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EXHIBIT 2
AMENDED AND RESTATED SHARE EXCHANGE AGREEMENT
THIS AMENDED AND RESTATED SHARE EXCHANGE AGREEMENT is entered into as of
June 12, 1996, by and among Xxxx Xxxxxx Financial Group, Inc. ("CTFG") and
those certain persons listed on Schedule 7(b) hereof (the "Xxxxxx Family") and
represented by the members of the Xxxxxx Family shown on the signature page
hereof, for the purposes described below. References to "the date hereof" or
"the date of this Agreement," or similar references, shall mean June 12, 1996,
the date of the original Share Exchange Agreement between the parties hereto.
RECITALS
WHEREAS, CTFG is the beneficial and record owner of one hundred percent
(100%) of the issued and outstanding shares of capital stock (the "Bank Stock")
of Xxxx Xxxxxx Bank, an Illinois state-chartered bank, having its principal
place of business at 000 Xxxx Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000 (the
"Bank"); and
WHEREAS, substantial disagreements have arisen between CTFG's two largest
shareholder groups concerning the future strategic direction of CTFG and, in an
effort to avoid the adverse consequences of these disagreements, the Xxxxxx
Family has offered to exchange its shares in CTFG for shares of the Bank;
WHEREAS, the Board of Directors of CTFG (the "Board") has determined that
the transfer of all of the outstanding shares of Bank Stock and certain other
assets of CTFG in exchange for certain shares of common stock, par value $.01
per share, of CTFG (the "CTFG Stock") on the terms and subject to the conditions
set forth in this Agreement is fair to and in the best interest of CTFG and its
shareholders; and
WHEREAS, the parties desire to enter into certain other related agreements
in connection with the foregoing transactions; and
WHEREAS, the Xxxxxx Family currently intends to cause a new bank holding
company ("Newco") to be formed to hold the Bank Stock at the Closing (as defined
below) if permitted by the Private Letter Ruling (as defined below); and
WHEREAS, the parties hereto intend that the exchange of the Bank Stock (or
the common stock of Newco (the "Newco Stock") as the case may be) for CTFG Stock
owned by the Xxxxxx Family, as described herein, qualify as a tax-free split-off
under Section 355 of the Internal Revenue Code of 1986, as amended (the "Code").
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NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual covenants and agreements herein contained, the parties hereby agree as
follows:
1. Exchange of Bank Stock.
Upon the terms and subject to the conditions set forth in this
Agreement, CTFG shall assign, transfer and deliver to the Xxxxxx Family (or,
with respect to not more than 49.9% of the outstanding stock of the Bank, to
such party or parties as the Xxxxxx Family shall direct) on the Closing Date (as
hereinafter defined), in exchange for a number of shares of CTFG Stock equal to
the Stock Amount (as defined below), all right, title and interest in and to all
of the Bank Stock. In the event that the Private Letter Ruling specifically
contemplates the formation of Newco and the transfer of Bank Stock to it and
such transfer occurs prior to the Closing, CTFG shall exchange and the Xxxxxx
Family (or, with respect to not more than 49.9% of the outstanding stock of
Newco, such party or parties as the Xxxxxx Family shall direct) shall receive
Newco stock in lieu of Bank Stock.
2. Exchange of CTFG Stock; Options; Adjustments.
2.1 Transfer and Exchange. At the Closing, in exchange for the
transfer of the Bank Stock or Newco stock to the Xxxxxx Family (or, with respect
to not more than 49.9% of the outstanding stock of the Bank or Newco, to such
party or parties as the Xxxxxx Family shall direct), the Xxxxxx Family shall
assign, transfer and deliver or cause to be assigned, transferred and delivered
to CTFG a number of shares of CTFG Stock to be determined, subject to the
proviso set forth below, at the discretion of the Xxxxxx Family (such number of
shares of CTFG Stock shall be referred to as the "Stock Amount"); provided,
however, that in no event shall the Stock Amount consist of more than 4,500,000
shares of CTFG Common Stock or less than the greater of (i) 4,000,000 shares of
CTFG Common Stock or (ii) all of the shares of CTFG Stock owned beneficially or
of record by the Xxxxxx Family (including any shares of CTFG Stock owned after
the exercise of any options to purchase shares of CTFG Stock ("Options") and any
shares of CTFG Stock in the CTFG Employee Stock Ownership Plan (the "ESOP") and
the CTFG 401(k) Plan allocated to members of the Xxxxxx Family) immediately
prior to the Closing.
2.2 Options. CTFG will cause all outstanding Options to become
vested and exercisable prior to the Closing. Each Xxxxxx Family member holding
any Options shall exercise such Options at or prior to the Closing.
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2.3 Change in CTFG Stock. In the event that between the date of
this Agreement and the Closing Date CTFG subdivides the outstanding shares of
CTFG Stock into a greater number of shares, or combines its outstanding shares
of CTFG Stock into a smaller number of shares, or effects a reclassification of
the CTFG Stock, or pays a dividend in shares of its capital stock, then the
consideration set forth in this Section 2 shall be adjusted so that the number
of shares of CTFG Stock to be received by CTFG shall be reduced or increased by
an amount such that the aggregate value received is not increased or decreased
as a result of such subdivision, combination, reclassification or dividend.
3. Pre-Closing Transactions.
3.1 Spin-Off of Automobile Receivables Business.
(a) Prior to the Closing, CTFG shall cause the Bank to form a new
wholly-owned subsidiary ("Auto Sub") to which the Bank shall contribute its used
automobile receivables business, consisting of substantially all of the assets
used in its used automobile receivables business (the "UARB Assets") and (i) the
Cash Component (as defined below); plus (ii) all of the Bank's rights and
obligations pursuant to automobile loans, notes or the Bank's securities which
as of the Closing Date are collateralized primarily with used automobiles and
have a fair market value as determined in writing by KPMG Peat Marwick (or such
other person upon whom the parties hereto shall mutually agree) of no less than
$30,000,000 nor more than $31,000,000 (the "Automobile Receivables").
Immediately prior to the Closing, CTFG shall cause the Bank employees identified
on Schedule 3.1 to be terminated by the Bank and immediately offered employment
with Auto Sub. The Bank shall be responsible for and shall indemnify CTFG for
severance costs arising out of such termination. The term "Cash Component"
shall mean: (x) if the Stock Amount is less than 4,250,000, cash in an amount
equal to (A) $60,000,000 minus (B) the amount, if any, by which the fair market
value of the Automobile Receivables exceeds $30,000,000 plus (C) the product of
$33.00 and the difference between 4,250,000 and the Stock Amount; (y) if the
Stock Amount is equal to 4,250,000, cash in an amount equal to (A) $60,000,000
minus (B) the amount, if any, by which the fair market value of the Automobile
Receivables exceeds $30,000,000; and (z) if the Stock Amount is greater than
4,250,000, cash in an amount equal to (A) $60,000,000 minus (B) the amount, if
any, by which the fair market value of the Automobile Receivables exceeds
$30,000,000 minus (C) the product of $33.00 and the difference between the Stock
Amount and 4,250,000.
(b) In addition, prior to the Closing and in conjunction with the
formation of Auto Sub as contemplated by Section 3.1(a), the Bank shall
contribute to Auto Sub an amount in cash equal to
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the sum of: (i) the amount of CTFG's cash investment in Alpha Capital Fund, net
of all partner distributions, return of capital and like payments, made from
time to time prior to the date hereof (which was $139,831 as of May 31, 1996),
plus any additional cash investment made by CTFG in Alpha Capital Fund after
the date hereof if made with the Xxxxxx Family's consent, plus interest on the
total amount invested beginning, as to each portion of such amount invested at
different times, on the date of such investment, at the rate of 9% per annum,
compounded annually; plus (ii) the amount of CTFG's aggregate cash investments
in CT Mortgage, net of all distributions to stockholders, return of capital and
like payments, made from time to time prior to the date hereof (which was
$1,007,000 as of May 31, 1996), plus any additional cash investment made by
CTFG in CT Mortgage after the date hereof if made with the Xxxxxx Family's
consent, plus interest on the total amount invested beginning, as to each
portion of such amount invested at different times, on the date of such
investment, at the rate of 9% per annum, compounded annually.
3.2 Transfer to CTFG. Immediately prior to the Closing Date, CTFG
shall cause the Bank to distribute all of the capital stock of Auto Sub to CTFG,
following which CTFG shall cause Xxxx Xxxxxx Finance Co., a Delaware corporation
and a wholly-owned subsidiary of CTFG ("Finance") to be merged with and into
Auto Sub.
3.3 Investment in Alpha Capital Fund II, L.P. In conjunction with
the formation of Newco as contemplated by Section 3.5, immmediately prior to the
Closing Date, CTFG shall transfer to Newco all of CTFG's rights, obligations and
interest, including, without limitation, CTFG's $500,000 commitment with respect
thereto (the "Alpha Interest") in Alpha Capital Fund II, L.P., a small business
investment company ("Alpha Capital Fund").
3.4 Transfer of CT Mortgage Stock. In conjunction with the
formation of Newco as contemplated by Section 3.5, immediately prior to the
Closing Date, CTFG shall transfer to Newco 100% of the capital stock (the "CT
Mortgage Stock") of CT Mortgage Company, Inc. ("CT Mortgage"), a subsidiary of
CTFG. All intercompany indebtedness between CTFG and CT Mortgage reflected on
the books and records of CT Mortgage and CTFG on the Closing Date shall have
been repaid, together with interest thereon at the interest rate specified by
such indebtedness, and no intercompany indebtedness shall be incurred subsequent
to the date hereof, except in accordance with Section 9(a)(i)(E) hereof.
3.5 Formation of Newco; Transfer of Bank Stock. If specifically
contemplated by the Private Letter Ruling and requested by the Xxxxxx Family,
prior to the closing CTFG shall form Newco and shall transfer all the Bank
shares owned by CTFG
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to Newco. CTFG shall not, however, be required to effectuate this transfer
unless (1) the Xxxxxx Family shall have applied for and obtained appropriate
regulatory approval for Newco, (2) the Internal Revenue Service shall have
ruled in the Private Letter Ruling that the transfer of Bank Stock by CTFG to
Newco is a tax-free transaction to CTFG and Newco, and (3) the New Bank
Securities (as defined below) shall be issued on terms disclosed to the
Internal Revenue Service and consistent with the Private Letter Ruling.
4. Consummation of the Transactions; Closing Date. The consummation of the
transactions contemplated herein (the "Closing") and the delivery of the
certificates and acknowledgements called for by this Agreement shall take place
at the offices of Xxxxx, Xxxxx & Xxxxx, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000, at such time and date (the "Closing Date") as shall be fixed by
mutual agreement of the Xxxxxx Family and CTFG as promptly as practicable
following the satisfaction or waiver of the conditions set forth in Sections 11
and 12 of this Agreement.
5. Regulatory Matters.
5.1 Regulatory Approvals. The parties hereto acknowledge that
requisite approvals must be received from or notices must be given to certain
federal and state governmental bodies and agencies which may include (i) the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board");
(ii) the Federal Deposit Insurance Corporation (the "FDIC"); (iii) the Illinois
Commissioner of Banks and Trust Companies; (iv) the Federal Trade Commission,
(v) the Antitrust Division of the Department of Justice and/or (vi) any other
regulatory authorities having jurisdiction (collectively, the governmental
bodies and agencies referred to in this Section 5.1 are referred to herein as
the "Applicable Governmental Authorities"), in accordance with the laws, rules
and regulations governing or related to the Applicable Governmental Authorities
(the "Applicable Laws"). The parties hereto agree to use their reasonable best
efforts to obtain all such approvals as promptly as practicable and to give all
such notices.
5.2 Capital Infusion; Newco Stock Registration.
(a) Capital Infusion. The Xxxxxx Family acknowledges that the Bank will
require additional capital upon the consummation of the transactions
contemplated by this Agreement in order to comply with the minimum capital
requirements of any applicable banking laws, regulations or any requirements of
any regulatory agencies and agrees to use its reasonable best efforts to obtain
financing sufficient to satisfy this requirement. It is understood that the
Xxxxxx Family intends to obtain some or all
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of such financing from the net proceeds of a sale of securities of the Bank (or
Newco, as the case may be) (the "New Bank Securities"); provided, that the
terms of the New Bank Securities shall have been disclosed to the Internal
Revenue Service and shall be consistent with the Private Letter Ruling. If the
Xxxxxx Family chooses to make such a sale through a public offering, CTFG,
following the direction of the Xxxxxx Family (except as such direction may be
inconsistent with the fiduciary duties of CTFG's directors), shall cause the
Bank (or Newco, as the case may be) to file prior to the Closing Date a
registration statement (the "Registration Statement") with the U.S. Securities
and Exchange Commission (the "SEC") or a comparable agency relating to the
offer and sale of New Bank Securities. The Registration Statement shall be in
form and substance reasonably satisfactory to the Xxxxxx Family. CTFG shall
cause the Bank to use its reasonable best efforts to have the Registration
Statement declared effective and to cause the offer and sale of the New Bank
Securities to be registered, qualified or exempted under applicable state
securities laws as soon as is reasonably practicable, but in no event later
than the Closing Date. CTFG shall cause the Bank (or Newco, as the case may
be) to use its reasonable best efforts to amend or supplement the Registration
Statement or the prospectus contained therein and to take such actions as may
be necessary to cause the Registration Statement to remain effective until the
offer and sale of the New Bank Securities has been completed. If the New Bank
Securities are offered in a manner not involving a public offering requiring a
Registration Statement, CTFG will similarly cooperate in the preparation of
documents for such offering. Unless this Agreement has been terminated by the
Xxxxxx Family pursuant to Section 13(d), the Xxxxxx Family will indemnify and
hold harmless CTFG against all costs and liabilities related to the offer and
sale of the New Bank Securities, including but not limited to all underwriting,
accounting, legal, printing, filing fee and other expenses of a public or
private offering and any liabilities relating to misstatements or omissions in
the Registration Statement or other offering documents or any part thereof.
