the appropriate regulatory authority.
5.7 Financial Statements and Reports. From the date of this Agreement
and prior to the Effective Time: (a) each party will deliver to the other, not
later than ninety days after the end of any fiscal year, its Annual Report on
Form 10-K (and all schedules and exhibits thereto) for the fiscal period then
ended as filed with the SEC, which shall be prepared in conformity with GAAP and
the rules and regulations of the SEC; (b) the Company will deliver to Purchaser
not later than thirty days after the end of any fiscal quarter, the quarterly
reports filed with the OTS by the Company or the Bank which shall be prepared in
accordance with the rules and regulations of the OTS; (c) each party will
deliver to the other not later than forty-five days after the end of each of its
first three (3) fiscal quarters, its report on Form 10-Q for such quarter as
filed with the SEC which shall be prepared in conformity with GAAP and the rules
and regulations of the SEC; (d) the Company will deliver to Purchaser any and
all other material reports filed with the SEC, the FDIC, the OTS or any other
regulatory agency within five (5) business days of the filing of any such
report; and (e) the Company will deliver to Purchaser monthly financial
statements which shall include a summary of the investment securities acquired
in the ordinary course of business.
5.8 Registration Statement; Shareholder Approval. As soon as
practicable after the date hereof, Purchaser shall prepare and file with the SEC
a Registration Statement on Form S-4 covering the Purchaser Common Stock to be
issued to holders of Company Common Stock in the Merger, which Registration
Statement shall include the Proxy Statement for use in soliciting proxies for
the special meetings of shareholders (the "Shareholders' Meeting") to be held by
each of Purchaser and the Company for purposes of considering the Merger, and
Purchaser and the Company shall use their reasonable best efforts to cause the
Registration Statement to become effective under the Securities Act. Purchaser
will take any reasonable action required to be taken under the applicable blue
sky or securities laws in connection with the issuance of the shares of
Purchaser Common Stock in the Merger. Each party shall furnish all information
concerning it and the holders of its capital stock as the other party may
reasonably request in connection with the preparation and filing of the
Registration Statement and Proxy Statement and related actions. Purchaser and
the Company shall each call a meeting of shareholders as
42
soon as reasonably practicable after the effective date of the Registration
Statement for the purpose of voting upon this Agreement and the Merger. In
connection with the Shareholders' Meeting, (a) Purchaser and the Company shall
jointly prepare the Proxy Statement as part of the Registration Statement, and
Purchaser and the Company shall mail the Proxy Statement to their respective
shareholders, on a date mutually acceptable to the parties hereto (the "Mailing
Date"); (b) the Boards of Directors of Purchaser and the Company shall
unanimously recommend to their respective shareholders the approval of this
Agreement and the Merger (subject to the receipt of a fairness opinion from
their respective investment bankers dated as of the mailing date of the Proxy
Statement), and (c) the Boards of Directors of Purchaser and the Company shall
otherwise use their best efforts, to the extent consistent with the fiduciary
duty of each, to obtain such shareholder approval.
5.9 Notice. At all times prior to the Effective Time, each party shall
give prompt notice to the other of the occurrence or its knowledge of any event
or condition that would cause any of its representations or warranties set forth
in this Agreement not to be true and correct in all material respects as of the
date of this Agreement or as of the Effective Time, or any of its obligations
set forth in this Agreement required to be performed at or prior to the
Effective Time not to be performed in all material respects at or prior to the
Effective Time, including without limitation, any event, condition, change or
occurrence which individually, or in the aggregate with any other events,
conditions or changes that have occurred after the date hereof, has resulted or
which, so far as reasonably can be foreseen at the time of its occurrence, is
reasonably likely to result in a Material Adverse Effect on it. After receipt of
any such notice disclosing a material breach, the nondisclosing party may,
within five (5) business days thereof, notify the disclosing party of its intent
to terminate this Agreement pursuant to Section 7.1(d); provided, however, that
the disclosing party shall have the right to cure such breach within 30 days
thereof but no later than the Effective Time. In the event the nondisclosing
party fails to notify the disclosing party of its intent to terminate within
five (5) business days after receipt of any notice hereunder, the nondisclosing
party shall be deemed to have waived its right of termination as to any such
breach arising out of or with respect to the events, conditions, change or
occurrence described in such notice; provided, however, that any particular
breach that is deemed to have been waived by the nondisclosing party may
thereafter be considered by the nondisclosing party in determining the aggregate
contribution of all events, conditions, changes and occurrences described by the
disclosing party pursuant to this Section 5.9 toward the occurrence of a
material breach by the disclosing party.
5.10 Press Releases. Purchaser and the Company shall coordinate all
publicity relating to the transactions contemplated by this Agreement and,
except as otherwise required by law, or with respect to employee meetings,
neither party shall issue any press release, publicity statement or other public
notice relating to this Agreement or any of the transactions contemplated hereby
without obtaining the prior consent of the other, which consent shall not be
unreasonably withheld. The Company shall obtain the prior consent of Purchaser
with respect to the content of any communication to its shareholders.
5.11 Delivery of Supplements to Disclosure Schedules. Five (5) business
days prior to the Effective Time, the Company and Purchaser will supplement or
amend the Company Disclosure Schedule and Purchaser Disclosure Schedule,
respectively, with respect to any matter hereafter arising which, if existing or
occurring at or prior to the date of this Agreement, would
43
have been required to be set forth or described in such Disclosure Schedule or
which is necessary to correct any information in the Company Disclosure Schedule
and Purchaser Disclosure Schedule in any representation and warranty made by the
disclosing party which has been rendered inaccurate thereby. For purposes of
determining the accuracy of the representations and warranties of Purchaser and
the Company contained in Article II and Article III hereof, respectively, and in
order to determine the fulfillment of the conditions set forth in Article VI
hereof as of the Effective Time, the Company Disclosure Schedule and Purchaser
Disclosure Schedule shall be deemed to include only the information contained
therein on the date hereof and any information previously disclosed by the
Company and Purchaser, respectively, pursuant to Section 5.9 as to which
Purchaser or the Company is deemed to have waived its right of termination;
provided, however, that delivery of such supplements containing information
which causes any representation or warranty of the Company or Purchaser to be
false or materially misleading will not cure any breach hereunder of such
representations or warranties.
