SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report AUGUST 17, 1999 (AUGUST 12, 1999)
(Date of earliest event reported)
FIRST DECATUR BANCSHARES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
33-80333 37-1085161
(Commission File Number) (I.R.S. Employer Identification Number)
130 North Water Street, Decatur, Illinois 62523
(Address of principal executive offices) (Zip Code)
(217) 424-1111
(Registrant's telephone number, including area code)
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ITEM 5. OTHER INFORMATION
On August 12, 1999, First Decatur Bancshares, Inc., a Delaware
corporation ("First Decatur"), entered into an Agreement and Plan of Merger (the
"Merger Agreement") with BankIllinois Financial Corporation, a Delaware
corporation ("BankIllinois"), which provides for the merger of the two companies
into a newly-organized bank holding company to be known as Main Street Trust,
Inc. ("Main Street"). The Merger is conditioned upon, among other things,
approval by holders of a majority of First Decatur common stock and of
BankIllinois common stock, and the receipt of certain regulatory approvals. It
is intended that the merger will be treated as a tax-free reorganization and as
a pooling-of-interests for accounting and financial reporting purposes. The
Merger Agreement is attached as Exhibit 2.1 and its terms are incorporated
herein by reference.
Pursuant to the Merger Agreement, stockholders of First Decatur will
receive 1.638 shares of Main Street for each share of First Decatur, and
stockholders of BankIllinois will receive one share of Main Street for each
share of BankIllinois.
A copy of a Press Release, dated August 13, 1999, issued by First
Decatur and BankIllinois relating to the merger is attached as Exhibit 99.1 and
is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of August 12,
1999, by and among BankIllinois Financial Corporation,
First Decatur Bancshares, Inc. and Main Street Trust,
Inc.
99.1 First Decatur and BankIllinois Press Release dated
August 13, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST DECATUR BANCSHARES, INC.
Dated: August 16, 1999 By: /s/Phillip C. Wise
-------------------------------------
Phillip C. Wise
President and Chief Executive Officer
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FIRST DECATUR BANCSHARES, INC.,
BANKILLINOIS FINANCIAL CORPORATION
AND
MAIN STREET TRUST, INC.
AUGUST 12, 1999
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS....................................................................1
Section 1.1 Definitions....................................................1
Section 1.2 Principles of Construction.....................................5
ARTICLE 2
THE MERGER.....................................................................6
Section 2.1 Manner of Merger...............................................6
Section 2.2 Effect of Merger...............................................6
Section 2.3 Amended and Restated Articles of Incorporation.................7
Section 2.4 Bylaws.........................................................7
Section 2.5 Directors and Officers.........................................7
Section 2.6 FDB's Deliveries at Closing....................................7
Section 2.7 BIF's Deliveries at Closing....................................8
Section 2.8 Newco's Deliveries at Closing..................................9
Section 2.9 Closing; Effective Time........................................9
Section 2.10 Confirming Due Diligence......................................10
ARTICLE 3
TREATMENT OF SHARES...........................................................10
Section 3.1 Treatment of Newco, FDB and BIF Common Stock..................10
Section 3.2 Exchange Ratios...............................................11
Section 3.3 Steps of Transaction..........................................11
Section 3.4 Tax Free Reorganization.......................................13
Section 3.5 Dissenting Shares.............................................13
Section 3.6 Options.......................................................13
ARTICLE 4
REPRESENTATIONS AND WARRANTIES BY BIF.........................................14
Section 4.1 BIF Organization..............................................14
Section 4.2 BIF Capitalization............................................15
Section 4.3 Subsidiary Organization.......................................15
Section 4.4 Subsidiary Capitalization.....................................16
Section 4.5 Authorization.................................................16
Section 4.6 Litigation and Regulatory Matters.............................16
Section 4.7 Insurance.....................................................17
Section 4.8 Defaults Under Agreements.....................................17
Section 4.9 Financial Statements and Reports..............................17
Section 4.10 Properties, Contracts, Benefit Plans and Other Agreements.....17
Section 4.11 Disclosures...................................................19
Section 4.12 Effect of Agreement...........................................19
Section 4.13 Books and Records.............................................19
Section 4.14 Taxes.........................................................20
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Section 4.15 Title to Properties...........................................20
Section 4.16 Brokerage Commissions.........................................20
Section 4.17 Certificate of Incorporation, Charter and Bylaws..............21
Section 4.18 Interim Events................................................21
Section 4.19 Regulatory Filings............................................22
Section 4.20 Compliance with Applicable Law................................22
Section 4.21 Compliance With ERISA.........................................22
Section 4.22 Compliance With Environmental Laws............................23
Section 4.23 Trust Administration..........................................23
Section 4.24 Loan Loss Reserve.............................................24
Section 4.25 Year 2000.....................................................24
Section 4.26 Approval Delays...............................................24
ARTICLE 5
REPRESENTATIONS AND WARRANTIES BY FDB.........................................24
Section 5.1 FDB Organization..............................................24
Section 5.2 FDB Capitalization............................................25
Section 5.3 Subsidiary Organization.......................................25
Section 5.4 Subsidiary Capitalization.....................................26
Section 5.5 Authorization.................................................26
Section 5.6 Litigation and Regulatory Matters.............................26
Section 5.7 Insurance.....................................................27
Section 5.8 Defaults Under Agreements.....................................27
Section 5.9 Financial Statements and Reports..............................27
Section 5.10 Properties, Contracts, Benefit Plans and Other Agreements.....28
Section 5.11 Disclosures...................................................29
Section 5.12 Effect of Agreement...........................................29
Section 5.13 Books and Records.............................................29
Section 5.14 Taxes.........................................................30
Section 5.15 Title to Properties...........................................30
Section 5.16 Brokerage Commissions.........................................31
Section 5.17 Certificate of Incorporation and Bylaws.......................31
Section 5.18 Interim Events................................................31
Section 5.19 Regulatory Filings............................................32
Section 5.20 Compliance with Applicable Law................................32
Section 5.21 Compliance With ERISA.........................................32
Section 5.22 Compliance With Environmental Laws............................33
Section 5.23 Trust Administration..........................................33
Section 5.24 Loan Loss Reserve.............................................33
Section 5.25 Year 2000.....................................................34
Section 5.26 Approval Delays...............................................34
ARTICLE 6
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COVENANTS OF BIF..............................................................34
Section 6.1 Information, Access Thereto, Confidentiality..................34
Section 6.2 Carry on in Regular Course....................................35
Section 6.3 Subsequent BIF Financial Statements...........................37
Section 6.4 Stockholders' Meeting.........................................37
Section 6.5 BIF Affiliate Undertaking.....................................37
Section 6.6 Dividends.....................................................37
Section 6.7 Environmental Matters.........................................38
Section 6.8 Advice of Changes.............................................48
Section 6.9 Exclusivity...................................................38
Section 6.10 Information Provided to FDB...................................39
Section 6.11 Reasonable Efforts............................................39
Section 6.12 Termination of BIF Rights Agreement...........................39
Section 6.13 TIA Agreement.................................................39
ARTICLE 7
COVENANTS OF FDB..............................................................40
Section 7.1 Information, Access Thereto, Confidentiality..................40
Section 7.2 Carry on in Regular Course....................................40
Section 7.3 Subsequent FDB Financial Statements...........................42
Section 7.4 Stockholders' Meeting.........................................42
Section 7.5 FDB Affiliate Undertaking.....................................43
Section 7.6 Dividends.....................................................43
Section 7.7 Environmental Matters.........................................43
Section 7.8 Advice of Changes.............................................44
Section 7.9 Exclusivity...................................................44
Section 7.10 Information Provided to BIF...................................44
Section 7.11 Reasonable Efforts............................................45
ARTICLE 8
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BIF................................45
Section 8.1 Representations and Warranties True at Effective Time.........45
Section 8.2 Compliance With Agreement.....................................45
Section 8.3 Opinion of Counsel for FDB....................................45
Section 8.4 Proceedings and Documents Satisfactory........................46
Section 8.5 Statutory Requirements........................................46
Section 8.6 Litigation....................................................46
Section 8.7 Accuracy of Financial Statements..............................46
Section 8.8 Absence of Certain Changes or Events..........................46
Section 8.9 Consents and Approvals........................................46
Section 8.10 Accrual of Costs..............................................46
Section 8.11 Loan Loss Reserve.............................................46
Section 8.12 Fairness Opinion..............................................47
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Section 8.13 Employment Agreements.........................................47
Section 8.14 Environmental Reports.........................................47
ARTICLE 9
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF FDB................................47
Section 9.1 Representations and Warranties True at Effective Time.........47
Section 9.2 Compliance With Agreement.....................................47
Section 9.3 Opinion of Counsel for BIF....................................48
Section 9.4 Proceedings and Documents Satisfactory........................48
Section 9.5 Statutory Requirements........................................48
Section 9.6 Litigation....................................................48
Section 9.7 Accuracy of Financial Statements..............................48
Section 9.8 Absence of Certain Changes or Events..........................48
Section 9.9 Consents and Approvals........................................48
Section 9.10 Accrual of Costs..............................................48
Section 9.11 Loan Loss Reserve.............................................49
Section 9.12 Fairness Opinion..............................................49
Section 9.13 Employment Agreements.........................................49
Section 9.14 Environmental Reports.........................................49
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS OF BOTH PARTIES...........................49
Section 10.1 Registration Statement........................................49
Section 10.2 Other Approvals...............................................49
Section 10.3 Orders, Decrees and Judgments.................................49
Section 10.4 Regulatory Approvals..........................................49
Section 10.5 Tax Opinion...................................................49
Section 10.6 Pooling Letter................................................49
ARTICLE 11
ADDITIONAL COVENANTS OF THE PARTIES...........................................50
Section 11.1 SEC Registration..............................................50
Section 11.2 Cooperation...................................................50
Section 11.3 Customer and Employee Relationships...........................51
Section 11.4 Pooling Treatment.............................................51
Section 11.5 Expenses......................................................51
Section 11.6 Publicity.....................................................51
Section 11.7 Newco Employee Benefits.......................................51
Section 11.8 Director and Officer Liability Coverage.......................51
Section 11.9 Actions by Newco..............................................52
Section 11.10 Employment Agreement..........................................52
ARTICLE 12
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REGULATORY APPROVALS..........................................................52
Section 12.1 Initial Filings...............................................52
Section 12.2 Necessary Approvals...........................................52
ARTICLE 13
TERMINATION AND ABANDONMENT...................................................52
Section 13.1 Termination of Agreement......................................52
Section 13.2 Effect of Termination or Abandonment..........................52
Section 13.3 Payments to FDB...............................................55
Section 13.4 Payments to BIF...............................................55
Section 13.5 Special Termination Fees......................................56
ARTICLE 14
MISCELLANEOUS.................................................................57
Section 14.1 Governing Law.................................................57
Section 14.2 Assignment....................................................57
Section 14.3 Amendment and Modification....................................57
Section 14.4 Notices.......................................................58
Section 14.5 Headings......................................................59
Section 14.6 Entire Agreement..............................................59
Section 14.7 Severability..................................................59
Section 14.8 Further Instruments...........................................59
Section 14.9 Counterparts..................................................60
Section 14.10 All Reasonable Efforts........................................60
Section 14.11 Survival of Representations and Warranties....................60
Section 14.12 No Third Party Beneficiaries..................................60
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LIST OF EXHIBITS
Exhibit A Amended and Restated Articles of
Incorporation of Newco
Exhibit B Bylaws of Newco
Exhibit C List of Directors and Executive Officers of Newco
Exhibit D Form of Opinion of Counsel to FDB
Exhibit E Form of Opinion of Counsel to BIF
Exhibit F Form of Exchange Agent Agreement
Exhibit G Form of Affiliate Undertaking
Exhibit H FDB Employment Agreement Amendments
Exhibit I BIF Employment Agreements Amendments
Exhibit J Newco Employment Agreement
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LIST OF SCHEDULES
Schedule 4.1 BIF Organization
Schedule 4.2 BIF Capitalization
Schedule 4.3 Subsidiary Organization
Schedule 4.6 BIF Litigation and Regulatory Matters
Schedule 4.7 BIF Insurance
Schedule 4.9 BIF Financial Statements and Reports
Schedule 4.10 BIF Properties, Contracts, Benefit Plans and Other
Agreements
Schedule 4.14 BIF Taxes
Schedule 4.15 BIF Encumbrances and Liens
Schedule 4.16 Keefe Bruyette & Woods, Inc. Engagement Letter
Schedule 4.17 Certificate or Articles of Incorporation of BIF and
TIA Corp, BKI
Charter and Bylaws of BIF, TIA Corp and BKI
Schedule 4.18 BIF Interim Events
Schedule 4.19 FDB SEC Filings
Schedule 4.25 BIF Year 2000 Plans
Schedule 5.1 FDB Organization
Schedule 5.2 Subsidiary Capitalization
Schedule 5.3 FNB Organization
Schedule 5.6 FDB Litigation and Regulatory Matters
Schedule 5.7 FDB Insurance
Schedule 5.9 FDB Financial Statements and Reports
Schedule 5.10 FDB Properties, Contracts, Benefit Plans and
Other Agreements
Schedule 5.14 FDB Taxes
Schedule 5.15 FDB Encumbrances and Liens
Schedule 5.16 ABN AMRO Engagement Letter
Schedule 5.17 Certificate of Incorporation of FDB and FirsTech, FNB
Articles of Association, First Trust Charter and Bylaws of
FDB, FirsTech, FNB and First Trust
Schedule 5.18 FDB Interim Events
Schedule 5.19 FDB SEC Filings
Schedule 5.25 FDB Year 2000 Plans
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into
as of this 12th day of August, 1999, among FIRST DECATUR BANCSHARES, INC., a
Delaware corporation ("FDB"), BANKILLINOIS FINANCIAL CORPORATION, a Delaware
corporation ("BIF"), and MAIN STREET TRUST, INC., an Illinois corporation
("Newco").
