EXHIBIT 99.3
STOCK PURCHASE AGREEMENT
BY AND AMONG
FIRST BANKS, INC.,
A MISSOURI CORPORATION,
THE SAN FRANCISCO COMPANY,
A DELAWARE CORPORATION,
CIB MARINE BANCSHARES, INC.,
A WISCONSIN CORPORATION,
HILLSIDE INVESTORS, LTD.,
AN ILLINOIS CORPORATION,
AND
CIB BANK, HILLSIDE, ILLINOIS,
AN ILLINOIS BANKING CORPORATION
AUGUST 12, 2004
TABLE OF CONTENTS
ARTICLE I - TERMS OF THE STOCK PURCHASE; CLOSING
Section 1.01 Purchase and Sale of Stock ........................................ 1
Section 1.02 The Closing ....................................................... 2
Section 1.03 Closing Date ...................................................... 2
Section 1.04 Actions At Closing ................................................ 2
Section 1.05 Subsequent Mergers ................................................ 3
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE CIB PARTIES
Section 2.01 Organization and Capital Stock; Authority ......................... 4
Section 2.02 Authorization; No Defaults ........................................ 5
Section 2.03 Subsidiaries ...................................................... 5
Section 2.04 Financial Information ............................................. 6
Section 2.05 Absence of Changes ................................................ 6
Section 2.06 Regulatory Enforcement Matters .................................... 6
Section 2.07 Tax Matters ....................................................... 6
Section 2.08 Litigation ........................................................ 9
Section 2.09 Properties, Contracts, Employee Plans and Other Arrangements ...... 9
Section 2.10 Reports ........................................................... 10
Section 2.11 Investment Portfolio .............................................. 11
Section 2.12 Loan Portfolio .................................................... 11
Section 2.13 Employee Matters and ERISA ........................................ 11
Section 2.14 Title to Properties; Licenses; Insurance .......................... 13
Section 2.15 Environmental Matters ............................................. 13
Section 2.16 Compliance with Laws and Regulations .............................. 14
Section 2.17 Brokerage ......................................................... 14
Section 2.18 No Undisclosed Liabilities ........................................ 14
Section 2.19 Statements True and Correct ....................................... 14
Section 2.20 Commitments and Contracts ......................................... 15
Section 2.21 Material Interest of Certain Persons .............................. 15
Section 2.22 Conduct to Date ................................................... 15
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ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE FIRST BANKS PARTIES
Section 3.01 Organization and Authority ........................................ 17
Section 3.02 Authorization ..................................................... 17
Section 3.03 Absence of Changes ................................................ 17
Section 3.04 Litigation ........................................................ 17
Section 3.05 Statements True and Correct ....................................... 17
Section 3.06 Regulatory Approval ............................................... 18
Section 3.07 Financing ......................................................... 18
ARTICLE IV - AGREEMENTS OF THE CIB PARTIES
Section 4.01 Business in Ordinary Course ....................................... 18
Section 4.02 Breaches .......................................................... 21
Section 4.03 Consummation of Agreement ......................................... 21
Section 4.04 Environmental Reports ............................................. 21
Section 4.05 Access to Information; Reports .................................... 22
Section 4.06 Consents to Contracts and Leases .................................. 23
Section 4.07 Subsequent Financial Statements ................................... 23
Section 4.08 Tax Covenants ..................................................... 23
Section 4.09 Termination of Other Arrangements; Loan Participations ............ 25
Section 4.10 Transfer of Certain Assets ........................................ 26
Section 4.11 Pledge of Champaign Bank Stock .................................... 26
Section 4.12 0 Xxxxx Xxxxxxxx Xxxxxx Loan ...................................... 27
Section 4.13 Cooperation Regarding CIB Commercial Financial, LLC ............... 27
ARTICLE V - AGREEMENTS OF THE FIRST BANKS PARTIES
Section 5.01 Regulatory Approvals; Financing ................................... 28
Section 5.02 Breaches .......................................................... 28
Section 5.03 Consummation of Agreement ......................................... 28
Section 5.04 Employee Benefits ................................................. 28
Section 5.05 Tax Matters after the Closing Date ................................ 29
ARTICLE VI - CONDITIONS PRECEDENT TO THE STOCK PURCHASE
Section 6.01 Conditions to the Obligations of the First Banks Parties .......... 29
Section 6.02 Conditions to the Obligations of the CIB Parties .................. 30
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ARTICLE VII - TERMINATION
Section 7.01 Mutual Agreement .................................................. 31
Section 7.02 Breach of Agreements .............................................. 31
Section 7.03 Failure of Conditions ............................................. 31
Section 7.04 Denial of Regulatory Approval ..................................... 31
Section 7.05 Environmental Reports ............................................. 32
Section 7.06 Regulatory Enforcement Matters .................................... 32
Section 7.07 Unilateral Termination ............................................ 32
Section 7.08 Break-up Fee ...................................................... 32
ARTICLE VIII - GENERAL PROVISIONS
Section 8.01 Confidential Information .......................................... 34
Section 8.02 Publicity ......................................................... 34
Section 8.03 Return of Documents ............................................... 35
Section 8.04 Notices ........................................................... 35
Section 8.05 Limited Survival of Representations, Warranties and Agreements .... 36
Section 8.06 Indemnification ................................................... 36
Section 8.07 Costs and Expenses ................................................ 39
Section 8.08 Entire Agreement .................................................. 40
Section 8.09 Headings and Captions ............................................. 40
Section 8.10 Waiver, Amendment or Modification ................................. 40
Section 8.11 Rules of Construction ............................................. 40
Section 8.12 Counterparts ...................................................... 40
Section 8.13 Successors and Assigns ............................................ 40
Section 8.14 Governing Law ..................................................... 40
Signatures ...................................................................... 41
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STOCK PURCHASE AGREEMENT
This
Stock Purchase Agreement, dated as of August 12, 2004 (the
"Agreement"), is by and among First Banks, Inc., a bank holding company
organized as a
Missouri corporation ("First Banks"), The San Francisco Company,
a Delaware corporation which is a wholly-owned subsidiary of First Banks ("SF
Company"), CIB Marine Bancshares, Inc., a bank holding company organized as a
Wisconsin corporation ("CIB Marine"), Hillside Investors, Ltd., an Illinois
corporation which is a wholly-owned subsidiary of CIB Marine ("Hillside"), and
CIB Bank, Hillside, Illinois, an Illinois banking corporation ("Bank"). First
Banks and SF Company are sometimes collectively referred to herein as the "First
Banks Parties," and CIB Marine, Hillside and Bank are sometimes collectively
referred to as the "CIB Parties."
WHEREAS, CIB Marine is the owner of all of the outstanding capital
stock of Hillside, Hillside is the owner of all of the outstanding capital stock
of Bank, and First Banks is the owner of all of the outstanding capital stock of
SF Company; and
WHEREAS, upon the terms and provisions and subject to the conditions
set forth in this Agreement, First Banks has agreed to purchase, and CIB Marine
has agreed to sell, all of the outstanding capital stock of Hillside.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, agreements and covenants contained herein, the parties hereby agree
as follows:
ARTICLE I
TERMS OF THE STOCK PURCHASE; CLOSING
Section 1.01. Purchase and Sale of Stock. Pursuant to the terms and
provisions and subject to the conditions set forth in this Agreement, First
Banks shall purchase from CIB Marine, and CIB Marine shall sell to First Banks,
all of the issued and outstanding capital stock of Hillside (such transaction
being referred to herein as the "Stock Purchase"), for a purchase price of Sixty
Two Million Dollars ($62,000,000.00), plus the amount of any cash payment
received by Bank in exchange for the Subsidiary Stock, the 0 Xxxxx Xxxxxxxx
Xxxxxx Loan and the Global Real Estate Claim (as such terms are defined herein)
pursuant to Section 4.10 of this Agreement (the "Purchase Price") payable in
cash at the Closing (as defined in Section 1.02). In the event that the Tax
Benefits (as defined in Section 2.07) fall materially below $60,000,000, which
amount shall be calculated as described in Section 2.07(d), the parties shall
attempt in good faith to renegotiate the Purchase Price to account for such
reduction by taking into account the net economic impact of the loss of the Tax
Benefits associated with the shortfall. If a revised Purchase Price is not
agreed to within ten days from the date that this shortfall is first reported to
First Banks, either First Banks or CIB Marine may terminate this Agreement by
written notice to the other parties.
Section 1.02. The Closing. The closing of the Stock Purchase (the
"Closing") shall take place at a location mutually agreeable to the parties at
10:00 a.m. on the Closing Date (as defined in Section 1.03).
Section 1.03. Closing Date. At First Banks' election, the Closing shall
take place on either (i) one of the last five (5) business days of the month, or
(ii) the first business day of the month following the month, in either case,
during which each of the conditions in Sections 6.01 and 6.02 is satisfied or
waived by the appropriate party, or on such other date as First Banks and CIB
Marine may agree (the "Closing Date").
Section 1.04. Actions At Closing. (a) At the Closing, the CIB Parties
shall deliver to the First Banks Parties:
(i) a stock certificate, duly endorsed or accompanied by executed stock
powers, in either case in form reasonably acceptable to First Banks,
evidencing CIB Marine's ownership and unencumbered transfer to First
Banks of all of the outstanding capital stock of Hillside, and stock
certificates evidencing Hillside's unencumbered ownership of all of the
outstanding capital stock of Bank and Bank's unencumbered ownership of
the outstanding stock of the Acquired Bank Subsidiaries (as defined in
Section 2.03);
(ii) certified copies of the Articles of Incorporation and Bylaws of
Hillside, the Charter and Bylaws of Bank and the Articles of
Incorporation or Articles of Organization and Bylaws or similar
governing documents of the Acquired Bank Subsidiaries (as defined in
Section 2.03), and complete minute books or other records reasonably
satisfactory to First Banks of the minutes of all corporate proceedings
of Hillside, Bank and the Acquired Bank Subsidiaries;
(iii) certificates signed by appropriate officers of each of the CIB
Parties stating that (A) each of the representations and warranties
contained in Article II is true and correct in all material respects at
the time of the Closing with the same force and effect as if such
representations and warranties had been made at the Closing, and (B)
each of the conditions set forth in Section 6.01 has been satisfied or
waived as provided therein. If as a result of changes occurring after
the date of this Agreement and prior to the Closing Date such officers
determine in good faith that it is necessary to modify any of the
representations or warranties referred to in such certificates in order
for the statements made in the certificates to be accurate, they shall
deliver to First Banks certificates accompanied by a schedule
describing such changes in reasonable detail;
(iv) certified copies of currently effective resolutions of the Boards
of Directors of each of the CIB Parties authorizing the execution of
this Agreement and the consummation of the transactions contemplated
hereby;
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(v) certificates of the Secretaries of State or comparable officials of
the jurisdictions of incorporation of CIB Marine, Hillside, Bank and
each Acquired Bank Subsidiary, each dated a recent date, stating that
such entities are in good standing;
(vi) evidence reasonably satisfactory to First Banks of the release of
Hillside from any further liability related to credit obligations of
CIB Marine; and
(vii) a legal opinion from counsel for the CIB Parties regarding CIB
Marine, Hillside and Bank, this Agreement and the transactions
contemplated hereby, in form reasonably satisfactory to First Banks.
(b) At the Closing, the First Banks Parties shall deliver to CIB
Marine:
(i) the Purchase Price in immediately available funds, in form
reasonably acceptable to CIB Marine;
(ii) certificates signed by appropriate officers of each of the First
Banks Parties stating that (A) each of the representations and
warranties contained in Article III is true and correct in all material
respects at the time of the Closing with the same force and effect as
if such representations and warranties had been made at the Closing,
and (B) each of the conditions set forth in Section 6.02 has been
satisfied or waived as provided therein. If as a result of changes
occurring after the date of this Agreement and prior to the Closing
Date such officers determine in good faith that it is necessary to
modify any of the representations or warranties referred to in such
certificates in order for the statements made in the certificates to be
accurate, they shall deliver to CIB Marine certificates accompanied by
a schedule describing such changes in reasonable detail;
(iii) a certified copy of currently effective resolutions of the Boards
of Directors of each of the First Banks Parties authorizing the
execution of this Agreement and the consummation of the transactions
contemplated hereby; and
(iv) a legal opinion from counsel for the First Banks Parties regarding
First Banks, SF Company, this Agreement and the transactions
contemplated hereby, in form reasonably satisfactory to CIB Marine.
Section 1.05. Subsequent Mergers. The CIB Parties have been informed
that First Banks intends to cause (i) the merger of Hillside with and into SF
Company, and (ii) the merger of Bank with and into First Bank, a
Missouri
banking corporation which is a wholly-owned subsidiary of SF Company,
immediately following the Closing. The CIB Parties agree that they will
cooperate with the First Banks Parties by executing any documents reasonably
requested by First Banks, prior to or at the Closing, to expedite the
consummation of such mergers (the "Subsequent Mergers"). Notwithstanding any
subsequent mergers, the intention of the parties hereto is that the transactions
contemplated hereby will be considered a qualified stock purchase for income tax
purposes.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE CIB PARTIES
To induce the First Banks Parties to enter into this Agreement and
consummate the transactions contemplated hereby, the CIB Parties represent and
warrant to the First Banks Parties as follows:
Section 2.01. Organization and Capital Stock; Authority.
(a) Hillside is a corporation, and Bank is a banking corporation, in
each case duly organized, validly existing and in good standing under the laws
of the State of Illinois. Each of such entities has the corporate power to own
all of its property and assets, to incur all of its liabilities and to carry on
its business as it is now conducted. Hillside is duly registered as a bank
holding company pursuant to the Bank Holding Company Act of 1956, as amended.