5.12 Tax Opinion. Purchaser and the Company shall obtain a written
opinion ("Tax Opinion") of Vedder, Price, Xxxxxxx & Kammholz addressed to
Purchaser and the Company, dated the Closing Date, subject to customary
representations and assumptions referred to therein, and substantially to the
effect that (a) the Merger will constitute a tax-free reorganization within the
meaning of Section 368(a) of the Code, and Purchaser and the Company will each
be a party to such reorganization; (b) the exchange in the Merger of Purchaser
Common Stock for Company Common Stock will not give rise to the recognition of
any income, gain or loss to Purchaser, the Company, or the shareholders of the
Company with respect to such exchange except, with respect to the shareholders
of the Company, to the extent of cash received for fractional shares; (c) the
adjusted tax basis of the Purchaser Common Stock received by Company
shareholders in the Merger will equal the adjusted tax basis of the Company
Common Stock exchanged therefor decreased by the amount of money received in the
exchange and increased by the amount of gain recognized in the exchange; (d) the
holding period of the Purchaser Common Stock received in the Merger will include
the period during which the shares of Company Common Stock surrendered in
exchange therefor were held, provided such shares of Company Common Stock were
held as a capital asset at the Effective Time; (e) the adjusted tax basis of the
assets of the Company in the hands of Purchaser will be the same as the adjusted
tax basis of such assets in the hands of the Company immediately prior to the
exchange; and (f) the holding period of the assets of the Company transferred to
Purchaser will include the period during which such assets were held by the
Company prior to the exchange.
5.13 Tax Treatment. Neither the Company, the Company Subsidiaries,
Purchaser, the Purchaser Subsidiaries, nor any of their affiliates, shall
voluntarily take any action which would cause the Merger to fail to qualify as a
tax-free reorganization under Section 368(a) of the Code. In addition, Purchaser
and the Company agree to take any and all necessary or advisable steps to
restructure or modify the terms of the transaction contemplated hereby, if such
steps are necessary or advisable to qualify the transaction contemplated hereby
as a tax-free reorganization under Section 368(a) of the Code; provided,
however, nothing contained in this Section 5.13 shall be deemed to require
Purchaser to take any steps which will increase the Merger Consideration
provided for in Section 1.2.
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5.14 Resolution of Company Benefit Plans. The Company and Purchaser
shall cooperate in effecting the following treatment of the Company Benefit
Plans, except as mutually agreed upon by Purchaser and the Company prior to the
Effective Time:
(a) At the Effective Time, Purchaser (or a Purchaser Subsidiary)
shall be substituted for the Company as the sponsoring employer under those
Company Benefit Plans with respect to which the Company or the Bank is a
sponsoring employer immediately prior to the Effective Time, and shall assume
and be vested with all of the powers, rights, duties, obligations and
liabilities previously vested in the Company or the Bank with respect to each
such plan. Except as otherwise provided herein, each such plan and any Company
Benefit Plan sponsored by the Company or the Bank shall be continued in effect
by Purchaser or any applicable Purchaser Subsidiary after the Effective Time
without a termination or discontinuance thereof as a result of the Merger,
subject to the power reserved to Purchaser or any applicable Purchaser
Subsidiary under each such plan to subsequently amend or terminate the plan,
which amendments or terminations shall comply with applicable law. The Company,
the Bank and Purchaser will use all reasonable efforts (i) to effect said
substitutions and assumptions, and take such other actions contemplated under
this Agreement, and (ii) to amend such plans as to the extent necessary to
provide for said substitutions and assumptions, and such other actions
contemplated under this Agreement.
(b) Except as contemplated in any Letter of Understanding or the
letter agreement referred to in Section 5.14(g) below, at or as promptly as
practicable after the Effective Time, as Purchaser shall reasonably determine,
Purchaser shall provide, or cause any Purchaser Subsidiary to provide, to each
employee of the Company and the Bank as of the Effective Time ("Company
Employees") the opportunity to participate in each employee benefit plan and
program maintained by Purchaser or the Purchaser Subsidiaries for similarly
situated employees (the "Purchaser Benefit Plans"); provided, however, that with
respect to such Purchaser Benefit Plans, Company Employees shall be given credit
for service with the Company or the Bank in determining eligibility for and
vesting in benefits thereunder, but not for purposes of benefit accrual;
provided, further that Company Employees shall not be subject to any waiting
periods or pre-existing condition exclusions under the Purchaser Benefit Plans
to the extent that such periods are longer or restrictions impose a greater
limitation than the periods or limitations imposed under the Company Benefit
Plans; provided, further, that to the extent that the initial period of coverage
for Company Employees under any Purchaser Benefit Plan that is an "employee
welfare benefit plan" as defined in Section 3(1) of ERISA is not a full 12-month
period of coverage, Company Employees shall be given credit under the applicable
Purchaser Benefit Plans for any deductibles and co-insurance payments made by
such Company Employees under the Company Benefit Plans during the balance of
such 12-month period of coverage; provided, further that Company Employees shall
receive a contribution to the ESOP and in the Savings and Retirement Plan
(collectively, the "Qualified Retirement Plans") for the portion of the plan
years during which such Qualified Retirement Plans are maintained by the Company
or Purchaser (whether or not such employees satisfy any service or employment
requirements of the Qualified Retirement Plan after the Effective Time); and the
participants shall be fully vested in such Qualified Retirement Plans as of the
Effective Time for such portion of the plan year. Nothing in the preceding
sentence shall obligate Purchaser to provide or cause to be provided any
benefits duplicative of those provided under any Company Benefit Plan continued
pursuant to subparagraph (a) above, including, but not limited to, extending
participation in any Purchaser
45
Benefit Plan which is an "employee pension benefit plan" under ERISA with
respect to any year during which allocations are made to Company Employees under
the Company ESOP or Savings and Retirement Plan. Except as otherwise provided in
this Agreement, the power of Purchaser or any Purchaser Subsidiary to amend or
terminate any benefit plan or program, including any Company Benefit Plan, shall
not be altered or affected. Moreover, this Agreement shall not confer upon any
Company Employee any rights or remedies hereunder and shall not constitute a
contract of employment or create the rights, to be retained or otherwise, in
employment with Purchaser or any Purchaser Subsidiary.
(c) Concurrently with or immediately after the execution of this
Agreement, the Company shall use its best efforts to obtain from each officer of
the Company who is a party to an employment agreement or special termination
agreement with the Company or the Bank a statement of benefits with Purchaser
and the Company substantially in the form of Exhibit E attached hereto (each
such statement of benefits referred to herein, as a "Letter of Understanding"),
addressing certain matters pertaining to such executive's employment agreement
or special termination agreement and benefits payable thereunder, and where
applicable, such executive's employment after the Effective Date.
(d) Notwithstanding anything in this Agreement to the contrary, all
retention, severance, covenant not to compete, termination payments,
acceleration of benefit vesting, and other compensation paid by the Company or
the Bank, or as provided for in this Agreement, any Letter of Understanding, any
Company Benefit Plan or otherwise, including, but not limited to, any Change in
Control Benefit, shall not violate any prohibitions which are imposed by any
Governmental Authorities, or which any Governmental Authorities otherwise deem
to constitute unsafe and unsound banking practices giving effect to any
obligations of Purchaser or the Purchaser Subsidiary as provided herein or in
any Letter of Understanding.