RECITALS
A. FDB and BIF each desire to merge with and into Newco (the
"Merger") with Newco as the resulting corporation (the "Resulting Corporation").
B. Pursuant to the terms of this Agreement, each outstanding share
of the common stock of FDB, $0.01 par value per share ("FDB Common Stock"), and
each outstanding share of the common stock of BIF, $0.01 par value per share
("BIF Common Stock"), shall be converted into the right to receive and be
exchangeable for the number of shares of the common stock of Newco, $0.01 par
value per share ("Newco Common Stock"), provided for herein at the time of the
closing of the Merger (the "Closing").
AGREEMENTS
In consideration of the mutual covenants, representations and
warranties contained herein, the parties agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINITIONS. The following terms, when used herein and
unless the context clearly requires otherwise, shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Affiliate" shall have the meaning provided in Rule 144 promulgated
under the Securities Act.
"Agreement" shall mean this Agreement and Plan of Merger.
"Articles of Merger" shall mean the articles of merger filed by FDB,
BIF and Newco with the Secretary of State of the State of Illinois pursuant to
Section 2.9(b).
"BCA" shall mean the Illinois Business Corporation Act of 1983, as
amended.
"BHCA" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"BIF" shall mean BankIllinois Financial Corporation, a Delaware
corporation.
"BIF Common Stock" shall mean the common stock of BIF, $0.01 par
value per share.
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"BIF Employee Benefit Plans" shall have the meaning provided in
Section 4.10(d).
"BIF Exchange Ratio" shall have the meaning provided in Section
3.2(a).
"BIF Exchange Shares" shall have the meaning provided in Section
3.2(a).
"BIF Financial Statements" shall have the meaning provided in
Section 4.9.
"BIF Subsidiary" shall mean any Subsidiary of BIF.
"BIF Transactional Expenses" shall mean all fees and expenses of
attorneys, accountants, consultants, financial advisors and other professional
advisors incurred by BIF in connection with this Agreement and the transactions
contemplated hereby, BIF's costs of preparing, printing and mailing the Proxy
Statement-Prospectus, and all other non-payroll related costs and expenses owed
or paid by BIF to third parties in connection with this Agreement and the
transactions contemplated hereby.
"BKI" shall mean BankIllinois, an Illinois state bank with its main
office located in Champaign, Illinois, and a wholly-owned Subsidiary of BIF.
"Blue Sky Laws" shall mean the securities or blue sky laws of the
various states and all regulations promulgated thereunder.
"Business Day" shall mean any day on which the trading of stocks
occurs on the New York Stock Exchange.
"Call Report" shall mean the Consolidated Report of Condition and
Income of a bank.
"Certificate" shall mean a stock certificate representing an
outstanding share or outstanding shares of either FDB Common Stock or BIF Common
Stock.
"Closing" shall mean the closing of the Merger and all other
transactions contemplated by this Agreement.
"Closing Date" shall mean the day the Closing occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder.
"Commissioner" shall mean the Commissioner of the Office of Banks
and Real Estate of the State of Illinois.
"Competing BIF Proposal" shall have the meaning provided in Section
6.9.
"Competing FDB Proposal" shall have the meaning provided in Section
7.9.
"Delaware Code" shall mean the General Corporation Law of the State
of Delaware, as amended.
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"Dissenting Shares" shall have the meaning set forth in Section 3.5.
"Effective Time" shall have the meaning provided in Section 2.9(b).
"Environmental Laws" shall mean those statutes, regulations, rules,
ordinances, orders, restrictions and requirements relating to the protection of
the environment described in Section 4.22.
"Environmental Report" shall have the meaning set forth in Section
6.7.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean with respect to FDB or BIF, any person
(as defined in Section 3(9) of ERISA) which together with FDB or BIF,
respectively, or any of its respective Subsidiaries would be a member of the
same "controlled group" within the meaning of Section 414(b), (m), (c) and (o)
of the Code.
"Exchange Agent" shall have the meaning provided in Section 3.3(a).
"Federal Reserve" shall mean the Board of Governors of the Federal
Reserve System.
"FDB" shall mean First Decatur Bancshares, Inc., a Delaware
corporation.
"FDB Common Stock" shall mean the common stock of FDB, $0.01 par
value per share.
"FDB Employee Benefit Plans" shall have the meaning provided in
Section 5.10(d).
"FDB Exchange Ratio" shall have the meaning provided in Section
3.2(a).
"FDB Exchange Shares" shall have the meaning provided in Section
3.2(a).
"FDB Financial Statements" shall have the meaning provided in
Section 5.9.
"FDB Subsidiary" shall mean any Subsidiary of FDB.
"FDB Transactional Expenses" shall mean all fees and expenses of
attorneys, accountants, consultants, financial advisors and other professional
advisors incurred by FDB in connection with this Agreement and the transactions
contemplated hereby, FDB's costs of preparing, printing and mailing the Proxy
Statement-Prospectus, and all other non-payroll related costs and expenses owed
or paid by FDB to third parties in connection with this Agreement and the
transactions contemplated hereby.
"FirsTech" shall mean FirsTech, Inc., a Delaware corporation, and a
wholly-owned Subsidiary of FDB.
"First Trust" shall mean the First Trust Bank of Shelbyville, an
Illinois state bank with its main office located in Shelbyville, Illinois, and a
wholly-owned Subsidiary of FDB.
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"FNB" shall mean The First National Bank of Decatur, a national
banking association with its main office located in Decatur, Illinois, and a
wholly-owned Subsidiary of FDB.
"Illinois Act" shall mean the Illinois Bank Holding Company Act of
1957, as amended.
"IRS" shall mean the United States Internal Revenue Service.
"Letter of Transmittal" shall have the meaning set forth in Section
3.3.
"Material Adverse Effect" or "Material Adverse Change" with respect
to a Person (other than an individual) means a material adverse effect on or
material adverse change in the consolidated financial condition, assets or
business of such Person and its Subsidiaries, if any, but not including the
effect of any change of law, rule or regulation or economic event affecting
financial institutions generally.
"Merger" shall mean the merger of FDB and BIF with and into Newco.
"Merging Corporations" shall collectively mean FDB, BIF and Newco.
"Newco Common Stock" shall mean the common stock of Newco, $0.01 par
value per share.
"OCC" shall mean the Office of the Comptroller of the Currency.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Proxy Statement-Prospectus" shall have the meaning provided in
Section 11.1.
"Registration Statement" shall have the meaning provided in Section
11.1.
"Resulting Corporation" shall mean Newco, the corporation resulting
from the merger of FDB and BIF with and into Newco.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Subsequent BIF Financial Statements" shall have the meaning
provided in Section 6.3.
"Subsequent FDB Financial Statements" shall have the meaning
provided in Section 7.3.
"Subsidiary" shall mean, as to any Person: (i) any corporation more
than fifty percent (50%) of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at
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the time stock of any class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at the time
owned by such Person and/or one or more Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
and/or one or more Subsidiaries of such Person has more than a fifty percent
(50%) equity interest at the time.
"Superior BIF Proposal" shall have the meaning provided in Section
13.1(g).
"Superior FDB Proposal" shall have the meaning provided in Section
13.1(h).
"Termination Date" shall mean July 1, 2000, or such later date as
shall have been agreed to in writing by the parties.
"TIA Agreement" shall mean that certain Asset Purchase Agreement
between BKI and Trust and Investment Advisors, Inc. providing for the
acquisition by BKI or TIA Corp, as BKI's assignee, of certain assets which it
will utilize in establishing and maintaining an investment advisory business.
"TIA Corp" shall mean TIA Acquisition Corporation, an Indiana
corporation and a wholly-owned subsidiary of BIF.
"Unsolicited BIF Proposal" shall have the meaning provided in
Section 6.9.
"Unsolicited FDB Proposal" shall have the meaning provided in
Section 7.9.
SECTION 1.2 PRINCIPLES OF CONSTRUCTION. (a) In this Agreement,
unless otherwise stated or the context otherwise requires, the following uses
apply: (i) actions permitted under this Agreement may be taken at any time and
from time to time in the actor's sole discretion; (ii) references to a statute
shall refer to the statute and any successor statute, and to all regulations
promulgated under or implementing the statute or successor, as in effect at the
relevant time; (iii) in computing periods from a specified date to a later
specified date, the words "from" and "commencing on" (and the like) mean "from
and including," and the words "to," "until" and "ending on" (and the like) mean
"to, but excluding"; (iv) references to a governmental or quasi-governmental
agency, authority or instrumentality shall also refer to a regulatory body that
succeeds to the functions of the agency, authority or instrumentality; (v)
indications of time of day mean Decatur, Illinois time; (vi) "including" means
"including, but not limited to"; (vii) all references to sections, schedules and
exhibits are to sections, schedules and exhibits in or to this Agreement unless
otherwise specified; (viii) all words used in this Agreement will be construed
to be of such gender or number as the circumstances require; and (ix) the
captions and headings of articles, sections, schedules and exhibits appearing in
or attached to this Agreement have been inserted solely for convenience of
reference and shall not be considered a part of this Agreement nor shall any of
them affect the meaning or interpretation of this Agreement or any of its
provisions.