Bank is authorized to engage in the business of banking in the State of
Illinois, and its deposits are insured by the Federal Deposit Insurance
Corporation (the "FDIC") to the maximum extent authorized by law. The CIB
Parties each have the corporate power to execute and deliver this Agreement and
to consummate the transactions contemplated hereby.
(b) As of the date hereof:
(i) the authorized capital stock of Hillside consists solely of (A)
200,000 shares of common stock, no par value per share ("Hillside Stock"), of
which 103,100 shares are outstanding;
(ii) the authorized capital stock of Bank consists solely of (i) 75,000
shares of common stock, $5.00 par value per share ("Bank Stock"), of which
75,000 shares are outstanding.
(iii) All of the outstanding shares of Hillside Stock and Bank Stock
are duly and validly issued, fully paid and non-assessable. CIB Marine is the
sole owner of all of the outstanding shares of Hillside Stock, and Hillside is
the sole owner of all of the outstanding shares of Bank Stock. None of such
shares was issued in violation of any preemptive rights. Each certificate
representing shares of Hillside Stock or Bank Stock issued in replacement of any
certificate theretofore issued by it which was claimed by the record holder
thereof to have been lost, stolen or destroyed was issued only upon receipt of
an affidavit of lost stock certificate or a bond sufficient to indemnify the
issuer against any claim that may be made against it on account of the alleged
loss, theft or destruction of any such certificate or the issuance of such
replacement certificate.
(c) There are no shares of capital stock or other equity
securities of Hillside or Bank issued or outstanding and no outstanding options,
warrants, rights to subscribe for, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of Hillside Stock or Bank Stock or contracts, commitments,
understandings
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or arrangements by which Hillside or Bank is or may be obligated to issue
additional shares of capital stock.
Section 2.02. Authorization; No Defaults. The Boards of Directors of
each of the CIB Parties have by all requisite action approved this Agreement and
the transactions contemplated hereby and have authorized the execution hereof by
their duly authorized officers and the performance by them of their obligations
hereunder. Nothing in the Articles of Incorporation, Charter or Bylaws of any of
the CIB Parties, or any other agreement, instrument, decree, proceeding, law or
regulation (except for the regulatory approvals contemplated in Section 6.01) by
or to which any of them is bound or subject, prohibits or inhibits any of them
from consummating this Agreement and the Stock Purchase on the terms and
conditions herein contained or requires that the approval of the shareholders of
CIB Marine be obtained in order to authorize the consummation of the
transactions contemplated by this Agreement, except that at the date hereof
only, this Agreement requires the consent of the lender pursuant to the Amended
Credit Agreement with M&I Xxxxxxxx & Xxxxxx Bank ("M&I"). This Agreement has
been duly and validly executed and delivered by each of the CIB Parties and
constitutes the legal, valid and binding obligation of each CIB Party,
enforceable against them in accordance with its terms. Except as set forth in
Section 2.02 of that certain document delivered jointly by the CIB Parties to
First Banks entitled "Disclosure Schedule" and executed by the CIB Parties and
the First Banks Parties concurrently with the execution and delivery of this
Agreement (the "Disclosure Schedule") neither CIB Marine, Hillside, Bank nor any
Bank Subsidiary (as defined in Section 2.03 hereof) is in default under nor in
violation of any provision of its Charter, Articles or Certificate of
Incorporation, Bylaws, or any promissory note, indenture or evidence of
indebtedness or security therefor, lease, contract, purchase or other commitment
or other agreement which is material to such entity and its subsidiaries, taken
as a whole.
Section 2.03. Subsidiaries. Each of Bank's direct and indirect
subsidiaries (hereinafter referred to singularly as a "Bank Subsidiary" and
collectively as the "Bank Subsidiaries"), the names and jurisdictions of
incorporation of which are disclosed in Section 2.03 of the Disclosure Schedule,
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and each of the Bank Subsidiaries has the
corporate power to own its properties and assets, to incur its liabilities and
to carry on its business as now being conducted. As used in this Agreement, the
term "Acquired Bank Subsidiaries" means the Bank Subsidiaries other than MICR,
Inc. ("MICR") and CIB Construction, LLC and its direct and indirect subsidiaries
("Canron"). The number of issued and outstanding shares of capital stock of each
Bank Subsidiary and the ownership of such shares is set forth in Section 2.03 of
the Disclosure Schedule, and all of such shares are owned by Bank or a Bank
Subsidiary, free and clear of all liens, encumbrances, rights of first refusal,
options or other rights or restrictions of any nature whatsoever, except as
disclosed in Section 2.03 of the Disclosure Schedule. There are no options,
warrants or rights outstanding to acquire any capital stock of any Bank
Subsidiary, and no person or entity has any other right to purchase or acquire
any unissued stock of any Bank Subsidiary, nor does any Bank Subsidiary have any
obligation of any nature with respect to its unissued shares of stock. Except as
disclosed in Section 2.03 of the Disclosure Schedule, neither Bank nor any Bank
Subsidiary is a party to any partnership or joint venture or owns an equity
interest in any other business or enterprise.
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Section 2.04. Financial Information. The unaudited consolidated balance
sheet and profit and loss statement of Hillside as of and for the six months
ended June 30, 2004, in the form previously provided to First Banks, and the
balance sheet and income statement of Bank and the Bank Subsidiaries as of June
30, 2004, contained in the Bank's Report of Condition and Income as of June 30,
2004, as filed with the FDIC (such financial statements collectively referred to
herein as the "Bank Financial Statements"), have been prepared in accordance
with GAAP (except as disclosed therein and except for regulatory reporting
differences required for the financial statements of Hillside and Bank) and, to
the best knowledge of the CIB Parties, fairly present the financial position of
the respective entity and its consolidated subsidiaries as of June 30, 2004.
Section 2.05. Absence of Changes. Since June 30, 2004, except as set
forth in Section 2.05(a) of the Disclosure Schedule, there has not been, to the
best knowledge of the CIB Parties, any material adverse change in the financial
condition, the results of operations or the business or prospects of Hillside,
Bank and the Acquired Bank Subsidiaries taken as a whole, nor have there been
any events or transactions having such a material adverse effect which should be
disclosed in order to make the Bank Financial Statements not misleading. For the
purposes of this Agreement, no adverse change in Bank's loans, loan portfolio or
allowance for loan losses shall be deemed to constitute a material adverse
change unless, after June 30, 2004 and prior to the Closing, Bank shall have
incurred cumulative loan losses, as determined in accordance with generally
accepted accounting principles ("GAAP"), in excess of $25 million. For the
purposes of this Agreement, cumulative loan losses shall be equal to the result
of the following calculation: (i) the amount of additional specific reserves
allocated to loans in the Bank's loan portfolio, plus (ii) any amounts directly
charged off, less (iii) recoveries of previously charged-off loans, less (iv)
the recapture of excess specific reserves which result from loan payoffs,
collection activity, improvement in the quality of loans or other factors, less
(v) the amount of specific reserves allocated to loans directly charged off.
Section 2.05(b) of the Disclosure Schedule sets forth a listing of the Bank's
loans for which specific reserves have been allocated as of June 30, 2004,
including the amount of the specific reserve.
Section 2.06. Regulatory Enforcement Matters. Except as set forth in
Section 2.06 of the Disclosure Schedule, neither Hillside, Bank nor any Bank
Subsidiary is subject to, or has received any notice or advice that it may
become subject to, any order, agreement, memorandum of understanding or other
regulatory enforcement action or proceeding with or by any federal or state
agency charged with the supervision or regulation of banks or bank holding
companies or engaged in the insurance of bank deposits or any other governmental
agency having supervisory or regulatory authority with respect to Bank or any of
the Bank Subsidiaries.
Section 2.07. Tax Matters. (a) Each of Hillside, Bank and the Acquired
Bank Subsidiaries has timely filed all returns, declarations, reports, claims
for refund, and information returns and statements relating to taxes ("Tax
Returns"), or has filed appropriate extensions relating thereto, that it was
required to file under applicable laws and regulations. Except as disclosed in
Section 2.07 of the Disclosure Schedule, all such Tax Returns of Hillside, Bank
and the Acquired Bank Subsidiaries
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were and shall be true, correct and complete in all respects and prepared in
compliance with all applicable laws and regulations. All federal, state, local
and foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental, customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, and other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not and including any
obligations to indemnify or otherwise assume or succeed to the tax liability of
any other person or entity ("Taxes") due and owing by Hillside, Bank and the
Acquired Bank Subsidiaries have been paid with respect to Tax Returns that have
been filed for Hillside, Bank and the Acquired Bank Subsidiaries (other than
those being contested in good faith and which are disclosed in the Disclosure
Schedule). None of Hillside, Bank and the Acquired Bank Subsidiaries will be
liable for any Tax (i) relating to any period that ends on or before the Closing
Date or (ii) for any period that begins on or before the Closing Date and ends
after the Closing Date, for the portion of such period that ends on the Closing
Date, except to the extent a liability for such Taxes has been fully accrued as
of the date hereof on the books of the appropriate entity. Complete copies of
all Income Tax Returns for Hillside, Bank and the Acquired Bank Subsidiaries
that have been filed through the date hereof with respect to taxable periods
ended on or after December 31, 2001 have been delivered to First Banks prior to
the date hereof. Except as disclosed in Section 2.07 of the Disclosure Schedule,
each of Hillside, Bank and the Acquired Bank Subsidiaries has provided to First
Banks copies of all revenue agent's reports and other written assertions of Tax
deficiencies or other liabilities for Taxes against any of them with respect to
past periods for which the applicable statute of limitations has not run.
(b) Except as disclosed in Section 2.07 of the Disclosure Schedule,
none of Hillside, Bank and the Acquired Bank Subsidiaries currently is the
beneficiary of any extension of time within which to file any Tax Return. To the
best knowledge of the CIB Parties, no claim (written or verbal) that has not
been resolved has been made by an authority in a jurisdiction where Hillside,
Bank or the Acquired Bank Subsidiaries does not file Tax Returns to the effect
that any of them is or may be subject to taxation by that jurisdiction. There
are no Liens for Taxes upon any of the assets of Hillside, Bank or the Acquired
Bank Subsidiaries.
(c) Except as disclosed in Section 2.07 of the Disclosure Schedule, (i)
each of Hillside, Bank and the Acquired Bank Subsidiaries has withheld and paid
all Taxes required to have been withheld and paid in connection with any amounts
paid or owing to any employee, independent contractor, creditor, stockholder or
other third party, (ii) none of the CIB Parties has been notified by any taxing
authority that any Tax Return will be examined that involves Hillside, Bank and
the Acquired Bank Subsidiaries , (iii) there is no litigation or assessment or
audit appeal pending or proposed with respect to any liability for Tax that
relates to, or could have an impact on, Hillside, Bank or the Acquired Bank
Subsidiaries, (iv) there are no waivers or extensions of any applicable statute
of limitations for the assessment or collection of Taxes with respect to any Tax
Return for Hillside, Bank and the Acquired Bank Subsidiaries which remains in
effect, (v) there are no Tax rulings, requests for rulings, pre-filing
agreements or closing agreements relating to Hillside, Bank or the Acquired Bank
Subsidiaries which could affect any of their liability for Taxes for any period
after the
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Closing Date, (vi) no power of attorney has been granted by any of the CIB
Parties with respect to any matter relating to Taxes of Hillside, Bank or the
Acquired Bank Subsidiaries which is currently in force, (vii) no issue has
arisen in any examination of any of Hillside, Bank or the Acquired Bank
Subsidiaries by any taxing authority that if raised with respect to any other
period not so examined would result in a material deficiency for any other
period not so examined, if upheld, (viii) none of Hillside, Bank and the
Acquired Bank Subsidiaries has agreed, and none of them is required, to include
in income any adjustment pursuant to section 481(a) of the Code (or similar
provisions of other Laws) by reason of a change in accounting method or
otherwise, and, to the best knowledge of the CIB Parties, the IRS (or any other
taxing authority) has not proposed and is not considering any such change in
accounting method, (ix) none of Hillside, Bank and the Acquired Bank
Subsidiaries has disposed of property in a transaction being accounted for under
the installment method pursuant to section 453 of the Code, (x) none of
Hillside, Bank and the Acquired Bank Subsidiaries has received notice of any
liability for Taxes as a result of Treasury Regulation Section 1.1502-6 or any
comparable provision of state, local or foreign Law, (xi) none of Hillside, Bank
and the Acquired Bank Subsidiaries has made any payments, is obligated to make
any payments or is a party to any agreement that could obligate it to make any
payments that will not be deductible under sections 162(m) or 280G of the Code,
(xii) each of Hillside, Bank and the Acquired Bank Subsidiaries has disclosed on
its original federal income Tax Returns filed with respect to years ending
before January 1, 2003 and will disclose on its original federal income Tax
Returns to be filed with respect to its year ended December 31, 2003, all
positions taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of section 6662 of the Code, (xiii) none
of Hillside, the Bank and Acquired Bank Subsidiaries is bound by any Tax
allocation or sharing agreement that will not be terminated on or before the
Closing Date, and (xiv) all Tax Returns filed and to be filed pursuant to
Section 4.08(c) contain or shall contain any disclosures required under Treasury
Regulation Section 1.6011-4(b)(2) and Temporary Treasury Regulation Section
1.6011-4T promulgated under authority of the Internal Revenue Code of 1986, as
amended.