(e) At the Effective Time, the ESOP shall be amended to provide that
all accounts thereunder shall be fully vested and nonforfeitable and that the
Purchaser Common Stock issued upon the conversion of the Company Common Stock in
the Merger shall become the qualifying employee security for purposes of the
ESOP.
(f) For a period of at least one year after the Effective Time, the
Company Employees shall be eligible for severance benefits in accordance with
the severance benefits program to be established by Mid America effective as of
the Effective Time.
(g) Purchaser and the Company agree to take certain other actions with
respect to the Company Benefit Plans and this Section 5.14 as set forth in the
letter agreement of even date herewith between Purchaser and the Company.
5.15 Appointment to Purchaser Board of Directors. Purchaser shall, as soon
as practicable after the Merger, cause one member of the Company's Board of
Directors to be appointed a director of Purchaser and Mid America until the next
annual meeting of stockholders of Purchaser and Mid America, and at such annual
meetings of stockholders, shall nominate such individual to the Board of
Directors of Purchaser and Mid America to serve for a three (3) year term. In
addition, two (2) individuals shall be appointed as directors of Mid America
immediately following the consummation of the Bank Merger to serve until the
next election of
00
Xxx Xxxxxxx directors, at which time they shall be elected to an additional term
on the Board of Directors of Mid America. Subject to the limitations set forth
on Schedule 5.15 to the Purchaser Disclosure Schedule, the individuals
identified on Schedule 5.15 shall be appointed, as designated, to the respective
Boards of Purchaser and Mid America.
5.16 Advisory Board. Purchaser shall cause Mid America to create an
advisory board (the "Advisory Board") to (a) assist in and advise with respect
to integration of the operations of the Bank with and into those of Mid America,
and (b) advise with respect to the operations of Mid America. Other than the
individuals appointed pursuant to Section 5.15 above, the Advisory Board shall
consist of all current members of the Boards of Directors of the Company and
Bank who are members of such Boards of Directors as of the Effective Time, each
of whom shall be entitled to receive a retainer and per meeting fees (without
reimbursement for travel expenses) equal to those currently in effect at the
Company and whose period for post-termination exercise of stock options shall
not commence until completion of Advisory Board service. The Advisory Board
shall meet at least quarterly, and may meet more frequently at the request of
Purchaser. The Board of Directors of Purchaser shall review the Advisory Board
function annually to consider its continuation.
5.17 Rights Agreement. The Company shall take all necessary steps to
terminate the Rights Agreement at no cost to the Company or Purchaser effective
upon the Effective Time.
5.18 Environmental Investigation.
(a) Purchaser may elect to engage a mutually acceptable environmental
consultant to conduct a preliminary ("Phase I") environmental assessment of each
of the parcels of owned real estate used in the operation of the businesses of
the Company or the Company Subsidiaries and any other real estate owned by the
Company or the Company Subsidiaries. The fees and expenses of the consultant
with respect to the Phase I assessments shall be paid by Purchaser. The Company
shall fully cooperate with Purchaser to provide the consultant reasonable access
to the premises under assessment. The consultant shall complete and deliver the
Phase I assessments not later than sixty (60) days after the date of this
Agreement. If any environmental conditions are found or suspected or would tend
to be indicated by the report of the consultant which may be contrary to the
representations and warranties of the Company set forth herein, without regard
to any knowledge qualifiers, then the parties shall obtain from one or more
mutually acceptable consultants or contractors, as appropriate, an estimate of
the cost of any further environmental investigation, sampling, analysis,
remediation, or other follow-up work that may be necessary to address those
conditions in accordance with applicable laws and regulations.
(b) Upon receipt of the estimate of the costs of all follow-up work to
the Phase I assessments or any subsequent investigation phases that may be
conducted, the parties shall attempt to agree upon a course of action for
further investigation and remediation of any environmental condition suspected
found to exist by the report of the consultant. All post-Phase I investigations
or assessments (the cost of which shall be paid by Purchaser), all work plans
for any post-Phase I assessments or remediation and any removal or remediation
actions that may be performed shall be mutually satisfactory to Purchaser and
the Company. If the work plans or removal or remediation actions are estimated
to cost more than $2,250,000 (individually or in the
47
aggregate) but net of reimbursable expenses or contractual obligations of others
to remediate costs and exclusive of anticipated or potential costs related to
the matters disclosed on Schedule 5.18 to the Company Disclosure Schedule,
Purchaser may abandon this Agreement as soon as possible but in no event more
than 180 days after the date of this Agreement. Purchaser and the Company shall
cooperate in the review, approval and implementation of all work plans.
5.19 Title to Real Estate. As soon as practical after the date hereof, but
in any event no later than thirty (30) days after the date hereof, the Company,
at its own expense, shall obtain and deliver to Purchaser, with respect to all
real estate owned or held pursuant to a ground lease by the Company, or any
Company Subsidiary, either (i) an owner's preliminary report of title covering a
date subsequent to the date hereof, issued by Chicago Title Insurance Company or
such other title insurance company accepted by Purchaser (such acceptance not to
be unreasonably withheld), showing fee simple title in the Company or such
Company Subsidiary in such real estate or the appropriate leasehold interest of
the Company or such Company Subsidiary subject only to (A) the standard
exceptions to title customarily contained in a policy on ALTA 1970 Owner's Form
B; (B) liens of current state and local property taxes which are not delinquent
or subject to penalty; and (C) liens and encumbrances as disclosed on Schedule
3.25(a)(ii), and restrictions and conditions of record that do not materially
adversely affect the value or use of such real estate, or (ii) a commitment by
the title insurance company currently insuring Company or Company Subsidiary's
title to the real estate owned or held pursuant to a ground lease to provide an
endorsement to the current title policies changing the name of the insured to
Purchaser at Closing; provided, however, (a) such commitments and title policies
are subject only to the matters set forth in this Section 5.19; and (b) the
effective date of such endorsement shall be subsequent to or contemporaneous
with the Effective Time.
5.20 Conforming Entries. Subject to applicable law, the Company and the
Company Subsidiaries shall (i) consult and cooperate with Purchaser with respect
to conforming the loan, accrual and reserve policies of the Company and the
Company Subsidiaries to those policies of Purchaser and the Purchaser
Subsidiaries, (ii) establish and take such reserves and accruals to conform the
loan, accrual and reserves policies of the Company and the Company Subsidiaries
to the differing policies of Purchaser and the Purchaser Subsidiaries and (iii)
establish and take such accruals, reserves and charges in order to implement
such policies in each case at such times as are reasonably requested by
Purchaser, provided, however, that the Company and the Company Subsidiaries
shall not be required to take any such action that is not permitted under GAAP.