(b) The Book of Schedules of each of FDB and BIF referred to in this
Agreement shall consist of the information, agreements and other documentation
described and referred to in this Agreement as being included in the Book of
Schedules with respect to such party, which Book of Schedules were delivered by
each of FDB and BIF to the other not less than five (5)
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Business Days before the date of this Agreement. Disclosure of any fact or item
in any Schedule or Exhibit hereto referenced by a particular paragraph or
section in this Agreement shall, should the existence of the fact or item or its
contents be relevant to any other paragraph or section, be deemed to be
disclosed with respect to that other paragraph or section whether or not an
explicit cross-reference appears.
(c) All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles in the
United States consistent with those used in the preparation of the most recent
audited consolidated financial statements of FDB or BIF, as the case may be.
ARTICLE 2
THE MERGER
SECTION 2.1 MANNER OF MERGER. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as defined below), FDB and
BIF shall be merged with and into Newco pursuant to the provisions of, and with
the effect provided in the BCA, and Newco shall be the corporation resulting
from such merger. As a result of the Merger, each share of FDB Common Stock
issued and outstanding immediately prior to the Effective Time, other than any
Dissenting Shares held by FDB stockholders or as otherwise provided herein, and
each share of BIF Common Stock issued and outstanding immediately prior to the
Effective Time, other than Dissenting Shares held by BIF stockholders or as
otherwise provided herein, will be converted into the right to receive the
number of shares of Newco Common Stock in accordance with the FDB Exchange Ratio
and the BIF Exchange Ratio, respectively, set forth in Section 3.2(a).
SECTION 2.2 EFFECT OF MERGER. (a) At the Effective Time, BIF and FDB
shall be merged with and into Newco and Newco Corp shall be the Surviving
Corporation. BFI, FDB and Newco are sometimes referred to collectively herein as
the "Merging Corporations."
(b) Without limiting the generality of the foregoing, at the
Effective Time, the Surviving Corporation shall thereupon and thereafter possess
all the rights, privileges, immunities and franchises, as of a public or a
private nature, of each of the Merging Corporations, and all property, real,
personal and mixed, and all debts due on whatever account, including
subscriptions to shares, and all other choses in action, and all and every other
interest, of or belonging to or due to each of the Merging Corporations, shall
be taken and deemed to be transferred to and vested in the Surviving Corporation
without further act or deed; and the title to any real estate, or any interest
therein, vested in any of such corporations shall not revert or be in any way
impaired by reason of the Merger. Upon the terms and subject to the conditions
of this Agreement, the Surviving Corporation shall assume and thenceforth be
responsible and liable for all the liabilities and obligations (including all
obligations of indemnification, if any) of each of the Merging Corporations, and
any claim existing or action or proceeding pending by or against any of the
Merging Corporations may be prosecuted to judgment as if the Merger had not
taken place, or the Surviving Corporation may be substituted in its place.
Neither rights of creditors nor any liens upon the property of any of the
Merging Corporations shall be impaired by the Merger.
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SECTION 2.3 AMENDED AND RESTATED ARTICLES OF INCORPORATION. At the
Effective Time, an amendment and restatement of the articles of incorporation of
Newco substantially in the form attached as Exhibit A shall be filed with the
Secretary of State of the State of Illinois, and such amended and restated
articles of incorporation shall thereafter represent the articles of
incorporation of the Resulting Corporation until amended as provided by law.
SECTION 2.4 BYLAWS. The bylaws of Newco, in the form attached as
Exhibit B, shall be the bylaws of the Resulting Corporation until amended as
provided by law.
SECTION 2.5 DIRECTORS AND OFFICERS. From and after the Effective
Time, the directors and executive officers of the Resulting Corporation shall be
as set forth in Exhibit C, with the directors divided into Class I and Class II
of four (4) members each, and Class III of five (5) members. Such directors and
executive officers shall serve until their successors shall have been elected or
appointed and shall have qualified in accordance with the BCA and the articles
of incorporation and bylaws of the Resulting Corporation.
SECTION 2.6 FDB'S DELIVERIES AT CLOSING. At the Closing, FDB shall
deliver, or cause to be delivered to BIF the following items:
(a) a good standing certificate for each of FDB and FirsTech, in
each case issued by the Secretary of State of each of the States of Delaware and
Illinois and dated in not more than fifteen (15) Business Days prior to the
Closing Date, as defined below;
(b) a good standing certificate for FNB issued by the OCC and dated
not more than fifteen (15) Business Days prior to the Closing Date;
(c) a good standing certificate for First Trust issued by the
Commissioner and dated not more than fifteen (15) Business Days prior to the
Closing Date;
(d) a copy of the certificate of incorporation of each of FDB and
FirsTech, in each case certified not more than fifteen (15) Business Days prior
to the Closing Date by the Secretary of State of the State of Delaware;
(e) a copy of the articles of association of FNB certified not more
that fifteen (15) Business Days prior to the Closing Date by the OCC;
(f) a copy of the charter of First Trust certified not more that
fifteen (15) Business Days prior to the Closing Date by the Commissioner;
(g) a certificate of the Secretary or any Assistant Secretary of
each of FDB and FirsTech, in each case dated the Closing Date and certifying a
copy of their respective bylaws;
(h) a certificate of the Cashier or any Assistant Cashier of each of
FNB and First Trust, in each case dated the Closing Date and certifying a copy
of their respective bylaws;
(i) copies of resolutions of the board of directors of FDB
authorizing and approving this Agreement and the consummation of the
transactions contemplated hereby, certified as of the Closing Date by the
Secretary or any Assistant Secretary of FDB;
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(j) the certificates contemplated by Section 8.1 and Section 8.2;
(k) a list of FDB's stockholders as of the Closing Date certified by
the Secretary or any Assistant Secretary of FDB;
(l) a legal opinion of FDB's counsel, Howard & Howard Attorneys,
P.C., dated the Closing Date to the effect set forth in Exhibit D attached
hereto; and
(m) such other documents as BIF or its counsel shall reasonably
request.
SECTION 2.7 BIF'S DELIVERIES AT CLOSING. At the Closing, BIF shall
deliver, or cause to be delivered to FDB the following items:
(a) a good standing certificate for BIF issued by the Secretary of
State of the States of Delaware and Illinois, and a good standing certificate
for TIA Corp issued by the Secretary of State of the States of Indiana and
Illinois, in each case dated not more than fifteen (15) Business Days prior to
the Closing Date;
(b) a good standing certificate for BKI, issued by the Commissioner
and dated not more than fifteen (15) Business Days prior to the Closing Date;
(c) a copy of the certificate or articles of incorporation, as the
case may be, of each of BIF and TIA Corp, in each case certified not more than
fifteen (15) Business Days prior to the Closing Date by the Secretary of State
of the States of Delaware and Indiana, respectively;
(d) a copy of the charter of BKI certified not more that fifteen
(15) Business Days prior to the Closing Date by the Commissioner;
(e) a certificate of the Secretary or any Assistant Secretary of
each of BIF and TIA Corp, in each case dated the Closing Date certifying a copy
of their respective bylaws;
(f) a certificate of the Cashier or any Assistant Cashier of BKI
dated the Closing Date certifying a copy of the bylaws of BKI;
(g) copies of resolutions of the board of directors of BIF
authorizing and approving this Agreement and the consummation of the
transactions contemplated hereby, certified as of the Closing Date by the
Secretary or any Assistant Secretary of BIF;
(h) the certificates contemplated by Section 9.1 and Section 9.2;
(i) a list of BIF's stockholders as of the Closing Date certified by
the Secretary or any Assistant Secretary of BIF;
(j) a legal opinion of BIF's counsel, Barack Ferrazzano Kirschbaum
Perlman & Nagelberg, dated the Closing Date to the effect set forth in Exhibit E
attached hereto; and
(k) such other documents as FDB or its counsel shall reasonably
request.
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SECTION 2.8 NEWCO'S DELIVERIES AT CLOSING. At the Closing, Newco
shall deliver, or cause to be delivered to BIF and FDB the following items:
(a) a good standing certificate for Newco issued by the Secretary of
State of the State of Illinois and dated not more than fifteen (15) Business
Days prior to the Closing Date,
(b) a copy of the articles of incorporation of Newco certified not
more than fifteen (15) Business Days prior to the Closing Date by the Secretary
of State of the State of Illinois;
(c) a certificate of the Secretary or any Assistant Secretary of
Newco dated the Closing Date certifying a copy of the bylaws of Newco;
(d) copies of resolutions of the board of directors of Newco
authorizing and approving this Agreement and the consummation of the
transactions contemplated hereby, certified as of the Closing Date by the
Secretary or any Assistant Secretary of Newco;
(e) a certificate of the President or any Vice President and the
Secretary or any Assistant Secretary of Newco dated the Closing Date certifying
that: (i) there have been no further amendments to the articles of incorporation
delivered pursuant to subsection (b) of this Section; (ii) all of the
representations and warranties of Newco set forth in this Agreement are true and
correct with the same force and effect as if all of such representations and
warranties were made at the Closing Date; and (iii) Newco has performed or
complied with all of the covenants and obligations to be performed or complied
with by Newco under the terms of this Agreement on or prior to the Closing Date;
and
(f) such other documents as BIF, FDB or the counsel of either shall
reasonably request.
SECTION 2.9 CLOSING; EFFECTIVE TIME. (a) The Closing shall be on a
date agreed to by the parties hereto, and in the event the parties fail to so
agree, the Closing shall take place on the last Business Day of the calendar
month in which all of the following conditions are satisfied: (i) the receipt of
the last required regulatory approval of the Merger; (ii) the expiration of the
last requisite waiting period; and (iii) the satisfaction or waiver in writing
of all of the conditions provided for in Articles 8, 9 and 10; whichever is
later (the "Closing Date").
(b) The parties hereto agree to file on the Closing Date the
appropriate articles of merger, as contemplated by Section 11.25 of the BCA,
with the Secretary of State of the State of Illinois, and an appropriate
certificate of merger, as contemplated by Section 252(c) of the Delaware Code,
with the Secretary of State of the State of Delaware. The Merger shall be
effective at the time and on the date agreed to by the parties hereto, and in
the event the parties fail to so agree, at 12:01 a.m. of the day following the
later of the dates on which the Secretary of State of the State of Illinois
issues a certificate of Merger, or the Certificate of Merger is accepted for
filing by the Secretary of State of the State of Delaware, as the case may be
(the "Effective Time").
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(c) The Closing shall take place at 10:00 a.m. on the Closing Date,
at such place as the parties hereto may mutually agree, and in the event they
fail to agree, at the main banking offices of FNB.
SECTION 2.10 CONFIRMING DUE DILIGENCE. (a) Immediately after the
execution of this Agreement, FDB shall initiate an additional pre-acquisition
investigation and review of the books, records and facilities of BIF and its
Subsidiaries and will complete such pre-acquisition investigation not later than
thirty (30) days following the date of this Agreement. FDB shall have the right
to terminate this Agreement by giving written notice of its election to
terminate to BIF, together with a brief statement of the reason therefor, by
5:00 p.m. on or before the thirtieth (30th) day after the date of this Agreement
in the event that such pre-acquisition investigation and review discloses
matters not previously disclosed to FDB which FDB in good faith believes either:
(i) violate or contravene in a material and adverse respect any of the
representations and warranties of BIF contained in this Agreement or in any of
the Schedules hereto provided by BIF; or (ii) could reasonably be expected to
have a Material Adverse Effect on BIF, and which in either case of item (i) or
(ii) has not been cured within ten (10) Business Days of receipt of such written
notice from FDB. Nothing in this Section shall limit in any respect any other
right or basis that FDB may then or thereafter have to terminate this Agreement
by reason of any breach hereof by BIF or any breach or inaccuracy of any of the
aforesaid representations and warranties of BIF.