(d) As of the date hereof, the Closing Date, and the date of the filing
of CIB Marine's federal income Tax Returns for its taxable year with which or
within which the Closing Date falls (the "Filing Date"), the sum of gross
built-in losses (which shall include the tax basis in goodwill and intangible
assets) without reduction for built-in gains and federal net operating loss
carry forwards (collectively "the Tax Benefits"), each as defined and determined
under applicable federal income tax principles, will be not less than
$60,000,000 for Hillside, Bank and the Acquired Bank Subsidiaries. If an event
causes the sum of the Tax Benefits to fall below $60,000,000, and such event
results in an increase in Hillside's or the Bank's or the Acquired Bank
Subsidiaries' net equity, credit shall be given for the amount of increase in
net equity in calculating the Tax Benefits. If the increase in net equity equals
or exceeds 65% of such reduction in the Tax Benefits, such reduction will not be
deemed a breach of this representation.
(e) Except as contemplated by this Agreement, none of Hillside, Bank
and Acquired Bank Subsidiaries has distributed stock of another person or
entity, or has had its stock distributed by another person or entity, in a
transaction that was purported or intended to be governed in whole or in part by
Sections 355 or 361 of the Code.
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Section 2.08. Litigation. Except as disclosed in Section 2.08 of the
Disclosure Schedule, there is no (i) litigation, claim or other proceeding
pending or, to the best of the knowledge of the CIB Parties, threatened against
Hillside, Bank or any of the Bank Subsidiaries, or of which the property of
Hillside, Bank or any of the Bank Subsidiaries is or would be subject, or (ii)
internal or external investigation known to any of the CIB Parties regarding the
condition or conduct of Hillside, Bank or any of the Bank Subsidiaries or their
officers or directors.
Section 2.09. Properties, Contracts, Employee Plans and Other
Arrangements. Section 2.09 of the Disclosure Schedule specifically identifies
the following:
(a) all real property owned by Hillside, Bank and each Bank Subsidiary
and the principal buildings and structures located thereon, together with a
legal description of such real estate, and each lease of real property to which
Bank or any Bank Subsidiary is a party, identifying the parties thereto, the
annual rental, the expiration date thereof and a brief description of the
property covered;
(b) all loan and credit agreements, conditional sales contracts or
other title retention agreements or security agreements relating to money
borrowed by Hillside, Bank or a Bank Subsidiary, exclusive of deposit agreements
with customers of Bank entered into in the ordinary course of business,
agreements for the purchase of federal funds and repurchase agreements;
(c) all agreements, loans, contracts, leases, guaranties, letters of
credit, lines of credit or commitments of Hillside, Bank and each Bank
Subsidiary not referred to elsewhere in this Section 2.09 which:
(i) (except for loans, loan commitments or letters of
credit) involve payment by Bank or any Bank
Subsidiary of more than $250,000;
(ii) involve payments based on profits of Hillside, Bank
or any Bank Subsidiary;
(iii) relate to the future purchase of goods or services in
excess of the requirements of its respective business
at current levels or for normal operating purposes;
(iv) were not made in the ordinary course of business;
(v) materially affect the business or financial condition
of Hillside, Bank or any Bank Subsidiary;
(vi) require the consent or approval of any third party
for the Stock Purchase to be consummated; or
9
(vii) relate directly or indirectly to the acceptance of
Brokered Deposits (as such term is used in 12 C.F.R.
Section 337.6).
(d) all employee benefit plans, as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and all
other contracts, agreements, plans and arrangements for the benefit of officers,
directors, consultants, contractors or current or former employees of Hillside,
Bank or any Bank Subsidiary, including but not limited to group insurance,
medical, hospitalization, disability and life insurance, stock option, stock
bonus, stock purchase, bonus, profit sharing, deferred compensation, pension,
retirement, employment, severance, retention, salary continuation agreements,
similar agreements and arrangements, and collective bargaining agreements
(collectively, "Employee Plans") (including each trust or other agreement with a
custodian or trustee for funds held under any such Employee Plan), and with
respect to all Employee Plans, (i) any reports or forms filed since January 1,
1999 with the Department of Labor or the Pension Benefit Guaranty Corporation,
(ii) any current financial and actuarial reports, and (iii) any currently
effective IRS private letter rulings and determination letters by or for the
benefit of any of the CIB Parties or any Employee Plan;
(e) all leases, subleases, licenses and sublicenses with respect to
real or personal property, whether as lessor, lessee, licensor, licensee or
guarantor, with annual rental or other payments due thereunder in excess of
$200,000;
(f) all agreements for the employment, retention or engagement, or with
respect to the severance, of any officer, employee, agent, consultant or other
person or entity which by its terms is not terminable by Hillside, Bank or the
relevant Bank Subsidiary on thirty (30) days written notice or less without any
payment by reason of such termination; and
(g) the name and annual compensation as of July 1, 2004 of each
director, officer and employee of Bank or any Bank Subsidiary with annual
compensation in excess of $150,000.
Copies of each document, plan or contract identified in Section 2.09 of
the Disclosure Schedule are appended to such Schedule and are hereby
incorporated into and constitute a part of the Disclosure Schedule.
Section 2.10. Reports. Except as set forth in Section 2.10 of the
Disclosure Schedule, since January 1, 2003, Hillside, Bank and the Bank
Subsidiaries have filed all reports and statements, together with any required
amendments, required to be filed with the Office of Banks and Real Estate for
the State of Illinois, the FDIC or any other regulatory or governmental
authority with jurisdiction over Hillside, Bank or any Bank Subsidiary. Except
as set forth in Section 2.10 of the Disclosure Schedule, since January 1, 2003,
each of such reports and documents, including any financial statements, exhibits
and schedules thereto, as currently amended, complied in all material respects
with applicable statutes, rules and regulations and did not contain any untrue
statement of a 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. The
10
CIB Parties have provided to First Banks copies of all amended reports referred
to in the preceding sentence which relate to time periods after December 31,
2003.
Section 2.11. Investment Portfolio. All investment securities held by
Bank and the Bank Subsidiaries as reflected in the Bank Financial Statements are
carried in accordance with GAAP.
Section 2.12. Loan Portfolio. Except as disclosed in Section 2.12 of
the Disclosure Schedule, (i) all loans and discounts shown in the Bank Financial
Statements and those which were or will be entered into after June 30, 2004 and
before the Closing Date were and will be made in all material respects for good,
valuable and adequate consideration in the ordinary course of the business of
Bank and the Bank Subsidiaries, and they are not subject to any material known
defenses, setoffs or counterclaims, including without limitation any such as are
afforded by usury or truth in lending laws, except as may be provided by
bankruptcy, insolvency or similar laws or by general principles of equity; (ii)
the notes and other evidences of indebtedness evidencing such loans and all
forms of pledges, mortgages and other collateral documents and security
agreements are and will be in all material respects enforceable, valid, true and
genuine and what they purport to be; and (iii) Bank and the Bank Subsidiaries
have complied and will through the Closing Date comply with all laws and
regulations relating to such loans, or to the extent there has not been such
compliance, such failure to comply will not materially interfere with the
collection of any loan. Except as disclosed in Section 2.12 of the Disclosure
Schedule, all loans and loan commitments extended by Bank and any extensions,
renewals or continuations of such loans and loan commitments were made in
accordance with its customary lending standards in the ordinary course of
business. Such loans are evidenced by appropriate and sufficient documentation
based upon Bank's customary and ordinary past practices. The allowance for loan
losses as of June 30, 2004 as reflected in the Bank Financial Statements is
adequate in all material respects under the requirements of GAAP to provide for
possible losses, net of recoveries relating to loans previously charged off, on
loans outstanding (including, without limitation, accrued interest receivable)
as of June 30, 2004.
Section 2.13. Employee Matters and ERISA.
(a) Except as disclosed in Section 2.13(a) of the Disclosure Schedule,
neither Hillside, Bank nor any Bank Subsidiary has entered into any collective
bargaining agreement with any labor organization with respect to any group of
their employees, and to the best of the knowledge of the CIB Parties, there is
no present effort nor existing proposal to attempt to unionize any group of
their employees.
(b)(i) Hillside, Bank and the Bank Subsidiaries have been and are in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including,
without limitation, any laws respecting employment discrimination and
occupational safety and health requirements, and neither Hillside, Bank nor any
Bank Subsidiary is engaged in any unfair labor practice; (ii) there is no unfair
labor practice complaint against Hillside, Bank or any Bank Subsidiary (or
against CIB Marine with respect to any employee of Hillside, Bank or a Bank
Subsidiary) pending or, to the best of the knowledge of the
11
CIB Parties, threatened before the National Labor Relations Board; (iii) there
is no labor dispute, strike, slowdown or stoppage actually pending or, to the
best of the knowledge of the CIB Parties, threatened against or directly
affecting Hillside, Bank or any Bank Subsidiary; and (iv) neither Hillside, Bank
nor any Bank Subsidiary has experienced any work stoppage or other material
labor difficulty during the past five years.
(c) Except as disclosed in Section 2.13(c) of the Disclosure Schedule,
neither Hillside, Bank nor any Bank Subsidiary maintains, contributes to or
participates in or has any liability under any Employee Plan. To the best of the
knowledge of the CIB Parties, no present or former employee of Hillside, Bank or
any Bank Subsidiary has been charged with breaching or has breached a fiduciary
duty under any Employee Plan. Neither Hillside, Bank nor any Bank Subsidiary
participates in, nor has it in the past five years participated in, nor has it
any present or future obligation or liability under, under any Employee Plan
subject to Section 302 of Title IV of ERISA or Section 412 of the Code, or any
multiemployer plan (as defined at Section 3(37) of ERISA). Except as separately
disclosed in Section 2.13(c) of the Disclosure Schedule, neither Hillside, Bank
nor any Bank Subsidiary maintains, contributes to, or participates in any
Employee Plan.
(d) Except as disclosed in Section 2.13(a) of the Disclosure Schedule,
all liabilities of the Employee Plans have been funded on the basis of
consistent methods in accordance with sound actuarial assumptions and practices,
and no Employee Plan, at the end of any plan year, or at June 30, 2004, had an
accumulated funding deficiency. No actuarial assumptions have been changed since
the last written report of actuaries on the Employee Plans. All insurance
premiums (including premiums to the Pension Benefit Guaranty Corporation) have
been paid in full, subject only to normal retrospective adjustments in the
ordinary course. Except as reflected in the Bank Financial Statements, Bank and
the Bank Subsidiaries have no contingent or actual liabilities under Title IV of
ERISA. No accumulated funding deficiency (within the meaning of Section 302 of
ERISA or Section 412 of the Code) has been incurred with respect to any Employee
Plan, whether or not waived. No reportable event (as defined in Section 4043 of
ERISA) has occurred with respect to any Employee Plan as to which a notice would
be required to be filed with the Pension Benefit Guaranty Corporation. No claim
is pending, threatened or imminent with respect to any Employee Plan (other than
a routine claim for benefits for which plan administrative review procedures
have not been exhausted) for which Hillside, Bank or any Bank Subsidiary would
be liable, except as is reflected in the Bank Financial Statements. Hillside,
Bank and the Bank Subsidiaries have no liability for excise taxes under Sections
4971, 4975, 4976, 4977, 4979 or 4980B of the Code or for a fine under Section
502 of ERISA with respect to any Employee Plan. All Employee Plans have in all
material respects been operated, administered and maintained in accordance with
the terms thereof and in compliance with the requirements of all applicable
laws, including, without limitation, ERISA.
12
Section 2.14. Title to Properties; Licenses; Insurance.
(a) Except as disclosed in Section 2.09(b) of the Disclosure Schedule
with respect to real estate of Canron, Hillside, Bank and the Bank Subsidiaries
have marketable title, insurable at standard rates, free and clear of all liens,
charges and encumbrances (except taxes which are a lien but not yet payable and
liens, charges or encumbrances reflected in the Bank Financial Statements and
easements, rights-of-way, and other restrictions which are not material, and
further excepting in the case of other Real Estate Owned, as such real estate is
internally classified on the books of Bank or any Bank Subsidiary, rights of
redemption under applicable law), to all of their real properties;
(b) all leasehold interests for real property and any material personal
property used by Hillside, Bank or a Bank Subsidiary in its business are held
pursuant to lease agreements which are valid and enforceable in accordance with
their terms;
(c) all such properties comply in all material respects with all
applicable private agreements, zoning requirements and other governmental laws
and regulations relating thereto, and there are no condemnation proceedings
pending or threatened with respect to any of such properties;
(d) Hillside, Bank and the Bank Subsidiaries have valid title or other
ownership rights under licenses to all material intangible personal or
intellectual property used by Hillside, Bank or any Bank Subsidiary in its
business, free and clear of any material claim, defense or right of any other
person or entity, subject only to rights of the licensors pursuant to applicable
license agreements, which rights do not materially and adversely interfere with
the use of such property; and
(e) all material insurable properties owned or held by Hillside, Bank
or a Bank Subsidiary are adequately insured by financially sound and reputable
insurers in such amounts and against fire, earthquake and other risks insured
against by extended coverage and public liability insurance, in amounts and on
terms customary with bank holding companies and banks of similar size.
Section 2.15. Environmental Matters. As used in this Agreement,
"Environmental Laws" means all federal, state and local environmental, health
and safety laws and regulations in all jurisdictions in which Hillside, Bank or
any Bank Subsidiary has done business or owned, leased or operated property,
including, without limitation, the Federal Resource Conservation and Recovery
Act, the Federal Comprehensive Environmental Response, Compensation and
Liability Act, the Federal Clean Water Act, the Federal Clean Air Act, and the
Federal Occupational Safety and Health Act.