VI.
CONDITIONS
6.1 Conditions to the Obligations of the Parties. Notwithstanding any
other provision of this Agreement, the obligations of Purchaser on the one hand,
and the Company on the other hand, to consummate the Merger are subject to the
following conditions precedent:
(a) No preliminary or permanent injunction or other order by any
federal or state court which prevents the consummation of the Merger or the Bank
Merger shall have been issued and shall remain in effect.
48
(b) This Agreement and the Merger shall have been duly approved by the
requisite vote of the stockholders of Purchaser and the Company at duly called
meetings.
(c) Purchaser shall have received approvals of the Governmental
Authorities to acquire the Company and to consummate the transactions
contemplated hereby and all required waiting periods relating thereto shall have
expired.
(d) The Registration Statement shall have been declared effective
under the Securities Act and no stop orders shall be in effect and no
proceedings for such purpose shall be pending or threatened by the SEC.
(e) Each party shall have received the Tax Opinion (as contemplated in
Section 5.12 above).
(f) The shares of Purchaser Common Stock which shall be issued to the
shareholders of the Company upon consummation of the Merger shall have been
authorized for listing on Nasdaq, subject to official notice of issuance.
6.2 Conditions to the Obligations of Purchaser. Notwithstanding any other
provision of this Agreement, the obligations of Purchaser to consummate the
Merger are subject to the following conditions precedent:
(a) All of the representations and warranties made by the Company in
this Agreement and in any documents or certificates provided by the Company
shall have been true and correct in all material respects as of the date of this
Agreement and as of the Effective Time as though made at and as of the Effective
Time.
(b) The Company shall have performed in all material respects all
obligations and shall have complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with by it
prior to or at the Effective Time.
(c) Except as specifically contemplated herein, there shall not have
been any action taken, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the Merger by any federal or state
government or governmental agency or instrumentality or court, which would
prohibit Purchaser's ownership or operation of all or a material portion of the
Company's business or assets, whether immediately at the Effective Time or as of
some future date, whether specified or to be specified, or would compel
Purchaser to dispose of or hold separate all or a material portion of the
Company's business or assets, whether immediately at the Effective Time or as of
some future date, whether specified or to be specified as a result of this
Agreement, or which would render Purchaser or the Company unable to consummate
the transactions contemplated by this Agreement.
(d) To the extent any material lease, license, loan or financing
agreement or other contract or agreement to which the Company or any Company
Subsidiary, as the case may be, is a party requires the consent of, waiver from,
or notice to, the other party thereto as a result of the transactions
contemplated by this Agreement, such consent, waiver or notice shall have been
obtained or given.
49
(e) As of the Closing Date, there shall have been no material adverse
change in the operations or financial condition of the Company (or with respect
to any Company Subsidiary or Subsidiaries which taken in the aggregate would
constitute a material adverse change) from that which was represented and
warranted on the date of this Agreement pursuant to this Agreement and the
Company Disclosure Schedules provided on the date of this Agreement, it being
understood that any updates provided pursuant to Section 5.11 hereof do not
constitute a waiver or other consent to any such material adverse change in the
Company, except in accordance with Section 5.9.
(f) Purchaser shall have received a certificate signed by the
President and Chief Executive Officer of the Company, dated as of the Effective
Time, certifying that based upon his knowledge, the conditions set forth in
Sections 6.2(a), (b) and (e) hereto have been satisfied.
(g) Neither the Company nor any Company Subsidiary shall be made a
party to, or to the knowledge of the Company, threatened by, any actions, suits,
proceedings, litigation or legal proceedings which, in the reasonable opinion of
Purchaser, have or are likely to have a Material Adverse Effect on the
consolidated assets, properties, business, operations or condition, financial or
otherwise, of the Company or the assets, properties, business, operations or
condition, financial or otherwise, of any Company Subsidiary, nor shall any
director or officer or former director or officer of the Company or any Company
Subsidiary be made a party to, or threatened by, any actions, suits,
proceedings, litigation or legal proceedings relating to their performance or
nonperformance of their legal or fiduciary duties as directors and officers of
the Company or any Company Subsidiary which in the reasonable opinion of
Purchaser is likely to have a Material Adverse Effect on the Company or any
Company Subsidiary. No action, suit, proceeding or claim shall have been
instituted, made or threatened by any person relating to the Merger or the
validity or propriety of the transactions contemplated by this Agreement or the
Bank Merger Agreement which would make consummation of the Merger inadvisable in
the reasonable opinion of Purchaser.
(h) The Bank Merger Agreement shall have been duly authorized and
approved by the Company and the Bank and the other terms and conditions of the
Bank Merger Agreement shall have been satisfied so as to permit the Bank Merger
to be consummated as contemplated thereby.
(i) If requested by Purchaser, the Company shall have caused to be
delivered to Purchaser letters from Company's independent public accountants,
KPMG LLP, dated the date on which the Registration Statement shall become
effective, and dated the Effective Time, and addressed to Purchaser and the
Company, with respect to the Company's consolidated financial position and
results of operations, and which describes procedures which shall be consistent
with applicable professional standards for "comfort" letters delivered by
independent accountants in connection with comparable transactions.
(j) All action required to be taken by or on the part of the Company
to authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by the Board of
50
Directors and the shareholders of the Company, and Purchaser shall have received
certified copies of the resolutions evidencing such authorization.
(k) The Company shall have procured and delivered to Purchaser the
resignations of each of the directors and executive officers of the Company and
the Company Subsidiaries in form and substance reasonably acceptable to
Purchaser (none of which resignations shall prejudice or limit any rights such
persons would otherwise have).
(l) Purchaser shall have received an opinion of Xxxxxxx, Best &
Friedrich LLP, counsel for the Company, substantially in the form of Exhibit F
hereto.
(m) The Company shall have delivered to Purchaser applicable titles
with respect to any and all real property owned by the Company or the Company
Subsidiaries, pursuant to Section 5.19.
(n) Except as detailed on Schedule 6.2(n) to the Company Disclosure
Schedule, the Company shall have taken all necessary actions to repay the debt
maintained by the Company.
(o) Purchaser shall have received a certificate signed by the President
and Chief Executive Officer, and Chief Financial Officer of the Company, dated
as of the Effective Time, certifying that: (i) based on their most recent
evaluation, such officers concluded that the Company's disclosure controls and
procedures are effective to ensure that material information relating to the
Company and the Company Subsidiaries is made known to such executives; (ii) such
officers have disclosed to the Company's auditors and audit committee any
significant deficiencies in the design or operation of internal controls which
could adversely affect the Company's ability to record, process, summarize and
report financial data and have identified for the Company's auditors any
material weaknesses in internal controls, and any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company's internal controls; and (iii) corrective actions have been
taken to address any such significant deficiencies or material weaknesses
identified in the internal controls.