The Bank will assume such indemnity and hold harmless agreement upon
consummation of the transfer and exchange referred to in Section 2.1 hereof.
(b) Newco Stock Registration. It is understood that Newco may need to
file a registration statement with the SEC with respect to the offer and sale of
Newco Stock in exchange for CTFG Stock pursuant to Section 1 (a "Common
Registration Statement"). CTFG, following the direction of the Xxxxxx Family
(unless the Board, without the participation of the Xxxxxx Directors (as defined
below), shall reasonably determine that such direction is inconsistent with the
Board's fiduciary duties under applicable law), shall cause Newco to file prior
to the Closing Date a Common Registration Statement with the SEC. The Common
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Registration Statement shall be in form and substance reasonably satisfactory
to the Xxxxxx Family. CTFG shall cause Newco to use its reasonable best
efforts to have the Common Registration Statement declared effective and to
cause the offer and sale of the Newco Stock referenced therein to be
registered, qualified or exempted under applicable state securities laws as
soon as reasonably practicable, but in no event later than two weeks prior to
the Closing Date. CTFG shall cause Newco to use its reasonable best efforts to
amend or supplement the Common Registration Statement or the prospectus
contained therein and to take such actions as may be necessary to cause the
Common Registration Statement to remain effective until the earlier to occur of
the Closing Date or the completion of the offer and sale of the Newco Stock
thereunder. Unless this Agreement has been terminated by the Xxxxxx Family
pursuant to Section 13(d), the Xxxxxx Family will indemnify and hold harmless
CTFG against all costs and liabilities related to the offer and sale of the
Newco Stock registered pursuant to the Common Registration Statement, including
but not limited to all underwriting, accounting, legal, printing, filing fee
and other expenses of such offer and sale of Newco Stock and any liabilities
relating to misstatements or omissions in the Common Registration Statement or
other offering documents or part thereof. The Bank and Newco will assume such
indemnity and hold harmless agreement from and after the Closing; provided,
however, that no such assumption shall relieve the Xxxxxx Family from any
liability or obligation in the event that the Bank or Newco shall fail to
perform thereunder.
6. Escrow. Within five business days from the date hereof, as security to
ensure the payment of any termination fee required pursuant to Section 14(c) of
this Agreement, the Xxxxxx Family shall deposit 750,000 shares of CTFG Stock,
with executed stock transfer powers, into escrow (the "Escrow Fund") with The
Northern Trust Company (or such other entity as the parties hereto shall
reasonably agree) pursuant to an Escrow Agreement between the Xxxxxx Family,
CTFG and The Northern Trust Company substantially in the form attached hereto as
Exhibit A.
7. Representations and Warranties of the Xxxxxx Family. Each member of the
Xxxxxx Family, jointly and severally, represents and warrants to CTFG that:
(a) Authorization, No Violation, Et Cetera. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby by such Xxxxxx Family member has been duly authorized
by all necessary action on the part of such member of the Xxxxxx Family and
this Agreement constitutes the legal, valid and binding obligation of such
Xxxxxx Family member, enforceable against such Xxxxxx Family member in
accordance with its terms. The execution and delivery of this Agreement by
the
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Xxxxxx Family, and the consummation of the transactions contemplated by this
Agreement, will not violate the provisions of, or constitute a breach or default
under, any material agreement to which such member of the Xxxxxx Family is a
party or is bound, or any other material license, law, order, rule, regulation
or judgment to which such member of the Xxxxxx Family is a party.
(b) Stock and Option Ownership. Each member of the Xxxxxx Family owns in
the aggregate or has allocated to him or her in the ESOP and the CTFG 401(k)
Plan, as applicable, that number of shares of CTFG Stock and Options to purchase
shares of CTFG Stock as set forth opposite his, her or its name on Schedule 7(b)
hereto, and as of the Closing Date, such CTFG Stock and Options will be free and
clear of any security interests, liens, claims, pledges, charges, voting
agreements or other encumbrances of any nature whatsoever ("Liens").
(c) Formation of Newco. In the event the Xxxxxx Family determines to
form Newco as a bank holding company, and the Private Letter Ruling specifically
contemplates the formation of Newco and transfer of Bank Stock to it, the Xxxxxx
Family represents that it will cooperate with CTFG in taking all necessary
corporate and other action to create and form Newco and cause Newco to enter
into, ratify and approve this Agreement and all of the related transactions
prior to the Closing Date.
(d) Broker's and Finder's Fees. No member of the Xxxxxx Family has
incurred any obligation or liability, contingent or otherwise, to any brokers or
finders in respect of the matters provided for in this Agreement other than to
Piper, Jaffray Companies.
(e) UARB Assets. The UARB Assets are substantially all of the assets
used exclusively in or necessary for the conduct of the Bank's used automobile
receivables business.
(f) Prohibitions. Neither any member of the Xxxxxx Family nor any of
their respective properties is subject to any order, writ, judgment, injunction,
decree, determination or award which would prevent or delay the consummation of
the transactions contemplated hereby.
(g) Transfer of Title. The transfer of the shares of CTFG constituting
the Stock Amount hereunder to CTFG will transfer to CTFG good and valid title to
the shares of CTFG constituting the Stock Amount, free and clear of any Liens
(except for Liens CTFG has permitted to attach upon transfer at the Closing).
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8. Representations and Warranties of CTFG. Except as set forth below, CTFG
makes no representation or warranty with respect to the Bank, CT Mortgage or
Alpha Capital Fund and the Xxxxxx Family acknowledges that the Bank, CT Mortgage
and the Alpha Interest are being transferred on an as is, where is basis.
Notwithstanding the foregoing, CTFG represents and warrants to the Xxxxxx Family
that:
(a) Capital Stock. On the date hereof, the Bank has authorized,
issued and outstanding capital stock as follows:
Authorized Issued Outstanding Treasury
---------- ------ ----------- --------
Common 1,500,000 1,500,000 1,500,000 0
--------- --------- --------- --------
There are no issued or outstanding warrants, options, preemptive rights, rights
of first refusal or other rights to purchase equity or debt instruments of the
Bank.
On the date hereof, CT Mortgage has authorized, issued and outstanding
capital stock as follows:
Authorized Issued Outstanding Treasury
---------- ------ ----------- --------
Common 10,000 1,000 1,000 0
---------- ------ ----------- --------
There are no issued or outstanding warrants, options, preemptive rights, rights
of first refusal or other rights to purchase equity or debt instruments of CT
Mortgage.
All of the issued and outstanding shares of Bank Stock and stock of CT Mortgage
are duly and validly authorized and issued. All of the outstanding shares of
Bank Stock and stock of CT Mortgage are fully paid and nonassessable and are
owned free and clear of any liens, mortgages or claims by CTFG.
On the date hereof, CTFG holds a $500,000 commitment in Alpha Capital Fund of
which $139,831 was funded as of May 31, 1996.
(b) Authorization: Validity. The consummation of the transactions
contemplated by this Agreement have been duly and validly authorized by all
necessary corporate action on the part of CTFG and this Agreement
constitutes the legal, valid and binding obligation of CTFG, enforceable
against CTFG in accordance with its terms.
(c) Broker's and Finder's Fees. Neither CTFG nor the Bank has
incurred any obligation or otherwise, to any brokers or finders in respect
of the matters provided for in
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this Agreement other than to The Chicago Corporation and Sandler X'Xxxxx &
Partners, L.P.
(d) Investment Schedule. CTFG has previously delivered to the Xxxxxx
Family a true and accurate schedule showing the amounts and dates of its
investments in CT Mortgage and Alpha Capital Fund.
(e) Prohibitions. None of CTFG, any of its subsidiaries or any of
their respective properties is subject to any order, writ, judgment,
injunction, decree, determination or award which would prevent or delay the
consummation of the transactions contemplated hereby.
(f) Title. At the Closing, CTFG will have good and valid title to
all of the Bank Stock, the CT Mortgage Stock and the Alpha Interest free
and clear of any Liens.
(g) Transfer of Title. The transfer of the Bank Shares, the CT
Mortgage Stock and the Alpha Interest hereunder to the Xxxxxx Family, the
Bank or Newco, as the case may be, will transfer to such person good and
valid title to the Bank Shares, the CT Mortgage Stock and the Alpha
Interest, free and clear of any Liens (except for Liens the Xxxxxx Family
has permitted to attach upon transfer at the Closing).
(h) Proposals. Except as previously disclosed in writing to the
Xxxxxx Family, CTFG has not received since September 1, 1995 any offers or
proposals for the acquisition of CTFG, the Bank or Finance.
9. Agreements with Respect to Conduct of the Business After the Date
Hereof.
(a) Ordinary Course, Insurance, Preservation of Business.
(i) Except as otherwise agreed to in writing by the Board and
Xxxxxx Xxxxxx, Xxxxxxx Xxxxxx and Xxxxx Xxxxxx (the "Xxxxxx
Directors") and except to the extent required to consummate the
transactions contemplated by Section 3 hereof, CTFG and the Xxxxxx
Directors covenant and agree that they will not, prior to the earlier
of the Closing Date and the termination of this Agreement, terminate
or change the terms or conditions of employment of Xxxxxxx Xxxxxx or
Xxxxx Xxxxxx at CTFG, and prior to the later of (i) the Closing Date
and (ii) the termination of the Xxxxxx Sale Period (as that term is
defined in Section 14(d) hereof), terminate or change the terms or
conditions of
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employment of any employees of CTFG (other than Xxxxxxx Xxxxxx or Xxxxx Xxxxxx),
the Bank (including Xxxxxxx Xxxxxx and Xxxxx Xxxxxx) or CT Mortgage (provided
that this Section 9(a)(i) shall not apply to employees of Finance or its
subsidiaries in their capacity as such) having an annual salary of $100,000 or
more per year and that they will use their reasonable best efforts to cause each
of the Bank and CT Mortgage from and after the date of this Agreement and until
the later of (i) the Closing Date and (ii) the termination of the Xxxxxx Sale
Period to:
(A) carry on its business only in the ordinary course and consistent
with its respective policies, procedures and practices in substantially the
same manner as heretofore conducted (provided that it may take any action
listed on Schedule 9(a)(i));
(B) except as they may terminate in accordance with their terms or in
accordance with the terms of this Agreement, keep in full force and effect,
and not commit or cause a default of any of its obligations under, any
material contracts;
(C) keep in full force and effect the insurance coverage in effect on
the date hereof to the extent that such insurance continues to be
reasonably available;
(D) use its best efforts to maintain, renew, keep in full force and
effect and preserve its business organization and material rights and
franchises, permits and licenses and to retain its present employee force
(including retaining each Xxxxxx Director in all of his current positions
as director, officer and employee of the Bank with no diminution of his
current duties, authority, compensation and benefits except as otherwise
provided in this Agreement), and to maintain its existing, or substantially
equivalent, credit arrangements with banks and other financial institutions
and to use its reasonable best efforts to maintain the continuance of its
general customer relationships;
(E) continue all usual intercompany relationships and practices to
support the ongoing business activities of the Bank and CT Mortgage in
accordance with existing practices, including
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funding usual working capital contributions and normal budgeted
expenditures and making reimbursements for services rendered in accordance
with existing practices, budgets and plans; and
(F) take such action as may be necessary to maintain, preserve, renew
and keep in full force and effect its corporate existence and material
rights and franchises; and duly comply in all material respects with all
laws applicable to it and to the conduct of its business.
(ii) Except as otherwise agreed to by the Board (with the participation of
the Xxxxxx Directors) and except to the extent required to consummate the
transactions contemplated by Section 3 hereof, CTFG covenants and agrees that it
will use its reasonable best efforts to cause each of Finance and Finance's
subsidiaries from and after the date of this Agreement and until the earlier of
the Closing Date and the termination of this Agreement to:
(A) carry on its business only in the ordinary course and consistent
with its respective policies, procedures and practices in substantially the
same manner as heretofore conducted;
(B) except as they may terminate in accordance with their terms or in
accordance with the terms of this Agreement, keep in full force and effect,
and not commit or cause a default of any of its obligations under, any
material contracts;
(C) keep in full force and effect the insurance coverage in effect on
the date hereof to the extent that such insurance continues to be
reasonably available;
(D) use its best efforts to maintain, renew, keep in full force and
effect and preserve its business organization and material rights and
franchises, permits and licenses and to retain its present employee force,
and to maintain its existing, or substantially equivalent, credit
arrangements with banks and other financial institutions and to use its
reasonable best efforts to maintain the continuance of its general customer
relationships;
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(E) continue all usual intercompany relationships and practices to
support the ongoing business activities of Finance in accordance with
existing practices, including funding usual working capital contributions
and normal budgeted expenditures and making reimbursements for services
rendered in accordance with existing practices, budgets and plans; and
(F) take such action as may be necessary to maintain, preserve, renew
and keep in full force and effect its corporate existence and material
rights and franchises; and duly comply in all material respects with all
laws applicable to it and to the conduct of its business.