(b) Immediately after the execution of this Agreement, BIF shall
initiate an additional pre-acquisition investigation and review of the books,
records and facilities of FDB and its Subsidiaries and will complete such
pre-acquisition investigation not later than thirty (30) days following the date
of this Agreement. BIF shall have the right to terminate this Agreement by
giving written notice of its election to terminate to FDB, together with a brief
statement of the reason therefor, by 5:00 p.m. on or before the thirtieth (30th)
day after the date of this Agreement in the event that such pre-acquisition
investigation and review discloses matters not previously disclosed to BIF which
BIF in good faith believe either: (i) violate or contravene in a material and
adverse respect any of the representations and warranties of FDB contained in
this Agreement or in any of the Schedules hereto provided by FDB; or (ii) could
reasonably be expected to have a Material Adverse Effect on FDB, and which in
either case of item (i) or (ii) has not been cured within ten (10) Business Days
of receipt of such written notice from BIF. Nothing in this Section shall limit
in any respect any other right or basis that BIF may then or thereafter have to
terminate this Agreement by reason of any breach hereof by FDB or any breach or
inaccuracy of any of the aforesaid representations and warranties of FDB.
ARTICLE 3
TREATMENT OF SHARES
SECTION 3.1 TREATMENT OF NEWCO, FDB AND BIF COMMON STOCK. Each share
of Newco Common Stock which is issued and outstanding immediately prior to the
Effective Time shall at the Effective Time be cancelled without consideration
and without any action required on the part of FDB or BIF, as the holders
thereof. Each share of FDB Common Stock and each share of BIF Common Stock which
is issued and outstanding immediately prior
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to the Effective Time shall at the Effective Time be converted into and shall
thereafter represent the right to receive the number of shares of Newco Common
Stock as is set forth in Section 3.2(a).
SECTION 3.2 EXCHANGE RATIOS. (a) Subject to the provisions of this
Article, by virtue of the Merger and without any action on the part of the
holder thereof, at the Effective Time, (i) each share of FDB Common Stock issued
and outstanding immediately prior to the Effective Time shall become and
automatically be converted into 1.638 shares of Newco Common Stock (the "FDB
Exchange Ratio") and shall thereafter represent the right to receive and be
exchangeable for such number of shares, rounded to the nearest hundredth of a
share (subject to the provisions of Sections 3.2(b) and (c)), of Newco Common
Stock (the "FDB Exchange Shares"), and (ii) each share of BIF Common Stock
issued and outstanding immediately prior to the Effective Time shall become and
automatically be converted into one (1) share of Newco Common Stock (the "BIF
Exchange Ratio") and shall thereafter represent the right to receive and be
exchangeable for such number of shares, rounded to the nearest hundredth of a
share (subject to the provisions of Sections 3.2(b) and (c), of Newco Common
Stock (the "BIF Exchange Shares").
(b) After the Effective Time, no holder of FDB Common Stock or BIF
Common Stock which is issued and outstanding immediately prior to the Effective
Time will have any rights in respect of such FDB Common Stock or BIF Common
Stock, respectively, except: (i) to receive shares of Newco Common Stock for the
shares of FDB Common Stock or BIF Common Stock, respectively, converted as
provided in this Section 3.2(a), plus an amount in cash, as provided below, for
any fractional share of Newco Common Stock which such holder would have been
entitled to receive; or (ii) to receive payment for such shares of FDB Common
Stock or BIF Common Stock, respectively, in the manner and to the extent
provided in Section 262 of the Delaware Code.
SECTION 3.3 STEPS OF TRANSACTION. (a) On the date agreed to by the
parties hereto, and in the event the parties fail to so agree, the date which is
ten (10) Business Days prior to the Closing, the Exchange Agent shall mail or
cause to be mailed to each then current holder of record of a certificate or
certificates representing outstanding shares of either FDB Common Stock or BIF
Common Stock (the "Certificates") a form of transmittal letter (the "Letter of
Transmittal") which shall provide instructions for the transmittal of the
Certificates and shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon delivery of the Certificates
(or a lost certificate affidavit and a bond in a form reasonably acceptable to
Newco). Pursuant to the terms of an exchange agent agreement in the form
attached as Exhibit F, BKI shall serve as exchange agent (the "Exchange Agent")
for the parties to effect the surrender of the Certificates in exchange for
Newco Common Stock. FDB and BIF agree to cause the Exchange Agent to use all
reasonable efforts to mail or cause to be mailed the Letter of Transmittal to
all Persons who become holders of FDB Common Stock or BIF Common Stock,
respectively, subsequent to the date the Letter of Transmittal was first mailed
to FDB and BIF stockholders, respectively, and by 5:00 p.m. on the date which is
five (5) Business Days prior to the Closing Date.
(b) As promptly as practicable, BIF and FDB shall cause the Exchange
Agent to deliver to each holder of FDB Common Stock or BIF Common Stock who has
previously
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submitted an effective Letter of Transmittal accompanied by the Certificates
covered by such Letter of Transmittal: (i) certificates representing the number
of whole shares of Newco Common Stock into which the shares of FDB Common Stock
or BIF Common Stock previously represented by the Certificates so surrendered
were converted; plus (ii) an amount in cash, as provided below, for any
fractional share of Newco Common Stock which such holder would have been
entitled to receive.
(c) As promptly as practicable after the Effective Time, the
Exchange Agent shall send to each holder of record of FDB Common Stock or BIF
Common Stock immediately prior to the Effective Time who has not previously
submitted his or her Certificates, additional transmittal materials for use in
surrendering such Certificates to the Exchange Agent and instructions for use in
effecting such surrender in exchange for shares of Newco Common Stock.
(d) No dividends or other distributions declared after the Effective
Time with respect to Newco Common Stock payable to former stockholders of record
of FDB or BIF, respectively, after the Effective Time shall be paid to a former
stockholder of FDB or BIF, respectively, who holds any unsurrendered Certificate
with respect to FDB Common Stock or BIF Common Stock formerly represented
thereby, until such stockholder shall surrender such Certificate. Until so
surrendered and exchanged, each such outstanding Certificate shall for all
purposes, other than the payment of dividends or other distributions, if any, to
former holders of record of shares of FDB Common Stock or BIF Common Stock
represent the shares of Newco Common Stock into and for which such shares have
been so converted; provided, however, that upon surrender of a Certificate,
there shall be paid to the record holder or holders of the Certificate, the
amount, without interest thereon, of such dividends and other distributions, if
any, which previously have become payable with respect to the number of whole
shares of Newco Common Stock represented by such Certificate.
(e) No fractional shares of Newco Common Stock shall be issued upon
the surrender for exchange of Certificates; no dividend or distribution of Newco
shall relate to any fractional share interest; and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Newco. Instead, each holder of shares of FDB Common Stock or BIF
Common Stock having a fractional interest in shares of Newco Common Stock
arising upon the conversion of such shares of FDB Common Stock or BIF Common
Stock shall, at the time of surrender of the Certificates, be paid by Newco an
amount in cash, without interest, determined by multiplying such fractional
share of Newco Common Stock by the average of the closing sale prices of Newco
Common Stock for the three (3) trading days immediately following the Closing
Date.
(f) All rights to receive shares of Newco Common Stock into and for
which shares of FDB Common Stock or BIF Common Stock shall have been converted
and exchanged pursuant to this Agreement, shall be deemed to have been issued in
full satisfaction of all rights pertaining to such converted and exchanged
shares of FDB Common Stock or BIF Common Stock, respectively.
(g) At the Effective Time, FDB and BIF shall each deliver to the
Exchange Agent a certified copy of a list of its respective stockholders, after
which there shall be no further
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registration or transfers on the stock transfer books of FDB of the shares of
FDB Common Stock or of BIF of the shares of BIF Common Stock, all of which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Exchange Agent or Newco, they shall be
cancelled and exchanged for Newco Common Stock as provided in this Agreement.
(h) If a certificate representing shares of Newco Common Stock is to
be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed, accompanied by
all documents required to evidence and effect such transfer and otherwise in
proper form for transfer and that the Person requesting such exchange shall pay
to Newco any transfer or other taxes required by reason of the issuance of a
certificate representing shares of Newco Common Stock in any name other than
that of the registered holder of the Certificate surrendered, or otherwise
required, or shall establish to the satisfaction of Newco that such tax has been
paid or is not payable.
SECTION 3.4 TAX FREE REORGANIZATION. The parties hereto intend for
the Merger to qualify as a nontaxable reorganization within the meaning of
Section 368(a) and related sections of the Code, and agree to cooperate and to
take such actions as may be reasonably necessary to ensure such result.
SECTION 3.5 DISSENTING SHARES. Notwithstanding anything to the
contrary contained in this Agreement, to the extent appraisal rights are
available to stockholders of FDB or BIF pursuant to the Delaware Code, any
shares of FDB Common Stock or BIF Common Stock held by a Person who objects to
the Merger, whose shares either were not entitled to vote or were not voted in
favor of the Merger and who complies with all of the provisions of the Delaware
Code concerning the rights of such Person to dissent from the Merger and to
require appraisal of such Person's shares and who has not withdrawn such
objection or waived such rights prior to the Effective Time (collectively with
respect to all such FDB or BIF stockholders, the "Dissenting Shares"), shall not
be converted pursuant to Section 3.2(a) but shall become the right to receive
such consideration as may be determined to be due to the holder of such
Dissenting Shares pursuant to the Delaware Code, including, if applicable, any
costs determined to be payable by either FDB or BIF to its respective holders of
Dissenting Shares pursuant to an order of the Delaware Court of Chancery in
accordance with the Delaware Code; provided, however, that each Dissenting Share
held by a Person at the Effective Time who shall, after the Effective Time,
withdraw the demand for appraisal or lose the right of appraisal, in either case
pursuant to the Delaware Code shall be deemed to be converted, as of the
Effective Time, into the number of shares of Newco Common Stock as is determined
in accordance with Section 3.2(a).
SECTION 3.6 OPTIONS. (a) At and after the Effective Time, each
option granted by FDB and BIF to purchase shares of FDB Common Stock and BIF
Common Stock, respectively, which is outstanding and unexercised immediately
prior thereto shall cease to represent a right to acquire shares of either FDB
Common Stock or BIF Common Stock and shall be converted automatically into an
option to purchase shares of Newco Common Stock (the "FDB Converted Stock
Options" and the "BIF Converted Stock Options," respectively) in an amount and
at an
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exercise price determined as provided below and otherwise subject to the terms
of the agreements evidencing the grants of such options:
(i) The number of shares of Newco Common Stock to be subject
to each FDB Converted Stock Option shall be equal to the product of the number
of shares of FDB Common Stock subject to the original option and the FDB
Exchange Ratio, provided that any fractional shares of Newco Common Stock shall
be rounded up to the next highest whole share; and
(ii) The exercise price per share of Newco Common Stock under
the FDB Converted Stock Option shall be equal to the exercise price per share of
FDB Common Stock under the original option divided by the FDB Exchange Ratio,
provided that such exercise price shall be rounded to the nearest whole cent.
