EXHIBIT 10.11
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
PRIVATEBANCORP, INC.
AND
TOWNE SQUARE FINANCIAL CORPORATION
DATED AS OF JUNE 24, 1999
TABLE OF CONTENTS
I. THE MERGER................................................... 1
1.1 Effects of the Merger.................................. 1
1.2 Effect of Merger on Capital Stock...................... 2
1.3 Consummation of the Merger; Effective Time............. 3
1.4 Exchange of TSFC Common Stock.......................... 3
1.5 Dissenting Shares...................................... 4
II. REPRESENTATIONS AND WARRANTIES OF PRIVATE.................... 5
2.1 Organization........................................... 5
2.2 Authorization.......................................... 5
2.3 Conflicts.............................................. 5
2.4 Capitalization......................................... 6
2.5 Private Registration Statement; Financial Statements
of Private............................................ 6
2.6 Private Subsidiary..................................... 7
2.7 Private Reports........................................ 7
2.8 Compliance With Laws................................... 8
2.9 Litigation............................................. 8
2.10 Taxation............................................... 8
2.11 Advice of Changes...................................... 8
2.12 Activities in Xxxx County.............................. 9
2.13 Fox Valley Advisory Board.............................. 9
2.14 Tax Consequences of Merger............................. 9
III. REPRESENTATIONS AND WARRANTIES OF TSFC....................... 9
3.1 Organization........................................... 9
3.2 Authorization.......................................... 9
3.3 Conflicts.............................................. 10
3.4 Capitalization and Stockholders........................ 10
3.5 TSFC Financial Information............................. 10
3.6 Compliance With Laws................................... 11
3.7 Disclosure............................................. 11
3.8 Litigation............................................. 11
3.9 Licenses............................................... 11
3.10 Taxes.................................................. 11
3.11 Disclosure Schedule of TSFC............................ 11
3.12 Operations Since June 1, 1999.......................... 12
3.13 Corporate Records...................................... 12
3.14 Tax Matters............................................ 12
3.15 Advice of Changes...................................... 12
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IV. COVENANTS..................................................... 12
4.1 Conduct of Business by TSFC Until the Effective Time.... 12
4.2 Conduct of Business by Private Until the Effective Time. 13
4.3 Execution of the Advisory Board and Support Agreement... 14
4.4 Execution of the Stock Restriction Agreement............ 14
4.5 Capital Stock........................................... 14
4.6 Execution of Lease...................................... 14
4.7 Execution of Employment and Non-Compete and Support
Agreement.............................................. 14
V. ADDITIONAL AGREEMENTS......................................... 14
5.1 Inspection of Records; Confidentiality.................. 14
5.2 Board Representation.................................... 15
5.3 Brokers................................................. 15
5.4 Cooperation............................................. 15
5.5 Regulatory Applications................................. 15
5.6 Notice.................................................. 16
5.7 Press Releases.......................................... 16
5.8 Delivery of Supplements to Disclosure Schedules......... 16
5.9 Tax Opinion............................................. 17
5.10 Tax Treatment........................................... 17
5.11 Tax Indemnification..................................... 17
VI. CONDITIONS.................................................... 18
6.1 Conditions to the Obligations of Private................ 18
6.2 Conditions to the Obligations of TSFC................... 19
6.3 Conditions to the Obligations of the Parties............ 20
VII. TERMINATION; AMENDMENT; WAIVER................................ 20
7.1 Termination............................................. 20
7.2 Expenses................................................ 21
7.3 Survival of Agreements.................................. 21
7.4 Amendment............................................... 21
7.5 Waiver.................................................. 21
VIII. GENERAL PROVISIONS............................................ 22
8.1 Survival................................................ 22
8.2 Notice.................................................. 22
8.3 Specific Enforceability................................. 23
8.4 Applicable Law.......................................... 23
8.5 Headings, Etc........................................... 23
8.6 Severability............................................ 23
8.7 Entire Agreement; Binding Effect; Non-Assignment;
Counterparts........................................... 23
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EXHIBITS............................................................ 26
Exhibit A - Certificate of Merger
Exhibit B - Disclosure Schedule
Exhibit C - Advisory Board and Support Agreement
Exhibit D - Stock Restriction Agreement
Exhibit E - Xxxxxx X. Xxxxxxxxxx Employment and Non-Compete
and Support Agreement
Exhibit F - Lease
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") is made and entered
into as of the 24th day of June, 1999, by and among PrivateBancorp, Inc., a
Delaware corporation ("Private"), and Towne Square Financial Corporation, a
Delaware corporation ("TSFC").
W I T N E S S E T H :
WHEREAS, Private is a registered bank holding company under the Bank
Holding Company Act of 1956 ("BHCA");
WHEREAS, TSFC has been organized for the purpose of establishing a "de
novo" Illinois chartered bank to be located in St. Xxxxxxx, Illinois;
WHEREAS, the Boards of Directors of Private and TSFC deem it advisable that
TSFC be merged with and into Private ("Merger") in accordance with the Delaware
General Corporation Law ("DGCL") and this Agreement; and
WHEREAS, Private and TSFC intend the Merger to qualify as a tax-free
reorganization under Section 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended ("Code").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties hereto agree as follows:
I.
THE MERGER
1.1 Effects of the Merger.
(a) Surviving Corporation. Subject to the terms and conditions of
this Agreement, the separate existence of TSFC shall cease and shall be merged
with and into, and under the Certificate of Incorporation of, Private at the
Effective Time (as defined below) in accordance with the DGCL, with Private
being the continuing and surviving corporation (sometimes referred to
hereinafter as the "Surviving Corporation"). At and after the Effective Time,
the Merger shall have the further effects as set forth in Section 259 of the
DGCL.
(b) Certificate of Incorporation. The Certificate of Incorporation of
Private 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 Private 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 Private immediately prior
to the Effective Time. TSFC will be entitled to designate one (1) individual to
serve as a director of the Surviving Corporation, with such individual to be
mutually agreeable to Private and TSFC ("TSFC Director"). The above-mentioned
TSFC Director shall serve as a Class III director of the Surviving Corporation,
with his term expiring in April, 2001. Upon the expiration of the TSFC
Director's initial term, Private agrees to nominate an individual mutually
agreeable to Private and TSFC for one (1) additional term. The officers of the
Surviving Corporation shall be the persons who were officers of Private
immediately prior to the Effective Time.