(b) Prohibited Action Without Approval.
(i) Except as otherwise expressly provided in or permitted by this
Agreement, including the Schedules hereto, or as agreed by CTFG (with the
participation of the Xxxxxx Directors), CTFG and the Xxxxxx Directors covenant
and agree that they will use their reasonable best efforts to cause the Bank and
CT Mortgage, from and after the date of this Agreement and until the earlier of
the Closing and the termination of this Agreement, not to:
(A) incur or agree to incur any obligation or liability (absolute or
contingent) other than the taking of deposits and other liabilities
incurred in the ordinary course of business and consistent with prior
practice, and liabilities arising out of, incurred in connection with, or
related to the consummation of this Agreement; except in the ordinary
course of business consistent with past practice, assume, guarantee or
endorse the obligations of any other person; except in the ordinary course
of business consistent with past practice, mortgage or pledge any of its
assets, tangible or intangible, or create or suffer to exist any Lien
thereupon; make or permit any amendment or termination of any material
contract which would materially adversely affect its rights thereunder;
acquire (by merger, consolidation, or acquisition of stock or assets) any
corporation, partnership or other business organization or division or
substantial part thereof; sell, transfer or otherwise dispose of any
substantial part of its assets; sell, acquire or form any branch location;
enter into, dispose
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or divest itself of any joint venture or partnership or cause any business
entity to become a subsidiary or affiliate; sell or otherwise dispose of
any real property owned or operated by it except for the sale of real
estate held for sale in the ordinary course of business; enhance, expand,
modify, replace or alter any computer or data processing system owned,
leased or licensed by it (including any software associated with any such
computer or system); authorize any new capital expenditure or expenditures
or any other expenditures in excess of $50,000, either individually or in
the aggregate; make, originate or otherwise acquire one or more loans, or
one or more loan commitments for one or more loans, or one or more lines of
credit, except in the ordinary course of business, in accordance with prior
practice and with all approvals as are required by applicable procedures on
the date hereof; or enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing; or
(B) authorize for issuance, issue, sell, deliver (whether through the
issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise), redeem or acquire for value, or agree or
commit to do so, any debt securities or any shares of the capital stock or
other equity securities, or any other securities or equity equivalents
(including, without limitation, stock appreciation rights), or declare,
issue or pay any dividend or other distribution of assets, whether
consisting of money, other personal property, real property or other things
of value, to its shareholders other than as set forth in Section 3 or
Section 9(j) hereof; or
(C) split, combine or reclassify any shares of its capital stock; or
(D) sell or pledge or otherwise encumber any stock owned by it in any
subsidiary; amend or propose to amend its, or permit the amendment of any
subsidiary's certificate of incorporation, charter or by-laws or any other
governing document of any subsidiary; split, combine or reclassify any
shares of its capital stock; or enter into any agreement, commitment or
arrangement with respect to any of the foregoing; or
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15
(E) enter into, adopt or (except as may be required by law) amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock appreciation right, restricted stock, performance unit, stock
equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee, increase in any manner the compensation or
benefits of any director, officer or employee or pay any benefit not
required by any plan or arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock options, restricted
stock, stock appreciation rights or performance units) or hire any employee
with a salary in excess of $150,000 per year or hire, terminate or change
the terms or conditions of employment of any employee who would be entitled
to any payment upon a change of control of the Bank or CT Mortgage; or
(F) obligate the Bank or CT Mortgage to any intercompany charge; or
(G) acquire or dispose of any securities or interests for investment
purposes or sell or purchase mortgage servicing rights; or
(H) enter into any transactions other than in the ordinary course of
business; or
(I) compromise or otherwise settle or adjust any assertion or claim
of a deficiency in taxes (or interest thereon or penalties in connection
therewith) or file any appeal from an asserted deficiency, except in a form
previously approved by the Board and the Xxxxxx Directors, which approval
shall not be unreasonably withheld, or file any federal or state tax return
before furnishing a copy to the Xxxxxx Directors and affording an
opportunity to consult with the filing entity; or
(J) unless the Board decides otherwise, open any new office or close
any current office of the Bank, any of the Bank's subsidiaries or CT
Mortgage at which business is conducted.
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16
(K) take, or agree in writing or otherwise to take, any of the
actions described above in this Section 9(b)(i) or any action which would
make any of the representations or warranties of CTFG or the Xxxxxx Family
contained in this Agreement untrue or incorrect or would result in any of
the conditions hereunder not being satisfied.
(ii) Except as otherwise expressly provided in or permitted by this
Agreement or as agreed by the Board (with the participation of the Xxxxxx
Directors), CTFG will use its reasonable best efforts to cause Finance, from and
after the date of this Agreement and until the earlier of the Closing and the
termination of this Agreement, not to:
(A) incur or agree to incur any obligation or liability (absolute or
contingent) other than liabilities incurred in the ordinary course of
business and consistent with prior practice, and liabilities arising out
of, incurred in connection with, or related to the consummation of this
Agreement; except in the ordinary course of business consistent with past
practice, assume, guarantee or endorse the obligations of any other person;
except in the ordinary course of business consistent with past practice,
mortgage or pledge any of its assets, tangible or intangible, or create or
suffer to exist any Lien thereupon; make or permit any amendment or
termination of any material contract which would materially adversely
affect its rights thereunder; acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or other
business organization or division or substantial part thereof; sell,
transfer or otherwise dispose of any substantial part of its assets; enter
into, dispose or divest itself of any joint venture or partnership or cause
any business entity to become a subsidiary or affiliate; sell or otherwise
dispose of any real property owned or operated by it except for the sale of
real estate held for sale in the ordinary course of business; except as
identified on Schedule 9(b)(ii)(A), enhance, expand, modify, replace or
alter any computer or data processing system owned, leased or licensed by
it (including any software associated with any such computer or system);
authorize any new capital expenditure or expenditures or, except as
identified on Schedule 9(b)(ii)(A), any other
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expenditures in excess of $50,000, either individually or in the aggregate;
make, originate or otherwise acquire one or more loans, or one or more loan
commitments for one or more loans, or one or more lines of credit, except
in the ordinary course of business, in accordance with prior practice and
with all approvals as are required by applicable procedures on the date
hereof; or enter into any contract, agreement, commitment or arrangement
with respect to any of the foregoing; or
(B) authorize for issuance, issue, sell, deliver (whether through the
issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise), redeem or acquire for value, or agree or
commit to do so, any debt securities or any shares of the capital stock or
other equity securities, or any other securities or equity equivalents
(including, without limitation, stock appreciation rights), except pursuant
to any employee benefit plan of Finance as in effect as of the date hereof,
or amend any of the terms of any such securities or agreements outstanding
as of the date hereof; or
(C) split, combine or reclassify any shares of its capital stock; or
(D) sell or pledge or otherwise encumber any stock owned by it in any
subsidiary; (b) amend or propose to amend its, or permit the amendment of
any subsidiary's certificate of incorporation, charter or by-laws or any
other governing document of any subsidiary; (c) split, combine or
reclassify any shares of its capital stock; or (d) enter into any
agreement, commitment or arrangement with respect to any of the foregoing;
or
(E) enter into, adopt or (except as may be required by law) amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock appreciation right, restricted stock, performance unit, stock
equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee, increase in any manner the compensation or
benefits of any
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director, officer or employee or pay any benefit not required by any plan
or arrangement as in effect as of the date hereof (including, without
limitation, the granting of stock options, restricted stock, stock
appreciation rights or performance units) or hire any employee with a
salary in excess of $150,000 per year or hire, terminate or change the
terms or conditions of employment of any employee who would be entitled to
any payment upon a change of control of the Bank or CT Mortgage; or
(F) obligate Finance to any intercompany charge other than in the
ordinary course of business consistent with past practice; or
(G) acquire or dispose of any securities or interests for investment
purposes or sell or purchase mortgage servicing rights; or
(H) enter into any transactions other than in the ordinary course of
business; or
(I) compromise or otherwise settle or adjust any assertion or claim
of a deficiency in taxes (or interest thereon or penalties in connection
therewith) or file any appeal from an asserted deficiency; or
(J) take, or agree in writing or otherwise to take, any of the
actions described above in this Section 9(b)(ii).
(c) No Solicitation.
(1) CTFG will immediately cease any existing discussions or
negotiations with any third parties conducted prior to the date hereof with
respect to any Acquisition Proposal (as defined below). CTFG shall not,
directly or indirectly, through any officer, director, employee,
representative or agent or any of its subsidiaries, (i) solicit, initiate,
continue or encourage any inquiries, proposals or offers that constitute,
or could reasonably be expected to lead to, a proposal or offer for a
merger, consolidation, business combination, sale of substantial assets,
sale of shares of capital stock (including, without limitation, by way of a
tender offer) or similar transactions involving CTFG, the Bank or any of
CTFG's subsidiaries, other than the transactions
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contemplated by this Agreement (any of the foregoing inquiries or
proposals being referred to in this Agreement as an "Acquisition
Proposal"), (ii) solicit, initiate, continue or engage in negotiations
or discussions concerning, or provide any non-public information or
data to any person or entity relating to, any Acquisition Proposal, or
(iii) agree to, approve or recommend any Acquisition Proposal;
provided, that nothing contained in this Section 9(c) shall prevent
CTFG from furnishing non-public information or data to, or entering
into discussions or negotiations with, any person in connection with
an unsolicited Acquisition Proposal by such person or recommending an
unsolicited Acquisition Proposal to the stockholders of CTFG, if and
only to the extent that (1) CTFG's directors determine in good faith
that such action is required for the discharge of their fiduciary
duties to stockholders under applicable law if so advised by
independent counsel, and (2) CTFG advises the Xxxxxx Family of all
such nonpublic information delivered to such person concurrently with
its delivery to the requesting party.
(2) CTFG shall notify the Xxxxxx Directors immediately (and in
no event later than 24 hours) after receipt by CTFG of any Acquisition
Proposal or any request for non-public information in connection with
an Acquisition Proposal or for access to the properties, books or
records of CTFG by any person or entity that informs CTFG that it is
considering making, or has made, an Acquisition Proposal.
(d) Liabilities. After the date hereof and prior to the Closing Date,
CTFG and the Xxxxxx Directors shall use their reasonable best efforts to cause
the Bank, Finance, CT Mortgage and each of their subsidiaries to pay or
discharge their current liabilities when the same become due and payable, except
for such liabilities as may be subject to a good faith dispute or counterclaim.
(e) Goodwill. After the date hereof and prior to the Closing Date, CTFG
and the Xxxxxx Directors shall use their reasonable best efforts to cause each
of the Bank, Finance, CT Mortgage and each of their subsidiaries not to enter
into any transaction which will create goodwill on its books and records under
generally accepted accounting principles.
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20
(f) Insider Lending. After the date hereof and prior to the Closing
Date, CTFG and the Xxxxxx Directors shall use their reasonable best efforts to
cause each of the Bank, Finance, CT Mortgage and each of their subsidiaries not
to change or modify any of its current practices relating to the lending of
money, secured or unsecured, to its affiliated persons, including but not
limited to its directors, officers and employees.
(g) No Violation. After the date hereof and prior to the Closing Date,
CTFG and the Xxxxxx Directors shall use their reasonable best efforts to cause
each of the Bank, Finance, CT Mortgage and each of their subsidiaries not to
take any action which knowingly violates any statute, code, ordinance, rule,
regulation or judgment, order, writ, arbitral award, injunction or decree of any
court, governmental agency or body or arbitrator, domestic or foreign, having
jurisdiction over its properties.
(h) Operating Expenses. After the date hereof and prior to the Closing
Date, CTFG and the Xxxxxx Directors shall use their reasonable best efforts to
cause each of the Bank, Finance, CT Mortgage and each of their subsidiaries not
to increase the level of its operating expenses in any material respect.
(i) Accounting. After the date hereof and prior to the Closing Date,
CTFG and the Xxxxxx Directors shall use their reasonable best efforts to cause
each of the Bank, Finance, CT Mortgage and each of their subsidiaries to
maintain its books, accounts and records in accordance with generally accepted
accounting principles. CTFG and the Xxxxxx Directors shall use their reasonable
best efforts to cause the Bank, Finance, CT Mortgage and each of their
subsidiaries not to make any change in any method of accounting or accounting
practice, or any change in the method used in allocating income, charging costs
or accounting for income, except as may be required by law, regulation or
generally accepted accounting principles. CTFG and the Xxxxxx Directors shall
use their reasonable best efforts to cause the Bank, Finance, CT Mortgage and
each of their subsidiaries not to change any practice or policy with respect to
the charging off of loans or the maintenance of its reserves for possible loan
losses, except as required by law, regulation or generally accepted accounting
principles.
(j) Dividends. Except as required otherwise by law, the parties
acknowledge and agree that, from the date hereof through the Closing Date, the
Bank will pay monthly dividends to CTFG equal to one-half of Bank earnings with
an
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adjustment in December, 1996 so that the cumulative dividends to CTFG for
calendar year 1996 are equal to $10,100,000; provided further, that if the
Closing Date occurs prior to January 1, 1997, the maximum amounts of dividends
which may be paid in calendar year 1996 shall be reduced by $27,671.23 for each
day after the Closing Date and prior to January 1, 1997; and provided further,
that such dividends will be $880,000 per month of calendar year 1997
($10,560,000 for all of calendar year 1997) if the Closing Date has not occurred
prior to December 31, 1996 and, if the Closing Date does not occur at the end of
a month, the dividends paid shall be pro-rated on a daily basis through the
Closing Date.