6.3 Conditions to the Obligations of the Company. Notwithstanding any other
provision of this Agreement, the obligations of the Company to consummate the
Merger are subject to the following conditions precedent:
(a) All of the representations and warranties made by Purchaser in this
Agreement and in any documents or certificates provided by Purchaser shall have
been true and correct in all material respects as of the date of this Agreement
and as of the Effective Time as though made on and as of the Effective Time.
(b) Purchaser shall have performed in all material respects all
obligations and shall have complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with by it
prior to or at the Effective Time.
(c) Except as specifically contemplated herein, there shall not have
been any action taken, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the Merger by any federal or state
government or governmental agency or
51
instrumentality or court, which would prohibit Purchaser's ownership or
operation of all or a material portion of the Company's business or assets,
whether immediately at the Effective Time or as of some future date, whether
specified or to be specified, or would compel Purchaser to dispose of or hold
separate all or a material portion of the Company's business or assets, whether
immediately at the Effective Time or as of some future date, whether specified
or to be specified as a result of this Agreement, or which would render the
Purchaser or the Company unable to consummate the transactions contemplated by
this Agreement.
(d) As of the Closing Date, there shall have been no material adverse
change in the operations or financial condition of Purchaser from that which was
represented and warranted on the date of this Agreement pursuant to this
Agreement and the Purchaser Disclosure Schedules provided on the date of this
Agreement, it being understood that any updates provided pursuant to Section
5.11 hereof do not constitute a waiver or other consent to any such material
adverse change in Purchaser, except in accordance with Section 5.9.
(e) The Company shall have received a certificate signed by the
Chairman and Chief Executive Officer of Purchaser, dated as of the Effective
Time, that based upon such Chief Executive Officer's knowledge, the conditions
set forth in Sections 6.3(a), (b) and (d) have been satisfied.
(f) Neither Purchaser nor any Purchaser Subsidiary shall be made a
party to, or to the knowledge of Purchaser, threatened by, any actions, suits,
proceedings, litigation or legal proceedings which, in the reasonable opinion of
the Company, have or are likely to have a Material Adverse Effect on the
consolidated assets, properties, business, operations or condition, financial or
otherwise, of Purchaser.
(g) All action required to be taken by or on the part of Purchaser to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by the Board of Directors and the stockholders of Purchaser, and
the Company shall have received certified copies of the resolutions evidencing
such authorization.
(h) The Company shall have received an opinion of Vedder, Price,
Xxxxxxx & Kammholz, counsel for Purchaser, substantially in the form of Exhibit
G hereto.
VII.
TERMINATION; AMENDMENT; WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time:
(a) By mutual written consent of the Board of Directors of Purchaser
and the Board of Directors of the Company;
(b) At any time prior to the Effective Time, by Purchaser or the
Company if there shall have been a final judicial or regulatory determination
(as to which all periods for appeal shall have expired and no appeal shall be
pending) that any material provision of this
52
Agreement is illegal, invalid or unenforceable (unless the enforcement thereof
is waived by the affected party) or denying any regulatory application, the
approval of which is a condition precedent to either party's obligations
hereunder;
(c) By either party at any time after the shareholders of Purchaser or
the Company fail to approve this Agreement and the Merger in a vote taken at a
meeting duly convened for that purpose; provided, however, (A) the Company shall
have no right to terminate pursuant to this Section 7.1(c) if the Company has
taken any action, or failed to take any action, as applicable, as prescribed by
Section 7.2(a)(ii), and (B) Purchaser shall have no right to terminate pursuant
to this Section 7.1(c) if the Board of Directors of Purchaser (i) shall have
withdrawn, modified or amended in any respect its approval or recommendation of
this Agreement or the transactions contemplated hereby, (ii) shall not at the
appropriate time have unanimously recommended or shall have withdrawn, modified
or amended in any respect its recommendation that its stockholders vote in favor
of this Agreement, (iii) shall not have included such recommendation in the
Proxy Statement, or (iv) the Board of Directors of Purchaser shall have resolved
to do any of the foregoing;
(d) By Purchaser or the Company in the event of the material breach by
the other party of any representation, warranty, covenant or agreement contained
herein or in any schedule or document delivered pursuant hereto, which breach
would result in the failure to satisfy the closing conditions set forth in
Section 6.2 hereof, in the case of Purchaser, or Section 6.3 hereof, in the case
of the Company, except in each case, for any such breach which has been
disclosed pursuant to Section 5.9 and waived by the non-disclosing party
pursuant to Section 5.9 or cured by the disclosing party prior to the Effective
Time and within the time period specified in Section 5.9;
(e) By either party on or after March 1, 2004, in the event the Merger
has not been consummated by such date (provided that the terminating party is
not then in material breach of any representation, warranty, covenant or other
agreement contained herein);
(f) By Purchaser pursuant to the provision of Section 5.18 hereof
relating to certain environmental matters;
(g) By the Company, by delivery of notice to Purchaser at any time
during the three business-day period commencing on the Determination Date, if
both of the conditions in (i) and (ii) are satisfied:
(i) the average of the daily closing price of a share of Purchaser
Common Stock as reported on Nasdaq for twenty (20) consecutive trading days
ending at the Determination Date (the "Purchaser Average Price") is less
than 82.5% of the closing price of Purchaser Common Stock ending on the
Starting Date (as defined below).
(ii) the number obtained by dividing the Purchaser Average Price by
the closing price of Purchaser Common Stock as reported on Nasdaq for the
trading day immediately following the date of public announcement of this
Agreement is less than the number obtained by dividing the Final Index
Price (as defined below) by the Initial Index Price (as defined below) and
subtracting 0.175 from such quotient.
53
(iii) For purposes of this Section 7.1(g):
(A) The "Index Group" shall mean all of those companies (and
the appropriate index weighting of such entities) as set forth on
Exhibit H;
(B) The "Initial Index Price" shall mean the value of the Index
Group, determined in accordance with Exhibit H, for the Starting Date;
(C) The "Final Index Price" shall mean the average of the value
of the Index Group, determined in accordance with Exhibit H, for the
twenty (20) consecutive trading days ending on the Determination Date;
(D) "Determination Date" shall mean the date seven (7) business
days prior to the Closing Date;
(E) "Starting Date" shall mean the trading day immediately
following the date of public announcement of this Agreement.