(iii) The number of shares of Newco Common Stock to be subject
to each BIF Converted Stock Option shall be equal to the product of the number
of shares of BIF Common Stock subject to the original option and the BIF
Exchange Ratio, provided that any fractional shares of Newco Common Stock shall
be rounded up to the next highest whole share; and
(iv) The exercise price per share of Newco Common Stock under
the BIF Converted Stock Option shall be equal to the exercise price per share of
BIF Common Stock under the original option divided by the BIF Exchange Ratio,
provided that such exercise price shall be rounded to the nearest whole cent.
(b) The adjustment provided herein with respect to any options which
are "incentive stock options" (as defined in Section 422 of the Code), shall be
and is intended to be effected in a manner which is consistent with Section
424(a) of the Code. The duration and other terms of the FDB Converted Stock
Options and BIF Converted Stock Options shall be the same as the original option
except that all references to FDB or BIF, as the case may be, shall be deemed to
be references to Newco.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES BY BIF
BIF hereby represents and warrants to FDB that the following are
true and correct as of the date hereof, and will be true and correct as of the
Effective Time:
SECTION 4.1 BIF ORGANIZATION. BIF: (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is a registered bank holding company under the BHCA; (b) is duly
qualified to do business and is in good standing in the states of Delaware and
Illinois and in each other jurisdiction in which the nature of the business
conducted or the properties or assets owned or leased by it makes such
qualification necessary and where failure to be so qualified would reasonably be
expected to have a Material Adverse Effect on BIF; and (c) has full power and
authority, corporate and otherwise, to own,
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operate and lease its properties as presently owned, operated and leased, and to
carry on its business as it is now being conducted. BIF owns no voting stock or
equity securities of any corporation, association, partnership or other entity,
other than all of the voting stock of BKI and TIA Corp and as set forth on
Schedule 4.1 of the BIF Book of Schedules.
SECTION 4.2 BIF CAPITALIZATION. The authorized capital stock of BIF
consists, and at June 30, 1999, consisted of: (a) 6,500,000 shares of common
stock, $0.01 par value per share, of which 5,739,965 shares were issued as of
July 31, 1999, of which 193,910 shares were held in the treasury of BIF as of
that date; and (b) 300,000 shares of preferred stock, no par value per share,
none of which shares are issued and outstanding. The maximum number of shares of
BIF Common Stock (assuming for this purpose that share equivalents constitute
BIF Common Stock) that would be outstanding immediately prior to the Effective
Time (including treasury shares) if all options, warrants, conversion rights and
other rights with respect thereto were exercised and the restrictions on any
restricted stock were no longer applicable is 6,267,722 shares. All of the
outstanding shares of capital stock of BIF have been duly and validly authorized
and issued and are fully paid and nonassessable. Except as contemplated in this
Agreement or as set forth in Schedule 4.2 of the BIF Book of Schedules, there
are, as of the date of this Agreement, no outstanding subscriptions, contracts,
conversion privileges, options, warrants, calls or other rights obligating BIF
or any BIF Subsidiary to issue, sell or otherwise dispose of, or to purchase,
redeem or otherwise acquire, any shares of capital stock of BIF or any BIF
Subsidiary, other than preemptive rights granted to stockholders of Illinois
state banks pursuant to the Illinois Banking Act, as amended. Except as
permitted by this Agreement and provided on Schedule 4.2 of the BIF Book of
Schedules, no shares of BIF capital stock have been purchased, redeemed or
otherwise acquired, directly or indirectly, by BIF or any BIF Subsidiary and no
dividends or other distributions payable in any equity securities of BIF or any
BIF Subsidiary have been declared, set aside, made or paid to the stockholders
of BIF.
SECTION 4.3 SUBSIDIARY ORGANIZATION. (a) BKI is an Illinois state
bank duly organized, validly existing and in good standing under the laws of the
State of Illinois. BKI has full power and authority, corporate and otherwise, to
own, operate and lease its properties as presently owned, operated and leased,
and to carry on its business as it is now being conducted. BKI owns no voting
stock or equity securities of any corporation, association, partnership or other
entity, other than as shown on Schedule 4.3 of the BIF Book of Schedules.
(b) TIA Corp (i) is, or prior to the Closing will be, a corporation
duly organized, validly existing and in good standing under the laws of the
State of Indiana; (ii) is, or will be prior to the Closing, duly qualified to do
business and is in good standing in the states of Indiana and Illinois and in
each other jurisdiction in which the nature of the business conducted or the
properties or assets owned or leased by it makes such qualification necessary
and where failure to be so qualified would reasonably be expected to have a
Material Adverse Effect on BIF; and (iii) has, or will have prior to the
Closing, full power and authority, corporate and otherwise, to own, operate and
lease its properties as presently owned, operated and leased, and to carry on
its business as it is now being conducted. TIA Corp will own no voting stock or
equity securities of any corporation, association, partnership or other entity,
other than in a fiduciary or representative capacity for others.
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SECTION 4.4 SUBSIDIARY CAPITALIZATION. (a) The authorized capital
stock of BKI consists, and at the Effective Time will consist, of 250,000 shares
of common stock, $10.00 par value per share, all of which shares are validly
issued and outstanding, fully paid and nonassessable, and owned by BIF. There
are no options, warrants, rights, calls or commitments of any character relating
to any additional shares of the capital stock of BKI except for stockholders'
preemptive rights granted by the Illinois Banking Act, as amended. No capital
stock or other security issued by BKI has been issued in violation of, or
without compliance with, the preemptive rights of stockholders.
(b) The authorized capital stock of TIA Corp will consists at the
Effective Time of 1,000 shares of common stock, $0.01 par value per share, all
of which shares will be validly issued and outstanding, fully paid and
nonassessable, and owned by BIF. There will be no options, warrants, rights,
calls or commitments of any character relating to any additional shares of the
capital stock of TIA Corp.
SECTION 4.5 AUTHORIZATION. BIF has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and the
execution, delivery and performance of this Agreement by BIF and the
consummation by it of the transactions contemplated thereby, have been duly
authorized by all necessary corporate action, subject to stockholder approval.
This Agreement constitutes a legal, valid and binding obligation of BIF
enforceable in accordance with its terms except as such enforcement may be
limited by bankruptcy, insolvency, reorganization or other similar laws and
subject to general principles of equity.
SECTION 4.6 LITIGATION AND REGULATORY MATTERS. Schedule 4.6 of the
BIF Book of Schedules sets forth a list of all actions, suits or proceedings
pending as of the date hereof in which BIF or any BIF Subsidiary is a named
party, other than collection or foreclosure actions brought by BIF or any BIF
Subsidiary in the ordinary course of business and where no counterclaim has been
filed against BIF or such BIF Subsidiary. Except as set forth on Schedule 4.6 of
the BIF Book of Schedules, there is no action, suit, proceeding, claim or formal
written protest by any Person or agency, or any investigation or report by any
regulatory authority having jurisdiction over BIF or any BIF Subsidiary or any
of its respective assets or businesses which is pending or, to BIF's knowledge,
threatened against BIF or any BIF Subsidiary, or any of its respective officers
or directors in their capacities as such, or its assets, business or goodwill
which would reasonably be expected to have a Material Adverse Effect on BIF or
which would impair BIF's ability to consummate the Merger. BIF further
represents and warrants that except as set forth on Schedule 4.6 of the BIF Book
of Schedules, it does not know or have any reason to believe that there is any
basis for assertion against it or any BIF Subsidiary of any material claims
based upon the wrongful action or inaction of either BIF or any BIF Subsidiary,
and any of their respective officers, directors or employees which would
reasonably be expected to have a Material Adverse Effect on BIF or which would
impair BIF's ability to consummate the Merger. Neither BIF nor any BIF
Subsidiary is subject to, or in default with respect to, nor are any of its
assets subject to, any outstanding judgment, regulatory agreement, injunction,
writ, order or decree or any other requirement of any governmental body or court
or of any governmental agency or instrumentality which would reasonably be
expected to have a Material Adverse Effect on BIF or which would impair BIF's
ability to consummate the Merger.
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SECTION 4.7 INSURANCE. Schedule 4.7 of the BIF Book of Schedules
lists the policies of insurance (including bankers blanket bond and insurance
providing benefits for employees) owned or held by BIF or any BIF Subsidiary on
the date hereof. Each such policy is, and BIF will use all reasonable efforts to
keep each such policy, in full force and effect (except for any expiring policy
which is replaced by coverage at least as extensive) until the Effective Time.
All premiums due on such policies have been paid.
SECTION 4.8 DEFAULTS UNDER AGREEMENTS. Neither BIF nor any BIF
Subsidiary is in default or alleged to be in default, under any loan or credit
agreement, conditional sales contract or other title retention agreement or
security agreement relating to money borrowed by BIF or any BIF Subsidiary,
agreements pursuant to which it leases real or personal property or any other
instrument or obligation, which would reasonably be expected to have a Material
Adverse Effect on BIF. Neither BIF nor any BIF Subsidiary is in default in any
material respect and BIF has no knowledge of any material default under such
instruments by any other party thereto and has no knowledge of any event which
with notice or lapse of time or both would constitute a material default.
SECTION 4.9 FINANCIAL STATEMENTS AND REPORTS. Copies of the
following financial statements and reports of BIF and the BIF Subsidiaries
(collectively, the "BIF Financial Statements") have been delivered by BIF to
FDB:
(a) Consolidated Balance Sheets and the related Statements of
Income, Statements of Changes in Stockholders' Equity and Statements of Cash
Flows of BIF for the years ended December 31, 1996, 1997 and 1998;
(b) Consolidated Balance Sheets and the related Statements of Income
of BIF for the quarter ended March 31, 1999; and
(c) Consolidated Reports of Condition and Income (the "Call
Reports") for BKI at the close of business on December 31, 1996, 1997 and 1998,
and on March 31, 1999.
The BIF Financial Statements are complete and correct in all material respects
and fairly present the consolidated financial position of BIF and BKI, as the
case may be, at the dates shown and the results of operations for the periods
covered. The BIF Financial Statements described in clause (a) above are audited
statements and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis. The BIF Financial
Statements described in clauses (b) and (c) above have been prepared on a basis
consistent with past accounting practices and as required by applicable rules or
regulations and fairly present the consolidated financial condition and results
of operations at the dates and for the entities and periods presented, subject
to year-end audit adjustments (which changes in the aggregate would not
reasonably be expected to be materially adverse). The BIF Financial Statements
do not include any material assets or omit to state any material liabilities,
absolute or contingent, or other facts, which inclusion or omission would render
the BIF Financial Statements misleading in any material respect.