1.2 Effect of Merger on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of Private, TSFC or the holders of
Private Common Stock (defined below) or TSFC Common Stock (defined below), the
following shall occur:
(a) Private Common Stock. Each share of the common stock, no par
value of Private ("Private Common Stock") issued and outstanding immediately
prior to the Effective Time shall remain outstanding and shall be unchanged
after the Merger.
(b) TSFC Common Stock. Each share of the common stock, par value
$0.01 per share, of TSFC ("TSFC Common Stock") issued and outstanding
immediately prior to the Effective Time shall be canceled, and other than
Dissenting Shares (as defined in Section 1.5 below) or Fractional Shares (as
defined in Section 1.4(e) below), and shall be converted into the right to
receive a number of shares, or fractional part thereof, (the "Exchange Ratio")
of Private Common Stock based on the factors set forth hereafter. The Exchange
Ratio has been established to provide that Private Common Stock will be
exchanged in an amount such that the stockholders of TSFC, in the aggregate,
shall receive $1,650,000 of Private Common Stock (the "Merger Consideration").
The fair market value of the Private Common Stock for purposes of the Exchange
Ratio shall be determined pursuant to the Private Initial Public Offering Price
(as defined below). Should the initial public offering of Private Common Stock
("Private Initial Public Offering") be projected to be delayed beyond July 31,
1999, or terminated, for any reason, the fair market value of Private Common
Stock for purposes of this Section 1.2(b), shall be seventeen dollars ($17.00)
per share. For example, using the above-mentioned seventeen dollars ($17.00) per
share price, the Merger Consideration would be 97,058.82352 shares of Private
Common Stock, and the Exchange Ratio would be 16.17647058 shares, and thereby
each holder of 1,000 shares of TSFC Common Stock would be entitled to receive
16,176.47058 shares of Private Common Stock. Pursuant to Section 1.4(e), any
fractional share to be issued to any single holder of TSFC Common Stock shall be
rounded to the nearest whole share.
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As used herein, "Private Initial Public Offering Stock Price" means
the price of one share of Private Common Stock as it is first offered for sale
by the underwriters on the date of the Private Initial Public Offering.
(c) Stock Held by TSFC. All shares of TSFC Common Stock that are
owned by TSFC as treasury stock other than shares as to which appraisal rights
have been asserted and duly perfected in accordance with Section 262 of the
DGCL, shall be canceled and shall constitute authorized but unissued Private
Common Stock and no stock of Private or other consideration shall be delivered
in exchange therefor.
1.3 Consummation of the Merger; Effective Time. The delivery of the
documents, certificates and opinions called for by this Agreement shall take
place at such location and such time as shall be fixed by mutual agreement of
Private and TSFC as promptly as practicable, but not later than three (3) days,
following the latest of: (i) approval of the transactions required to effect the
transactions contemplated by this Agreement by all the Applicable Governmental
Authorities (defined below), other than any regulatory approval relating to the
opening of the Office (defined below), and the approval, consent or other action
of such other governmental authorities having jurisdiction over the transactions
governed by this Agreement as may be required (provided that any such approval,
consent or other action shall have been granted without the imposition of any
condition which Private reasonably and in good xxxxx xxxxx to be materially
burdensome to Private); and (ii) the expiration of any waiting period imposed by
law. Upon satisfaction or waiver of all conditions precedent to the consummation
of the transactions contemplated by this Agreement, the parties hereto shall
cause the Merger to become effective on the date of the closing (the "Closing
Date") by executing, acknowledging and filing on that date, pursuant to Section
251 of the DGCL, a Certificate of Merger substantially in the form of Exhibit A
attached hereto and made a part hereof (the "Certificate of Merger"). The date
and time on which the Merger becomes effective shall be referred to herein as
the "Effective Time."
1.4 Exchange of TSFC Common Stock.
(a) Surrender of Certificates. As soon as practicable after the
Effective Time, Private shall deliver to each holder of record of a certificate
or certificates which as of the Effective Time represented outstanding shares of
TSFC Common Stock (each, a "Certificate") instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to Private, the holder of such
Certificate shall be entitled to receive, in exchange therefor, Private Common
Stock representing the number of shares of Private Common Stock into which the
shares of TSFC Common Stock, theretofore represented by the Certificate so
surrendered, shall have been converted pursuant to the provisions of Section
1.2, and the Certificate so surrendered shall be canceled.
(b) Escheat. Notwithstanding anything in this Agreement to the
contrary, neither Private nor any party hereto shall be liable to a former
holder of TSFC Common Stock for any cash delivered to a public official pursuant
to applicable escheat or abandoned property laws.
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(c) Failure to Exchange TSFC Common Stock. No dividends or other
distributions declared after the Effective Time with respect to Private 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 Private
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.
(d) Full Payment. The Merger Consideration paid pursuant to this
Article I, including all shares of Private Common Stock issued upon the
surrender for exchange of TSFC Common Stock in accordance with the terms hereof,
shall be delivered and paid in full satisfaction of all rights pertaining to
such shares of TSFC Common Stock. The shares of Private Common Stock for which
the shares of TSFC Common Stock shall be exchanged shall thereupon be validly
issued and outstanding, fully paid and non-assessable, and shall not be liable
to any further call, nor shall the holder thereof be liable for any further
payments with respect thereto.
(e) Fractional Shares. No certificates or scrip representing
fractional shares of Private Common Stock shall be issued upon the surrender for
exchange of Certificates, no dividend or distribution of Private shall relate to
any fractional share, and such fractional share interests ("Fractional Shares")
will not entitle the owner thereof to vote or assert any rights of a stockholder
of Private. Any and all Fractional Shares created as a result of the Exchange
Ratio calculated pursuant to Section 1.2(b) that are due and owing to any single
holder of TSFC Common Stock, shall be rounded to the nearest whole share.
1.5 Dissenting Shares. Any holder of TSFC Common Stock otherwise entitled
to receive part of the Merger Consideration for each of his or her shares shall
be entitled to demand payment of the fair cash value of such shares as specified
in Section 262 of the DGCL if the holder follows the procedures specified
therein. These shares shall hereafter be specified as "Dissenting Shares." Any
Dissenting Shares shall not, after the Effective Time, be entitled to vote for
any purpose or receive any dividends or other distributions and shall not be
converted into part of the Merger Consideration as provided in Section 1.2(b)
hereof, which Merger Consideration shall be reduced by the amount represented by
the shares of TSFC Common Stock held by such holder through the application of
the Exchange Ratio; provided, however, that shares of TSFC Common Stock held by
a dissenting stockholder who subsequently withdraws a demand for payment, fails
to comply fully with the requirements of the DGCL, or otherwise fails to
establish the right of such stockholder to be paid the fair cash value of such
stockholder's shares under the DGCL shall be deemed to be converted into part of
the Merger Consideration pursuant to the terms and conditions specified herein.