(k) Lenders' Consents. After the date hereof and prior to the Closing
Date, CTFG and the Xxxxxx Directors will use their reasonable best efforts to
cause CTFG, the Bank and Finance to obtain any waivers, consents, amendments or
approvals required to prevent any default, acceleration or other adverse effect
upon CTFG, the Bank or Finance under any indenture, credit agreement, note or
other indebtedness of CTFG, the Bank or Finance.
10. Additional Agreements.
(a) Continuing Access to Information. CTFG shall permit the Xxxxxx
Family and its authorized representatives reasonable access during regular
business hours to the Bank's properties and those of the Bank's subsidiaries and
CT Mortgage. The Bank shall make its and its subsidiaries' directors,
management and other employees and agents and authorized representatives
(including counsel and independent public accountants) available to confer with
the Xxxxxx Family and its authorized representatives at reasonable times and
upon reasonable request, and CTFG shall, and shall cause the Bank and its
subsidiaries and CT Mortgage to disclose and make available to the Xxxxxx
Family, and shall use its reasonable best efforts to cause its agents and
authorized representatives to disclose and make available to the Xxxxxx Family,
all books, papers and records relating to the assets, properties, operations,
obligations and liabilities of the Bank and its subsidiaries and CT Mortgage.
(b) Notification of Change. CTFG shall promptly notify the Xxxxxx
Directors and the Xxxxxx Directors shall promptly notify the Board of any
material change in the ordinary course of business or in the operation of the
properties of the Bank or any of its subsidiaries or CT Mortgage and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may
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be contemplated), or the institution or the threat of litigation involving the
Bank or its subsidiaries or CT Mortgage which is known to CTFG and which is
material or which might have a material adverse effect, or of any other material
breach by CTFG, the Bank or any of its subsidiaries or CT Mortgage of any
representation, warranty, covenant or agreement set forth in this Agreement, and
will keep the Xxxxxx Family promptly and fully informed of such events. CTFG
will consult with the Xxxxxx Directors before taking any steps to comply with
suggestions made by any Applicable Governmental Authorities which could
reasonably be considered significant to the Bank or CT Mortgage.
(c) Information for Regulatory Filings. CTFG promptly shall furnish the
Xxxxxx Directors, and the Xxxxxx Directors shall furnish the Board, with any
information relating to CTFG, the Bank or any of its subsidiaries or CT Mortgage
which is required under any applicable law or regulation for inclusion in any
filing that the Xxxxxx Family, on the one hand, or CTFG, on the other hand, is
required to make with any regulatory or supervisory authority (including the SEC
and State securities authorities) in order to consummate the transactions
contemplated by this Agreement. CTFG represents and warrants to the Xxxxxx
Family that all information so furnished by it shall be true and correct in all
material respects without omission of any material fact required to be stated to
make the information stated therein not misleading and the Xxxxxx Family
represents and warrants to CTFG that all information furnished by it relating to
the transactions contemplated by this Agreement or relating to its ownership
interest in CTFG shall be true and correct in all material respects without
omission of any material fact required to be stated to make the information
stated therein not misleading.
(d) Regulatory Approvals. As promptly as practicable, and in any event
no later than August 31, 1996, the Xxxxxx Directors will submit any necessary
applications to the Applicable Governmental Authorities for approval of the
transactions contemplated hereby, including but not limited to, the Federal
Reserve Board, FDIC and the Illinois Commissioner of Banks. The Bank and CTFG
shall cooperate with and shall assist the Xxxxxx Directors in the preparation
and filing of all such applications.
(e) Private Letter Ruling. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to obtain a private letter ruling from the
Internal Revenue Service (the "IRS")
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that the exchange of Bank (or, as the case may be, Newco) Stock for CTFG Stock
held by the Xxxxxx Family members constitutes a tax-free transaction under
Section 355 of the Internal Revenue Code, and that the transfer of Bank Stock to
Newco constitutes a tax-free transaction to CTFG and Newco (the "Private Letter
Ruling"); provided, however, that no party shall be required to make any
representation or take any action having an effect inconsistent with the
limitations set forth on Schedule 10(e). CTFG will agree to any changes in the
structure of the transactions contemplated herein required by the IRS before it
will issue the Private Letter Ruling so long as such changes do not materially
affect the benefits or impact (economic or otherwise) of, or legal risks
associated with, those transactions on CTFG, Finance or any of their
subsidiaries, affiliates, shareholders, or employees other than the Bank or the
members of the Xxxxxx Family. CTFG and Finance agree in particular that if
necessary they will either eliminate intercompany debt between them prior to the
Closing or, alternatively, convert obligations of Finance to CTFG into a term
promissory note with a minimum term of 10 years. Except as set forth in
Schedule 10(e), neither party shall take action that is intended to cause the
transactions contemplated herein not to qualify as a tax-free exchange under the
Internal Revenue Code. All contacts with the IRS shall be coordinated through
the Xxxxxx Family and its representatives. Counsel for CTFG shall be entitled
to attend all meetings with and participate in all material discussions with the
IRS in connection with the ruling process, and shall review (prior to
submission) all written material submitted to the IRS.
(f) CTFG Shareholder Approval.
(i) CTFG, acting through the Board, shall in accordance with
applicable law and subject to the fiduciary duties of the Board under
applicable law (as determined in good faith after consultation with
independent counsel), as soon as practicable following the execution of
this Agreement:
(x) duly call, give notice of, convene and hold an annual or
special meeting of its shareholders (the "Shareholders Meeting") for the
purpose of considering and taking action upon this Agreement;
(y) prepare and file with the SEC a proxy or information
statement (as amended or supplemented, the "Proxy Statement") to be mailed
to CTFG's shareholders in connection with the Shareholders Meeting and
include in the Proxy Statement the recommendation of the Board
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that shareholders of CTFG vote in favor of the approval and adoption of
this Agreement and the transactions contemplated hereby; and
(z) use its reasonable best efforts (A) to obtain and furnish the
information required to be included by it in the Proxy Statement and, after
consultation with the Xxxxxx Family, respond promptly to any comments made
by the SEC with respect to the Proxy Statement and any preliminary version
thereof and cause the Proxy Statement to be mailed to its shareholders at
the earliest practicable time and (B) to obtain the necessary approvals by
its shareholders of this Agreement and the transactions contemplated
hereby.
(ii) CTFG and the Xxxxxx Family shall cooperate in the preparation of
the Proxy Statement. The Proxy Statement shall not, at the time filed with
the SEC, at the time mailed to the Company's shareholders, at the time of
the Shareholders Meeting or at the Closing Date, 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 are made, not misleading.
(iii) At the Shareholders Meeting, the members of the Xxxxxx Family
will vote all shares of CTFG Stock owned or controlled by them in favor of
this Agreement and the transactions contemplated hereby.
(g) Compliance with Tax and Regulatory Representations.
(i) Each party hereto will comply with any covenants it makes in
connection with the Private Letter Ruling or with any Applicable
Governmental Authority to ensure the tax-free nature of the transactions
contemplated hereby. CTFG, for the two-year period following the Closing
Date, will cause Auto Sub to continue the operation of the used automobile
receivables business previously operated by the Bank through undertaking
the following actions: (v) purchasing the same type of automobile
receivables previously purchased by the Bank (except that such receivables
may be collateralized by used automobiles only), (w) maintaining a
portfolio of at least $30,000,000 in face amount value of such receivables
(net of unearned finance charge); (x) continuing to underwrite, collect and
process such receivables; (y)
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to the extent practicable, purchasing receivables from the same automobile
dealerships from which the Bank previously purchased such receivables, and
(z) to the extent practicable, retaining the employees specified in
Schedule 3.1 transferred from the Bank to conduct the Auto Sub business.
(ii) For the two-year period following the Closing Date, unless the
Xxxxxx Family has obtained a written opinion from nationally recognized tax
counsel, which opinion shall be reasonably satisfactory in form and
substance to tax counsel for CTFG, that the desired transactions and any
transaction related thereto will neither affect the qualification of the
exchange of the Bank Stock (or the Newco Stock, as the case may be) for the
CTFG Stock under Section 355 of the Code nor affect the validity of the
Private Letter Ruling (a "Tax Opinion"), (x) no Xxxxxx Family member will
sell, exchange, transfer or enter into any transaction reducing economic
risk with respect to, the Bank Stock received in the split-off, (y) the
Xxxxxx Family will cause the Bank to continue the active conduct of its
banking business, and (z) the Xxxxxx Family will not permit either the Bank
or Newco (if Newco is formed) to (A) merge or consolidate with or into any
other corporation, (B) liquidate or partially liquidate, (C) sell or
transfer any significant part of its assets, (D) redeem or otherwise
purchase any of its capital stock, or (E) except as specifically
contemplated by the Private Letter Ruling, issue additional shares of its
capital stock; provided, however, that, regardless of whether the Xxxxxx
Family has obtained a Tax Opinion, the Xxxxxx Family shall not enter into
any agreement, arrangement or understanding for transfer of control of the
Bank or Newco (a "Transfer Arrangement") for one year following the Closing
Date and, if the Xxxxxx Family enters into a Transfer Arrangement more than
one year but less than two years following the Closing Date, the Xxxxxx
Family shall remain responsible for ensuring that, and shall obtain a
written contractual commitment from the other parties to the Transfer
Arrangement that they will ensure that, the Bank and Newco comply with this
Section 10(g)(ii) except to the extent that the Tax Opinion also opines
that the qualification of the exchange of the Bank Stock (or the Newco
Stock, as the case may be) for the CTFG Stock under Section 355 and the
validity of the Private Letter Ruling will not be affected by the
particular actions specified in the Tax Opinion.
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(iii) For the two-year period following the Closing Date, unless CTFG
has obtained a written opinion from nationally recognized tax counsel,
which opinion shall be reasonably satisfactory in form and substance to tax
counsel for the Xxxxxx Family, that the desired transactions and any
transaction related thereto will neither affect the qualification of the
exchange of the Bank Stock (or the Newco Stock, as the case may be) for the
CTFG Stock under Section 355 of the Code nor affect the validity of the
Private Letter Ruling, (x) CTFG will not sell, exchange or transfer the
capital stock of Auto Sub, (y) CTFG will not permit Auto Sub to (A) merge
or consolidate with or into any other corporation (other than a merger of
Finance with and into Auto Sub), (B) liquidate or partially liquidate, or
(C) sell or transfer any significant part of the UARB Assets and (z) CTFG
will not redeem or repurchase any shares of CTFG Stock (except for
purchases of up to 16 percent of the outstanding CTFG Stock as described in
Schedule 10(e) or such greater amounts as may be consistent with the
Private Letter Ruling).
(iv) CTFG and the Bank shall immediately amend their existing tax
allocation agreement so that (A) the allocation of federal, state and local
tax liabilities through the Closing between CTFG and its subsidiaries on
the one hand and Bank on the other shall continue in a manner consistent
with past practice, except that, beginning with the date of the execution
of this Agreement, all tax benefits associated with the exercise or buyout
of all compensatory options on CTFG shares, whether held by employees or
former employees of the Bank or otherwise, shall inure solely to the
benefit of CTFG; and (B) any claims or liabilities arising from audits
(including audits commenced or completed after the Closing) of preclosing
periods shall be borne by the party (i.e., the Bank and CT Mortgage on the
one hand or CTFG and its continuing subsidiaries on the other) to whom the
adjustment is attributable. The party financially responsible for a
proposed audit adjustment shall be afforded the opportunity to determine
and direct the defense of the particular matter at its own expense and the
matter shall be settled or compromised only with such party's consent.
(v) Each of the Bank and/or Newco and CTFG shall deliver a
certificate of an officer as to compliance with such covenants to the other
on the last day of
-26-
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each calendar quarter until such ongoing covenants have terminated.
(h) Deconsolidation. After the Closing, CTFG and the Xxxxxx Directors
agree to take such steps in accordance with generally accepting accounting
principles to deconsolidate the Bank from CTFG for accounting purposes. The
parties acknowledge that any Options exercised immediately prior to Closing
pursuant to this Agreement are Options of CTFG, and shall be treated as such for
tax, accounting and deconsolidation purposes.
(i) Lease Arrangements. If requested by CTFG, for 90 days after the
Closing Date, the Bank will sublease to CTFG the space currently utilized by
CTFG on terms reasonably acceptable to the parties hereto. On the Closing Date,
CTFG will assign to the Bank any leases, licenses, and real or personal property
used by or adjacent to the Bank properties but owned by CTFG or Reliance
Acceptance Corporation for no additional consideration. All property (including
leases and real property) owned by the Bank on the date hereof shall be and
remain the property of the Bank on and after the Closing Date.
(j) Employees. CTFG hereby assumes all liability (and indemnifies the
Bank and the Xxxxxx Family against such liability) for any payments which, as a
result of the Closing, are owed to the persons listed on Schedule 10(j)(i) or
full-time employees of Finance or its subsidiaries. The Xxxxxx Family will
cause the Bank to assume all liability (and to indemnify CTFG and its
subsidiaries against such liability) for any severance or change of control
payments which, as a result of the Closing, are owed to any employee of CTFG,
the Bank or any of their affiliates other than the persons listed on Schedule
10(j)(i) and other than full-time employees of Finance or any of its
subsidiaries. On the Closing Date, the employees of CTFG other than the persons
listed on Schedule 10(j)(i) and persons who are also full-time employees of
Finance or any of its subsidiaries will remain or become employees of the Bank.