(h) By the Company upon ten days' prior written notice to Purchaser if,
as a result of an unsolicited Takeover Proposal (as defined herein) by a party
other than Purchaser or its affiliates, the Board of Directors of the Company
determines in good faith (A) after consultation with an outside financial
advisor, that such Takeover Proposal (if consummated in accordance with its
terms) would be more favorable to the Company's shareholders than the Merger (a
"Superior Proposal"), and (B) after consultation with and receipt of advice from
outside counsel, that its failure to accept such Superior Proposal could
reasonably be deemed to constitute a breach of its fiduciary obligations under
applicable Law. As used in this Agreement, "Takeover Proposal" shall mean any
tender or exchange offer, proposal for a merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any Company Subsidiary or any proposal or offer to
acquire in any manner substantially all of the stock or the assets of the
Company or any Company Subsidiary other than the transactions contemplated or
permitted by this Agreement;
(i) By Purchaser in the event (1) the Board of Directors of the Company
(A) shall have withdrawn, modified or amended in any respect its approval or
recommendation of this Agreement or the transactions contemplated hereby, (B)
shall not at the appropriate time have unanimously recommended or shall have
withdrawn, modified or amended in any respect its recommendation that its
shareholders vote in favor of this Agreement, or (C) shall not have included
such recommendation in the Proxy Statement, or (2) the Board of Directors of the
Company shall have resolved to do any of the foregoing.
7.2 Effect of Termination. (a) In consideration of the expenses and forgone
opportunities of Purchaser, and as a condition and inducement to Purchaser to
enter into and perform this Agreement, the Company shall pay immediately to
Purchaser upon demand a fee of $13,300,000 of the aggregate Merger Consideration
if:
(i) in the event of a termination by the Company pursuant to Section
7.1(c) or (h), or by Purchaser pursuant to Section 7.1(c) or (i), at any
time within eighteen (18) months after such termination a Third Party
Acquisition Event (as defined
54
below) occurs or the Company shall enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement
with respect to a Third Party Acquisition Event. As used in this Agreement,
a "Third Party Acquisition Event" involving the Company means (A) a
transaction or series of transactions pursuant to which any person or group
(as such term is defined under the Exchange Act), other than Acquiror or
any affiliate thereof ("Third Party"), acquires (or would acquire upon
completion of such transaction or series of transactions) more than twenty
percent (20%) of the equity securities or voting power of the Company or
any Company Subsidiary, pursuant to a tender offer or exchange offer or
otherwise, (B) a merger, consolidation, share exchange or other business
combination involving the Company or any Company Subsidiary pursuant to
which any person other than Purchaser acquires ownership (or would acquire
ownership upon consummation of such merger, consolidation, share exchange
or other business combination) of more than twenty percent (20%) of the
outstanding equity securities or voting power of the Company or any Company
Subsidiary or of the entity surviving such merger or business combination
or resulting from such consolidation, (C) any other transaction or series
of transactions pursuant to which any Third Party acquires (or would
acquire upon completion of such transaction or series of transactions)
control of assets of the Company or any Company Subsidiary (including, for
this purpose, outstanding equity securities of subsidiaries of such party)
having a fair market value equal to more than twenty percent (20%) of the
fair market value of all the consolidated assets of the Company immediately
prior to such transaction or series of transactions, or (D) any transaction
or series of transactions pursuant to which any Third Party acquires (or
would acquire upon completion of such transaction or series of
transactions) control of the Board of Directors of the Company or by which
nominees of any Third Party are (or would be) elected or appointed to a
majority of the seats on the Board of Directors of the Company; or
(ii) the Purchaser shall have terminated this Agreement pursuant to
Section 7.1(c) and (A) the Board of Directors of the Company (1) shall have
withdrawn, modified or amended in any respect its approval or
recommendation of this Agreement or the transactions contemplated hereby,
(2) shall not at the appropriate time have unanimously recommended or shall
have withdrawn or changed in any respect its recommendation that its
stockholders vote in favor of the adoption of this Agreement, or (3) shall
not have included such recommendation in the Proxy Statement, or (B) the
Board of Directors of the Company shall have resolved to do any of the
foregoing in clause (A).
(b) In consideration of the expenses and foregone opportunities of
Purchaser, and as a condition and inducement to Purchaser to enter into and
perform this Agreement, the Company shall pay immediately to Purchaser, upon
demand, a fee of Six Million Dollars ($6,000,000) if Purchaser has terminated
this Agreement under Section 7.1(i) because any of the events described in
Section 7.1(i) have occurred after the Company sought and failed to obtain a
bring-down fairness opinion; provided, however, that if any Third Party
Acquisition Event described in Section 7.2(a) occurs within eighteen (18) months
after such termination, Purchaser shall be entitled to the additional amounts
payable under such provisions.
55
(c) If Purchaser terminates this Agreement otherwise than in
accordance with its rights to do so pursuant to Sections 7.1(a), (b), (c), (d),
(e), (f) or (i), or if the Company terminates this Agreement pursuant to Section
7.1(d), Purchaser shall pay to the Company upon demand a termination payment in
the amount of Five Million Dollars ($5,000,000). Any sum payable by Purchaser to
the Company pursuant to the terms of this Section 7.2(c) shall constitute
liquidated damages under this Agreement and the receipt thereof shall be the
Company's sole and exclusive remedy.
7.3 Expenses. Except as provided elsewhere herein, Purchaser and the
Company shall each bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial or other consultants, investment bankers,
accountants and counsel. In the event one of the parties hereto files suit to
enforce this Section or a suit seeking to recover costs and expenses or damages
for breach of this Agreement, the costs, fees, charges and expenses (including
attorneys' fees and expenses) of the prevailing party in such litigation (and
any related litigation) shall be borne by the losing party.
7.4 Survival of Agreements. In the event of termination of this
Agreement by either Purchaser or the Company as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect except that (i) the
agreements contained in Sections 5.1(b), 5.10, 7.2 and 7.3 hereof shall survive
the termination hereof; and (ii) a termination pursuant to Section 7.1(d) hereof
shall not relieve a breaching party from any liability for any breach giving
rise to such termination (except as otherwise provided herein).
7.5 Amendment. This Agreement may be amended by the parties hereto by
action taken by their respective Boards of Directors at any time before or after
approval hereof by the stockholders of Purchaser or the Company but, after such
approval, no amendment shall be made which changes the form of consideration or
adversely affects or decreases the value of the consideration to be received by
the shareholders of the Company without the further approval of such
shareholders or which in any other way adversely affects the rights of the
stockholders of either the Company or Purchaser without the further required
approval of the stockholders so affected. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. Purchaser and the Company may, without approval of their respective
Boards of Directors, make such technical changes to this Agreement, not
inconsistent with the purposes hereof and thereof, as may be required to effect
or facilitate any governmental approval or acceptance of the Merger or of this
Agreement or to effect or facilitate any filing or recording required for the
consummation of any of the transactions contemplated hereby.