TSFC shall give Private prompt notice of any written demands for appraisal for
any shares of TSFC Common Stock, attempted withdrawals of any such demands, and
any other instruments served pursuant to the DGCL and received by TSFC relating
to stockholders' rights of appraisal.
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II.
REPRESENTATIONS AND WARRANTIES OF PRIVATE
Private represents and warrants to TSFC that:
2.1 Organization.
(a) Private 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. Private 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 Private and the Private Subsidiary
(defined below), taken as a whole, or its ability to consummate the transactions
contemplated herein or in the Certificate of Merger. Private has all requisite
corporate power and authority to enter into this Agreement, and the Certificate
of Merger and, upon the approval of all requisite state and federal regulatory
agencies to consummate the transactions contemplated hereby and thereby. Private
is duly registered as a bank holding company under the BHCA.
(b) PrivateBank & Trust Company, a wholly-owned subsidiary of
Private, ("Private Subsidiary") is an Illinois chartered bank duly organized and
in existence under the laws of the State of Illinois, the deposits of which are
insured by the Federal Deposit Insurance Corporation ("FDIC") through the Bank
Insurance Fund ("BIF") to the full extent permitted under applicable laws.
(c) Private and the Private Subsidiary hold 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 business, except where the failure to so hold would not have a
material adverse effect on Private and the Private Subsidiary, taken as a whole.
2.2 Authorization. The execution, delivery and performance of this
Agreement, and the Certificate of Merger, and the consummation of the
transactions contemplated hereby and thereby have been duly and unanimously
approved and authorized by Private's Board of Directors, and all necessary
corporate action on the part of Private has been taken. This Agreement has been
duly executed and delivered by Private and, subject to the approval of all
requisite state and federal regulatory agencies, will constitute the valid and
binding obligations of Private, except to the extent that enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws or equitable principles and doctrines. Neither the Certificate
of Incorporation nor the By-laws of Private will need to be amended to
effectuate the transactions contemplated by this Agreement.
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2.3 Conflicts. 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, conflict with or result in any
violation of the Certificate of Incorporation or By-laws of Private or similar
documents of the Private Subsidiary. The execution and delivery of this
Agreement, and Certificate of Merger do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with or result
in any violation, breach or termination of, or default or loss of a material
benefit under, or permit the acceleration of, any obligation or result in the
creation of any material lien, charge or encumbrance on any of the property or
assets under any provision of any mortgage, indenture, lease, agreement or other
instrument, permit, concession, grant, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Private or the
Private Subsidiary or their respective properties, other than any such
conflicts, violations or defaults which (i) individually or in the aggregate do
not have a material adverse effect on Private, or (ii) will be cured or waived
prior to the Effective Time. No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal or state governmental
authority is required by or with respect to Private in connection with the
execution and delivery of this Agreement, the Certificate of Merger, or the
consummation by Private of the transactions contemplated hereby or thereby, the
absence of which would have a material adverse effect upon Private, except for:
the filings by Private, or the Private Subsidiary, of any application or notice
with the, Illinois Commissioner of Banks and Real Estate ("Illinois
Commissioner"), FDIC and any other regulatory authorities having jurisdiction
over the transactions contemplated hereby (collectively, the "Applicable
Governmental Authorities") the parties specifically agree that the failure to
obtain such approval or consent shall not be a condition to the consummation of
the Merger; the filing by Private of the registration statement relating to the
Private Common Stock to be issued pursuant to this Agreement with the Securities
and Exchange Commission (the "SEC") and various blue sky authorities; the filing
of the Certificate of Merger with respect to the Merger with the Secretaries of
State of the State of Illinois and the State of Delaware; and any filings,
approvals or no-action letters with or from state securities authorities.
Private shall provide the TSFC stockholders, in a timely manner, with any and
all public information portions of filings described in this Section 2.3.
2.4 Capitalization. The current and pro-forma capitalization of Private
has been fully disclosed in Private's IPO Registration Statement (as defined
below). All of the issued and outstanding shares of Private Common Stock have
been, and all of the shares of Private 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 non-
assessable. None of the outstanding shares of Private Common Stock has been
issued in violation of any preemptive rights and none of the outstanding shares
of Private 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. Private will, at the Effective Time, have a number of authorized but
unissued shares of Private Common Stock sufficient to pay the Merger
Consideration in accordance with Section 1.2(b) above.
2.5 Private Registration Statement; Financial Statements of Private.
Private has heretofore delivered to TSFC its S-1 Registration Statement ("IPO
Registration Statement") which has been prepared in preparation of the Private
Initial Public Offering, as filed with the Securities and
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Exchange Commission under the Securities Exchange Act of 1933, as amended. The
IPO Registration Statement is (y) true and correct in all material respects, and
(z) fairly represents all material information concerning Private as of the date
of filing.
The IPO Registration Statement contains: (a) the consolidated balance
sheets of Private and the Subsidiary as of December 31, for the fiscal years
1997 and 1998, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the fiscal years 1996 through 1998,
inclusive, accompanied by the audit report of Xxxxxx Xxxxxxxx LLP, independent
public accountants with respect to Private, and (b) the unaudited consolidated
balance sheet of Private and the Private Subsidiary as of March 31, 1999 and
March 31, 1998 and the related unaudited consolidated statements of income, cash
flows and changes in stockholders' equity for the three-month periods then ended
as set forth in the IPO Registration Statement. The December 31, 1998
consolidated balance sheet of Private (including the related notes, where
applicable) fairly presents the consolidated financial position of Private and
the Private Subsidiary as of the date thereof, and the other financial
statements referred to in this Section (including the related notes, where
applicable) fairly present (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount) the results of the
consolidated operations and changes in stockholders' equity and consolidated
financial position of Private and the Private Subsidiary for the respective
fiscal periods or as of the respective dates therein set forth; each of such
statements (including the related notes, where applicable) comply in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto; and each of such
statements (including the related notes, where applicable) has been prepared in
all material respects in accordance with GAAP consistently applied during the
periods involved, except in each case as indicated in such statements or in the
notes thereto or, in the case of unaudited statements, as permitted by SEC
regulation. The books and record of Private and the Private Subsidiary have
been, and are being, maintained in all material respects in accordance with GAAP
and any other applicable legal and accounting requirements and reflect only
actual transactions.