Neither the conduct nor operation of Hillside, Bank or any Bank
Subsidiary nor the condition of any property presently or previously owned,
leased or operated by any of them on their own behalf or in a fiduciary capacity
violates or violated any Environmental Law in any respect material to the
business of Hillside, Bank and the Bank Subsidiaries, taken as a whole, and no
condition or event has occurred with respect to any of them or any property
that, with notice or the passage of time, or both, would constitute a violation
material to the business of Hillside, Bank and the Bank
13
Subsidiaries, taken as a whole, of any Environmental Law or obligate (or
potentially obligate) Hillside, Bank or any Bank Subsidiary to remedy,
stabilize, neutralize or otherwise alter the environmental condition of any
property, where the aggregate cost of such actions would be material to
Hillside, Bank and the Bank Subsidiaries, taken as a whole. Except as disclosed
in Section 2.15 of the Disclosure Schedule, neither Hillside, Bank nor any Bank
Subsidiary has received notice from any person or entity that Hillside, Bank or
any Bank Subsidiary, or the operation or condition of any property ever owned,
leased or operated by any of them on their own behalf or in a fiduciary
capacity, are or were in violation of any Environmental Law, or that Hillside,
Bank or any Bank Subsidiary is responsible (or potentially responsible) for
remedying, or the cleanup of, any pollutants, contaminants, or hazardous or
toxic wastes, substances or materials at, on or beneath any such property.
Section 2.16. Compliance with Laws and Regulations. Except as set forth
in Section 2.16 of the Disclosure Schedule, Hillside, Bank and the Bank
Subsidiaries have all licenses, franchises, permits and other governmental
authorizations that are legally required to enable them to conduct their
respective businesses in all material respects, are qualified to conduct
business in every jurisdiction in which such qualification is legally required
and are in compliance in all material respects with all applicable laws and
regulations.
Section 2.17. Brokerage. Except as set forth in Section 2.17 of the
Disclosure Schedule, there are no claims or agreements for brokerage
commissions, investment banking fees, finders' fees, financial advisory fees or
similar compensation payable by CIB Marine, Hillside, Bank or any Bank
Subsidiary in connection with this Agreement or the transactions contemplated
hereby.
Section 2.18. No Undisclosed Liabilities. Neither Hillside, Bank nor
any Bank Subsidiary has any material liability, whether known or unknown,
asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated, and whether due or to become due (and there is no past or
present fact, situation, circumstance, condition or other basis for any present
or future action, suit or proceeding, hearing, charge, complaint, claim or
demand against Hillside, Bank or any Bank Subsidiary giving rise to any such
liability), except (i) liabilities reflected in the Bank Financial Statements,
(ii) liabilities of the same type incurred in the ordinary course of business of
Bank and the Bank Subsidiaries since June 30, 2004 and (iii) as disclosed in
Section 2.18 of the Disclosure Schedule.
Section 2.19. Statements True and Correct. None of the information
supplied or to be supplied by CIB Marine, Hillside or Bank for inclusion in any
document to be filed with any regulatory authority in connection with the
transactions contemplated hereby will, at the respective times such documents
are filed, be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein not
misleading. All documents that CIB Marine, Hillside or Bank are responsible for
filing with any regulatory authority in connection with the transactions
contemplated hereby will comply in all material respects with the provisions of
applicable law and the applicable rules and regulations thereunder.
14
Section 2.20. Commitments and Contracts. Except as disclosed in Section
2.20 of the Disclosure Schedule (with a true and correct copy of the document or
other item in question having been made available to First Banks for
inspection), neither Hillside, Bank nor any Bank Subsidiary is a party or
subject to any of the following (whether written or oral, express or implied):
(i) any agreement, arrangement or commitment not made in the ordinary
course of business (except as disclosed in Section 2.09(c)(iv) of the Disclosure
Schedule);
(ii) any agreement, indenture or other instrument not reflected in the
Bank Financial Statements relating to the borrowing of money by Hillside, Bank
or a Bank Subsidiary or the guarantee by Hillside, Bank or a Bank Subsidiary of
any obligation (other than trade payables or instruments related to transactions
entered into in the ordinary course of business by Bank or a Bank Subsidiary,
such as deposits, federal funds borrowings and repurchase agreements), other
than agreements, indentures or instruments providing for annual payments of less
than $100,000; or
(iii) any contract containing covenants which limit the ability of
Hillside, Bank or a Bank Subsidiary to compete in any line of business or with
any person or containing any restriction of the geographical area in which, or
method by which, Hillside, Bank or any Bank Subsidiary may carry on its business
(other than as may be required by law or an applicable regulatory authority).
Section 2.21. Material Interest of Certain Persons. Except as disclosed
in Section 2.21 of the Disclosure Schedule:
(a) no officer or director of CIB Marine, Hillside or Bank or any
"associate" (as such term is defined in Rule 14a-1 under the Securities Exchange
Act of 1934, as amended) of any such officer or director, has any material
direct or indirect interest in any material contract or property (real or
personal, tangible or intangible), used in or pertaining to the business of
Hillside, Bank or any Bank Subsidiary; and
(b) all outstanding loans from Hillside, Bank or any Bank Subsidiary to
any officer, director or employee thereof or of CIB Marine, Hillside or Bank, or
any associate or related interest of any such person, were approved by or
reported to Bank's Board of Directors in accordance with all applicable laws and
regulations.
Section 2.22. Conduct to Date. Except as disclosed in Section 2.22 of
the Disclosure Schedule, from and after June 30, 2004, Hillside, Bank and the
Bank Subsidiaries have not done any of the following:
(a) failed to conduct business in the ordinary and usual course
consistent with past practices;
15
(b) issued, sold, granted, conferred or awarded any common or other
stock, or any corporate debt securities properly classified under generally
accepted accounting principles;
(c) effected any stock split or adjusted, combined, reclassified or
otherwise changed capitalization;
(d) declared, set aside or paid any cash or stock dividend or other
distribution in respect of capital stock, other than the dividend of stock or
other ownership interests of MICR and Canron and/or the Canron Subsidiaries, or
purchased, redeemed, retired, repurchased, or exchanged, or otherwise directly
or indirectly acquired or disposed of any capital stock;
(e) incurred any material obligation or liability (absolute or
contingent), except normal trade or business obligations or liabilities incurred
in the ordinary course of business, or subjected to a lien any assets or
properties other than in the ordinary course of business consistent with past
practice;
(f) discharged or satisfied any material lien or paid any material
obligation or liability (absolute or contingent), other than in accordance with
its terms in the ordinary course of business;
(g) sold, assigned, transferred, leased, exchanged, or otherwise
disposed of any properties or assets other than for fair consideration in the
ordinary course of business;
(h) except as required by contract, (A) increased the rate of
compensation of, or paid any bonus to, any director, officer, or other employee,
except merit or promotion increases in accordance with existing policy, (B)
entered into any new, or amended or supplemented any existing, employment,
management, consulting, deferred compensation, severance or other similar
contract, (C) entered into, terminated or substantially modified any Employee
Plan or (D) agreed to do any of the foregoing;
(i) suffered any material damage, destruction or loss, whether as the
result of fire, explosion, earthquake, accident, casualty, labor trouble, taking
of property by any governmental authority, flood, windstorm, embargo, riot, act
of God, act of war or other casualty or event, whether or not covered by
insurance;
(j) canceled or compromised any debt, except for debts charged off or
compromised in accordance with past practice;
(k) entered into any material transaction, contract or commitment
outside the ordinary course of business; or
(l) made or guaranteed any loan to any of the Employee Plans.
16
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE FIRST BANKS PARTIES
To induce the CIB Parties to enter into this Agreement and consummate
the transactions contemplated hereby, the First Banks Parties represent and
warrant to the CIB Parties as follows:
Section 3.01. Organization and Authority. First Banks is a corporation
duly organized, validly existing and in good standing under the laws of the
State of
Missouri. SF Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Both of such
corporations (i) are duly registered bank holding companies under the Bank
Holding Company Act of 1956, as amended, and (ii) have the corporate power to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
Section 3.02. Authorization. The Boards of Directors of First Banks and
SF Company have by all requisite action approved this Agreement and the
transactions contemplated hereby and have authorized the execution hereof on its
behalf by their duly authorized officers and the performance of their respective
obligations hereunder. Nothing in the Articles of Incorporation of First Banks,
the Certificate of Incorporation of SF Company, or the Bylaws of either of them,
or any other agreement, instrument, decree, proceeding, law or regulation
(except for the regulatory approvals contemplated in Section 6.01) by or to
which First Banks or any of First Banks' subsidiaries is bound or subject
prohibits or inhibits First Banks or SF Company from consummating this Agreement
and the transactions contemplated hereby on the terms and conditions herein
contained. This Agreement has been duly and validly executed and delivered by
each of First Banks and SF Company and constitutes its legal, valid and binding
obligation, enforceable against First Banks and SF Company in accordance with
its terms.
Section 3.03. Absence of Changes. Since June 30, 2004, there has not
been any material adverse change in the financial condition, the results of
operations or the business or prospects of First Banks and its subsidiaries that
would prevent either of the First Banks Parties from consummating this Agreement
and the transactions contemplated hereby.
Section 3.04. Litigation. There is no litigation, claim or other
proceeding pending or, to the best of the knowledge of the First Banks Parties,
threatened that would prohibit either of the First Banks Parties from
consummating the transactions contemplated by this Agreement.
Section 3.05. Statements True and Correct. None of the information
supplied or to be supplied by either of the First Banks Parties for inclusion in
any documents to be filed with any regulatory authority in connection with the
transactions contemplated hereby will, at the respective times such documents
are filed, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements therein not misleading.
All documents that the First Banks Parties are responsible for filing with any
regulatory authority in connection with the
17
transactions contemplated by this Agreement will comply in all material respects
with the provisions of applicable law and the applicable rules and regulations
thereunder.
Section 3.06. Regulatory Approval. To the knowledge of the First Banks
Parties, there are no circumstances, conditions or facts pertaining to the First
Banks Parties that would reasonably be expected to result in a failure to obtain
or an unreasonable delay in the receipt of any state or federal banking
regulatory approvals necessary for consummation of the Stock Purchase and the
other transactions contemplated hereby, except that in order to obtain the
required approvals, First Banks expects that it will be required to obtain
additional capital to infuse into the Bank (or First Bank when the Bank is
merged into First Bank).
Section 3.07. Financing. Nothing has come to the attention of the First
Banks Parties that causes the First Banks Parties to believe that they will be
unable to obtain the financing necessary to complete the transactions
contemplated by this Agreement.
ARTICLE IV
AGREEMENTS OF THE CIB PARTIES
Section 4.01. Business in Ordinary Course.
(a) The CIB Parties shall cause Hillside, Bank and each Bank Subsidiary
to carry on after the date hereof its respective business and the discharge or
incurrence of obligations and liabilities only in the usual, regular and
ordinary course of business, as heretofore conducted, and by way of
amplification and not limitation, neither Hillside, Bank nor any Bank Subsidiary
will:
(i) declare or pay any dividend or make any other distribution to its
shareholders, whether in cash, stock or other property, except that,
notwithstanding any other provision of this Agreement, Hillside and
Bank shall be permitted prior to the Closing to effect the capital
distribution contemplated by Section 4.10 hereof, and CIB Capital I,
LLC (the Bank's real estate investment trust) shall be permitted prior
to the Closing to make capital distributions without restriction and/or
to discontinue and liquidate CIB Capital I, LLC; or
(ii) issue any capital stock or other stock or any options, warrants,
or other rights to subscribe for or purchase capital stock or any other
stock or any securities convertible into or exchangeable for capital
stock; or
(iii) directly or indirectly redeem, purchase or otherwise acquire any
capital stock or any other stock of Hillside, Bank or any Bank
Subsidiary; or
(iv) effect a reclassification, recapitalization, splitup, exchange of
shares, readjustment or other similar change in or to any capital
stock, or otherwise reorganize or recapitalize; or
18
(v) change its charter, certificate or articles of incorporation or
association, as the case may be, or bylaws, nor enter into any
agreement to merge or consolidate with, or sell a significant portion
of its assets to, any person or entity.
(b) The CIB Parties will assure that, without the prior written consent
of First Banks, from the date hereof through the Closing Date, Hillside and Bank
will not do any of the following or permit any Bank Subsidiary to:
(i) (A) grant any increase (other than ordinary and normal increases
consistent with past practices) in the compensation payable or to
become payable to officers or salaried employees; (B) grant or modify
any stock options; (C) except as required by law, adopt or modify any
bonus, insurance, pension, or other Employee Plan, agreement, payment
or arrangement made to, for or with any of such officers or employees;
or (D) adopt or modify any severance, salary continuation or other plan
or arrangement providing benefits to any officer, employee or former
officer of employee of Hillside, Bank or any Bank Subsidiary; or
(ii) borrow or agree to borrow any amount of funds except in the
ordinary course of business, or directly or indirectly guarantee or
agree to guarantee any obligations of others; or
(iii) make or commit to make any new loan or letter of credit or any
new or additional advance which is not now legally required under any
existing line of credit, in principal amount in excess of $2,000,000 or
that would increase the aggregate credit outstanding to any one
borrower (or group of affiliated borrowers) to more than $15,000,000
(excluding for this purpose any accrued interest or overdrafts); or
fail in any material respects to observe sound lending practices in
making loans and loans commitments; or
(iv) purchase or otherwise acquire for its own account any investment
security, except for (A) United States treasury or agency securities or
other securities of issuers in the United States rated "Investment
Grade" by Standard and Poor's Ratings Services or Xxxxx'x Investors
Service, maturing no later than three years from the date of purchase
by Bank or the applicable Bank Subsidiary, and (B) securities issued or
guaranteed by the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation, in either case having an average
remaining life not greater than three years at the time of purchase; or
(v) enter into any agreement, contract or commitment having a term in
excess of three (3) months other than letters of credit, loan
agreements, deposit agreements, and other lending, credit and deposit
agreements and documents made in the ordinary course of business; or
(vi) except in the ordinary course of business, place on any of its
assets or properties any mortgage, pledge, lien, charge, or other
encumbrance; or
19
(vii) except in the ordinary course of business, cancel or accelerate
any material indebtedness owing to Hillside, Bank or a Bank Subsidiary
or any claims which Hillside, Bank or any Bank Subsidiary may possess,
or waive any material rights of substantial value; or
(viii) except for the transfers contemplated by Section 4.10 hereof,
sell or otherwise dispose of any real property or any material amount
of any tangible or intangible personal property, other than properties
acquired in foreclosure or otherwise in the ordinary collection of
indebtedness; or
(ix) foreclose upon or otherwise take title to or possession or control
of any real property without first obtaining a phase one environmental
report thereon which indicates that the property is free of pollutants,
contaminants or hazardous or toxic waste materials; provided, however,
that Bank and the Bank Subsidiaries shall not be required to obtain
such a report with respect to single family, non-agricultural
residential property of one acre or less to be foreclosed upon unless
the entity proposing to acquire the property has reason to believe that
such property might contain any such waste materials or otherwise might
be contaminated; or
(x) commit any act or fail to do any act which will cause a breach of
any agreement, contract or commitment and which will have a material
adverse effect on the business, financial condition, earnings or
prospects of Hillside, Bank or a Bank Subsidiary; or
(xi) violate any law, statute, rule, governmental regulation or order,
which violation might have a material adverse effect on the business,
financial condition, or earnings of Hillside, Bank or a Bank
Subsidiary; or
(xii) purchase any real or personal property or make any other capital
expenditure where the amount paid or committed therefor is in excess of
$100,000; or
(xiii) increase or decrease the rate of interest paid on time deposits
or on certificates of deposit, except in a manner consistent with past
practices, or solicit or accept any Brokered Deposits.