SECTION 4.10 PROPERTIES, CONTRACTS, BENEFIT PLANS AND OTHER
AGREEMENTS. Schedule 4.10 of the BIF Book of Schedules lists or describes the
following:
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(a) All real property owned or leased by BIF or any BIF Subsidiary
together with a legal description of such real estate, and each lease of real
property to which BIF or any BIF Subsidiary is a party, identifying the parties
thereto, the annual rental payable and the expiration date thereof;
(b) All loan and credit agreements, conditional sales contracts or
other title retention agreements or security agreements relating to money
borrowed by BIF or any BIF Subsidiary, exclusive of deposit agreements with
customers of any BIF Subsidiary entered into in the ordinary course of business,
agreements for the purchase of federal funds and repurchase agreements;
(c) All agreements, loans, contracts, leases, guaranties, letters of
credit, lines of credit or commitments of BIF or any of the BIF Subsidiaries not
referred to elsewhere in this Section which:
(i) involve payment by BIF or any BIF Subsidiary (other than
as disbursement of loan proceeds to customers) of more than $50,000;
(ii) involve payments based on profits of BIF or any BIF
Subsidiary;
(iii) relate to the future purchase of goods or services in
excess of the requirements of its respective business at current levels or for
normal operating purposes;
(iv) were not made in the ordinary course of business; or
(v) materially affect the business or financial condition of
BIF or any BIF Subsidiary;
(d) All profit sharing; group insurance; hospitalization; stock
option; pension; retirement; bonus; deferred compensation; stock bonus; stock
purchase; collective bargaining agreements, contracts or arrangements under
which pensions, deferred compensation or other retirement benefits are being
paid or may become payable respectively by BIF or any BIF Subsidiary; or other
employee welfare or benefit agreements, plans or arrangements established,
maintained, sponsored or undertaken by BIF or any BIF Subsidiary for the benefit
of its respective officers, directors or employees, including each trust or
other agreement with any custodian or any trustee for funds held under any such
agreement, plan or arrangement (collectively, the "BIF Employee Benefit Plans"),
and, in respect to any of them, the latest reports or forms, if any, filed with
the Department of Labor and Pension Benefit Guaranty Corporation under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any
current financial or actuarial reports and any currently effective United States
Internal Revenue Service ("IRS") private rulings or determination letters
obtained by or for the benefit of BIF or any BIF Subsidiary;
(e) All leases or licenses of BIF or any BIF Subsidiary with respect
to personal property, whether as lessee or licensee, with annual rental or other
payments due thereunder in excess of $20,000;
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(f) All employment and consulting contracts to which BIF or any BIF
Subsidiary is a party (except for ordinary oral employment contracts with
employees of BIF or any BIF Subsidiary creating at will employment
relationships);
(g) The name and annual salary as of January 1, 1999, of each
director, officer or employee of BIF or any BIF Subsidiary; and
(h) The TIA Agreement.
Copies of each document, plan or contract listed and described in
Schedule 4.10 of the BIF Book of Schedules are appended to such Schedule and
included in the BIF Book of Schedules.
SECTION 4.11 DISCLOSURES. No representation or warranty made herein
by BIF contains any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements contained herein under the
circumstances under which they were made not misleading. Except as and to the
extent reflected or reserved against in BIF's audited financial statements for
the year ended December 31, 1998, referenced in Section 4.9 above, or the
Subsequent BIF Financial Statements (as such term is defined in Section 6.3),
neither BIF nor any BIF Subsidiary has, and with respect to the Subsequent BIF
Financial Statements will not have, any liabilities or obligations, of any
nature, secured or unsecured, (whether accrued, absolute, contingent or
otherwise) including, without limitation, any tax liabilities due or to become
due, which would reasonably be expected to have a Material Adverse Effect on
BIF.
SECTION 4.12 EFFECT OF AGREEMENT. The execution, delivery and
performance of this Agreement by BIF and the consummation by it of the
transactions contemplated hereby do not: (a) require the consent, waiver, order,
registration, qualification, approval, license or authorization of any Person,
court, regulatory authority or other governmental body, other than as
specifically contemplated by this Agreement and as may be required in connection
or in compliance with the provisions of the BCA, the Delaware Code, the BHCA and
the Illinois Act; (b) violate, with or without the giving of notice or the
passage of time or both, in any material respect any provision of law applicable
to it; (c) conflict with or result in a breach of any terms of its certificate
of incorporation or bylaws, or any material mortgage, deed of trust, license,
indenture or other agreement or instrument, or any order, judgment, decree,
statute, regulation or other restriction of any kind or character, to which BIF
or any BIF Subsidiary is a party or by which it or any of its respective assets
may be bound; (d) give to others any right to accelerate or terminate, or result
in acceleration or termination of, any such agreement or instrument; (e) result
in termination of any provision of any such agreement or instrument; or (f)
result in the creation of any lien, charge or encumbrance upon any of the
property or assets of BIF or any BIF Subsidiary.
SECTION 4.13 BOOKS AND RECORDS. The books and records of BIF and the
BIF Subsidiaries are in all material respects complete and correct and
accurately reflect the basis for the respective financial condition and results
of operations of BIF and the BIF Subsidiaries set forth in the BIF Financial
Statements.
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SECTION 4.14 TAXES. Each of BIF and the BIF Subsidiaries has filed
with the appropriate governmental agencies all federal, state and local income,
franchise, excise, sales, use, real and personal property and other tax returns
and reports required to be filed by it. Except as set forth on Schedule 4.14 of
the BIF Book of Schedules, neither BIF nor any BIF Subsidiary is: (a) delinquent
in the payment of any taxes shown on such returns or reports or on any
assessments received by it for such taxes; (b) aware of any pending or
threatened examination for income taxes for any year by the IRS or any state tax
agency; (c) subject to any agreement extending the period for assessment or
collection of any federal or state tax; or (d) a party to any action or
proceeding nor has any claim been asserted against it by any governmental
authority for assessment or collection of taxes. None of the tax liabilities of
BIF or any BIF Subsidiary has ever been audited by the IRS or any state tax
agency for any period since January 1, 1994. Other than non-material items
related to real estate tax assessments, neither BIF nor any BIF Subsidiary is,
to the knowledge of BIF, a party to any threatened action or proceeding by any
governmental authority for assessment or collection of taxes. The reserve for
taxes in the audited financial statements of BIF for the year ended December 31,
1998, is adequate to cover all of the tax liabilities of BIF and the BIF
Subsidiaries (including, without limitation, income taxes and franchise fees)
that may become payable in future years in respect to any transactions
consummated prior to December 31, 1998. Neither BIF nor any of the BIF
Subsidiaries has and, to the best of BIF's knowledge, will not have any
liability for taxes of any nature for or in respect of the operation of its
business or ownership of its assets from December 31, 1998, up to and including
the Effective Time, except to the extent reflected on the audited BIF Financial
Statements for the year ended December 31, 1998, or on the Subsequent BIF
Financial Statements or otherwise reflected in the books and records of BIF and
the BIF Subsidiaries for the period following its then most recent of the
Subsequent BIF Financial Statements.
SECTION 4.15 TITLE TO PROPERTIES. BIF either directly or indirectly
owns all of the issued and outstanding capital stock of the BIF Subsidiaries
free and clear of all liens and encumbrances of any kind whatsoever. Each of BIF
and the BIF Subsidiaries has good and marketable title to all other assets and
properties, whether real or personal, tangible or intangible, which it purports
to own subject to no liens, mortgages, security interests, encumbrances or
charges of any kind except: (a) as noted in the BIF Financial Statements or on
Schedule 4.15 of the BIF Book of Schedules; (b) statutory liens for taxes not
yet delinquent or being contested in good faith by appropriate proceedings and
for which appropriate reserves have been established and reflected on the BIF
Financial Statements or will be reflected on the Subsequent BIF Financial
Statements; (c) pledges or liens required to be granted in connection with the
acceptance of government deposits, granted in connection with repurchase or
reverse repurchase agreements or otherwise incurred in the ordinary course of
business; and (d) minor defects and irregularities in title and encumbrances
which do not materially impair the use thereof for the purposes for which they
are held and which would not reasonably be expected to have a Material Adverse
Effect on BIF. Each of BIF and the BIF Subsidiaries as lessee has the right
under valid and subsisting leases to occupy, use, possess and control any and
all of the respective properties leased by it.
SECTION 4.16 BROKERAGE COMMISSIONS. Except as disclosed in Schedule
4.16 of the BIF Book of Schedules, all negotiations relating to this Agreement
and the transactions contemplated herein have been and will be carried on
between BIF and FDB and its respective
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counsel, accountants and other representatives in such a manner that no actions
of BIF or any BIF Subsidiary or any of its respective officers, agents or
representatives shall give rise to any claim against BIF, FDB or Newco or any of
its respective Affiliates for any brokerage commission, finder's fee, investment
advisor's fee or other like payment.
SECTION 4.17 CERTIFICATE OF INCORPORATION, CHARTER AND BYLAWS. The
copies of the certificate of incorporation of BIF and the charter of BKI, and
the bylaws of each of BIF and BKI, as amended to date, are complete and correct
and set forth in Schedule 4.17 of the BIF Book of Schedules.
SECTION 4.18 INTERIM EVENTS. Except as disclosed on Schedule 4.18 of
the BIF Book of Schedules and as otherwise permitted hereunder, since December
31, 1998, neither BIF nor any of the BIF Subsidiaries has:
(a) Suffered any changes having a Material Adverse Effect on BIF, or
in the operation or conduct of the respective businesses of BIF or any of the
BIF Subsidiaries;
(b) Suffered any material damage, destruction or loss to any of its
respective properties whether covered by insurance or not;
(c) Declared any dividend or other distribution with respect to its
stock (except for payment of dividends and distributions from any BIF Subsidiary
to BIF or any other BIF Subsidiary), repurchased or redeemed shares of its
stock, issued any shares of its stock or sold or agreed to issue or sell any of
its stock or any right to purchase or acquire any such stock or any security
convertible into such stock or taken any action to reclassify, recapitalize or
split up its stock or issued any stock appreciation rights;
(d) Granted or agreed to grant any increase in benefits payable or
to become payable under any BIF Employee Benefit Plan;
(e) Cancelled or compromised any debt or claim other than in the
ordinary course of business;
(f) Entered into any transaction, contract or commitment other than
in the ordinary course of business;
(g) Incurred any obligation or liability (fixed or contingent) other
than obligations and liabilities incurred in the ordinary course of its
respective business;
(h) Mortgaged, pledged or subjected to a lien, security interest or
other encumbrance any of its assets except to tax and other liens which arise by
operation of law and with respect to which payment is not past due and except
for pledges or liens: (i) required to be granted in connection with the
acceptance by any BIF Subsidiary of government deposits; (ii) granted in
connection with repurchase or reverse repurchase agreements; or (iii) otherwise
incurred in the ordinary course of the conduct of its respective business;
(i) Conducted its respective business in any manner other than
substantially as it was being conducted prior to such time;
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(j) Leased, sold or otherwise disposed of any of its assets except
in the ordinary course of business or leased, purchased or otherwise acquired
from third parties any assets except in the ordinary course of business;
(k) Except for the transactions contemplated by this Agreement,
merged, consolidated or agreed to merge or consolidate with or into any other
Person, or acquired or agreed to acquire any stock, equity interest or business
of any other Person;
(l) Agreed to enter into any transaction for the borrowing or
loaning of monies, other than in the ordinary course of business; or
(m) Increased the salary of any officer or the compensation or fees
payable to any director, except for normal increases in the ordinary course of
business or in accordance with any BIF Employee Benefit Plan, or entered into
any employment contract with any officer or salaried employee or installed any
employee welfare, stock option, profit sharing or other similar plan or
arrangement.
SECTION 4.19 REGULATORY FILINGS. Each of BIF and the BIF
Subsidiaries has filed in a timely manner all required filings with all proper
regulatory agencies, including, but not limited to: (a) the Securities and
Exchange Commission (the "SEC"); (b) the Board of Governors of the Federal
Reserve System (the "Federal Reserve"); (c) the Federal Deposit Insurance
Corporation (the "FDIC"); and (d) the Commissioner. All such filings with such
federal and state regulatory agencies were accurate and complete in all material
respects as of the dates of the filings, and no such filing has made any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements made, in the light of the circumstances under which
they were made, not misleading. Accurate and complete copies of each document
filed by BIF with the SEC since January 1, 1999, are attached as Schedule 4.19
of the BIF Book of Schedules.