2.6 Private Subsidiary. Private owns directly or indirectly all of the
issued and outstanding shares of capital stock of the Private Subsidiary. No
capital stock of the Private Subsidiary is or may become required to be issued
(other than to Private) by reason of any options, warrants, scrip, rights to
subscribe to, calls, or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the capital
stock of the Private Subsidiary. There are no contracts, commitments,
understandings or arrangements relating to the rights of Private to vote or to
dispose of shares of the capital stock of the Private Subsidiary. All of the
shares of capital stock of the Private Subsidiary held by Private are fully paid
and non-assessable.
2.7 Private Reports. Since January 1, 1997, each of Private and the
Private Subsidiary has timely filed all reports and statements, together with
any amendment required to be made with respect thereto, that was required to be
filed with (i) the Applicable Governmental Authorities and (ii) any applicable
state banking, insurance, securities, or other regulatory authorities (except
filings which are not material). As of their respective dates (and without
giving effect to any amendments or modifications filed after the date of this
Agreement with respect to reports and documents filed
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before the date of this Agreement), each of such reports and documents,
including the financial statements, exhibits, and schedules thereto, complied in
all material respects with all 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. Except for normal
examinations conducted by the Internal Revenue Service, Department of Labor,
state, and local taxing authorities or the Applicable Governmental Authorities
in the regular course of the business of Private or the Private Subsidiary, no
federal, state or local governmental agency, commission or other entity has
initiated any proceeding or, to the best knowledge of Private, investigation
into the business or operations of Private or the Private Subsidiary within the
past three (3) years. There is no unresolved violation, criticism or exception
by the Applicable Governmental Authorities 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 financial condition, earnings
or business of Private and the Private Subsidiary, taken as a whole.
2.8 Compliance With Laws. Private and the Private Subsidiary are each in
compliance with all applicable federal and state laws and regulations that
regulate or are concerned in any way with the business of a commercial bank,
including, without limitation, the BHCA and the Federal Deposit Insurance Act
("FDI Act"), and Private and the Private Subsidiary are in compliance with all
other applicable laws and regulations, except in each case where the failure to
comply would not have a material adverse effect on the financial condition,
earnings or business of Private and the Private Subsidiary, taken as a whole.
2.9 Litigation. There is no suit, action, investigation or proceeding,
legal, quasi-judicial, administrative or otherwise, pending or, to the best of
the knowledge of Private, threatened against or affecting Private or the Private
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 Private or which would materially affect the ability
of Private 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, nor is there any judgment, decree, injunction,
rule or order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against Private or the Private
Subsidiary or any of their respective officers, directors, employees or agents,
in their capacities as such, having, or which could reasonably be foreseen to
have in the future, any such effect.
2.10 Taxation. To the best of the knowledge of Private, neither it nor the
Private Subsidiary has engaged in any act that would preclude or adversely
affect the Merger from qualifying as a tax-free reorganization under Section
368(a)(1)(A) of the Code.
2.11 Advice of Changes. Between the date hereof and the Effective Time,
Private shall promptly advise TSFC in writing of any fact or occurrence (other
than as contemplated herein) which,
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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 materially untrue.
2.12 Activities in Xxxx County. Prior to the closing of the Merger,
Private and/or Private Subsidiary shall not pursue any other expansion into Xxxx
County, other than the St. Xxxxxxx office of Private Subsidiary in conjunction
with the TSFC stockholders as contemplated by this Agreement (the "Office"),
including, but not limited to, any branching activities or potential business
combinations.
2.13 Fox Valley Advisory Board. In the event Private receives regulatory
approval to establish the Office, Private, and Private Subsidiary, agree, upon
the opening of the Office, the TSFC stockholders, plus two additional
individuals mutually agreeable to Private and TSFC, will form the Fox Valley
Advisory Board of the Private Subsidiary. The members of the Fox Valley Advisory
Board will be compensated $200 per meeting attended. It is anticipated the Fox
Valley Advisory will meet monthly for at least the first full year following the
opening of the Office.
2.14 Tax Consequences of Merger. For U.S. federal income tax purposes, the
Merger will qualify as a tax-free reorganization under Section 368(a)(1)(A) of
the Code and accordingly, no gain or loss will be recognized by TSFC or the
holders of TSFC Common Stock upon the receipt of the Merger Consideration.
III.
REPRESENTATIONS AND WARRANTIES OF TSFC
TSFC represents and warrants to Private that:
3.1 Organization. TSFC 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. TSFC 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 TSFC or its ability to
consummate the transactions contemplated herein, and in the Certificate of
Merger. TSFC has all requisite corporate power and authority to enter into this
Agreement, and the Certificate of Merger and, upon the approval of all requisite
state and federal regulatory agencies and in the case of this Agreement, the
majority of the shares of stock of TSFC as hereinafter provided, to consummate
the transactions contemplated hereby and thereby.
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3.2 Authorization. The execution, delivery and performance of this
Agreement, and the Certificate of Merger, and the consummation of the
transactions contemplated hereby and thereby have been duly and unanimously
approved and authorized by TSFC's Board of Directors, and all necessary
corporate action on the part of TSFC has been taken, subject to the approval of
this Agreement by the stockholders of TSFC. This Agreement has been, and the
Certificate of Merger will be, duly executed and delivered by TSFC and, subject
to the approval of all requisite state and federal regulatory agencies, and, in
the case of this Agreement, the approval by the stockholders of TSFC, and
constitutes the valid and binding obligation of TSFC (except to the extent that
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles or
doctrines). Neither the Certificate of Incorporation nor the by-laws of TSFC
will need to be amended to effectuate the transactions contemplated by this
Agreement.
3.3 Conflicts. 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, conflict with or result in any
violation of the Certificate of Incorporation or By-laws of TSFC. 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,
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 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 TSFC or their respective properties other than any such conflicts, violations
or defaults which (i) individually or in the aggregate do not have a material
adverse effect on TSFC, or (ii) will be cured or waived prior to the Effective
Time. No consent, approval, order or authorization of, or registration,
declaration or filing with, any federal or state governmental authority is
required by or with respect to TSFC in connection with the execution and
delivery of this Agreement or the consummation by TSFC of the transactions
contemplated hereby or thereby, the absence of which would have a material
adverse effect upon TSFC except for: the filings by Private of applications or
notices with the Applicable Government Authorities; the filing by Private of the
Registration Statement with the SEC relating to the Stockholder vote on this
Agreement on Form S-4 (the "S-4 Registration Statement") and the effectiveness
thereof; the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware.