(k) CT Mortgage Comfort. CTFG has made, and through the Closing Date
will continue in the normal course of business in accordance with prior practice
to make, representations and provide indemnification, guarantees as customarily
required by mortgage investors to assure the validity of mortgages sold and
other assurances to purchasers of mortgages and mortgage-backed securities from
CT Mortgage and the Bank. After the Closing the Bank will indemnify and hold
harmless CTFG from any liability with respect thereto.
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(l) Finance Comfort. CTFG has made and will make representations
and provide indemnification and other assurances and make-well agreements
to purchasers of securities and mortgages from, and creditors of, Finance.
The parties acknowledge that the Bank has no responsibility for such
agreements and CTFG will indemnify and hold the Bank and CT Mortgage
harmless from any liability with respect thereto.
(m) Insurance Policies. The Bank may purchase from CTFG any
insurance policies owned by CTFG and providing coverage with respect to the
Bank or any of its officers at the greater of the book value of such
policies or the cash value of such policies. CTFG may purchase from the
Bank any insurance policies owned by the Bank and providing coverage with
respect to CTFG, any of its subsidiaries or any of their respective
officers at the greater of the book value of such policies or the cash
value of such policies.
(n) Employee Benefit Plans.
(i) CTFG's obligations to CTFG employees who will become Bank employees at
Closing, provided such obligations are incurred prior to the Closing (including
a pro rata portion of obligations accruing with the passage of time in
accordance with usual practice but for which cash or other contributions are not
then required) pursuant to its benefit plans, including, without limitation, the
CTFG 1996 incentive plan, the CTFG 401(k) Plan and the CTFG ESOP, will be and
remain the responsibility of CTFG. The Bank's obligations to Bank employees who
will become employees of CTFG at Closing, provided such obligations are incurred
prior to the Closing (including a pro rata portion of obligations accruing with
the passage of time in accordance with usual practice but for which cash or
other contributions are not then required) pursuant to the CTFG benefit plans in
which the Bank participates, including, without limitation, the CTFG 1996
incentive plan, the CTFG 401(k) Plan and the CTFG ESOP, will be and remain the
responsibility of the Bank. Any such accrued and unpaid salary and vacation
will be paid in full at or prior to the Closing. Any such accrued and unpaid
amounts under the 1996 incentive plan, the CTFG 401(k) Plan and the CTFG ESOP
shall be paid in accordance with the terms of such plans.
(ii) 401(k) Plans.
(A) Prior to the Closing Date but no later than the transfer date
described in paragraph (B) next below, the Xxxxxx Family shall cause the
Bank or Newco to establish a profit sharing plan with a salary reduction
arrangement that covers the employees who are or will become employees of
the Bank and former employees of the Bank ("Bank Employees") and
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meets the requirements of Sections 401(a) and 401(k) of the Code (the "CTB
401(k) Plan"). The Xxxxxx Family shall cause the sponsor of the CTB 401(k)
Plan to credit the Bank Employees with all service credited to them under
the CTFG 401(k) Plan as of the Closing Date and to fully vest them in the
account balances that are transferred from the CTFG 401(k) Plan to the CTB
401(k) Plan.
(B) Prior to the Closing Date, CTFG shall cause the account
balances of all Bank Employees under the CTFG 401(k) Plan as of the date of
the transfer (other than the accounts of those Bank Employees who are
expected to become employees of CTFG at Closing) to be transferred from the
trust maintained under the CTFG 401(k) Plan to the trust maintained under
the CTB 401(k) Plan. Shares of CTFG Stock allocated to the account balances
of the Bank Employees shall be transferred in kind. Such transfer shall be
made only after the sponsor of the CTB 401(k) Plan has supplied CTFG either
a copy of an Internal Revenue Service determination letter finding the CTB
401(k) Plan to be a qualified plan meeting the requirements of Sections
401(a) and 401(k) of the Code or an opinion of counsel or written
representation from the sponsor of the CTB 401(k) Plan (with appropriate
indemnities), in either case to the effect that the CTB 401(k) Plan is a
qualified plan under Sections 401(a) and 401(k) of the Code and the related
trust is exempt from taxation under Section 501(a) of the Code, and an
agreement that the sponsor of the CTB 401(k) Plan will timely request a
determination letter from the IRS with respect to the qualified status of
the CTB 401(k) Plan and will make any and all changes to the CTB 401(k)
Plan necessary to receive a favorable determination letter. As soon as
practicable after the Closing Date, the Xxxxxx Family shall cause the
sponsor of the CTB 401(k) Plan to transfer from the trust maintained under
the CTB 401(k) Plan to the trust maintained under the CTFG 401(k) plan the
account balances of all Bank Employees who become employees of CTFG at
Closing. As soon as practicable after the Closing Date, CTFG shall cause
the transfer from the trust maintained under the CTFG 401(k) Plan to the
trust maintained under the CTB 401(k) plan the account balances of all CTFG
employees who become employees of the Bank at Closing.
(C) The parties agree that the participants in the CTB 401(k) Plan,
in the discretion of the Xxxxxx Family, may have the opportunity to
participate in the Exchange Transaction by electing to exchange for shares
of Newco Stock the shares of CTFG Stock held in their CTFG Stock accounts
under the CTB 401(k) Plan, subject to the terms and conditions of the
Exchange Agreement, as long as the
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requirements of applicable securities laws have been satisfied by the
closing date to which the parties have otherwise agreed.
(iii) ESOPs.
(A) Prior to the Closing Date, the Xxxxxx Family shall cause the
Bank or Newco to establish an employee stock ownership plan that covers the
Bank Employees and meets the requirements of Sections 401(a) and 4975(e)(7)
of the Code (the "CTB ESOP"). The Xxxxxx Family shall cause the sponsor of
the CTB ESOP to credit the Bank Employees with all service credited to them
under the CTFG ESOP as of the Closing Date and to fully vest them in the
account balances that are transferred from the CTFG ESOP to the CTB ESOP.
(B) The parties agree that prior to the Closing Date CTFG shall
cause the applicable employers to make contributions to the CTFG ESOP
sufficient to prepay the outstanding CTFG ESOP loan and shall cause, in
accordance with applicable law, the allocation to the accounts of
participants of the shares of CTFG Stock that are released from the
suspense account by reason of such loan prepayment.
(C) Effective as of the Closing Date, CTFG shall cause the shares
of CTFG Stock and cash held in the account balances of all Bank Employees
under the CTFG ESOP as of such date (other than the accounts of those Bank
Employees who become employees of CTFG on such date) to be transferred
from the trust maintained under the CTFG ESOP to the trust maintained
under the CTB ESOP. Such transfer shall be made only after the sponsor of
the CTB ESOP has supplied CTFG either a copy of an Internal Revenue
Service determination letter finding the CTB ESOP to be a qualified plan
meeting the requirements of Sections 401(a) and 4975(e)(7) of the Code or
an opinion of counsel or written representation from the sponsor of the
CTB ESOP (with appropriate indemnities), in either case to the effect that
the CTB ESOP is a qualified plan under Sections 401(a) and 4975(e)(7) of
the Code and the related trust is exempt from taxation under Section
501(a) of the Code, and an agreement that the sponsor of the CTB ESOP will
timely request a determination letter from the IRS with respect to the
qualified status of the CTB ESOP and will make any and all changes to the
CTB ESOP necessary to receive a favorable determination letter.
(D) The parties agree that the CTB ESOP, in the discretion of the
Xxxxxx Family, may be offered the opportunity to participate in the
Exchange Transaction by exchanging for shares of Newco Stock the shares of
CTFG Stock that will be transferred to the CTB ESOP under
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paragraph (C) next above, subject to the terms and conditions of the
Exchange Agreement, as long as the CTB ESOP trustee making the
determination on the exchange of the shares is an independent financial
institution and retains an independent financial advisor.
(iv) The parties agree that (A) prior to the Closing, they will come to
agreement on any other employee benefit plan matters that need to be resolved
and (B) they shall consult with each other and share information relating to all
the matters set forth in this Section 10(n).
11. Conditions Precedent to Obligations of the Xxxxxx Family. The
obligations of the Xxxxxx Family to effect the transactions contemplated hereby
shall be subject to the fulfillment at the Closing Date of each of the following
conditions (any one or more of which may be waived by the Xxxxxx Family, but
only in writing):
(a) Status as of Closing Date. All representations and warranties
of CTFG contained in this Agreement shall be true in all material respects
when made and at and as of the Closing Date, as though such representations
and warranties were made at and as of the Closing Date (except where the
failure to be so true has been caused by the Xxxxxx Family), and CTFG shall
have performed and satisfied in all material respects all covenants and
agreements required by this Agreement to be performed and satisfied on or
prior to the Closing Date (except where the failure to be so performed or
satisfied has been caused by the Xxxxxx Family), and at the Closing Date
there shall be delivered to the Xxxxxx Family a certificate signed by an
officer of CTFG dated as of the Closing Date to the foregoing effect.
(b) Required Action. All action required to be taken by or on the
part of CTFG and the Bank to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the Boards of
Directors of CTFG and the Bank.
(c) Regulatory Approvals. Any applicable waiting periods under any
Applicable Laws shall have expired or been terminated and the transactions
contemplated by this Agreement shall have been approved by all Applicable
Governmental Authorities and such approval shall not contain or be subject
to any terms or conditions that the Xxxxxx Family reasonably deems
materially burdensome. The IRS shall have issued rulings that (i) the
exchange of Bank (or, as the case may be, Newco) Stock for CTFG Stock held
by the Xxxxxx Family members will be a tax-free transaction under
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Section 355 of the Code, and (ii) that if the transfer of Bank Stock to
Newco is part of the transaction, that transfer will be a tax-free
transaction to CTFG and Newco.
(d) No Order Preventing Consummation. There shall not be any order,
injunction or decree of any such court or any governmental agency,
department or other regulatory body prohibiting the consummation of the
transactions contemplated hereby.
(e) Material New Litigation. After the date of this Agreement there
shall have been no litigation filed which could reasonably be expected to
have a material adverse effect on the business or financial condition (a
"Material Adverse Effect") of the Bank and its subsidiaries, taken as a
whole.
(f) No Action to Prevent or Restrict Transactions. No statute,
rule, regulation or policy shall have been proposed, promulgated or enacted
by any governmental or regulatory agency of competent jurisdiction which
prevents or restricts the transactions contemplated hereby.
(g) Pre-Closing Transactions. The transactions set forth in Section
3 hereof shall have occurred.
(h) Shareholder Approval. Shareholders of CTFG holding at least a
majority of the outstanding shares of CTFG Stock shall have approved the
transactions contemplated by this Agreement.
(i) Consents. All required approvals, consents and authorizations
of any third parties in connection with the transactions contemplated
hereby shall have been obtained except such approvals, consents and
authorizations which if not obtained would not individually or in the
aggregate have a Material Adverse Effect on the Bank and its subsidiaries,
taken as a whole.
12. Conditions Precedent to Obligations of CTFG. The obligations of CTFG
to effect the transactions contemplated hereby shall be subject to the
fulfillment at the Closing Date of each of the following conditions (any one or
more of which may be waived by CTFG, but only in writing):
(a) Status as of Closing Date. All representations and warranties
of the Xxxxxx Family contained in this Agreement shall be true in all
material respects when made and at and as of the Closing Date, as though
such representations and warranties were made at and as of the Closing Date
(except where the failure to be so true has
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been caused by CTFG), and the Xxxxxx Family and Xxxxxx Directors shall have
performed and satisfied in all material respects all covenants and
agreements required by this Agreement to be performed and satisfied on or
prior to the Closing Date (except where the failure to be so performed or
satisfied has been caused by CTFG), and at the Closing Date there shall be
delivered to CTFG certificates dated as of the Closing Date and signed by
Xxxxxxx Xxxxxx, as representative of the Xxxxxx Family, to the foregoing
effect.
(b) Required Action. All action required to be taken by or on the
part the Xxxxxx Family to authorize the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated
hereby shall have been duly and validly taken by the Xxxxxx Family and, if
appropriate, by the Board of Directors of Newco.
(c) Regulatory Approvals. Any applicable waiting periods under any
Applicable Laws shall have expired or been terminated, and the transactions
contemplated by this Agreement shall have been approved by all Applicable
Governmental Authorities and such approval shall not contain or be subject
to any terms or conditions that CTFG reasonably deems materially
burdensome. The IRS shall have issued rulings that (i) the exchange of Bank
(or, as the case may be, Newco) Stock for CTFG Stock held by the Xxxxxx
Family members will be a tax-free transaction under Section 355 of the
Code, and (ii) that if the transfer of Bank Stock to Newco is part of the
transaction, that transfer will be a tax-free transaction to CTFG and
Newco.
(d) No Order Preventing Consummation. There shall not be any order,
injunction or decree of any such court or any governmental agency,
department or other regulatory body of competent jurisdiction prohibiting
the consummation of the transactions contemplated hereby.
(e) No Action to Prevent or Restrict Transactions. No statute,
rule, regulation or policy shall have been proposed, promulgated or enacted
by any governmental or regulatory agency of competent jurisdiction which
prevents or restricts or could prevent or restrict the transactions
contemplated hereby.
(f) Pre-Closing Transactions. The transactions set forth in Section
3 hereof shall have occurred.