SECTION 4.20 COMPLIANCE WITH APPLICABLE LAW. Each of BIF and the BIF
Subsidiaries holds all licenses, certificates, permits, franchises and rights
from all appropriate federal, state or other public authorities necessary for
the conduct of its respective business and where failure to do so would
reasonably be expected to have a Material Adverse Effect on BIF. Each of BIF and
the BIF Subsidiaries has complied in all material respects with all applicable
federal, state and local statutes, ordinances, regulations, rules or
requirements, and neither BIF nor any BIF Subsidiary is presently charged with,
or to the knowledge of BIF, under governmental investigation with respect to,
any actual or alleged material violations of any statute, ordinance, regulation
or rule.
SECTION 4.21 COMPLIANCE WITH ERISA. All of the employee benefit
plans (as defined in Section 3(3) of ERISA) established or maintained by BIF or
any of the BIF Subsidiaries, or to which BIF or any of the BIF Subsidiaries
contributes are in compliance in all material respects with all applicable
requirements of ERISA, and are in compliance in all material respects with all
applicable requirements (including qualification and non-discrimination
requirements in effect as of the Effective Time) of the Code for obtaining the
tax benefits the Code thereupon permits with respect to such employee benefit
plans. For purposes of this Section, non-compliance with the Code and ERISA is
material if such
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non-compliance would reasonably be expected to have a Material Adverse Effect on
BIF. No such employee benefit plan has, or as of the Effective Time will have,
any amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA) for which BIF or any of the BIF Subsidiaries would be liable to any
Person under Title IV of ERISA if any such employee benefit plan were terminated
as of the Effective Time, which amounts would be material to BIF and the BIF
Subsidiaries taken as a whole. Such employee benefit plans are funded in
accordance with Section 412 of the Code (if applicable). There would be no
obligations which would be material to BIF and the BIF Subsidiaries taken as a
whole under Title IV of ERISA relating to any such employee benefit plan that is
a multi-employer plan if any such plan were terminated or if BIF or the BIF
Subsidiaries withdrew from any such plan as of the Effective Time.
SECTION 4.22 COMPLIANCE WITH ENVIRONMENTAL LAWS. Each of BIF and the
BIF Subsidiaries has conducted its respective business in material compliance
with all federal, state, county and municipal laws, including statutes,
regulations, rules, ordinances, orders, restrictions and requirements, relating
to underground storage tanks, petroleum products, air pollutants, water
pollutants or process waste water or otherwise relating to the environment or
toxic or hazardous substances or to the manufacture, processing, distribution,
use, recycling, generation, treatment, handling, storage, disposal or transport
of any hazardous or toxic substances or petroleum products (including
polychlorinated biphenyls, whether contained or uncontained, and
asbestos-containing materials, whether friable or not), including, but not
limited to, the Federal Solid Waste Disposal Act, the Hazardous and Solid Waste
Amendments, the Federal Clean Air Act, the Federal Clean Water Act, the
Occupational Health and Safety Act, the Federal Resource Conservation and
Recovery Act, the Toxic Substances Control Act, the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and the Superfund
Amendments and Reauthorization Act of 1986, all as amended, and regulations of
the Environmental Protection Agency, the Nuclear Regulatory Agency and any state
department of natural resources or state environmental protection agency now or
at any time hereafter in effect (collectively, the "Environmental Laws"). There
are no pending or, to the knowledge of BIF, threatened actions or proceedings by
any local municipality, sewerage district or other governmental entity against
BIF or any of the BIF Subsidiaries with respect to the Environmental Laws and,
to the knowledge of BIF, there is no basis or grounds for any such action or
proceeding. No environmental clearances or other governmental approvals are
required for the conduct of the business of BIF or any of the BIF Subsidiaries
or the consummation of the transactions contemplated hereby. To the knowledge of
BIF, neither BIF nor any of the BIF Subsidiaries is the owner of any interest in
real estate on which any substances have been used, stored, deposited, treated,
recycled or disposed of, which substances if known to be present on, at or under
such property, would require clean-up, removal or some other remedial action
under any Environmental Laws.
SECTION 4.23 TRUST ADMINISTRATION. Each of BIF and the BIF
Subsidiaries has properly administered, in all material respects, all accounts
for which it acts as fiduciary, including but not limited to accounts for which
it serves as a trustee, agent, custodian, personal representative, guardian or
investment advisor, in accordance with the terms of the governing documents and
applicable state and federal law and regulations and common law. None of BIF or
any BIF Subsidiary, or any director, officer or employee of BIF or any BIF
Subsidiary has committed any material breach of trust with respect to any such
fiduciary
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account, and the accountings for each such fiduciary account are true and
correct in all material respects and accurately reflect the assets of such
fiduciary account.
SECTION 4.24 LOAN LOSS RESERVE. The reserve for possible loan and
lease losses shown on the March 31, 1999, Call Report for BKI is adequate in all
material respects under the requirements of generally accepted accounting
principles to provide for possible losses, net of recoveries relating to loans
previously charged off, on loans outstanding (including, without limitation,
accrued interest receivable) as of March 31, 1999. The aggregate loan balances
of BKI at such date in excess of such reserves are, to the best knowledge of
BIF, and based on past loan loss experience, collectible in accordance with
their terms.
SECTION 4.25 YEAR 2000. Neither BIF nor any BIF Subsidiary has
received, and BIF has no reason to believe that it or any BIF Subsidiary will
receive, a rating of less than "satisfactory" on any Year 2000 Report of
Examination conducted by the Commissioner, the FDIC, the Federal Reserve or any
other regulatory authority. Schedule 4.25 of the BIF Book of Schedules contains
complete and accurate copies of the plans of BIF and each BIF Subsidiary for
addressing the issues set forth in the statements of the FFIEC dated May 5,
1997, entitled "Year 2000 Project Management Awareness," and December 17, 1997,
entitled "Safety and Soundness Guidelines Concerning the Year 2000 Business
Risk," as such issues affect BIF and its Subsidiaries. BIF, each BIF Subsidiary
and their respective plans are in material compliance with the Schedule set
forth in the foregoing FFIEC statements and with the foregoing FFIEC guidelines.
SECTION 4.26 APPROVAL DELAYS. To the best of its knowledge, BIF
knows of no reason why the granting of any of the regulatory approvals referred
to in Section 12.2 would be denied or unduly delayed.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES BY FDB
FDB hereby represents and warrants to BIF that the following are
true and correct as of the date hereof, and will be true and correct as of the
Effective Time:
SECTION 5.1 FDB ORGANIZATION. FDB: (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is a registered bank holding company under the BHCA; (b) is duly
qualified to do business and is in good standing in the states of Delaware and
Illinois and in each other jurisdiction in which the nature of the business
conducted or the properties or assets owned or leased by it makes such
qualification necessary and where failure to be so qualified would reasonably be
expected to have a Material Adverse Effect on FDB; and (c) has full power and
authority, corporate and otherwise, to own, operate and lease its properties as
presently owned, operated and leased, and to carry on its business as it is now
being conducted. FDB owns no voting stock or equity securities of any
corporation, association, partnership or other entity, other than all of the
voting stock of FNB, First Trust and FirsTech and as set forth on Schedule 5.1
of the FDB Book of Schedules.
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SECTION 5.2 FDB CAPITALIZATION. The authorized capital stock of FDB
consists, and at June 30, 1999, consisted of: (a) 5,000,000 shares of common
stock, $0.01 par value per share, of which 2,909,397 shares were issued as of
July 28, 1999, of which 144,427 shares were held in the treasury of FDB as of
that date; and (b) 200,000 shares of preferred stock, no par value per share,
none of which shares are issued and outstanding. The maximum number of shares of
FDB Common Stock (assuming for this purpose that share equivalents constitute
FDB Common Stock) that would be outstanding immediately prior to the Effective
Time (including treasury shares) if all options, warrants, conversion rights and
other rights with respect thereto were exercised and the restrictions on any
restricted stock were no longer applicable is 2,926,647 shares. All of the
outstanding shares of capital stock of FDB have been duly and validly authorized
and issued and are fully paid and nonassessable. Except as contemplated in this
Agreement or as set forth in Schedule 5.2 of the FDB Book of Schedules, there
are, as of the date of this Agreement, no outstanding subscriptions, contracts,
conversion privileges, options, warrants, calls or other rights obligating FDB
or any FDB Subsidiary to issue, sell or otherwise dispose of, or to purchase,
redeem or otherwise acquire, any shares of capital stock of FDB or any FDB
Subsidiary, other than preemptive rights granted to stockholders of Illinois
state banks pursuant to the Illinois Banking Act, as amended. Except as
permitted by this Agreement and provided on Schedule 5.2 of the FDB Book of
Schedules, no shares of FDB capital stock have been purchased, redeemed or
otherwise acquired, directly or indirectly, by FDB or any FDB Subsidiary and no
dividends or other distributions payable in any equity securities of FDB or any
FDB Subsidiary have been declared, set aside, made or paid to the stockholders
of FDB.
SECTION 5.3 SUBSIDIARY ORGANIZATION. (a) FNB is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States. FNB has full power and authority, corporate and otherwise,
to own, operate and lease its properties as presently owned, operated and
leased, and to carry on its business as it is now being conducted. FNB owns no
voting stock or equity securities of any corporation, association, partnership
or other entity, other than as shown on Schedule 5.3 of the FDB Book of
Schedules.
(b) First Trust is an Illinois state bank duly organized, validly
existing and in good standing under the laws of the State of Illinois. The Bank
has full power and authority, corporate and otherwise, to own, operate and lease
its properties as presently owned, operated and leased, and to carry on its
business as it is now being conducted. First Trust owns no voting stock or
equity securities of any corporation, association, partnership or other entity,
other than as shown on Schedule 5.3 of the FDB Book of Schedules.
(c) FirsTech: (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware; (ii) is duly
qualified to do business and is in good standing in the states of Delaware and
Illinois and in each other jurisdiction in which the nature of the business
conducted or the properties or assets owned or leased by it makes such
qualification necessary and where failure to be so qualified would reasonably be
expected to have a Material Adverse Effect on FDB; and (iii) has full power and
authority, corporate and otherwise, to own, operate and lease its properties as
presently owned, operated and leased, and to carry on its business as it is now
being conducted. FirsTech owns no voting stock or equity securities of any
corporation, association, partnership or other entity.
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SECTION 5.4 SUBSIDIARY CAPITALIZATION. (a) The authorized capital
stock of FNB consists, and at the Effective Time will consist, of 130,975 shares
of common stock, $25.00 par value per share, all of which shares are validly
issued and outstanding, fully paid and nonassessable, and owned by FDB. There
are no options, warrants, rights, calls or commitments of any character relating
to any additional shares of the capital stock of FNB.
(b) The authorized capital stock of First Trust consists, and at the
Effective Time will consist, of 9,000 shares of common stock, $50.00 par value
per share, all of which shares are validly issued and outstanding, fully paid
and nonassessable, and owned by FDB. There are no options, warrants, rights,
calls or commitments of any character relating to any additional shares of the
capital stock of First Trust except for the stockholders' pre-emptive rights
granted by the Illinois Banking Act, as amended.