7.6 Waiver. Any term, provision or condition of this Agreement (other
than requirements for stockholder approval and required approvals of the
Governmental Authorities) may be waived in writing at any time by the party
which is entitled to the benefits hereof. Each and every right granted to any
party hereunder, or under any other document delivered in connection herewith or
therewith, and each and every right allowed it by law or equity, shall be
cumulative and may be exercised from time to time. The failure of either party
at any time or times to require performance of any provision hereof shall in no
manner affect such party's right at a later time to enforce the same except as
provided in Section 5.9. No waiver by any party of a condition or of the breach
of any term, covenant, representation or warranty contained in this
56
Agreement, whether by conduct or otherwise, in any one or more instances shall
be deemed to be or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition or of the breach of any
other term, covenant, representation or warranty of this Agreement. No
investigation, review or audit by Purchaser of the Company or the Company of
Purchaser prior to or after the date hereof shall estop or prevent either party
from exercising any right hereunder or be deemed to be a waiver of any such
right.
VIII.
GENERAL PROVISIONS
8.1 Survival. All representations, warranties, covenants and agreements
of the parties in this Agreement or in any instrument delivered by the parties
pursuant to this Agreement (other than the agreements, covenants and obligations
set forth herein which are contemplated to be performed after the Effective
Time) shall not survive the Effective Time except as provided for in Section
7.4.
8.2 Notice. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, by facsimile
transmission or by registered or certified mail to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice) and shall be deemed to be delivered on the date so delivered:
(a) if to Purchaser: MAF Bancorp, Inc.
00xx & Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Chairman and Chief Executive
Officer
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
copy to: Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
(b) if to the Company: St. Xxxxxxx Capital Corporation
00000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxx
President and Chief Executive
Officer
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
57
copy to: Xxxxxxx, Best & Friedrich LLP
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: W. Xxxxxxx Xxxxxxx, Esq.
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
8.3 Applicable Law. This Agreement shall be construed and interpreted
in all respects, including validity, interpretation and effect, by the laws of
the State of Delaware with respect to matters of corporate laws and, with
respect to all other matters, by the laws of the State of Illinois, except to
the extent that the federal laws of the United States apply.
8.4 Material Adverse Effect. "Material Adverse Effect" means, with
respect to Purchaser or the Company, as the case may be, any effect that (a) is
material and adverse to the business, assets, liabilities, results of operations
or financial condition of the Purchaser and the Purchaser Subsidiaries taken as
a whole, or the Company and the Company Subsidiaries taken as a whole,
respectively, or (b) materially impairs the ability of Purchaser or the Company
to consummate the transactions contemplated hereby; provided, however, that
Material Adverse Effect shall not be deemed to include the impact of (i) actions
contemplated by this Agreement, (ii) changes in laws and regulations or
interpretations thereof that are generally applicable to banking or savings
institutions, (iii) changes in GAAP that are generally applicable to banking or
savings institutions, (iv) expenses incurred in connection with the transactions
contemplated hereby, and (v) changes attributable to or resulting from changes
in general economic conditions affecting similarly situated banks, savings
institutions or their holding companies generally, including changes in the
prevailing level of interest rates.
8.5 Headings, Etc. The article headings and section headings contained
in this Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.
8.6 Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a final and unappealable order of a court
of competent jurisdiction to be invalid, void, or unenforceable, then the
remainder of the terms, provisions, covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated unless the effect would be to cause this
Agreement to not achieve its essential purposes.
8.7 Entire Agreement; Binding Effect; Nonassignment; Counterparts.
Except as otherwise expressly provided herein, this Agreement (including the
documents and instruments referred to herein) (a) constitutes the entire
agreement between the parties hereto and supersedes all other prior agreements
and undertakings, both written and oral, between the parties, with respect to
the subject matter hereof; and (b) is not intended to confer upon any other
person any rights or remedies hereunder except as specifically provided herein.
This Agreement shall be binding upon and inure to the benefit of the parties
named herein and their respective successors. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by either party
hereto without the prior written consent of the other party hereto. This
58
Agreement may be executed in two or more counterparts which together shall
constitute a single agreement.
59
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first above written.
MAF BANCORP, INC.
/s/ Xxxxx X. Xxxxxxx
-------------------------------------------
By: Xxxxx X. Xxxxxxx
Its: Chairman and Chief Executive Officer
ST. XXXXXXX CAPITAL
CORPORATION
/s/ Xxxxxx X. Xxxx
-------------------------------------------
By: Xxxxxx X. Xxxx
Its: President and Chief Executive Officer
60
EXHIBIT D
Form of
AFFILIATE LETTER
May 20, 2003
MAF Bancorp, Inc.
00xx & Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed to
be an "affiliate" of St. Xxxxxxx Capital Corporation, a Wisconsin corporation
(the "Company"), as the term "affiliate" is defined for purposes of paragraphs
(c) and (d) of Rule 145 of the rules and regulations ("Rules and Regulations")
of the Securities and Exchange Commission ("Commission") under the Securities
Act of 1933, as amended ("Act"). Pursuant to the terms of the Agreement and Plan
of Reorganization dated as of May 20, 2003 ("Merger Agreement"), by and between
MAF Bancorp, Inc., a Delaware corporation ("Purchaser"), and the Company,
pursuant to which the Company shall be merged with and into Purchaser (the
"Merger") and the stockholders of the Company shall be entitled to receive
shares of common stock, par value $0.01 per share, of Purchaser ("Purchaser
Common Stock") in exchange for shares of common stock, par value $0.01 per
share, of the Company ("Company Common Stock").
As a result of the Merger, I may be entitled to receive shares of Purchaser
Common Stock in exchange for shares owned by me of the Company Common Stock (or
upon exercise of options to purchase shares or upon the exercise by me of rights
under certain option plans of the Company that become exercisable upon the
consummation of the Merger) (collectively, the "Purchaser Securities").
I represent, warrant and covenant to Purchaser that in the event I receive
any shares of Purchaser Securities as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of
Purchaser Securities in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Merger Agreement and
discussed the requirements of such documents and other applicable limitations
upon my ability to sell, transfer or otherwise dispose of Purchaser Securities
to the extent I felt necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of Purchaser Securities to
me pursuant to the Merger shall be registered with the Commission under the Act
on a Registration Statement on Form S-4. However, I have also been advised that,
because (a) at the time the Merger shall be submitted for a vote of the
shareholders of the Company, I may be deemed to be an affiliate of the Company
and (b) the distribution by me of Purchaser Securities has not been registered
under the Act, I may not sell, transfer or otherwise dispose of Purchaser
Securities
MAF Bancorp, Inc.