(g) Material New Litigation. After the date of this Agreement there
shall have been no litigation filed which could reasonably be expected to
have a Material Adverse
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Effect on CTFG and its subsidiaries (other than the Bank), taken as a
whole.
(h) Shareholder Approval. Shareholders of CTFG holding at least a
majority of the outstanding shares of CTFG Stock shall have approved the
transactions contemplated by this Agreement.
(i) Consents. All required approvals, consents and authorizations
of any third parties in connection with the transactions contemplated
hereby shall have been obtained except such approvals, consents and
authorizations which if not obtained would not individually or in the
aggregate have a Material Adverse Effect on CTFG and its subsidiaries
(other than the Bank), taken as a whole.
13. Termination. This Agreement may be terminated at any time prior to
the Closing, notwithstanding approval thereof by the stockholders of CTFG:
(a) by mutual written consent of the Xxxxxx Family and CTFG;
(b) by the Xxxxxx Family or CTFG if any court of competent
jurisdiction or other governmental body located or having jurisdiction
within the United States shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby and such order,
decree, ruling or other action shall have become final and nonappealable;
(c) by the Xxxxxx Family or CTFG if the approval of any Applicable
Governmental Authorities has been denied or if any approval of any
Applicable Governmental Authorities contains or is subject to any terms or
conditions that the Xxxxxx Family or CTFG reasonably deems to be materially
burdensome; provided, however, that neither the Xxxxxx Family nor CTFG
shall terminate this Agreement pursuant to this Section 13(c) until the
other party has had a reasonable opportunity (but not to exceed 60 days) to
persuade the relevant Applicable Governmental Authority to change its
decision; and further provided that neither party may terminate this
Agreement pursuant to this Section 13(c) if it has not complied with all
reasonable requests of the other party in connection with the other party's
efforts to obtain such approval;
(d) provided that the party seeking termination pursuant to this
Section 13(d) shall have performed and satisfied in all material respects
all covenants and
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agreements required by this Agreement to be performed and satisfied by it
on or prior to the date of termination (except where the failure to be so
performed or satisfied has been caused by the other party), by the Xxxxxx
Family or CTFG if the other party shall have breached in any material
respect any of its covenants or agreements contained in this Agreement
required to be complied with prior to the date of such termination, which
failure to comply has not been cured within thirty days (but in no event
later than June 30, 1997) following receipt by such other party of written
notice of such failure to comply;
(e) provided that CTFG shall have performed and satisfied in all
material respects all covenants and agreements required by this Agreement
to be performed and satisfied by it on or prior to the date of termination
(except where the failure to be so performed or satisfied has been caused
by the Xxxxxx Family), by CTFG if the Xxxxxx Family has failed to submit a
request for the Private Letter Ruling to the Internal Revenue Services
prior to July 31, 1996 or an application to any Applicable Governmental
Authority whose approval is required for the transactions contemplated
herein prior to August 31, 1996;
(f) by the Xxxxxx Family or CTFG if the Closing has not occurred
prior to June 30, 1997 (provided, however, that a party may not terminate
this Agreement under this Section 13(f) if that party has caused the
Closing not to occur in breach of this Agreement);
(g) by either CTFG or the Xxxxxx Family if the IRS has finally
determined not to issue the Private Letter Ruling or has issued an adverse
ruling (provided, however, that neither the Xxxxxx Family nor CTFG shall
terminate this Agreement pursuant to this Section 13(g) until the other
party has had a reasonable opportunity (but not to exceed 60 days) to
persuade the IRS to change its decision);
(h) by CTFG, prior to the Shareholders Meeting, after CTFG's receipt
of an Acquisition Proposal if the Board determines, based on the advice of
independent counsel, that such action is required for the discharge of its
fiduciary duties to shareholders under applicable law;
(i) by the Xxxxxx Family if the Board shall have withdrawn or
modified in a manner adverse to the Xxxxxx Family its approval of this
Agreement or its recommendation that CTFG's shareholders approve the
transactions contemplated hereby or if CTFG shall have entered into an
agreement providing for an Acquisition Proposal or the Board shall have
resolved to do any of the foregoing;
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(j) by the Xxxxxx Family if the Shareholders Meeting has not occurred
prior to November 28, 1996 (provided, however, that the Xxxxxx Family may
not terminate this Agreement under this Section 13(j) if the Xxxxxx Family
has caused the Shareholders Meeting not to occur prior to November 28,
1996);
(k) by either CTFG or the Xxxxxx Family if shareholders of CTFG
holding a majority of CTFG's outstanding common stock do not approve the
transactions contemplated herein at the Shareholders Meeting; or
(l) by CTFG if the Xxxxxx Family has not complied with its
obligations under Section 6 within five business days after the execution
of this Agreement (provided, however, that CTFG may not terminate this
Agreement pursuant to this Section 13(l) if CTFG has prevented such
compliance by the Xxxxxx Family).
14. Effect of Termination. (a) If this Agreement is terminated pursuant
to Section 13(h), or pursuant to Section 13(i) under circumstances where the
actions of CTFG or the Board which triggered the right of the Xxxxxx Family to
terminate this Agreement pursuant to Section 13(i) were permitted by Section
9(c) and not otherwise a breach of this Agreement, CTFG shall immediately pay
the Xxxxxx Family as an exclusive remedy liquidated damages in an amount equal
to (i) its out of pocket expenses paid to lawyers, accountants, investment
bankers or other experts plus (ii) three percent of the fair market value
(determined as of the date this Agreement is terminated) of the Acquisition
Proposal that gave rise to the termination of this Agreement.
(b) If this Agreement is terminated by the Xxxxxx Family pursuant to
Section 13(d), CTFG shall immediately pay the Xxxxxx Family as an exclusive
remedy liquidated damages equal to $15 million.
(c) If this Agreement is terminated pursuant to (i) Section 13(c)
other than because of a failure to obtain the approval of the Applicable
Governmental Authorities resulting from a failure to comply with the
Community Reinvestment Act or fair lending statutes, (ii) pursuant to
Section 13(f) where the failure to have closed before the applicable date
was caused by (x) a failure to have obtained the Private Letter Ruling, (y)
a failure to obtain the financing required by Section 5.2, or (z) the
failure to have obtained the approval of the Applicable Governmental
Authorities for any reason other than a failure to comply with the
Community Reinvestment Act or fair lending statutes or (iii) pursuant to
Section 13(g) (a termination pursuant
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to (i), (ii) or (iii) of this Section 14(c) being a "Triggering
Termination"), then CTFG will be entitled, subject to adjustment pursuant
to, and in the manner provided by, Section 14(d), to receive from the
Xxxxxx Family, as an exclusive remedy, liquidated damages in an amount
equal to $15 million.
(d) If this Agreement is terminated as a result of a Triggering
Termination, CTFG agrees to immediately use its reasonable best efforts to
solicit bids from third parties for the sale of all of the equity interest
in the Bank (the "Bank Sale Process"). The Xxxxxx Family shall use its
reasonable best efforts to support the Bank Sale Process. If members of
the Xxxxxx Family are members of the Board, those Board members shall
direct the Bank Sale Process, which power of direction shall include the
right to choose an investment banker to represent CTFG (with such
investment banker to be retained and compensated by CTFG on customary
terms) in connection with the Bank Sale Process. The Nominating Committee
of the Board shall reslate any Xxxxxx Director for reelection as a director
of CTFG if his present term will expire before the end of the Bank Sale
Process. If, during the nine month period after a Triggering Termination,
CTFG receives a Sufficient Bona Fide Offer to acquire all of the equity
interest in the Bank that the Xxxxxx Family wishes the Board to consider,
the obligation of the Xxxxxx Family to pay CTFG $15 million pursuant to
Section 14(c) shall be reduced (provided that in no event shall such
obligation ever be less than zero) by the amount by which the Sufficient
Bona Fide Offer would provide CTFG with gross proceeds with a fair market
value in excess of $235 million, and CTFG shall be entitled to receive the
amount payable under Section 14(c), as reduced pursuant to this sentence.
The Board shall be under no obligation to accept a Sufficient Bona Fide
Offer that the Xxxxxx Family wishes the Board to consider; provided,
however, that should the Board decide to reject a Sufficient Bona Fide
Offer, the obligation of the Xxxxxx Family to pay CTFG $15 million shall
nonetheless be reduced as provided for in the preceding sentence. If no
Sufficient Bona Fide Offer that the Xxxxxx Family wishes the Board to
consider has been made during the nine months after a Triggering
Termination, the full $15 million payable under Section 14(c) shall be
payable to CTFG. A "Sufficient Bona Fide Offer" shall be an offer for all
of the equity interest in the Bank from a financially reliable third party
(or parties) and subject only to customary terms and conditions that, if
accepted, would be likely to be consummated and that, if consummated, would
provide CTFG with gross proceeds with a fair market value in excess of $235
million. Notwithstanding the foregoing, the Board, without the
participation of any
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member of the Xxxxxx Family, may resolve not to pursue the Bank Sale
Process, to terminate the Bank Sale Process (with or without an agreement
to sell all of the equity interest in the Bank) or to enter into an
agreement providing for the merger or disposition of the stock or assets of
CTFG prior to the expiration of the nine month period following a
Triggering Termination, in which case the obligation of the Xxxxxx Family
to pay CTFG $15 million pursuant to Section 14(c) shall be extinguished.
Any amounts payable under Section 14(c) or this Section 14(d) may be paid,
at the option of the Xxxxxx Family, in cash, in CTFG Stock valued at the
Market Value as of the date of such payment, or in a combination of cash
and CTFG Stock valued at the Market Value (as defined below) as of the date
of such payment and shall be paid within seven days from the expiration of
the Xxxxxx Sale Period. Should any such amounts not be paid by the Xxxxxx
Family within such seven days, the amount shall be paid from the Escrow
Fund to the extent the Escrow Fund is sufficient for this purpose and
immediately by the Xxxxxx Family directly to the extent the Escrow Fund is
insufficient for this purpose. Should the Xxxxxx Family pay such
liquidated damages from another source, CTFG agrees to issue joint written
instructions with the Xxxxxx Family to effectuate the release of the Escrow
Fund to the Xxxxxx Family. The term "Market Value" on any date shall mean
the average of the last quoted trading price of CTFG Stock on the Nasdaq
Stock Market for the five preceding Nasdaq Stock Market trading days. The
"Xxxxxx Sale Period" shall be the shorter of (i) the nine month period
after a Triggering Termination, (ii) the period beginning with a Triggering
Termination and ending with a decision by the Board to not pursue or to
terminate the Bank Sale Process or (iii) the period beginning with a
Triggering Termination and ending on the date the Xxxxxx Directors present
a Sufficient Bona Fide Offer to the Board.
(e) In the event of the termination of this Agreement pursuant to
Section 13, this Agreement shall forthwith become void and have no effect,
other than as provided in this Section 14, in the second to last sentence
of Section 5.2, in Section 9 (provided that, in the absence of a Triggering
Termination, Section 9 shall become void and have no effect upon the
termination of this Agreement), in Section 17 and in Section 24. No
termination of this Agreement and nothing contained in this Section 14(e)
shall relieve any party from liability for any breach of this Agreement
except insofar as liquidated damages are paid by any party pursuant to
Sections 14(a), 14(b) or 14(c). The parties acknowledge that the liquidated
damages specified in Sections 14(a), 14(b) and 14(c) are not a penalty, and
are reasonable in light of the anticipated or actual harm, the
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difficulty of proof of loss, and the inconvenience and non-feasibility of
otherwise obtaining an adequate remedy.
15. Indemnification. (a) The Xxxxxx Family shall indemnify and hold
harmless CTFG and its affiliates from and against any and all losses, damages,
claims, liabilities or obligations (including attorneys' fees and interest)
("Losses") with respect to (i) any breach of any representation, warranty or
agreement of the Xxxxxx Family contained in this Agreement and (ii) any
brokerage fees, commissions or finders' fees payable on the basis of any action
taken or caused to be taken by the Xxxxxx Family. After the Closing, the Xxxxxx
Family shall cause the Bank to indemnify and hold harmless CTFG and its
affiliates from and against any and all Losses (x) whenever incurred, arising or
accrued, relating to the Bank or CT Mortgage or CTFG's ownership of securities
in the Bank, CT Mortgage or Alpha Capital Fund or (y) incurred, arising or
accrued prior to the Closing and relating to Auto Sub. In addition, after the
Closing, the Xxxxxx Family shall indemnify and hold harmless CTFG from and
against 25% of any Losses, including, without limitation, any costs or expenses
of defense or settlement of any suits, actions or proceedings initiated by third
parties and any judgments in such suits, actions or proceedings relating to the
transactions contemplated by this Agreement and any Losses relating to disputes
regarding Option terminations or limitations (collectively, "Transaction
Challenge Losses"); provided, however, that Transaction Challenge Losses shall
be net of any insurance proceeds paid to, or for the benefit of, CTFG or members
of the Board, and provided, further, that, for purposes of computing what the
Xxxxxx Family owes under this sentence, any attorneys fees or expenses,
settlements or judgments paid separately by the Xxxxxx Family in connection with
suits, actions or proceedings relating to the transactions contemplated by this
Agreement or regarding Option limitations or terminations (net of any insurance
proceeds paid to, or for the benefit of, the Xxxxxx Family) shall (A) be
considered part of Transaction Challenge Losses and (B) constitute a credit
against any amounts that the Xxxxxx Family owes under this sentence (with such
credit not to exceed such amounts that the Xxxxxx Family owes under this
sentence).