(c) The CIB Parties shall use their best efforts to satisfy the
conditions to closing set forth in Article VI hereof and to consummate the Stock
Purchase and the other transactions contemplated hereby as soon as practicable.
None of the CIB Parties shall knowingly take or permit any action that would
result in a material breach of any of the terms or provisions of this Agreement
or would cause any of the representations or warranties set forth in Article II
hereof to be or become untrue in any material respect.
(d) Each of the CIB Parties shall promptly notify First Banks of the
occurrence of any matter or event known to them that is materially adverse to
the business, operations, properties, assets, condition (financial or
otherwise), or prospects of Bank and the Bank Subsidiaries, taken as a whole.
20
(e) None of the CIB Parties shall solicit or encourage, or hold
discussions or negotiations with or provide information to, any person or entity
in connection with any proposal for the acquisition of all or a substantial
portion of the business, assets, shares of capital stock or other securities or
assets of Hillside, Bank or any Bank Subsidiary (except MICR and Canron). Each
of the CIB Parties shall promptly advise First Banks of its receipt of any such
proposal or inquiry relating to any of the foregoing and the substance thereof.
Section 4.02. Breaches. The CIB Parties shall each, in the event it has
knowledge of the occurrence, or impending or threatened occurrence, of any event
or condition which would cause or constitute a breach (or would have caused or
constituted a breach had such event occurred or been known prior to the date
hereof) of any of its representations or agreements contained or referred to
herein, give prompt written notice thereof to First Banks and use its best
efforts to prevent or promptly remedy the same.
Section 4.03. Consummation of Agreement. The CIB Parties shall not take
any action inconsistent with their approvals of this Agreement and the
transactions contemplated hereby, and they shall perform all of their
obligations pursuant to this Agreement and use reasonable efforts in good faith
to satisfy the various conditions to Closing and to cause the Stock Purchase and
the Subsequent Mergers to be consummated as soon as practicable. The CIB Parties
shall furnish to First Banks in a timely manner all information, data and
documents requested by First Banks for filing with any regulatory authority or
otherwise required to effect the transactions contemplated by this Agreement
(including the Subsequent Mergers) and shall join with First Banks in making any
application with respect to which First Banks reasonably determines it is
necessary or desirable for any of the CIB Parties to do so. When requested to do
so by First Banks, (i) Hillside in its capacity as the sole shareholder of the
Bank will formally approve the merger of the Bank with and into First Bank, and
(ii) the Bank will execute a short form agreement of merger for the purpose of
carrying out such merger.
Section 4.04. Environmental Reports. As soon as reasonably practical,
but not later than forty-five (45) days after the date hereof, CIB Marine shall
cause Hillside and Bank to obtain, and shall provide to First Banks, a report of
a phase one environmental investigation on all real property owned, leased or
operated by Bank or any Bank Subsidiary as of the date hereof (other than space
in (i) buildings in which the amount of space leased and operated by the Bank or
applicable Bank Subsidiary is less than fifty percent of the total leasable
space in such building, and (ii) retail and similar establishments leased by
Bank for automatic teller machines, and not including property owned or operated
by Canron), and within ten (10) days after the acquisition or lease of any real
property acquired or leased by Bank or any Bank Subsidiary after the date hereof
(with the exceptions stated above), except as otherwise provided in Section
4.01(b)(ix). If required by the phase one investigation, in First Banks'
reasonable opinion, CIB Marine shall obtain and provide to First Banks a report
of a phase two investigation on properties requiring such additional study.
First Banks shall have fifteen (15) business days after its receipt of any such
phase two report to notify the CIB Parties of any objection to the contents of
such report. Should the cost of taking all remedial and
21
corrective actions and measures (i) required by applicable law or (ii)
recommended or suggested by such report or prudent in light of serious life,
health or safety concerns, in the aggregate, exceed the sum of $1,000,000 as
reasonably estimated by an environmental expert retained for such purpose by
First Banks and reasonably acceptable to CIB Marine, or if the cost of such
actions and measures cannot be so reasonably estimated by such expert to be
$1,000,000 or less with a reasonable degree of certainty, then First Banks shall
have the right pursuant to Section 7.05 hereof, for a period of ten (10)
business days following receipt of such estimate or indication that the cost of
such actions and measures can not be so reasonably estimated, to terminate this
Agreement, which shall be First Banks' sole remedy in such event.
Section 4.05. Access to Information; Reports. (a) The CIB Parties shall
permit First Banks reasonable access, in a manner which will avoid undue
disruption or interference with normal operations of Hillside and Bank, to their
properties, and shall cause the Bank Subsidiaries to provide to First Banks
comparable access to their properties, and the CIB Parties shall cause Hillside,
Bank and the Bank Subsidiaries to disclose and make available to First Banks all
books, documents, papers and records relating to the assets, stock ownership,
properties, operations, obligations and liabilities of Hillside, Bank and the
Bank Subsidiaries including, but not limited to, all books of account (including
the general ledger), tax records, minute books of directors' and shareholders'
meetings, organizational documents, material contracts and agreements, loan
files, filings with any regulatory authority, internal accountants' workpapers,
litigation files (with the exception of documents protected by attorney work
product doctrine and/or the attorney client privilege), plans affecting
employees, and any other business activities or prospects in which First Banks
may have a reasonable and legitimate interest in furtherance of the transactions
contemplated by this Agreement, except as prohibited by law. First Banks will
hold any nonpublic information in confidence in accordance with the provisions
of Section 8.01 hereof.
(b) The CIB Parties shall deliver to First Banks on or before the
fifteenth day of each month following the date of this Agreement the monthly
asset quality reports prepared as of the end of the preceding month for the
internal use of the CIB Parties, which reports shall include information
regarding loans which are rated "watch list" and "past due."
(c) Promptly following the execution of this Agreement, CIB Marine and
First Banks shall enter into a mutually acceptable common interest agreement.
Pursuant to such agreement, CIB Marine shall provide to First Banks access to
all written reports regarding internal investigations conducted on behalf of CIB
Marine and its affiliates ("Investigative Reports") promptly after CIB Marine's
receipt thereof, except for any portions thereof which do not pertain directly
or indirectly to Hillside, Bank or a Bank Subsidiary. If requested by First
Banks, CIB Marine shall instruct its professional advisers involved in the
preparation of the Investigative Reports to respond to First Banks' inquiries
relating thereto.
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Section 4.06. Consents to Contracts and Leases. The CIB Parties shall
use their best efforts to obtain all consents required for the consummation of
the Stock Purchase in accordance with all material leases, licenses, contracts,
indentures, instruments and rights to which Hillside, Bank or a Bank Subsidiary
is a party or by which any of them is bound.
Section 4.07. Subsequent Financial Statements. (a) As soon as available
after the date hereof, the CIB Parties shall deliver to First Banks (i) monthly
unaudited consolidated balance sheets and profit and loss statements of Bank for
each month beginning as of July 1, 2004 prepared for internal use; (ii) Reports
of Condition and Income of Bank for each quarterly period from June 30, 2004
through the Closing; and (iii) all other financial reports or statements
submitted by Bank or any Bank Subsidiary (or by CIB Marine or Hillside with
respect to Bank or any Bank Subsidiary) to any regulatory authority after the
date hereof, to the extent permitted by law (collectively, the "Subsequent
Financial Statements"). The Subsequent Financial Statements shall be prepared on
a basis consistent with past accounting practices and GAAP, shall fairly
present, to the best knowledge of the CIB Parties, the financial condition and
results of operations for the dates and periods presented, and, to the best
knowledge of the CIB Parties, shall not include any material assets or omit to
state any material liabilities, absolute or contingent, or other facts, which
inclusion or omission would render such financial statements misleading in any
material respect. The CIB Parties shall promptly notify First Banks if there are
any material adjustments to the Bank Financial Statements as a result of the
ongoing external audit of the CIB Marine consolidated financial statements.
(b) From the date hereof through the Closing Date and following the
Closing, CIB Marine will cooperate with the First Banks Parties by providing
information reasonably requested by them to enable the First Banks Parties to
complete an audit of the financial statements of Hillside, the Bank and the
Acquired Bank Subsidiaries and to file audited financial statements with the
Securities and Exchange Commission pursuant to the requirements of Form 8-K
under the Securities Exchange Act of 1934, as amended.
Section 4.08. Tax Covenants. (a) CIB Marine shall, on or before
December 31, 2004, file Form 1139, Corporation Application for Tentative Refund,
with the Internal Revenue Service requesting a tentative refund of federal
income Tax with respect to the year ended December 31, 2003 (the "Tax Refund").
CIB Marine shall provide a copy of the Form 1139 to First Banks for review at
least two days prior to the filing thereof. CIB Marine shall pay to First Banks
$9,126,000, as follows. CIB Marine shall, on the later of the Closing Date or
within 10 days after receipt of the Tax Refund, pay to First Banks the lesser of
the full amount of the Tax Refund or $9,126,000. CIB Marine shall, no later than
October 15, 2005, pay to First Banks the difference between $9,126,000 and the
amount, if any, paid to First Banks pursuant to the preceding sentence.
(b) The CIB Parties shall terminate all tax sharing agreements and
similar agreements with respect to Hillside, Bank and the Acquired Bank
Subsidiaries as of the Closing Date and, after the Closing Date, Hillside, Bank
and the Acquired Bank Subsidiaries shall not be bound thereby or have any
liability thereunder.
23
(c) CIB Marine shall prepare and file, or cause to be prepared and
filed, all tax returns for Hillside, Bank and the Acquired Bank Subsidiaries
with respect to periods ending prior to or on the Closing Date for which a
consolidated, unitary or combined return of CIB Marine will include the
operations of Hillside, Bank and the Acquired Bank Subsidiaries, and such Tax
Returns shall be prepared consistent with preceding years and under applicable
tax authorities. CIB Marine shall permit First Banks and its subsidiaries to
review and comment on each return described in the preceding sentence prior to
the filing thereof. The Tax Returns for the year ended December 31, 2003 shall
be made available to First Banks no later than 2 days prior to its due date, and
all subsequent Tax Returns shall be made available to First Banks no later than
15 days prior to their due dates. CIB Marine shall prepare and file, as
applicable, or cause to be prepared and filed, as applicable, all Tax Returns
for CIB Capital I, LLC for the year ended December 31, 2004.
(d) After the Closing Date, CIB Marine shall provide to First Banks all
information reasonably requested in order for First Banks to file tax returns
and reports relating to Hillside, Bank and the Acquired Bank Subsidiaries.
(e) First Banks shall not (and shall not cause or permit Hillside,
Bank, and the Acquired Bank Subsidiaries to) amend, refile or otherwise modify
(or grant an extension of any statute of limitations with respect to) any tax
return relating in whole or in part to CIB Marine and its subsidiaries with
respect to any taxable year or period ending on or before the Closing Date
without the prior written consent of CIB Marine, which consent may not be
unreasonably withheld.
(f) In the event (i) First Banks or its Affiliates or (ii) CIB Marine
or its affiliates receive notice or obtain any knowledge of any pending or
threatened tax audits or assessments or other disputes concerning Taxes with
respect to which the other party may incur liability under this Article, the
party in receipt of such notice or knowledge shall promptly notify the other
party of such matter in writing. Such notice shall include a copy of written
correspondence, if any, and shall state the name of the organization or agency
that will conduct the audit, the nature of the proceedings and the periods
involved.
(g) Subject to the balance of this subsection (g), CIB Marine shall
have the right to represent the interests of Hillside, Bank, and the Acquired
Bank Subsidiaries in any Tax audit or administrative or court proceeding
involving Hillside, Bank or any of the Bank Subsidiaries (collectively, "Audit")
relating to any period for which CIB Marine may be liable under this Agreement
for any Tax, and to employ counsel of its choice at its expense, provided that
CIB Marine shall provide prompt written notice to First Banks of any such Audit
and of any substantive meeting or telephone conference with any taxing authority
with respect to the Audit, and First Banks shall have the right to participate
at its expense in any such meeting or conference. Notwithstanding the preceding
sentence, CIB Marine shall not settle, either administratively or after the
commencement of litigation, any Audit that could reduce the Tax Benefits by up
to $2,500,000 without the prior written consent of First Banks, which consent
shall not be unreasonably withheld. Notwithstanding the preceding two sentences,
if any issue or combination of issues raised or under consideration in any Audit
could reduce the Tax Benefits by more than $2,500,000, First Banks shall have
the sole
24
right to represent the interests of the Hillside, Bank and the Acquired Bank
Subsidiaries in the Audit or subsequent litigation, and CIB Marine shall execute
any document, including a Power of Attorney, reasonably requested to permit
First Banks to carry out such representation. Notwithstanding the preceding
sentence, First Banks shall not settle, either administratively or after the
commencement of litigation, any Audit without the prior written consent of CIB
Marine, which consent shall not be unreasonably withheld.