3.4 Capitalization and Stockholders. As of the date hereof, the authorized
capital stock of TSFC consists of the following:
Class of Par
Stock Value Authorized Issued Outstanding Treasury
-------- ----- ---------- ------ ----------- --------
Common $0.01 1,000,000 6,000 6,000 -0-
10
All of the issued and outstanding shares of TSFC Common Stock have been duly and
validly authorized and issued, and are fully paid and non-assessable. None of
the outstanding shares of TSFC Common Stock are subject to any preemptive rights
of the current or past stockholders of TSFC. All of the issued and outstanding
shares of TSFC Common Stock will be entitled to vote to approve the Agreement.
3.5 TSFC Financial Information. TSFC has heretofore delivered to Private
any existing, forecasted or other financial statements, business plans, real
estate appraisals, marketing studies and similar information relating to its
proposed plan of operation for the period ended June 1, 1999 (the "TSFC
Financial Information"). The TSFC Financial Information has been prepared in
good faith.
3.6 Compliance With Laws. The business of TSFC is not being conducted in
violation of any law, ordinance or regulation of any governmental entity, and
any statutes or ordinances relating to the properties occupied or used by TSFC,
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 TSFC.
3.7 Disclosure. None of the information relating to TSFC, and provided by
TSFC to Private in writing, which is contained in the S-4 Registration
Statement, will, 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.
3.8 Litigation. There is no suit, action, investigation or proceeding,
legal, quasi-judicial, administrative or otherwise, pending or, to the best of
the knowledge of TSFC, threatened against or affecting TSFC, or any of their
respective officers, directors, employees or agents, in their capacities as
such, which is seeking damages against TSFC, or any of their respective
officers, directors, employees or agents, in their capacities as such, in excess
of $1,000, or which would materially affect the ability of TSFC to consummate
the transactions contemplated herein or which is seeking to enjoin consummation
of the transactions provided for herein (including the opening of the Office) or
to obtain other relief in connection with this Agreement or the transactions
contemplated hereby or thereby, and judgment, decree, injunction, rule or order
of any court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against TSFC or any of their respective officers,
directors, employees or agents, in their capacities as such, having, or which
could reasonably be foreseen to have in the future any such effect.
3.9 Licenses. TSFC has not been required to obtain any licenses,
certificates, permits, service marks, trade names, copyrights or rights thereto,
adequate authorizations, approvals, consents, licenses, clearances and orders or
registrations with any appropriate federal, state or other authorities that are
material to the conduct of its business as now conducted.
3.10 Taxes. TSFC has filed any and all tax returns required to be filed
(all such returns being correct and complete in all material respects) and has
paid, or has accrued on its books and set
11
up an adequate reserve for the payment of, all taxes required to be paid in
respect of the periods covered by such returns. TSFC is not delinquent in the
payment of any tax, assessment or governmental charge. No deficiencies for any
taxes have been proposed, asserted or assessed against TSFC 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. TSFC is not a party to any action or
proceeding by any governmental authority for the assessment or the collection of
taxes.
3.11 Disclosure Schedule of TSFC. Exhibit B hereto contains, and shall be
supplemented by TSFC as required by Section 5.8 hereof, so as to contain at the
Closing Date the following information and copies of the following documents,
certified by an officer of TSFC to be true and correct copies of such documents
on the dates of such certificates:
(a) A list and description of each material contract or agreement
involving goods, services or occupancy and which (i) has a term of more than six
months; (ii) cannot be terminated on thirty days, (or less) written notice
without penalty; and (iii) involves an annual expenditure by TSFC in excess of
$1,000.
(b) A list and description of each material commitment made by TSFC
to or with any director, officer or employee of TSFC extending for a period of
more than three months from the date hereof or providing for earlier termination
only upon the payment of a penalty or equivalent thereto.
(c) Complete and correct copies of the Certificate of Incorporation,
By-laws and specimen certificates of each type of security issued by TSFC.
3.12 Operations Since June 1, 1999. Between June 1, 1999, and the date
hereof, TSFC has not actively pursued the formation of a de novo Illinois
chartered bank to be located in St. Xxxxxxx, Illinois.
3.13 Corporate Records. The corporate record books, transfer books and
stock ledgers of TSFC are complete and accurate in all material respects and
reflect all meetings, consents and other material actions of the organizers,
incorporators, stockholders, Boards of Directors and committees of the Boards of
Directors of TSFC, and all transactions in its capital stock.
3.14 Tax Matters. To the best knowledge of TSFC it has not engaged in any
act that would preclude or adversely affect the Merger from qualifying as a tax-
free reorganization under Section 368(a)(1)(A) of the Code.
3.15 Advice of Changes. Between the date hereof and the Effective Time,
TSFC shall promptly advise Private 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.
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IV.
COVENANTS
4.1 Conduct of Business by TSFC Until the Effective Time. During the
period commencing on the date hereof and continuing until the Effective Time or
the termination of the Agreement pursuant to Section 7.1, TSFC agrees (except as
expressly contemplated by this Agreement or to the extent that Private shall
otherwise consent in writing which consent shall not be unreasonably withheld)
that:
(a) TSFC will cease any and all actions by TSFC, its stockholders,
directors or officers to organize or obtain a charter for an Illinois chartered
"de novo" bank and instead will focus all such actions toward the establishment
of an Office of Subsidiary in the same business purview with the same intended
plan of operation as the now abandoned de novo bank business plan.
(b) TSFC will use their best efforts to comply promptly with all
requirements which federal or state law may impose on it with respect to the
Merger and will promptly cooperate with and furnish information to Private in
connection with any such requirements imposed upon it in connection with the
Merger.
(c) TSFC will use its best efforts to obtain (and to cooperate with
Private 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 them in connection with the Merger or the
taking of any action contemplated hereby. TSFC will not knowingly or willfully
take any action that would adversely affect the ability of such party to perform
its obligations under this Agreement.
(d) TSFC will not declare or pay any dividends on or make other
distributions with respect of capital stock.
(e) TSFC will not amend its respective Certificates of Incorporation
or by-laws, except as contemplated by this Agreement.