May 20, 2003
Page 2
issued to me in the Merger unless (i) such sale, transfer or other disposition
is made in conformity with the volume and other limitations of Rule 145(d)
promulgated by the Commission under the Act ("Rule 145(d)"), (ii) such sale,
transfer or other disposition has been registered under the Act or (iii) in the
opinion of counsel reasonably acceptable to Purchaser, such sale, transfer or
other disposition is otherwise exempt from registration under the Act.
D. I understand that, except as provided in the Merger Agreement,
Purchaser is under no obligation to register the sale, transfer or other
disposition of Purchaser Securities by me or on my behalf under the Act or to
take any other action necessary in order to make compliance with an exemption
from such registration available.
E. I also understand that stop transfer instructions will be given
to Purchaser's transfer agents with respect to Purchaser Securities issued to me
and that there will be placed on the certificates for Purchaser Securities
issued to me, or any substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED MAY 20,
2003 BETWEEN THE REGISTERED HOLDER HEREOF AND MAF BANCORP, INC., A
COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF MAF
BANCORP, INC."
F. I also understand that, unless the sale or transfer by me of
Purchaser Securities has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Purchaser reserves the right to put
the following legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ACQUIRED IN A
TRANSACTION THAT WAS NOT REGISTERED UNDER THE SECURITIES ACT OF 1933
AND WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A
VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF
WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
G. I hereby agree that at any meeting of the shareholders of the
Company however called, and in any action by written consent to the shareholders
of the Company, I (solely in my capacity as a shareholder) shall vote the
Company Common Stock which I am
MAF Bancorp, Inc.
May 20, 2003
Page 3
entitled to vote (a) in favor of the Merger and the transactions contemplated by
the Merger Agreement; (b) against any action or agreement which would result in
a breach of any covenant, representation or warranty or any other obligation of
the Company under the Merger Agreement; and (c) against any action or agreement
which would impede or interfere with the transactions contemplated by the Merger
Agreement, including, but not limited to: (i) any change in the management or
Board of Directors of the Company, except as otherwise agreed to in writing by
Purchaser; (ii) any change in the present capitalization or dividend policy of
the Company; or (iii) any other material change in the Company's corporate
structure or business.
H. I agree (solely in my capacity as a shareholder) not to vote or
execute any written consent to rescind or amend in any manner any prior vote or
written consent to approve or adopt the Merger Agreement and the transactions
contemplated thereby.
I. I agree (solely in my capacity as a shareholder) to use my best
efforts to cause the Merger and the other transactions contemplated by the
Merger Agreement to be consummated.
J. Prior to the Effective Time (as defined in the Merger Agreement),
I will not sell, assign, transfer or otherwise dispose of (including, without
limitation, by the creation of a Lien (as defined below) that would cause the
total number of shares of Company Common Stock subject to the Liens to exceed
the number shares in Section K below), or permit to be sold, assigned,
transferred or otherwise disposed of, any shares of Company Common Stock owned
of record or beneficially by me, whether such shares of Company Common Stock are
owned of record or beneficially by me on the date of the Merger Agreement or are
subsequently acquired, whether pursuant to the exercise of stock options or
otherwise, except (i) for transfers by will or by operation of law (in which
case this letter agreement shall bind the transferee); (ii) for sales,
assignments, transfers or other dispositions necessitated by hardship with the
prior written consent of Purchaser; or (iii) as Purchaser may otherwise agree in
writing.
K. I represent that (i) I have the complete and unrestricted power
and the unqualified right to enter into and perform the terms of this letter
agreement; (ii) this letter agreement constitutes a valid and binding agreement
with respect to me, enforceable against me in accordance with its terms; and
(iii) I own the shares of Company Common Stock free and clear of any liens,
claims, charges or other encumbrances and restrictions of any kind whatsoever
("Liens") except as noted below as of the date hereof, and have sole and
unrestricted voting power with respect in such shares of Company Common Stock:
__________________________
__________________________
__________________________
MAF Bancorp, Inc.
May 20, 2003
Page 4
Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of the Company as described in the first paragraph
of this letter, or as a waiver of any rights I may have to object to any claim
that I am such an affiliate on or after the date of this letter.
Very truly yours,
______________________________________
Name:
Accepted and Agreed to Number of Shares of
this 20th day of Company Common Stock _________________
May, 2003, by
MAF Bancorp, Inc.
By:______________________________
Name:
Title:
EXHIBIT H
The value of the Index Group means the weighted average (weighted in
accordance with the percentages listed below, which have been based on the
number of shares outstanding) of the closing prices of the twenty (20) financial
institution holding companies listed below as reported on the primary stock
exchange for such company on the applicable trading date; provided, however, the
common stock of such company must then be publicly traded and there shall not
have been, since the Starting Date and before the Determination Date, any public
announcement for such company to be acquired or for such company to acquire
another company or companies in a transaction with a value exceeding 25% of the
acquiror's market capitalization as of the Starting Date. In the event that the
common stock of any such company ceases to be publicly traded or any such
announcement is made with respect to any such company, such company shall be
removed from the Index and the weights redistributed proportionately for
purposes of determining the Index. Further, if any company belonging to the
Index declares or effects a stock split, stock dividend, recapitalization,
exchange of shares or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such company shall be
appropriately adjusted.
Common Shares Index
Company Name Ticker Outstanding Weighting
Xxxxxx Bancorp, Inc. RSLN 78,299,818 11.04%
Washington Federal, Inc. WFSL 69,580,218 9.81%
Staten Island Bancorp, Inc. SIB 59,752,432 8.42%
BankAtlantic Bancorp, Inc. BBX 58,392,970 8.23%
Independence Community Bank Corp. ICBC 55,212,455 7.78%
Xxxxxxx Financial Corporation WBS 45,617,000 6.43%
Commercial Federal Corporation CFB 44,808,282 6.32%
Westcorp XXX 39,204,709 5.53%
United Community Financial Corp. UCFC 34,414,965 4.85%
Waypoint Financial Corp. WYPT 32,665,309 4.60%
Xxxxxx Financial Corp. DSL 27,928,722 3.94%
Dime Community Bancshares, Inc. DCOM 25,423,452 3.58%
Anchor BanCorp Wisconsin Inc. ABCW 23,942,858 3.37%
Seacoast Financial Services Corporation SCFS 23,091,774 3.25%
First Federal Capital Corp. FTFC 19,702,712 2.78%
FirstFed Financial Corp. FED 16,972,146 2.39%
First Indiana Corp. FISB 15,597,000 2.20%
Sterling Financial Corporation STSA 14,436,190 2.03%
First Financial Holdings, Inc. FFCH 12,722,873 1.79%
PFF Bancorp, Inc. PFB 11,769,788 1.66%