(h) Notwithstanding anything in this Agreement to the contrary, CIB
Marine does not make any representation or warranty to First Banks and shall
have no responsibility or obligation whatsoever to First Banks with respect to
First Banks' ability to utilize for tax purposes in taxable years beginning on
or after the Closing Date, any net operating losses, built-in losses or other
tax attributes, of Hillside, Bank, and the Acquired Bank Subsidiaries.
(i) CIB Marine does not intend to make any election pursuant to
Internal Revenue Code Section 338 or the regulations thereunder with respect to
Hillside, Bank and the Acquired Bank Subsidiaries. Further, CIB Marine shall not
be liable for any tax or other liability resulting from any similar election
made by First Banks.
Section 4.09. Termination of Other Arrangements; Loan Participations.
(a) The CIB Parties shall terminate all agreements and arrangements between or
among Hillside, Bank and any Acquired Bank Subsidiary, on the one hand, and CIB
Marine or any of its affiliates, on the other hand (other than loans to officers
and directors and other related interests in compliance with applicable law)
("Intercompany Agreements"), such terminations to be effective on the Closing
Date or such later date as shall be specified by First Banks. The Intercompany
Agreements shall include, but not be limited to, all information technology and
item processing arrangements, management agreements, and all other agreements
and arrangements pursuant to which Hillside, Bank or an Acquired Bank Subsidiary
incurs any expense or liability or provides any service; provided, however, that
agreements and arrangements pertaining to loan participations shall not be
deemed Intercompany Agreements and shall not be terminated. Hillside, Bank and
the Acquired Bank Subsidiaries shall not be charged more than $100,000 in the
aggregate in fees and costs in connection with conversion of Bank's data
processing system to First Banks' system.
(b) Following the Closing, Bank (which term shall include First Bank as
successor following the merger of Bank into First Bank) shall have the right to
be designated and to act as Agent with respect to each loan participation in
which Bank holds the largest portion of the underlying credit and such credit is
at any time (i) classified internally by CIB Marine or by an bank regulatory
authority as "substandard" or worse, (ii) 90 days or more past due, (iii)
non-accruing, or (iv) in the process of foreclosure. Bank may exercise such
right by written notice to CIB Marine, and upon receipt of such a notice CIB
Marine shall promptly cause its subsidiaries to execute such documents as are
reasonably requested by First Banks in order to enable Bank to act as Agent with
respect to such credit.
25
Section 4.10. Transfer of Certain Assets. The CIB Parties shall take
all necessary corporate action to transfer to CIB Marine or a subsidiary of CIB
Marine (other than the Bank or Hillside) (i) the ownership of all the stock or
other ownership interests of MICR and Canron (the "Subsidiary Stock"), and (ii)
all right, title and interest of the Bank in (a) the Bank's loan secured by
property at 0 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx (the "6 North Michigan
Loan"), and (b) the Bank's claims against third-parties for recovery on the 6
North Michigan Loan, including but not limited to the Bank's pending claim in
the United States District Court for the Northern District of Illinois, Eastern
Division against defendants Esmail, Yousif, Global Real Estate Investors, LLC
et. al. as set forth in the Bank's complaint (the "Global Real Estate Claim").
The transfer shall be completed immediately prior to Closing, subject to
satisfaction of the conditions to the Closing set forth in Section 6.02 of this
Agreement, by one of the following methods, at the election of the CIB Parties:
(i) through a capital distribution of the Subsidiary Stock and the 6 North
Michigan Loan paid by the Bank to Hillside and then by Hillside to CIB Marine,
or (ii) by a sale of the Subsidiary Stock, the 6 North Michigan Loan and the
Global Real Estate Claim from the Bank to CIB Marine or one of its subsidiaries
other than the Bank or Hillside in exchange for a cash payment. In the event
that the CIB Parties elect to transfer the Subsidiary Stock, the 6 North
Michigan Loan and the Global Real Estate Claim by sale, the First Bank Parties
agree to advance to CIB Marine the funds necessary to pay for the Subsidiary
Stock, the 6 North Michigan Loan and the Global Real Estate Claim, subject to
satisfaction of the conditions to Closing set forth in Section 6.01 of this
Agreement and against the undertaking of CIB Marine to repay such funds
immediately after Closing, and the Purchase Price set forth in Section 1.01 of
this Agreement shall be increased by the amount of cash actually received by the
Bank. Notwithstanding whether the transfer occurs through a capital distribution
or sale, the Global Real Estate Claim shall in all cases be assigned by the Bank
to CIB Marine prior to Closing; and if the transfers other than of the Global
Real Estate Claim occur through a capital distribution, then the First Banks
Parties agree to advance CIB Marine the funds necessary to pay for the Global
Real Estate claim only, subject to satisfaction of the conditions to Closing set
forth in Section 6.01 of this Agreement and against the undertaking of CIB
Marine to repay such funds immediately after Closing, and the Purchase Price set
forth in Section 1.01 shall be increased by the amount of cash actually received
by the Bank in consideration of the Global Real Estate Claim. The CIB Parties
shall promptly prepare and file with the appropriate bank regulatory agencies
any application or notice required in order to effect the transfer of the
Subsidiary Stock, the 6 North Michigan Loan and the Global Real Estate Claim,
shall use their best efforts to obtain any necessary approvals and shall keep
the First Bank Parties reasonably informed as to the status thereof.
Section 4.11. Pledge of Champaign Bank Stock. (a) Concurrently with the
Closing, CIB Marine shall (i) pay off a sufficient amount owed under the notes
issued to M&I pursuant to the Amended Credit Agreement with M&I to cause M&I to
release from its collateral security agreement the stock of Central Illinois
Bank, Champaign, Illinois (the "Champaign Bank"), (ii) deliver to First Banks
written proof, in a form satisfactory to First Banks, confirming that the stock
of the Champaign Bank has been released by M&I and is no longer pledged or
otherwise encumbered, (iii) deliver to First Banks the stock certificate(s)
representing all of the issued and outstanding shares of capital stock of the
Champaign Bank (the "Champaign Bank Stock"), and (iv) enter into a collateral
pledge agreement with First Banks ("Pledge Agreement") whereby CIB Marine
pledges the
26
Champaign Bank Stock to First Banks under the terms and conditions and for the
purposes set forth in Section 4.11(b).
(b) The Pledge Agreement shall contain customary provisions for the
protection of a secured party and shall provide that First Banks may exercise
its rights thereunder by foreclosing upon the Champaign Bank Stock in order to
satisfy the indemnification liability owed by CIB Marine to First Banks under
Section 8.06(a)(iii) in the event CIB Marine is otherwise unable to satisfy its
Section 8.06(a)(iii) indemnification obligation whether in whole or in part. The
Pledge Agreement shall further provide that CIB Marine shall be entitled to
receive from First Banks any residual value associated with the Champaign Bank
Stock if First Banks takes title to and forecloses upon that pledged collateral
and the value of the collateral exceeds the Section 8.06(a)(iii) liability.
Furthermore, the Pledge Agreement shall provide that it will terminate upon the
earlier of the date (i) which is two years following the Closing Date, (ii) when
CIB Marine's Equity-to-TPS Ratio, as that term is defined below, equals or
exceeds 2-to-1 but not before CIB Marine provides written notice to First Banks
to this effect, (iii) when CIB Marine obtains the necessary documentation from
each holder or trustee, as the case may be, of CIB Marine's trust preferred
securities outstanding as of the Closing Date ("TPS") confirming that each
holder or trustee, as the case may be, does not object, under the terms of their
respective indenture agreement, to the sale of Hillside as contemplated by this
Agreement or a judicial determination is reached that the holders or trustees
have no right to object, or (iv) the TPS are paid off in full and evidence to
that effect is provided to First Banks in a form reasonably satisfactory to
First Banks. The Equity-to-TPS Ratio shall be derived as of the end of each
calendar quarter following the Closing Date by dividing (x) CIB Marine's total
consolidated stockholders' equity, as reported by CIB Marine in its FRY-9 filed
with the Federal Reserve Bank of Chicago, by (y) the amount of TPS, as reported
by CIB Marine in the FRY-9, less the principal amount of (I) TPS as to which CIB
Marine has obtained the necessary documentation confirming the non-objection of
the holders and/or the trustees as stated above or a judicial determination has
been reached that the holders and/or trustees have no right to object as stated
above, and (II) any TPS reported on such FRY-9 that have been paid off in full.
Section 4.12. 0 Xxxxx Xxxxxxxx Xxxxxx Loan. CIB Marine shall pay to
First Banks ten percent (10%) of any and all amounts recovered by CIB Marine on
the 0 Xxxxx Xxxxxxxx Xxxxxx Loan, net of any and all expenses, costs and
charges, including but not limited to attorneys' fees, paid or payable by CIB
Marine or any of its subsidiaries other than Bank or Hillside. CIB Marine shall
have no obligation to pay monies under this Section 4.12 until all controversies
with respect to the 0 Xxxxx Xxxxxxxx Xxxxxx Loan, in the reasonable judgment of
CIB Marine, have been completely and absolutely resolved.
Section 4.13. Cooperation Regarding CIB Marine Commercial Financial,
LLC. Prior to the Closing, CIB Marine will take actions reasonably requested by
First Banks in order to assure that the First Banks Parties and First Bank are
not materially and adversely affected by limitations on competition and
solicitation to which CIB Marine Commercial Financial, LLC is subject.
27
ARTICLE V
AGREEMENTS OF THE FIRST BANKS PARTIES
Section 5.01. Regulatory Approvals; Financing. (a) First Banks shall
file within 45 days after the date hereof all regulatory applications required
in order to consummate the Stock Purchase, including but not limited to the
necessary application for the prior approval of (i) the Stock Purchase by the
Federal Reserve Board and (ii) the merger of the Bank into First Bank by the
Missouri Department of Finance, use its best efforts to obtain all necessary
approvals and authorizations required to consummate the transactions
contemplated by this Agreement, keep the CIB Parties reasonably informed as to
the status of such applications and make available to the CIB Parties, upon
reasonable request, copies of such applications and any supplementally filed
materials. The First Banks Parties shall cooperate with the CIB Parties with
respect to filing the application or notice and obtaining any regulatory
approvals required in order to effect the transfer contemplated by Section 4.10
hereof. If required by the Federal Deposit Insurance Corporation, the First
Banks Parties shall enter into a Capital Maintenance and Commitment Guarantee
effective after the Closing.
(b) First Banks will use its best efforts to obtain the additional
capital referred to in Section 3.06 through the sale of trust preferred
securities and will keep CIB Marine reasonably informed regarding such efforts.
Not later than 60 days after the date hereof, First Banks will provide to CIB
Marine a written description in reasonable detail of the status of its efforts
to obtain such financing.
Section 5.02. Breaches. Each of the First Banks Parties shall, in the
event either has knowledge of the occurrence, or impending or threatened
occurrence, of any event or condition which would cause or constitute a breach
(or would have caused or constituted a breach had such event occurred or been
known prior to the date hereof) of any of its representations or agreements
contained or referred to herein, give prompt written notice thereof to the CIB
Parties and use their best efforts to prevent or promptly remedy the same.
Section 5.03. Consummation of Agreement. The First Banks Parties shall
perform all of their obligations pursuant to this Agreement and use their
reasonable efforts in good faith to satisfy the various conditions to Closing
and to cause the Stock Purchase to be consummated as soon as practicable.
Section 5.04. Employee Benefits. First Banks shall provide the benefits
described in this Section 5.04 with respect to each person who remains an
employee of Bank or any Acquired Bank Subsidiary following the Closing Date
(each a "Continued Employee"). Subject to First Banks' ongoing right to adopt
subsequent amendments or modifications of any plan referred to in this Section
5.04 or to terminate any such plan, in First Banks' sole discretion, each
Continued Employee shall be entitled, as a new employee of a subsidiary of First
Banks, to participate in such employee benefit plans, as defined in Section 3(3)
of ERISA, or any non-qualified employee benefit plans or deferred compensation,
stock option, bonus or incentive plans, or other employee benefit or fringe
benefit programs as may be in effect generally for employees of all of First
Banks' subsidiaries (the
28
"First Banks Plans"), if and as a Continued Employee shall be eligible and, if
required, selected for participation therein under the terms thereof and
otherwise shall not be participating in a similar plan which is maintained by a
Bank Subsidiary after the Effective Time. Continued Employees shall participate
therein on the same basis as similarly situated employees of other subsidiaries
of First Banks. All such participation shall be subject to the terms of such
plans as may be in effect from time to time, and this Section 5.04 shall not
give Continued Employees any rights or privileges superior to those of other
employees of First Banks and its subsidiaries. First Banks may terminate or
modify all Employee Plans, and First Banks' obligations under this Section 5.04
shall not be deemed or construed so as to provide duplication of similar
benefits but, subject to that qualification, First Banks shall credit each
Continued Employee with his or her term of service with Hillside, Bank and the
Bank Subsidiaries, for purposes of vesting and any age or period of service
requirements for commencement of participation with respect to any First Banks
Plan in which Continued Employees may participate. Nothing in this Agreement
shall obligate First Banks, SF Company, Bank, any Bank Subsidiary or any other
entity to employ any person or to continue to employ any person for any period
of time.