(b) CTFG shall indemnify and hold harmless the Xxxxxx Family, its
affiliates, and the Bank from and against any and all Losses with respect to (i)
any breach of any representation, warranty or agreement of CTFG contained in
this Agreement and (ii) any brokerage fees, commissions or finders' fees payable
on the basis of any action taken or caused to be taken by CTFG. In addition,
after the Closing, CTFG shall indemnify and hold harmless the Xxxxxx Family from
and against any and all Losses (x) whenever incurred, arising or accrued,
relating to CTFG (except for matters for which the Xxxxxx Family is indemnifying
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CTFG pursuant to this Agreement) or Finance or (y) incurred, arising or accrued
after the Closing and relating to Auto Sub.
(c) As soon as reasonably practicable after becoming aware of a claim for
indemnification under this Agreement, the person claiming a right to
indemnification (the "Indemnified Person") shall promptly give notice to the
person from whom indemnification is being sought (the "Indemnifying Person") of
such claim and the amount of indemnification claimed hereunder; provided that
the failure of the Indemnified Person to give notice shall not relieve the
Indemnifying Person of its obligations under this Agreement except to the extent
(if any) that the Indemnifying Person shall have been prejudiced thereby.
(d) With respect to claims for indemnification arising out of a claim, or
the commencement of any suit, action or proceeding asserted by a person not a
party to this Agreement, the Indemnifying Person may, at its own expense (i)
participate in the defense of any such claim, suit, action or proceeding and
(ii) upon notice to the Indemnified Person and the Indemnifying Person's
delivering to the Indemnified Person a written agreement that the Indemnified
Person is entitled to indemnification pursuant to this Section 15 for all Losses
arising out of such claim, suit, action or proceeding, at any time during the
course of any such claim, suit, action or proceeding, assume the defense
thereof; provided that (y) the Indemnifying Person's counsel is reasonably
satisfactory to the Indemnified Person, and (z) the Indemnifying Person shall
thereafter consult with the Indemnified Person upon the Indemnified Person's
reasonable request for such consultation from time to time with respect thereto.
If the Indemnifying Person assumes such defense, the Indemnified Person shall
have the right (but not the obligation) to participate in the defense thereof
and to employ counsel, at its own expense, separate from the counsel employed by
the Indemnifying Person. Whether or not the Indemnifying Person chooses to
defend or prosecute any such claim, suit, action or proceeding, all parties
shall cooperate in the defense or prosecution thereof. Neither the Indemnifying
Person nor the Indemnified Person shall settle any matter subject to
indemnification under this Agreement without the consent of the other, which
consent shall not be unreasonably withheld.
16. Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use reasonable best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable on the part of such party, to consummate
and make effective the transactions contemplated by this Agreement at the
earliest practicable date, including the obtaining of all required consents,
approvals, waivers, exemptions, amendments and authorizations, give all notices,
and make or effect all filings,
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registrations, applications, designations and declarations, including, but not
limited to, those described herein, and each party shall cooperate fully with
the other (including by providing any necessary information) with respect to
the foregoing. Each of the parties agrees not to enter into, or agree to enter
into, any transaction or perform, or agree to perform, any act which would
result in any of the representations or warranties on the part of such party
not being true and correct in all material respects at and as of the time
immediately after the occurrence of any such transaction or event or on the
Closing Date or that would be likely to jeopardize the consummation of the
transactions contemplated hereby. In case at any time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and/or directors of CTFG, the Bank and Newco and the members of the
Xxxxxx Family will take all such necessary action.
17. Payment of Expenses. Except as otherwise specifically set forth
herein, each party hereto shall pay its own fees and expenses incident to
preparing for, entering into, and carrying out this Agreement and the
transactions contemplated hereby. The fees and expenses of CTFG and Finance,
including any brokers', finders', investment bankers', attorneys', filing,
accountants' or tax advisors' fees (collectively, "Fees") are to be borne by
CTFG, and the Fees of the Bank and the Xxxxxx Family are to be borne by the
Xxxxxx Family.
18. Publicity and Reports. CTFG shall coordinate all publicity relating
to the transactions contemplated by this Agreement and, except as otherwise
required by law or as required to secure the financing referred to in Section
5.2, the Xxxxxx Family shall not issue any press release, publicity statement or
other public notice relating to this Agreement or any of the transactions
contemplated hereby, or communicate with analysts or the investment community,
without obtaining the prior consent of the Board, which consent shall not be
unreasonably withheld. All press releases, publicity statements, communications
with analysts or the investment community, or other public notice by CTFG
relating to this Agreement or any of the transactions contemplated hereby shall
be submitted for the approval of the full Board, including Xxxxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxx and Xxxxx X. Xxxxxx. Each party shall obtain the prior
consent of the other party, which consent shall not be unreasonably withheld, to
the form and content of any application or report made to any regulatory
authority, taxing authority or similar agency in each case which relates to any
of the transactions contemplated by this Agreement and to any proxy or
information statement or other material to be delivered to CTFG shareholders.
19. Survival of Representations and Warranties. The representations and
warranties in Sections 7(a), 7(b), 7(d),
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7(g), 8(a), 8(b), 8(c), 8(f) and 8(g), and the covenants and agreements, made
herein shall survive the Closing to the fullest extent permitted under the
applicable statute of limitations. All other representations and warranties
contained in this Agreement shall not survive beyond the Closing.
20. Binding Effect. Neither this Agreement nor any rights, duties or
obligations hereunder shall be assignable by CTFG or the Xxxxxx Family, in whole
or in part, and any attempted assignment in violation of this prohibition shall
be null and void; provided, however, that this Agreement shall be assignable by
the Xxxxxx Family to an affiliate of the Xxxxxx Family without the consent of
CTFG, but no such assignment shall relieve the Xxxxxx Family of its obligations
hereunder if such assignee does not perform such obligations. Subject to the
foregoing, all of the terms and provisions hereof shall be binding upon, and
inure to the benefit of, the successors and assigns of the parties hereto.
21. Law Governing. This Agreement will be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware. The parties hereto agree that the exclusive place of jurisdiction for
any action, suit or proceeding relating to this Agreement shall be in the courts
of the State of Delaware sitting in Wilmington, Delaware and each such party
hereby irrevocably and unconditionally agrees to submit to the jurisdiction of
such courts for the purposes of any such action, suit or proceeding. Each party
hereto irrevocably waives any objection it may have to the venue of any action,
suit or proceeding brought in such courts or to the convenience of the forum.
Final judgment in any such action, suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by the suit on the judgment, a certified
or true copy of which shall be conclusive evidence of the fact and amount of any
indebtedness or liability of any party therein described.
22. Counterparts. This Agreement may be executed in several counterparts
and one or more separate documents, all of which together shall constitute one
and the same instrument with the same force and effect as though all of the
parties had executed the same document.
23. Amendment and Waiver. Any of the terms or conditions of this
Agreement may be waived, amended or modified in whole or in part at any time
before or after the receipt of any approvals, to the extent authorized by
applicable law, by a writing signed by CTFG and the representatives of the
Xxxxxx Family.
24. CTFG Action. From and after the date of this Agreement, any amendment
of this Agreement, any action or inaction of CTFG or any of its subsidiaries
relating to this
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Agreement (other than as set forth in Sections 9(a)(ii), 9(b) and 18),
including any termination of this Agreement by CTFG or any extension by CTFG of
the time for performance of any of the acts or obligations of the Xxxxxx Family
or any waiver of CTFG's rights hereunder, will require the concurrence of the
Board or a duly authorized committee thereof by a majority of those voting
(assuming a quorum is present), without the vote of any member of the Xxxxxx
Family.
25. Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of the Xxxxxx Family and CTFG and their respective
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
26. Notices. Any notice of communication required or permitted hereunder
shall be sufficiently given if in writing and (a) delivered in person or (b)
mailed by certified or registered mail, postage prepaid, as follows:
If to CTFG, addressed to:
Xxxx Xxxxxx Financial Group, Inc.
000 Xxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxx
With a copy addressed to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx and Xxxxx X. Xxxxx
With a copy addressed to:
Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx
If to the Xxxxxx Family, addressed to:
Mr. Xxxxxxx Xxxxxx
00 Xxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
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With a copy addressed to:
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
27. Entire Agreement. All exhibits and lists referred to in this
Agreement are integral parts hereof, and this Agreement, such exhibits and
related lists, constitute the entire agreement among the parties hereto with
respect to the matters contained herein and therein, and supersede all prior
agreements and understandings between the parties with respect thereto.
28. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
* * *
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
XXXX XXXXXX FINANCIAL GROUP, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
"Xxxxxx Family" Representatives
------------------------------------
Xxxxxx Xxxxxx
------------------------------------
Xxxxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx
------------------------------------
Xxxx Xxxxxx
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EXHIBIT A
ESCROW AGREEMENT
ESCROW AGREEMENT, made this ____ day of June, 1996, by and among Xxxx
Xxxxxx Financial Group, Inc., a Delaware corporation ("CTFG"), those certain
persons listed on Schedule 7(b) of that certain Share Exchange Agreement dated
June __, 1996 by and among CTFG and such persons (the "Xxxxxx Family") and
represented by the members of the Xxxxxx Family shown on the signature page
hereof and The Northern Trust Company (the "Escrow Agent").
WHEREAS, CTFG and the Xxxxxx Family have entered into a Share Exchange
Agreement (the "Agreement") in respect of the sale by CTFG of all the issued and
outstanding shares of capital stock and ownership interests in Xxxx Xxxxxx Bank
(the "Bank") to the Xxxxxx Family; and
WHEREAS, the Agreement requires that 750,000 shares of CTFG common stock
(the "Escrow Amount") be deposited in escrow by the Xxxxxx Family pending
resolution of certain matters; and
WHEREAS, the Xxxxxx Family agreed to and is prepared to place the Escrow
Amount in escrow with Escrow Agent; and
WHEREAS, the Escrow Agent is prepared to accept the deposit of the Escrow
Amount in escrow.
NOW THEREFORE, the parties agree as follows:
1. Escrow Agent shall open an escrow account on the date hereof in the joint
names of CTFG and the Xxxxxx Family, entitled "CTFG/Xxxxxx Agreement Escrow
Account".
2. The Xxxxxx Family shall deliver the Escrow Amount to Escrow Agent for
deposit into the Escrow Account effective as of the date of the opening of said
Escrow Account.
3. Escrow Agent shall hold the Escrow Amount in escrow until such time as it
receives (i) a final order or judgment of a court of competent jurisdiction
directing the disposition of the Escrow Amount or any part thereof, together
with an opinion of counsel to CTFG or counsel to the Xxxxxx Family to the
effect that such order or judgment is final and not subject to appeal or (ii)
joint written notice from CTFG and the persons whose names appear below as
representatives of the Xxxxxx Family in which event Escrow Agent shall
distribute the Escrow Amount in accordance with the final order or judgment or
the joint written notice, as the case may be. The Escrow Agent shall hold any
interest,
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dividends, distributions or other earnings on the Escrow Amount for the sole
benefit of the Xxxxxx Family and shall pay such amounts as instructed in
writing from time to time by the Xxxxxx Family.
4. Any cash funds deposited in the Escrow Account shall be invested by Escrow
Agent in CTFG securities, government securities or certificates of deposit as
instructed by the Xxxxxx Family. CTFG Stock deposited in the Escrow Account
shall be held for investment and shall not be sold or transferred except
pursuant to the requirements of this Escrow Agreement.
5. The duties and responsibilities of the Escrow Agent shall be limited to
those expressly set forth in this Agreement. No implied duties or
discretionary powers may be imputed to it by the terms of this Agreement, or
otherwise. The Escrow Agent shall not be subject to, nor obliged to recognize,
any other instrument governing the rights or duties of the other parties to
this Agreement, even though reference thereto may be made in this Agreement.
6. The Escrow Agent may disregard any and all notices or instructions
received from any source, except only (i) such notices or instructions as are
specifically provided for in this Agreement and (ii) orders or process of any
court of competent jurisdiction. If from time to time any property held
pursuant to this Agreement becomes subject to any order, judgment, decree,
injunction or other judicial process of any court of competent jurisdiction
("Order"), the Escrow Agent may comply with any such Order without liability to
any person, even though such Order may thereafter be annulled, reversed,
modified or vacated.
7. Whenever the Escrow Agent should receive or become aware of any conflicting
demands or claims with respect to this Agreement or the rights of any of the
parties hereto or any property held hereunder, the Escrow Agent may without
liability refrain from any action until the conflict has been resolved or,
alternatively, may tender into the registry or custody of any court which the
Escrow Agent determines to have jurisdiction all money or property in its hands
under this Agreement, together with such legal pleadings as it deems
appropriate, less a reasonable allowance for its outside legal fees and other
reasonable out-of-pocket expenses, and thereupon be discharged from all further
duties and liabilities under this Agreement. Any inaction or filing of
proceedings pursuant to this section shall not deprive the Escrow Agent of its
compensation during such inaction or prior to such filing.
8. Unless otherwise specifically indicated herein the Escrow Agent shall
proceed as soon as practicable to collect any checks or other collection items
at any time deposited hereunder. All
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such collections shall be subject to the usual collection agreement regarding
items received by its commercial banking department for deposit or collection.
The Escrow Agent shall have no duty (1) to collect from any party any money,
securities or documents required to be deposited with it, (2) to notify anyone
of any payment or maturity under the terms of any instrument deposited
hereunder, or (3) to take any legal action to enforce payment of any check,
note or security deposited with it.