(f) TSFC will not incur any debts, liabilities or charges from the
date hereof.
4.2 Conduct of Business by Private Until the Effective Time. During the
period commencing on the date hereof and continuing until the Effective Time,
Private agrees (except as expressly contemplated by this Agreement or to the
extent that TSFC shall otherwise consent in writing which consent shall not be
unreasonably withheld) that:
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(a) Except as contemplated by this Agreement, Private and the Private
Subsidiary will carry on their respective businesses in, and only in, the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted, maintain their respective books in accordance with generally accepted
accounting principles, and conduct their respective businesses and operations
only in accordance with safe and sound banking and business practices.
(b) Private will, and will cause the Private 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 TSFC in connection with any such requirements
imposed upon any of them in connection with the Merger.
(c) Private will, and will cause the Private Subsidiary to, use their
best efforts to obtain (and to cooperate with TSFC 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.
4.3 Execution of the Advisory Board and Support Agreement. On the Closing
Date and as a condition of the Merger, Private and each stockholder of TSFC
shall enter into an advisory board and support agreement substantially in the
form attached hereto as Exhibit C (the "Advisory Board Agreement").
4.4 Execution of the Stock Restriction Agreement. On the Closing Date and
as a condition of the Merger, Private and each stockholder of TSFC shall enter
into a stock restriction agreement substantially in the form attached here as
Exhibit D (the "Stock Restriction Agreement").
4.5 Capital Stock. Except for or as otherwise permitted in or contemplated
by this Agreement, without the prior written consent of Private, from the date
of this Agreement to the earlier of the Effective Time or the termination of
this Agreement, TSFC shall not, and shall not enter into any agreement to,
issue, sell or otherwise permit to become outstanding any additional shares of
TSFC Common Stock, preferred stock, or any other capital stock of TSFC, or any
stock appreciation rights, or any option, warrant, conversion or other right to
acquire any such stock, or any security convertible into any such stock. No
additional shares of TSFC Common Stock shall become subject to new grants of
employee stock options, stock appreciation rights or similar stock based
employee compensation rights.
4.6 Execution of Lease. On the Closing Date and as a condition of the
Merger, Private Subsidiary and Towne Square Realty, L.L.C., shall enter into a
lease for the property located at 00 Xxxxx Xxxxxx Xxxxxx, Xx. Xxxxxxx, Xxxxxxxx
00000 substantially in the form attached hereto as Exhibit F (the "Lease
Agreement").
4.7 Execution of Employment and Non-Compete and Support Agreement. On the
Closing Date and as a condition of the Merger, Xxxxxx X. Xxxxxxxxxx and Private
Subsidiary shall
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enter into Employment Agreement and a Non-Compete and Support Agreement
substantially in the form attached hereto as Exhibit E.
V.
ADDITIONAL AGREEMENTS
5.1 Inspection of Records; Confidentiality.
(a) TSFC shall afford to Private and Private'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, employees, books,
contracts, commitments and records, including all attorneys' responses to
auditors' requests for information, and accountants' work papers, developed by
TSFC or their accountants or attorneys, and will permit TSFC's representatives
to discuss such information directly with Private's officers, directors,
employees, attorneys and accountants. No investigation by Private shall affect
the representations and warranties of TSFC herein and each such representation
and warranty shall survive any such investigation.
(b) In the event that this Agreement is terminated, each party shall
return all nonpublic documents furnished to it hereunder, shall destroy all
documents or portions thereof that contain nonpublic information furnished by
the other party pursuant hereto and, in any event, shall hold all nonpublic
information received pursuant hereto in the same degree of confidence with which
it maintains its own like information unless or until such information is or
becomes a matter of public knowledge or is or becomes known to the party
receiving the information through persons other than the party providing such
information.
5.2 Board Representation. TSFC will be entitled to designate one (1)
individual to serve on the Board of Directors of Private, with the selected
individual being mutually agreeable to Private and TSFC. The TSFC Director shall
serve as a Class III director of the Surviving Corporation, with his term
expiring in April, 2001. Upon the expiration of the TSFC Director's initial
term, Private agrees to nominate an individual mutually agreeable to Private and
TSFC for one (1) additional term.
5.3 Brokers. Each of Private and TSFC represents that no agent, broker,
investment banker or other firm or person or officer or director of either is or
will be entitled to any broker's or finder's fee or any other commission, bonus
or similar fee in connection with any of the transactions contemplated by this
Agreement.
5.4 Cooperation. Each of Private and TSFC covenants that, unless this
Agreement is terminated as provided herein, it will use its best efforts to
bring about the transactions contemplated by this Agreement as soon as
practicable, and that it will not willfully or intentionally breach this
Agreement. Subject to the terms and conditions herein provided, each of Private
and TSFC agrees to use all reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and
15
make effective the transactions contemplated by this Agreement. In case at any
time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and/or directors of Private or TSFC, as the
case may be, shall take all such necessary action. Each party shall use its
reasonable best efforts to preserve for itself and each other party each
available legal privilege with respect to confidentiality of their negotiations
and related communications including the attorney-client privilege.
5.5 Regulatory Applications. Private shall, as soon as practicable, file
applications or notices with the Applicable Regulatory Authorities to open the
Office, and shall use its best efforts to respond as promptly as practicable to
all inquiries received concerning said applications; provided, however, that
Private shall have no obligation to accept non-standard conditions or
restrictions with respect to the aforesaid approvals of governmental authorities
with respect to opening the Office if it shall reasonably determine that such
conditions or restrictions would have a material adverse effect on Private or
the Surviving Corporation or would be materially burdensome to Private and the
Private Subsidiary, or the Surviving Corporation. 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 Private after consultation with
TSFC. Private shall deliver a draft of the non-confidential portions of all
regulatory applications to TSFC prior to filing them and copies of the non-
confidential portions of all responses from or written communications from
regulatory authorities relating to the Merger or this Agreement (to the extent
permitted by law), and Private shall deliver a final copy of the non-
confidential portions of all regulatory applications to TSFC promptly after they
are filed with the appropriate regulatory authority.