Section 5.05. Tax Matters after the Closing Date. First Banks shall
prepare and file, or cause to be prepared and filed, all tax returns for
Hillside, Bank and the Bank Subsidiaries for all periods ending after the
Closing Date, except with respect to CIB Capital I, LLC, as referenced in
Section 4.08(c).
ARTICLE VI
CONDITIONS PRECEDENT TO THE STOCK PURCHASE
Section 6.01 Conditions to the Obligations of the First Banks Parties.
The obligations of the First Banks Parties to effect the Stock Purchase and the
other transactions contemplated by this Agreement shall be subject to the
satisfaction (or waiver by First Banks) prior to or on the Closing Date of the
following conditions:
(a) the representations and warranties made by the CIB Parties in this
Agreement shall be true in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
or given on and as of the Closing Date, except where the failure of such
representations and warranties to be true, in the aggregate, does not reflect a
material adverse change in the financial condition, results of operations,
business or prospects of Hillside, Bank and the Acquired Bank Subsidiaries,
taken as a whole;
(b) the CIB Parties shall have performed and complied in all material
respects with all of their respective obligations and agreements required to be
performed hereunder prior to the Closing Date;
(c) no temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Stock Purchase shall
be in effect, nor shall any proceeding by any regulatory
29
authority or other person seeking any of the foregoing be pending. There shall
not be any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Stock Purchase which makes the
consummation of the Stock Purchase illegal;
(d) all necessary approvals, consents and authorizations required by
law for consummation of the Stock Purchase and the Subsidiary Stock Dividend
shall have been obtained, and all waiting periods required by law shall have
expired;
(e) First Banks shall have received the environmental reports required
by Section 4.04 hereof and shall not have elected pursuant to Section 7.05
hereof to terminate this Agreement;
(f) First Banks shall have received all documents required to be
received from the CIB Parties on or prior to the Closing Date, all in form and
substance reasonably satisfactory to First Banks; and
(g) the parties shall not be negotiating a revised Purchase Price as
contemplated by the last sentence of Section 1.01 hereof.
Section 6.02. Conditions to the Obligations of the CIB Parties. The
obligations of the CIB Parties to effect the Stock Purchase and the other
transactions contemplated by this Agreement shall be subject to the satisfaction
(or waiver by CIB Marine) prior to or on the Closing Date of the following
conditions:
(a) the representations and warranties made by the First Banks Parties
in this Agreement shall be true in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made or given on the Closing Date, except where the failure of such
representations and warranties to be true, in the aggregate, does not materially
and adversely affect the ability of the First Banks Parties to consummate the
transactions contemplated hereby;
(b) the First Banks Parties shall have performed and complied in all
material respects with all of their respective obligations and agreements
required to be performed hereunder prior to the Closing Date;
(c) no temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Stock Purchase shall
be in effect, nor shall any proceeding by any bank regulatory authority or other
person seeking any of the foregoing be pending. There shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Stock Purchase which makes the consummation of the
Stock Purchase illegal;
(d) all necessary material approvals, consents and authorizations
required by law for consummation of the Stock Purchase and the Subsidiary Stock
Dividend shall have been obtained, and all waiting periods required by law shall
have expired;
30
(e) The CIB Parties shall have received all documents required to be
received from the First Banks Parties on or prior to the Closing Date, all in
form and substance reasonably satisfactory to the CIB Parties;
(f) CIB Marine shall be released from the Capital Maintenance and
Commitment Guarantee with respect to the Bank, executed June 4, 2004 and
submitted to the FDIC;
(g) CIB Marine shall have received from Xxxxxx, Xxxxxxxx & Company,
Incorporated a fairness opinion dated within 30 days following the date hereof,
in form and substance reasonably satisfactory to CIB Marine, to the effect that
the Stock Purchase is fair, from a financial point of view, to the shareholders
of CIB Marine; and
(h) the parties shall not be negotiating a revised Purchase Price as
contemplated by the last sentence of Section 1.01 hereof.
ARTICLE VII
TERMINATION
Section 7.01. Mutual Agreement. This Agreement may be terminated by the
mutual written agreement of the parties at any time prior to the Closing Date.
Section 7.02. Breach of Agreements. In the event that there is a
material breach of any of the representations, warranties or agreements of the
First Banks Parties, on the one hand, or the CIB Parties, on the other hand,
which breach is not cured within thirty (30) days after written notice to cure
such breach is given to the breaching party, then the non-breaching party may
terminate and cancel this Agreement by providing written notice of such action
to the other parties hereto.
Section 7.03. Failure of Conditions. In the event that any of the
conditions to the obligations of a party as set forth in Article VI hereof are
not satisfied or waived on or prior to the Closing Date, and if any applicable
cure period provided in Section 7.02 hereof has lapsed, then such party may
terminate and cancel this Agreement by delivery of written notice of such action
to the other parties.
Section 7.04. Denial of Regulatory Approval. If any regulatory
application filed pursuant to Section 5.01 hereof should be finally denied or
disapproved by a regulatory authority, then this Agreement thereupon shall be
deemed terminated and canceled; provided, however, that a request for additional
information or undertaking by First Banks, as a condition for approval, shall
not be deemed to be a denial or disapproval so long as First Banks diligently
provides the requested information or undertaking. In the event an application
is denied pending an appeal, petition for review or similar such act on the part
of First Banks (hereinafter referred to as the "Appeal"), then
31
the application will be deemed denied unless First Banks prepares and timely
files an Appeal and continues the appellate process for purposes of obtaining
the necessary approval.
Section 7.05. Environmental Reports. First Banks may terminate this
Agreement to the extent provided in Section 4.04 by giving written notice of
such termination to the CIB Parties.
Section 7.06. Regulatory Enforcement Matters. In the event that
Hillside, Bank or any Bank Subsidiary is or shall become a party or subject to
any new or adversely amended written agreement, memorandum of understanding,
cease and desist order, imposition of civil money penalties or other regulatory
enforcement action or proceeding with any regulatory authority after the date of
this Agreement which is not disclosed in Section 2.06 of the Disclosure Schedule
and is based upon acts or allegations of unsafe and/or unsound practices, then
First Banks may terminate this Agreement by giving written notice of such
termination to the CIB Parties.
Section 7.07. Unilateral Termination. If the Closing Date does not
occur on or prior to December 31, 2004, then this Agreement may be terminated by
any party by giving written notice to the other parties. First Banks or CIB
Marine may also exercise the right to terminate this Agreement if such right
arises pursuant to the last sentence of Section 1.01.
Section 7.08. Break-up Fee. (a) CIB Marine hereby agrees to pay to
First Banks, and First Banks shall be entitled to payment of, a fee in the
amount of $2,500,000.00 (the "Fee") in immediately available funds within five
business days after a proper written demand therefor by First Banks following
the occurrence of a Purchase Event (as defined herein), provided, that First
Banks' right to receive the Fee, and CIB Marine's obligation to pay the Fee,
shall terminate if any of the following (a "Fee Termination Event") occurs prior
to the occurrence of a Purchase Event: (i) the Closing; (ii) termination of this
Agreement in accordance with the provisions hereof if such termination occurs
prior to the occurrence of a Preliminary Purchase Event (as defined herein),
except a termination by First Banks pursuant to Section 7.02 hereof or a
termination by the CIB Parties because the First Banks Parties have been denied
regulatory approval necessary in order to consummate the Stock Purchase or have
withdrawn an application for regulatory approval; or (iii) the expiration of
eighteen months after termination of this Agreement if such termination follows
the occurrence of a Preliminary Purchase Event or a termination by First Banks
pursuant to Section 7.02 hereof (provided that if a Preliminary Purchase Event
continues or occurs beyond such termination, the Fee Termination Event shall be
eighteen months after the expiration of the Last Preliminary Purchase Event but
in no event more than 24 months after such termination). The "Last Preliminary
Purchase Event" shall mean the last Preliminary Purchase Event to expire.
(b) The term "Preliminary Purchase Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) CIB Marine, without having received First Banks' prior written
consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as defined herein) with any person (the term
"person" for purposes of this Agreement having the meaning assigned
32
thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934 and the rules and regulations thereunder) other than First
Banks or its affiliate (an "First Banks Affiliate"), or the Board of
Directors of Hillside or Bank shall have approved or recommended that
the shareholders of such company approve or accept any Acquisition
Transaction with any person other than First Banks or a First Banks
Affiliate. For purposes of this Agreement, "Acquisition Transaction"
shall mean (A) a merger, consolidation or any similar transaction
involving Hillside or Bank, (B) a purchase, lease or other acquisition
of a material portion of the assets of Hillside or Bank, (C) a purchase
or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more of the
voting power of Hillside or Bank, or (D) any transaction substantially
similar in effect to any of the foregoing;
(ii)(A) any person (other than First Banks or a First Banks Affiliate)
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of any class of voting securities
of Hillside or Bank (the term "beneficial ownership" for purposes of
this Agreement having the meaning assigned thereto under Section 13(d)
of the Exchange Act and the rules and regulations thereunder), or (B)
any group (as such term is defined in Section 13(d) of the Exchange
Act) other than a group of which First Banks or a First Banks Affiliate
is a member, shall beneficially own 10% or more of any class of voting
securities of Hillside or Bank;
(iii) any person other than First Banks or a First Banks Affiliate
shall have made a bona fide proposal to any of the CIB Parties, by
public announcement or written communication, to engage in an
Acquisition Transaction;
(iv) after a proposal is made by a third party to any of the CIB
Parties to engage in an Acquisition Transaction, any of the CIB Parties
shall have breached any covenant or obligation contained in this
Agreement, such breach would entitle First Banks to terminate this
Agreement under Section 7.02 of this Agreement and such breach shall
not have been cured within 30 days after written notice thereof from
First Banks; or
(v) any person other than First Banks or a First Banks Affiliate, other
than in connection with a transaction to which First Banks has given
its prior written consent, shall have filed an application or notice
with a governmental authority or regulatory or administrative agency or
commission, domestic or foreign, for approval to engage in an
Acquisition Transaction.
(c) the Term "Purchase Event" shall mean either of the following events
or transactions occurring after the date hereof:
(i) the acquisition by any person, other than First Banks or a First
Banks Affiliate, alone or as a part of a group (as defined in Section
13(d) of the Exchange Act), of beneficial ownership of 25% or more of
the then outstanding voting securities of Hillside or Bank; or
33
(ii) the occurrence of a Preliminary Purchase Event described in
subsection (b)(i), except that the percentage referred to in clause (C)
shall be 25%.
(d) The CIB Parties shall notify First Banks promptly in writing of
their knowledge of the occurrence of any Preliminary Purchase Event or Purchase
Event, and First Banks shall be required to make a written demand for payment of
the fee not later than 90 days following its receipt of such a notice; provided,
however, that the giving of notice by the CIB Parties shall not be a condition
precedent to the right of First Banks to receive payment of the Fee.
(e) Upon payment of the Fee by CIB Marine to First Banks, this
Agreement shall immediately terminate, shall be of no further force or effect,
and the First Banks Parties shall have no rights or remedies against the CIB
Parties under the terms of this Agreement in connection with the transactions
contemplated by this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 Confidential Information. The parties acknowledge the
confidential and proprietary nature of the "Information" (as herein defined)
which has heretofore been exchanged and which will be received from each other
hereunder and agree to hold and keep the same confidential. Such Information
will include any and all financial, technical, commercial, marketing, customer
or other information concerning the business, operations and affairs of a party
that may be provided to the others, irrespective of the form of the
communications, by such party's employees or agents. Such Information shall not
include information which is or becomes generally available to the public other
than as a result of a disclosure by a party or its representatives in violation
of this Agreement. The parties agree that the Information will be used solely
for the purposes contemplated by this Agreement and that such Information will
not be disclosed to any person other than employees and agents of a party who
are directly involved in implementing the Stock Purchase, who shall be informed
of the confidential nature of the Information and directed individually to abide
by the restrictions set forth in this Section 8.01. The Information shall not be
used in any way detrimental to a party, including use directly or indirectly in
the conduct of the other party's business or any business or enterprise in which
such party may have an interest, now or in the future, and whether or not now in
competition with such other party.
Section 8.02. Publicity. First Banks and CIB Marine hereto shall
cooperate in the development and distribution of all news releases and other
public disclosures concerning this Agreement and the transactions contemplated
hereby, and they will cooperate in the development and release of such
announcements (including news releases and current reports on Form 8-K to be
distributed by CIB Marine and First Banks and, in the case of CIB Marine, a
shareholders' letter, promptly after execution of this Agreement). Neither party
shall issue any news release or make any other public disclosure concerning this
Agreement or the transactions contemplated hereby without the prior written
consent of the other party, unless such is required by law upon the written
advice of counsel or is in response to published newspaper or other mass media
reports regarding the
34
transaction contemplated hereby, in which latter event the parties shall consult
with each other to the extent practicable regarding such responsive public
disclosure.
Section 8.03. Return of Documents. Upon termination of this Agreement
without the Stock Purchase becoming effective, each party shall deliver to the
others originals and all copies of all Information made available to such party
and will not retain any copies, extracts or other reproductions, in whole or in
part, of such Information.
Section 8.04. Notices. Any notice or other communication shall be in
writing and shall be deemed to have been given or made on the date of delivery,
in the case of hand delivery, or three (3) business days after deposit in the
United States Registered Mail, postage prepaid, or upon receipt if transmitted
by facsimile telecopy or any other means, addressed (in any case) as follows:
(a) if to First Banks or SF
Company: First Banks, Inc.