9. Except as may be specifically provided herein concerning investments of
cash, the Escrow Agent shall have no liability to pay interest on any money
held pursuant to this Agreement. The Escrow Agent may use its own bond
department in purchasing or selling securities. The Escrow Agent shall not be
liable for any depreciation or change in the value of such documents or
securities or any property evidenced thereby or for any losses incurred in
liquidating securities or other property to satisfy a distribution request.
All distributions provided for hereunder shall be made by the Escrow Agent from
the Escrow Amount or any interest, dividends, distributions or other earnings
thereon, subject to any unpaid fees and unreimbursed out-of-pocket expenses of
the Escrow Agent permitted by this Agreement which are then outstanding, in the
order that proper requests therefor are received by the Escrow Agent. In no
event shall the Escrow Agent be required to seek contributions from any source
or to advance its own funds in order to satisfy a distribution request.
10. The Escrow Agent shall not be responsible for any recitals of fact in this
Agreement, or for the sufficiency, form, execution, validity or genuineness of
any documents or securities deposited under this Agreement or for any
signature, endorsement or any lack of endorsement thereon, or for the accuracy
of any description therein, or for the identity, authority or rights of the
persons executing or delivering the same or this Agreement.
11. The Escrow Agent shall be fully protected in relying without investigation
upon any written notice, demand, certificate or document which it in good faith
believes to be genuine, as to the truth and accuracy of the statements made
therein, the identity and authority of the persons executing the same and the
validity of any signature thereon. Although the Escrow Agent may demand
specific authorizations (including corporate resolutions, incumbency
certificates and the like) or identification from a party or its representative
prior to taking any action hereunder, no such demand shall constitute a waiver
or deprive the Escrow Agent of the protections afforded by this paragraph.
12. The Escrow Agent shall not be personally liable for any act taken or
omitted by it under this Agreement in good faith and in the exercise of its own
best judgment. In no event shall the
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Escrow Agent be liable to any person for special, indirect or consequential
damages of any kind, even if it is advised of the possibility thereof. The
parties shall jointly and severally indemnify, defend and hold harmless the
Escrow Agent from and against any and all claims that may be asserted against
the Escrow Agent by any third parties and any and all liability, loss, cost or
expense (including outside attorneys' fees in a reasonable amount) that may be
incurred by the Escrow Agent as a result of any such claim or otherwise as a
result of acting as Escrow Agent hereunder unless due to bad faith, gross
negligence or wilful misconduct. The obligations of the parties under this
paragraph shall survive termination of this Agreement and distribution of the
Deposit.
13. The Escrow Agent may engage nationally recognized legal counsel to advise
it concerning any of its duties in connection with this Agreement, or in case
it becomes involved in litigation on account of being Escrow Agent under this
Agreement, and reliance on the advice of such counsel shall fully protect the
Escrow Agent except for any action taken by Escrow Agent in bad faith or do to
its gross negligence or willful misconduct.
14. The Escrow Agent shall be entitled to a fee of $3,000, payable in advance
for each 12-month period or any part thereof, without proration plus
reimbursement for its reasonable expenses, including outside attorneys' fees in
a reasonable amount. The fees and expenses of the Escrow Agent shall be paid
by CTFG.
15. Any notices or communication required or permitted hereunder shall be
sufficiently given if in writing and (a) delivered in person, (b) mailed by
certified or registered mail, postage prepaid or (c) transmitted by facsimile,
as follows:
If to Escrow Agent, addressed to:
The Northern Trust Company
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
If to CTFG, addressed to:
Xxxx Xxxxxx Financial Group, Inc.
000 Xxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
With a copy addressed to:
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Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
If to the Xxxxxx Family, addressed to:
Mr. Xxxxxxx Xxxxxx
00 Xxxxxxxx
Xxxxxxxx Xxxx, XX 00000
Fax: (847)___-____
With a copy addressed to:
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000
Whenever under this Agreement the time for giving a notice or performing an
act falls upon a Saturday, Sunday, or holiday, such time shall be extended to
the next business day.
16. Any Escrow Agent may resign by written notice to the other parties to this
Agreement. Any such resignation shall be effective upon delivery of the
property then held in escrow to the successor Escrow Agent, whereupon the
resigning Escrow Agent shall be discharged of any further duties under this
Agreement. If an Escrow Agent resigns, the other parties shall appoint a
successor Escrow Agent; provided that if no successor is appointed within 30
days after resignation, the resigning Escrow Agent may appoint as successor any
corporation with trust powers in the United States or may tender the Deposit
into court as provided in paragraph 4.3 hereof.
17. The Escrow Agent shall not be responsible for any delays or failure to
perform caused by circumstances reasonably beyond its control, including but
not limited to breaches by other parties of their obligations hereunder, delays
by messengers or other independent contractors, mechanical or computer
failures, malfunctioning or breakdowns in public utilities, securities
exchanges, Federal Reserve Banks, or securities depositories; interference by
governmental units; strikes, lockouts, or civil disobedience; fires or other
casualties, acts of God or other similar occurrences.
18. The rights and duties of CTFG and the Xxxxxx Family to each other shall be
governed by the laws of the state of Delaware. The rights and duties of the
Escrow Agent shall be determined in
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accordance with the laws of the State of Illinois without reference to its
conflict of law principles. This Agreement shall be deemed to be a contract
made and to be performed in the State of Illinois.
19. This Agreement may be amended from time to time by written instrument
executed by all the parties other than the Escrow Agent; provided that duties
and liabilities of the Escrow Agent may not thereby be changed without its
prior written consent.
20. This Agreement shall benefit, and be binding upon, only the parties hereto
and their respective heirs, estates, successors and assigns (each a "Party").
Nothing in this Agreement shall be construed to give any right against the
Escrow Agent to any person who is not a Party. The Escrow Agent shall have no
duty, express or implied, to any non-Party and no such person shall be deemed a
"third party beneficiary" of this Agreement.
21. The Escrow Agent shall furnish CTFG and the Xxxxxx Family upon the request
of either CTFG or the Xxxxxx Family with a report showing receipts and
disbursements during the period and a priced list of (publicly traded) assets.
Valuations appearing on such reports or otherwise utilized hereunder may be
obtained from third parties generally recognized as sources of pricing
information, but the Escrow Agent shall not be liable for the accuracy of
valuations furnished by recognized pricing sources.
22. This Agreement contains the entire agreement among the parties hereto with
respect to the subject matter hereof and may not be amended or modified in any
manner except by an instrument signed by all parties hereto.
* * *
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52
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
XXXX XXXXXX FINANCIAL GROUP, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
"XXXXXX FAMILY" REPRESENTATIVES
-------------------------------------
Xxxxxx Xxxxxx
-------------------------------------
Xxxxxxx Xxxxxx
-------------------------------------
Xxxxx Xxxxxx
-------------------------------------
Xxxx Xxxxxx
THE NORTHERN TRUST COMPANY
By:
-------------------------
Name:
------------------------
Title:
-----------------------
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53
Schedule 3.1
1. Xxx Xxxxxxx
2. ___________*
3. ___________*
4. ___________*
* To be selected by Xxx Xxxxxxx from persons currently reporting to him.
54
Schedule 7(b)
XXXXXX FAMILY
Directly Owned Shares
Xxxxxx Xxxxxx 53,900
Xxxxxxx Xxxxxx 86,880
Xxxxx Xxxxxx 126,880
Xxxxx Xxxxx 126,880
Indirectly Owned Shares
Xxxx Xxxxxx TR FBO Xxxx Xxxxxx 21,720
Xxxxxx Xxxxx TR/BT Gift Trust 26,480
Xxxxxx Xxxxx TR/Xxxxx Xxxxxx Xxxxxx 8,800
Xxxx Xxxxxx TR/Xxxxx Xxxxxx Xxxxxx 11,320
Xxxx Xxxxxx TR/Xxxxx Xxxxxx 21,720
Xxxx Xxxxxx TR/Xxxxx Xxxxxx 21,720
Xxxxxx Xxxxx TR/Tark/Xxxxx Xxxxxx 211,320
Xxxx Xxxxxx TR/Xxxxx Xxxxxx Xxxxx 21,720
Xxxxxx Xxxxx TR/Tark/Xxxxx Xxxxxx Xxxxx 211,320
Xxxxxx Xxxxx TR/Xxxxx Xxxxxx 26,520
Xxxx Xxxxxx Bank/FBO SJT 38,040
Xxxx Xxxxxx Bank/Xxxx Xxxx Fund 152,200
Xxxxxx Xxxxx TR/FBO X. Xxxxx 8,800
Xxxx Xxxxxx TR/FBO X. Xxxxx 4,640
Xxxxxx Xxxxx TR/FBO X. X. Xxxxxx 8,800
Xxxx Xxxxxx TR/FBO Xxxxx Xxxxxx 21,760
Xxxxxx Xxxxx TR/Tark/Xxxxx Xxxxxx 261,320
Xxxxxx Xxxxx TR/Tark/X. Xxxxx 261,320
Xxxxxx Xxxxx TR/Tark/X. Xxxxxx 261,320
Xxxxxx Xxxxx TR/JWT Gift Trust 26,520
Xxxx Xxxxxx TR/FBO JWT 17,800
Xxxxxx Xxxxx TR/Tark/X.Xxxxxx 211,320
Xxxxxx Xxxxx TR/FBO Xxxx Xxxxxx 4,800
Xxxx Xxxxxx TR/FBO Xxxx Xxxxxx 16,960
Xxxx Xxxxxx TR/FBO Xxxxxxx Xxxxxx 21,760
Xxxxxx Xxxxx TR/FBO X. Xxxxx 8,800
Xxxx Xxxxxx TR/FBO X. Xxxxx 11,320
Xxxxxx Xxxxx TR/FBO Xxxx Xxxxxx 8,800
Xxxx Xxxxxx TR/FBO Xxxx Xxxxxx 1,480
Xxxx Xxxxxx TR/FBO Xxxxxxxxx Xxxxxx 16,960
Xxxxxx Xxxxx TR/FBO Xxxxxxxxx Xxxxxx 4,800
Xxxxxx Family Partnership 750,000
Xxxxxx X. Xxxxxx Trust under self 509,280
Xxxxx Xxxxxx Trust 40,000
CTFG Stock Options Owned
Xxxxxxx Xxxxxx 140,270
55
Xxxxx Xxxxxx 140,270
ESOP Shares
Xxxxxx Xxxxxx 9,008.6824
Xxxxxxx Xxxxxx 8,861.9830
Xxxxx Xxxxxx 8,861.9961
56
SCHEDULE 9(a)(i)
1. Complete the installation of the FAST teller and platform automation
systems.
2. Complete the NCS trust accounting system conversion.
3. Open up to five CT Mortgage offices, each on a month to month lease with a
maximum rental expense for each office of $1000 per month.
4. Manage the Bank's asset and liability position in accordance with
established policies and past practices, including without limitation the
purchase and sale of securities.
5. Purchase or sell mortgage servicing rights in bulk up to a maximum total
value of $100,000 per month.
6. Originate and sell mortgages and related servicing rights without
limitation.
7. Expend the amounts necessary to maintain, renovate, and redecorate the
Bank's premises within the limits established by the Bank's 1996 Capital
Expenditure Budget of $1,950,000.
8. Purchase land trust portfolios up to $500,000 in purchase price per
transaction.
9. Expend the amounts indicated in the 1996 Technology Capital Investment plan
of $400,000 for PC and infrastructure upgrades.
10. Dispose of assets acquired through the disposition of problem loans.
11. With the approval of the CTFG compensation committee, implement the
Supplemental Mortgage Incentive Program and the Bank 1996 Incentive
program and the stock options granted as a condition of hiring to Xxxxxx
X. XxXxxxxx of 3500 shares and Xxx Xxxxxxx of 2000 shares.
12. Fund up to the amounts budgeted for 1996 contributions to the CTFG profit
sharing, 401k, ESOP, and Incentive Plans.
13. Prior to Closing liquidate sufficient assets to generate the cash required
at Closing.
57
Schedule 9(b)(ii)(A)
1. Finance may effect the conversion of certain computer software systems as
previously proposed to its board of directors.
2. Finance may furnish each new office which is opened with computer equipment,
furniture and leasehold improvements not to exceed $15,000 per office
opened.
58
SCHEDULE 10(e) -- [IRS REPRESENTATIONS]
1. No continuing shareholder of CTFG shall be required to give any
representation indicating that such shareholder does not have a plan or
intention to sell or dispose of its CTFG shares, or otherwise limiting the
ability of such shareholder to dispose of its shares at any time, and
management of CTFG shall not be required to make any representation with
respect to the plan or intention of any continuing 5 percent or greater CTFG
shareholder to sell or dispose of such holder's CTFG shares.
2. The obligations of CTFG, Finance and Auto Sub with respect to the
automobile receivables business transferred from the Bank shall be limited to
the obligations described in Section 10(g)(i), and neither CTFG, Finance or
Auto Sub shall be required to make any covenant or representation inconsistent
with such limitations.
3. Nothing in the Private Letter Ruling, representations or covenants shall
restrict CTFG's ability to repurchase, immediately following the exchange of
the Bank Stock (or Newco Stock, as the case may be) for the CTFG Stock, up to
16 percent of the CTFG Stock then outstanding, it being understood that
permission to redeem a greater percentage will, if possible, be obtained under
the Private Letter Ruling.
59
Schedule 10(j)(i)
Xxxxx Xxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. Race
Xxxxxx Xxxxxx