5.6 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 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 non-disclosing party may, within two business
days thereof, notify the disclosing party of its intent to terminate this
Agreement pursuant to Section 7.1(c); provided, however, that the disclosing
party shall have the right to cure such breach within 10 days thereof but no
later than the Effective Time. In the event the non-disclosing party fails to
notify the disclosing party of its intent to terminate within two business days
after receipt of any notice hereunder, the non-disclosing 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 non-disclosing party may thereafter be considered by the non-
16
disclosing party in determining the aggregate contribution of all events,
conditions, changes and occurrences described by the disclosing party pursuant
to this Section 5.7 toward the occurrence of a material breach by the closing
party.
5.7 Press Releases. Private and TSFC 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. TSFC shall obtain the prior consent of Private to the
content of any communication to its stockholders.
5.8 Delivery of Supplements to Disclosure Schedules. Five (5) business
days prior to the Effective Time, TSFC will supplement or amend Exhibit B with
respect to any matter hereafter arising which, if existing or occurring at or
prior to the date of this Agreement, would have been required to be set forth or
described in such exhibit or which is necessary to correct any information in
Exhibit B or in any representation and warranty made by the disclosing party
which has been rendered inaccurate thereby.
5.9 Tax Opinion. Private and TSFC agree to use their reasonable efforts
to obtain a written opinion ("Tax Opinion") of Vedder, Price, Xxxxxxx &
Kammholz, or such other counsel or nationally recognized accounting firm as
mutually agreed between the parties, addressed to Private, TSFC, and the TSFC
stockholders, dated the Closing Date, subject to the 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)(1)(A) of the Code and Private and TSFC will each be a party to
such reorganization; (b) the exchange in the Merger of Private Common Stock for
TSFC Common Stock representing the Merger consideration will not give rise to
the recognition of any income, gain or loss to Private, TSFC, or the
stockholders of TSFC with respect to such exchange except, with respect to the
stockholders of TSFC, to the extent of cash received for fractional shares; (c)
the adjusted tax basis of the Private Common Stock received by TSFC stockholders
in the Merger will equal the adjusted tax basis of the TSFC 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 Private Common Stock received in the Merger will include the
period during which the shares of TSFC Common Stock surrendered in exchange
therefor were held, provided such shares of TSFC Common Stock were held as a
capital asset at the Effective Time; (e) the adjusted tax basis of the assets of
TSFC in the hands of Private will be the same as the adjusted tax basis of such
assets in the hands of TSFC immediately prior to the exchange; and (f) the
holding period of the assets of TSFC transferred to Private will include the
period during which such assets were held by TSFC prior to the exchange. The
costs associated with the Tax Opinion shall be paid by Private.
5.10 Tax Treatment. Neither TSFC nor Private or the Private Subsidiary,
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)(1)(A) of the Code. In addition, Private and TSFC agree
17
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)(1)(A) of the Code; provided, however,
nothing contained in this Section 5.10 shall be deemed to require either party
to take any steps which will change the Merger Consideration provided for in
Section 1.2 above.
5.11 Tax Indemnification. If, as a result of a Final Determination (as
defined below), the representation contained in Section 2.14 is incorrect, then
Private shall indemnify and hold harmless each TSFC stockholder on an After-Tax
Basis (as defined below) for any additional U.S. federal and state income taxes,
including interest and penalties associated therewith, that are incurred by such
TSFC stockholder in connection with the receipt of the Merger Consideration.
Each TSFC stockholder shall promptly notify Private in writing upon the receipt
of any notification of a tax audit or proposed assessment with respect to the
income tax consequences of the receipt of the Merger Consideration. To the
extent allowable under applicable law, Private shall, through its independent
tax counsel and at Private's expense, contest any proposed adjustment with
respect to the Merger Consideration and shall control the conduct of such
contest. In the event Private is unable to contest such proposed adjustment,
such TSFC stockholder shall contest such proposed adjustment and shall cooperate
with Private as to the conduct of such contest and keep Private informed as to
the progress of such contest. In no event shall any TSFC stockholder settle any
proposed adjustment without the written consent of Private. Any amounts payable
by Private to any TSFC stockholder under this Section 5.11 shall be paid within
thirty (30) days of a Final Determination. For purposes of this Section 5.11, a
"Final Determination" shall mean (i) a decision, judgment or other order by any
court of competent jurisdiction, which decision, judgment or other order has
become final after all allowable appeals by either party to the action have been
exhausted or the time for filing such appeal has expired, (ii) a closing
agreement or other settlement agreement entered into in connection with an
administrative or judicial proceeding and with the written consent of Private or
(iii) the expiration of the time for instituting an assessment with respect to
the receipt of the Merger Consideration, and "After-Tax Basis" shall mean, with
respect to any payment to be made under this Section 5.11, an amount which,
after deduction of all Taxes required to be paid by the recipient with respect
to the receipt of such amount (net of any deductions or credits realized by the
recipient arising from the making of a payment of such Taxes to a governmental
authority), is equal to the payment required to be made under this Section 5.11.
VI.
CONDITIONS
6.1 Conditions to the Obligations of Private. Notwithstanding any other
provision of this Agreement, the obligations of Private to consummate the Merger
are subject to the following conditions precedent:
(a) All of the representations and warranties made by TSFC in this
Agreement and in any documents or certificates provided by TSFC shall have been
true and correct in all material
18
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) TSFC 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 Private's ownership or operation of all or a material portion of TSFC's
business or assets, or to conduct the activities set forth in the TSFC business
plan, whether immediately at the Effective Time or as of some future date,
whether specified or to be specified, or would compel Private to dispose of or
hold separate all or a material portion of TSFC's business or assets, or not to
conduct the activities set forth in the TSFC business plan, 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 Private or TSFC
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, financial condition or business prospects of TSFC from
that which was represented and warranted on the date of this Agreement pursuant
to this Agreement, it being understood that any updates provided pursuant to
Section 5.8 hereof do not constitute a waiver or other consent to any Adverse
Change in TSFC.
(e) Private shall have received a certificate signed by the President
and Chief Executive Officer of TSFC, dated as of the Effective Time, certifying
that based upon his knowledge, the conditions set forth in Sections 6.1(a) and
6.1(b) hereto have been satisfied.
(f) The Employment Agreement and the Non-Compete and Support
Agreement with Xxxxxx X. Xxxxxxxxxx shall be in full force and effect.
(g) Each of the Stock Restriction Agreement, the Advisory Board and
Support Agreements and the Lease Agreement shall also be in full force and
effect.
6.2 Conditions to the Obligations of TSFC. Notwithstanding any other
provision of this Agreement, the obligations of TSFC to consummate the Merger
are subject to the following conditions precedent:
(a) All of the representations and warranties made by Private in this
Agreement and in any documents or certificates provided by Private 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.