000 Xxxxx X. XxXxxxxxx Xxxxxxxxx
Mail Code M1-199-014
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
with a copy to: Xxxx X. Xxxxxxx
Attorney at Law
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
(b) if to CIB Marine: CIB Marine Bancshares, Inc.
N27 X00000 Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
(c) if to Hillside: Hillside Investors, Ltd.
c/o CIB Marine Bancshares, Inc.
N27 X00000 Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
35
(d) if to CIB Bank: CIB Bank
c/o CIB Marine Bancshares, Inc.
N27 X00000 Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy of notice to any of
the CIB Parties to:
Xxxxxxxxxxx X. Xxxxxx, Esq.
Xxxxxx Xxxxxx LLP
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
or to such other address as any party may from time to time designate by written
notice to the others.
Section 8.05. Limited Survival of Representations, Warranties and
Agreements. Except for the representations, warranties and agreements set forth
in Sections 2.01-2.03, 2.05, 2.07-2.08, 2.17, 3.01-3.04, 4.08, 4.12, 5.04-5.05,
8.01, 8.04, this Section 8.05, Sections 8.06, 8.07, 8.08, 8.13 and 8.14, no
representation, warranty or agreement contained herein shall survive the
Closing. As to those representations, warranties and agreements referenced in
the preceding sentence that survive the Closing, the survival periods shall be
as set forth in (a), (b), (c) and (d) below.
(a) Section 4.11 shall survive for two years following the Closing
Date.
(b) Section 2.07(d) shall survive until the Filing Date, as defined in
Section 2.07(d).
(c) Section 2.07 (except for subsection (d)) and Sections 4.08, 4.09,
4.10, 4.12, 5.04, 5.05, 8.01, 8.04, 8.05, 8.06, 8.07, 8.08, 8.13 and 8.14 shall
survive indefinitely.
(d) Those Sections not referenced in (a), (b) or (c) above shall
survive for one year following the Closing Date.
(e) In the event that this Agreement is terminated prior to Closing in
accordance with the provisions of Article VII, the representations, warranties
and agreements set forth herein shall not survive such termination, other than
Sections 7.08, 8.01, 8.02, 8.03, 8.04, 8.05, 8.07, 8.08, 8.13 and 8.14, which
shall survive indefinitely.
Section 8.06. Indemnification. (a) For so long as the representations,
warranties and agreements of the CIB Parties survive according to the terms
hereof, CIB Marine hereby indemnifies the First Banks Parties against, and
agrees to hold each of the First Banks Parties harmless from, any and all cost,
damage, loss, liability, and expense (including, without limitation, reasonable
expenses of investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding) ("Damages") incurred or suffered
by them arising out of (i) any breach of a surviving representation or warranty
made by a CIB Party pursuant to this Agreement, (ii) any breach of any
36
surviving covenant or agreement of a CIB Party in this Agreement, or (iii) any
breach of the TPS indentures described in Section 8.06(a)(iii) of the Disclosure
Schedule, provided that (A) CIB Marine shall not be liable under this Section
8.06 unless the aggregate amount of Damages with respect to all breaches under
this Section 8.06(a) exceeds $1,000,000 (the "Threshold"), provided, however,
that in the event the aggregate amount of Damages for which the First Banks
Parties are seeking indemnification as provided in this Section 8.06(a) exceeds
the Threshold, the First Banks Parties may recover only the amount of such
Damages in excess of the Threshold, and CIB Marine's maximum liability under
Section 8.06 shall not exceed the Purchase Price actually paid by the First
Banks Parties to Hillside at Closing.
(b) For so long as the representations, warranties and agreements of
the First Banks Parties survive according to the terms hereof, the First Banks
Parties hereby indemnify the CIB Marine Parties against, and agree, for so long
as the representations, warranties and agreements of the First Banks Parties
survive according to the terms hereof, to hold each of the CIB Marine Parties
harmless from, any and all Damages incurred or suffered by them arising out of
(i) any breach of a surviving representation or warranty made by a First Banks
Party pursuant to this Agreement, (ii) any breach of any surviving covenant or
agreement of a First Banks Party in this Agreement, (iii) any and all Taxes of
Hillside, Bank, and the Acquired Bank Subsidiaries for any taxable year or
period beginning after the Closing Date, or (iv) any election made by First
Banks pursuant to Section 338 of the Code that adversely affects CIB Marine;
provided that (A) the First Banks Parties shall not be liable under this Section
8.06 unless the aggregate amount of Damages with respect to all breaches under
this Section 8.06(b) exceeds the Threshold, provided, however, that in the event
the aggregate amount of Damages for which the CIB Marine Parties are seeking
indemnification as provided in this Section 8.06(b) exceeds the Threshold, the
CIB Marine Parties may recover only the amount of such Damages in excess of the
Threshold, and the First Banks Parties' maximum liability under this Section
8.06(b) shall not exceed $10,000,000.
(c) A party seeking indemnification (the "Indemnified Party") as
provided in Section 8.06(a) or (b) shall give written notice to the other party
setting forth in reasonable detail the claim for indemnification and the amount
sought. The other party (the "Indemnifying Party"), upon receipt of such written
notice, shall have 20 days from receipt of such written notice to (i) pay or
cause to be paid to the Indemnified Party the amount of Damages specified in the
indemnification notice (or that portion thereof which the Indemnifying Party
does not contest), or (ii) notify the Indemnified Party that it wishes to
contest the indemnification claim, stating with particularity the basis on which
it contests the claim. Thereafter, the Indemnified Party and Indemnifying Party
shall, during a period of ten business days beginning on the date of such
response from the Indemnifying Party, undertake in good faith to discuss the
claim and seek a resolution of the dispute. If, at the end of such ten business
day period, a resolution is not agreed to, the Indemnified Party may direct that
the parties shall enter into a mediation process as provided below.
(d) Notwithstanding anything to the contrary in this Section 8.06, the
parties agree that a party may refrain from contesting a claim made against it
hereunder and shall not thereby be prevented from contesting such claim at a
later time, for the purpose of eliminating or reducing such party's liability as
to a later claim. However, any payment made when such party did not contest the
claim at the earlier time shall not be undone, absent clear evidence of willful
deception or fraud by
37
the Indemnified Party with respect to such earlier claim. By way of illustration
of the foregoing, if Party A claims $1,010,000 in damages and Party B determines
to pay Party A $10,000 (being the amount in excess of the Threshold) rather than
contesting the claim, Party B shall not later be prevented from challenging the
Party A's original claim for $1,010,000 in damages if Party A later claims
additional damages, whether or not related to the original $1,010,000 claim; the
$10,000 earlier paid by Party B in satisfaction of Party A's initial claim of
$10,000 in damages, however, shall not be reversible.
(e) Except as provided herein, no civil action with respect to any
dispute, claim or controversy arising out of or relating to this Agreement may
be commenced until the matter has first been submitted to JAMS ADR Services
("JAMS"), or its successor, in Chicago, Illinois, for mediation. Either party
may commence mediation by providing to JAMS and the other party a written
request for mediation, setting forth the subject of the dispute and the relief
requested. The parties will cooperate with JAMS and with one another in
selecting a mediator from JAMS' panel of neutrals, and in scheduling the
mediation proceedings. The parties covenant that they will participate in the
mediation in good faith, and that they will share equally in the costs of the
mediator. All offers, promises, conduct and statements, whether oral or written,
made in the course of the mediation by any of the parties, their agents,
employees, experts and attorneys, and by the mediator and any JAMS employees,
are confidential, privileged and inadmissible for any purpose, including
impeachment, in any litigation or other proceeding involving the parties,
provided that evidence that is otherwise admissible or discoverable shall not be
rendered inadmissible or non-discoverable as a result of its use in the
mediation. Either party may seek equitable relief prior to or during the
pendency of the mediation to preserve the status quo pending the completion of
that process. Except for such an action to obtain equitable relief, neither
party may commence a civil action with respect to the matters submitted to
mediation until after the completion of the initial mediation session, or 45
days after the date of filing the written request for mediation, whichever
occurs first. Mediation may continue after the commencement of a civil action,
if the parties so desire. The provisions of this Section 8.06(e) may be enforced
by any court of competent jurisdiction, and the party seeking enforcement shall
be entitled to an award of all costs, fees and expenses, including attorneys'
fees, to be paid by the party against whom enforcement is ordered.
Notwithstanding anything in this paragraph (e) to the contrary, any party may
file a civil action during mediation and before mediation is complete if the
party filing the action has a good faith belief that a statute of limitations
may expire before the mediation is complete.
(f) The Indemnified Party under Section 8.06 agrees to give prompt
notice (an "Indemnification Notice") to the Indemnifying Party of any claim, or
the assertion or commencement of any claim, suit, action or proceeding by a
third party ("Claim") in respect of which indemnity may be sought under Section
8.06, which Indemnification Notice shall be given within 20 days from the
receipt of a Claim, and will provide the Indemnifying Party such information
with respect thereto that the Indemnifying Party may reasonably request and the
amount of Damages, if known. The failure to so notify the Indemnifying Party
shall not relieve the Indemnifying Party of its obligations hereunder, except to
the extent such failure shall have prejudiced the Indemnifying Party.
(g) The Indemnifying Party shall be entitled to participate in the
defense of any Claim asserted by any third party and, subject to the limitations
set forth in this Section 8.06, shall be
38
entitled to control and appoint lead counsel for such defense, in each case at
its expense. The Indemnifying Party's consent to any settlement of a Claim,
which consent shall not be unreasonably withheld, is a pre-condition to the
Indemnifying Party's obligation to reimburse the Indemnified Party for any
amounts paid under such settlement of a Claim.
(h) If the Indemnifying Party shall assume the control of the defense
of any Claim in accordance with the provisions of this Section 8.06, (i) the
Indemnifying Party shall obtain the prior written consent of the Indemnified
Party (which shall not be unreasonably withheld) before entering into any
settlement of such Claim, if the settlement does not release the Indemnified
Party from all liabilities and obligations with respect to such Claim or the
settlement imposes injunctive or other equitable relief against the Indemnified
Party, and (ii) the Indemnified Party shall be entitled to participate in the
defense of such Claim and to employ separate counsel of its choice for such
purpose. The fees and expenses of such separate counsel shall be paid by the
Indemnified Party.
(i) Each party shall cooperate, and cause their respective Affiliates
to cooperate, in the defense or prosecution of any Claim and shall furnish or
cause to be furnished such records, information and testimony, and attend such
conferences, discovery proceedings, hearings, trials or appeals, as may be
reasonably requested in connection therewith.
(j) No party shall be entitled to recover under Section 8.06:
(i) CONSEQUENTIAL DAMAGES, INCLUDING CONSEQUENTIAL DAMAGES
CONSISTING OF BUSINESS INTERRUPTION OR LOST PROFITS, OR
PUNITIVE DAMAGES; PROVIDED, HOWEVER, THAT THIS SUBPARAGRAPH
(i) SHALL IN NO WAY LIMIT ANY PARTY'S ABILITY TO RECOVER UNDER
SECTION 8.06 FOR ANY EXPENSE OR LIABILITY IT INCURS FOR
CONSEQUENTIAL OR PUNITIVE DAMAGES OWED TO THIRD PARTIES; and
(ii) the extent the Damages are covered by insurance payments
(including title insurance) actually made to or on behalf of
the Indemnified Party, under policies owned by such party or
its affiliates.
(k) Neither party shall have any right to Indemnification under this
Article before Closing or in the event that there is no Closing. After the
Closing, indemnification pursuant to the provisions of this Section 8.06 shall
be the exclusive remedy of the parties for any misrepresentation or breach of
any surviving representation or warranty, or agreement, contained herein.
Section 8.07. Costs and Expenses. Except as may be otherwise provided
herein, each party shall pay its own costs and expenses incurred in connection
with this Agreement and the matters contemplated hereby, including without
limitation all fees and expenses of attorneys, accountants, brokers, financial
advisors and other professionals.
39
Section 8.08. Entire Agreement. This Agreement constitutes the entire
agreement among the parties and supersedes and cancels any and all prior
discussions, negotiations, undertakings, agreements in principle and other
agreements among the parties relating to the subject matter hereof.
Section 8.09. Headings and Captions. The captions of Articles and
Sections hereof are for convenience only and shall not control or affect the
meaning or construction of any of the provisions of this Agreement.
Section 8.10. Waiver, Amendment or Modification. The conditions of this
Agreement which may be waived may only be waived by written notice delivered to
the other parties. The failure of any party at any time or times to require
performance of any provision hereof shall not constitute a waiver or otherwise
affect the right at a later time to enforce the same. This Agreement may not be
amended or modified except by a written document duly executed by the parties
hereto.
Section 8.11. Rules of Construction. Unless the context otherwise
requires: (a) a term has the meaning assigned to it; (b) an accounting term not
otherwise defined has the meaning assigned to it in accordance with GAAP; (c)
"or" is not exclusive; and (d) words in the singular may include the plural and
in the plural include the singular.
Section 8.12. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same instrument.
Section 8.13. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. There shall be no third party beneficiaries hereof.
Section 8.14. Governing Law. This Agreement shall be governed by the
laws of the State of
Missouri and any applicable federal laws and regulations.
40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
FIRST BANKS, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------
Its: President and Chief
Executive Officer
------------------------
THE SAN FRANCISCO COMPANY
By: /s/ Xxxxx X. Xxxxx
-------------------------
Its: President and Chief
Executive Officer
------------------------
CIB MARINE BANCSHARES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Its: President and Chief
Executive Officer
------------------------
HILLSIDE INVESTORS, LTD.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Its: President and Chief
Executive Officer
------------------------
CIB BANK, HILLSIDE, ILLINOIS
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------
Its: Chief Financial Officer
------------------------
41