19
(b) Private 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) TSFC shall have received a certificate signed by the Chief
Executive Officer of Private, dated as of the Effective Time, that based upon
such Chief Executive Officer's best knowledge, the conditions set forth in
Sections 6.2(a) and (b) have been satisfied.
(d) Towne Square Realty L.L.C. and Private Subsidiary shall have
entered into, and executed, a lease for the property located at 00 Xxxxx Xxxxxx
Xxxxxx, Xx. Xxxxxxx, Xxxxxxxx 00000 substantially in the form attached hereto as
Exhibit F.
(e) TSFC, and the TSFC stockholders, shall have received the Tax
Opinion described in Section 5.9.
(f) Private shall not have refused to enter into the Employment
Agreement and Non-Compete and Support Agreement with Xxxxxx X. Xxxxxxxxxx.
(g) Private shall not have refused to enter into the Stock
Restriction Agreement, Advisory Board and Support Agreements and the Lease
Agreement.
6.3 Conditions to the Obligations of the Parties. Notwithstanding any
other provision of this Agreement, the obligations of Private on the one hand,
and TSFC 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 shall have
been issued and shall remain in effect.
(b) This Agreement and the Merger shall have been duly approved by
the requisite vote of the stockholders of TSFC at a meeting duly called and held
for such purpose, or such stockholders shall have executed an unanimous written
consent in lieu thereof.
(c) Private shall have received the necessary approvals (other than
approval relating to the opening of the Office from the Applicable Regulatory
Authorities) of the Applicable Governmental Authorities to acquire TSFC and to
consummate the transactions contemplated hereby and all required waiting periods
relating thereto shall have expired.
(d) The S-4 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, or any
other necessary securities law compliance shall have been achieved.
20
(e) Assuming the Private Initial Public Offering has been, or will
be, accomplished as herein provided, the shares of Private Common Stock which
are to be issued to the stockholders of TSFC upon consummation of the Merger
shall have been authorized for listing on The Nasdaq Stock Market, subject to
official notice of issuance.
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 Private
and the Board of Directors of TSFC;
(b) At any time prior to the Effective Time, by Private or TSFC if
there shall have been a final judicial or regulatory determination (as to which
all periods for appeal shall have expired and no appeal shall be pending) that
any material provision of this Agreement is illegal, invalid or unenforceable
(unless the enforcement thereof is waived by the affected party) or denying any
regulatory application, the approval of which is a condition precedent to either
party's obligations hereunder;
(c) By Private or TSFC 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 6.1 hereof, in the case of Private, or Section 6.2 hereof, the case of
TSFC, except in each case, for any such breach which has been disclosed pursuant
to Section 5.8 and waived by the non-disclosing party or cured by the disclosing
party prior to the Effective Time; or
(d) By either party on or after November 1, 1999, 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).
7.2 Expenses. Except as provided elsewhere herein, Private and TSFC 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.
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7.3 Survival of Agreements. In the event of termination of this Agreement
by either Private or TSFC 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, 5.4, 5.5, 7.2 and 7.3 hereof shall survive the
termination hereof.
7.4 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 TSFC but, after such approval, no
amendment shall be made which changes the form of consideration or adversely
affects or decreases the value of the consideration to be received by the
stockholders of TSFC without the further approval of such stockholders or which
in any other way adversely affects the rights of stockholders of either TSFC or
Private without the further 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. Private and TSFC 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.
7.5 Waiver. Any term, provision or condition of this Agreement (other than
requirements for stockholders' approval and required approvals of the Applicable
Government Authorities) may be waived in writing at any time by the party which
is, or the stockholders of which are, entitled to the benefits hereof. Each and
every right granted to any party hereunder, or under any other document
delivered in connection herewith or therewith, and each and every right allowed
it by law or equity, shall be cumulative and may be exercised from time to time.
The failure of either party at any time or times to require performance of any
provision hereof shall in no manner affect such party's right at a later time to
enforce the same. No waiver by any party of a condition or of the breach of any
term, covenant, representation or warranty contained in this Agreement, whether
by conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach or a
waiver of any other condition or of the breach of any other term, covenant,
representation or warranty of this Agreement. No investigation, review or audit
by Private of TSFC or TSFC of Private 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.
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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 Private: Xxxxx X. Xxxxxxx
Chairman, President and
Chief Executive Officer
PrivateBancorp, Inc.
Ten North Dearborn
Xxxxxxx, Xxxxxxxx 00000
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
copy to: Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X'Xxxxxx, Esq.
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
(b) if to TSFC: Xxxxxx X. Xxxxxxxxxx
President & CEO
Towne Square Financial Corporation
0000 Xxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxx 00000
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
copy to: Xxxx X. Xxxxxxxx
Hoscheit & XxXxxxx, P.C.
0000 Xxxx Xxxx Xxxxxx
Xxxxx X
Xx. Xxxxxxx, Xxxxxxxx 00000
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
8.3 Specific Enforceability. The parties recognize and hereby acknowledge
that it is impossible to measure in money the damages that would result to a
party by reason of the failure of either of the parties to perform any of the
obligations imposed on it by this Agreement and that in any event damages would
be an inadequate remedy in this instance. Accordingly, if any party should
institute an action or proceeding seeking specific enforcement of the provisions
hereof, the party against which such action or proceeding is brought hereby
waives the claim or defense that the party
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instituting such action or proceeding has an adequate remedy at law and hereby
agrees not to assert in any such action or proceeding the claim or defense that
such a remedy at law exists and shall waive or not assert any requirement to
post bond in connection with seeking specific performance.
8.4 Applicable Law. This Agreement shall be construed and interpreted in
all respects, including validity, interpretation and effect, by the laws of the
State of Illinois with respect to matters of corporate laws and, with respect to
all other matters, by according the laws of the State of Illinois, except to the
extent that the federal laws of the United States apply.
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; Non-Assignment; 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 any party hereto without the prior
written consent of the other parties hereto. This Agreement may be executed in
two or more counterparts which together shall constitute a single agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the day and year first above written.
PrivateBancorp, Inc.
By: /s/ Xxxxxx X. Xxxxxxxxxx
--------------------------
Its: Chief Financial Officer
-------------------------
Towne Square Financial Corporation
By: /s/ Xxxxxx X. Xxxxxxxxxx
--------------------------
Its: President & Chief Executive Officer
-----------------------------------
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