(c) The authorized capital stock of FirsTech consists, and at the
Effective Time will consist, of 1,000 shares of common stock, no par value per
share, 100 of which shares are validly issued and outstanding, fully paid and
nonassessable, and owned by FDB. There are no options, warrants, rights, calls
or commitments of any character relating to any additional shares of the capital
stock of FirsTech.
SECTION 5.5 AUTHORIZATION. FDB has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and the
execution, delivery and performance of this Agreement by FDB and the
consummation by it of the transactions contemplated thereby, have been duly
authorized by all necessary corporate action, subject to stockholder approval.
This Agreement constitutes a legal, valid and binding obligation of FDB
enforceable in accordance with its terms except as such enforcement may be
limited by bankruptcy, insolvency, reorganization or other similar laws and
subject to general principles of equity.
SECTION 5.6 LITIGATION AND REGULATORY MATTERS. Schedule 5.6 of the
FDB Book of Schedules sets forth a list of all actions, suits or proceedings
pending as of the date hereof in which FDB or any FDB Subsidiary is a named
party, other than collection or foreclosure actions brought by FDB or any FDB
Subsidiary in the ordinary course of business and where no counterclaim has been
filed against FDB or such FDB Subsidiary. Except as set forth on Schedule 5.6 of
the FDB Book of Schedules, there is no action, suit, proceeding, claim or formal
written protest by any Person or agency, or any investigation or report by any
regulatory authority having jurisdiction over FDB or any FDB Subsidiary or any
of its respective assets or businesses which is pending or, to FDB's knowledge,
threatened against FDB or any FDB Subsidiary, or any of its respective officers
or directors in their capacities as such, or its assets, business or goodwill
which would reasonably be expected to have a Material Adverse Effect on FDB or
which would impair FDB's ability to consummate the Merger. FDB further
represents and warrants that except as set forth on Schedule 5.6 of the FDB Book
of Schedules, it does not know or have any reason to believe that there is any
basis for assertion against it or any FDB Subsidiary of any material claims
based upon the wrongful action or inaction of either FDB or any FDB Subsidiary,
and any of their respective officers, directors or employees which would
reasonably be expected to have a Material Adverse Effect on FDB or which would
impair FDB's ability to consummate the Merger. Neither FDB nor any FDB
Subsidiary is subject to, or in default with respect to, nor are any of its
assets subject
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to, any outstanding judgment, regulatory agreement, injunction, writ, order or
decree or any other requirement of any governmental body or court or of any
governmental agency or instrumentality which would reasonably be expected to
have a Material Adverse Effect on FDB or which would impair FDB's ability to
consummate the Merger.
SECTION 5.7 INSURANCE. Schedule 5.7 of the FDB Book of Schedules
lists the policies of insurance (including bankers blanket bond and insurance
providing benefits for employees) owned or held by FDB or any FDB Subsidiary on
the date hereof. Each such policy is, and FDB will use all reasonable efforts to
keep each such policy, in full force and effect (except for any expiring policy
which is replaced by coverage at least as extensive) until the Effective Time.
All premiums due on such policies have been paid.
SECTION 5.8 DEFAULTS UNDER AGREEMENTS. Neither FDB nor any FDB
Subsidiary is in default or alleged to be in default, under any loan or credit
agreement, conditional sales contract or other title retention agreement or
security agreement relating to money borrowed by FDB or any FDB Subsidiary,
agreements pursuant to which it leases real or personal property or any other
instrument or obligation, which would reasonably be expected to have a Material
Adverse Effect on FDB. Neither FDB nor any FDB Subsidiary is in default in any
material respect and FDB has no knowledge of any material default under such
instruments by any other party thereto and has no knowledge of any event which
with notice or lapse of time or both would constitute a material default.
SECTION 5.9 FINANCIAL STATEMENTS AND REPORTS. Copies of the
following financial statements and reports of FDB and the FDB Subsidiaries
(collectively, the "FDB Financial Statements") have been delivered by FDB to
BIF:
(a) Consolidated Balance Sheets and the related Statements of
Income, Statements of Changes in Stockholders' Equity and Statements of Cash
Flows of FDB for the years ended December 31, 1996, 1997 and 1998; and
(b) Consolidated Balance Sheets and the related Statements of Income
of FDB for the quarter ended March 31, 1999; and
(c) Call Reports for FNB and First Trust, in each case at the close
of business on December 31, 1996, 1997 and 1998, and on March 31, 1999.
The FDB Financial Statements are complete and correct in all material respects
and fairly present the consolidated financial position of FDB, FNB, First Trust
and FirsTech, as the case may be, at the dates shown and the results of
operations for the periods covered. The FDB Financial Statements described in
clause (a) above are audited statements and have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis. The
FDB Financial Statements described in clauses (b) and (c) above have been
prepared on a basis consistent with past accounting practices and as required by
applicable rules or regulations and fairly present the consolidated financial
condition and results of operations at the dates and for the entities and
periods presented, subject to year-end audit adjustments (which changes in the
aggregate would not reasonably be expected to be materially adverse). The FDB
Financial Statements do not include any material assets or omit to state
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any material liabilities, absolute or contingent, or other facts, which
inclusion or omission would render the FDB Financial Statements misleading in
any material respect.
SECTION 5.10 PROPERTIES, CONTRACTS, BENEFIT PLANS AND OTHER
AGREEMENTS. Schedule 5.10 of the FDB Book of Schedules lists or describes the
following:
(a) All real property owned or leased by FDB or any FDB Subsidiary
together with a legal description of such real estate, and each lease of real
property to which FDB or any FDB Subsidiary is a party, identifying the parties
thereto, the annual rental payable and the expiration date thereof;
(b) All loan and credit agreements, conditional sales contracts or
other title retention agreements or security agreements relating to money
borrowed by FDB or any FDB Subsidiary, exclusive of deposit agreements with
customers of any FDB Subsidiary entered into in the ordinary course of business,
agreements for the purchase of federal funds and repurchase agreements;
(c) All agreements, loans, contracts, leases, guaranties, letters of
credit, lines of credit or commitments of FDB or any of the FDB Subsidiaries not
referred to elsewhere in this Section which:
(i) involve payment by FDB or any FDB Subsidiary (other than
as disbursement of loan proceeds to customers) of more than $50,000;
(ii) involve payments based on profits of FDB or any FDB
Subsidiary;
(iii) relate to the future purchase of goods or services in
excess of the requirements of its respective business at current levels or for
normal operating purposes;
(iv) were not made in the ordinary course of business; or
(v) materially affect the business or financial condition of
FDB or any FDB Subsidiary;
(d) All profit sharing; group insurance; hospitalization; stock
option; pension; retirement; bonus; deferred compensation; stock bonus; stock
purchase; collective bargaining agreements, contracts or arrangements under
which pensions, deferred compensation or other retirement benefits are being
paid or may become payable respectively by FDB or any FDB Subsidiary; or other
employee welfare or benefit agreements, plans or arrangements established,
maintained, sponsored or undertaken by FDB or any FDB Subsidiary for the benefit
of its respective officers, directors or employees, including each trust or
other agreement with any custodian or any trustee for funds held under any such
agreement, plan or arrangement (collectively, the "FDB Employee Benefit Plans"),
and, in respect to any of them, the latest reports or forms, if any, filed with
the Department of Labor and Pension Benefit Guaranty Corporation under ERISA,
any current financial or actuarial reports and any currently effective IRS
private rulings or determination letters obtained by or for the benefit of FDB
or any FDB Subsidiary;
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(e) All leases or licenses of FDB or any FDB Subsidiary with respect
to personal property, whether as lessee or licensee, with annual rental or other
payments due thereunder in excess of $20,000;
(f) All employment and consulting contracts to which FDB or any FDB
Subsidiary is a party (except for ordinary oral employment contracts with
employees of FDB or any FDB Subsidiary creating at will employment
relationships); and
(g) The name and annual salary as of January 1, 1999, of each
director, officer or employee of FDB or any FDB Subsidiary.
Copies of each document, plan or contract listed and described in
Schedule 5.10 of the FDB Book of Schedules are appended to such Schedule and
included in the FDB Book of Schedules.
SECTION 5.11 DISCLOSURES. No representation or warranty made herein
by FDB contains any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements contained herein under the
circumstances under which they were made not misleading. Except as and to the
extent reflected or reserved against in FDB's audited financial statements for
the year ended December 31, 1998, referenced in Section 5.9 above, or the
Subsequent FDB Financial Statements, neither FDB nor any FDB Subsidiary has, and
with respect to the Subsequent FDB Financial Statements (as such term is defined
in Section 7.3) will not have, any liabilities or obligations, of any nature,
secured or unsecured, (whether accrued, absolute, contingent or otherwise)
including, without limitation, any tax liabilities due or to become due, which
would reasonably be expected to have a Material Adverse Effect on FDB.
SECTION 5.12 EFFECT OF AGREEMENT. The execution, delivery and
performance of this Agreement by FDB and the consummation by it of the
transactions contemplated hereby do not: (a) require the consent, waiver, order,
registration, qualification, approval, license or authorization of any Person,
court, regulatory authority or other governmental body, other than as
specifically contemplated by this Agreement and as may be required in connection
or in compliance with the provisions of the BCA, the Delaware Code, the BHCA and
the Illinois Act; (b) violate, with or without the giving of notice or the
passage of time or both, in any material respect any provision of law applicable
to it; (c) conflict with or result in a breach of any terms of its certificate
of incorporation or bylaws, or any material mortgage, deed of trust, license,
indenture or other agreement or instrument, or any order, judgment, decree,
statute, regulation or other restriction of any kind or character, to which FDB
or any FDB Subsidiary is a party or by which it or any of its respective assets
may be bound; (d) give to others any right to accelerate or terminate, or result
in acceleration or termination of, any such agreement or instrument; (e) result
in termination of any provision of any such agreement or instrument; or (f)
result in the creation of any lien, charge or encumbrance upon any of the
property or assets of FDB or any FDB Subsidiary.
SECTION 5.13 BOOKS AND RECORDS. The books and records of FDB and the
FDB Subsidiaries are in all material respects complete and correct and
accurately reflect the basis
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for the respective financial condition and results of operations of FDB and the
FDB Subsidiaries set forth in the FDB Financial Statements.
SECTION 5.14 TAXES. Each of FDB and the FDB Subsidiaries has filed
with the appropriate governmental agencies all federal, state and local income,
franchise, excise, sales, use, real and personal property and other tax returns
and reports required to be filed by it. Except as set forth on Schedule 5.14 of
the FDB Book of Schedules, neither FDB nor any FDB Subsidiary is: (a) delinquent
in the payment of any taxes shown on such returns or reports or on any
assessments received by it for such taxes; (b) aware of any pending or
threatened examination for income taxes for any year by the IRS or any state tax
agency; (c) subject to any agreement extending the period for assessment or
collection of any federal or state tax; or (d) a party to any action or
proceeding nor has any claim been asserted against it by any governmental
authority for assessment or collection of taxes. None of the tax liabilities of
FDB or any FDB Subsidiary has ever been audited by the IRS or any state tax
agency for any period since January 1, 1994. Other than non-material items
related to real estate tax assessments, neither FDB nor any FDB Subsidiary is,
to the knowledge of FDB, a party to any threatened action or proceeding by any
governmental authority for assessment or collection of taxes. The reserve for
taxes in the audited financial statements of FDB for the year ended December 31,
1998, is adequate to cover all of the tax liabilities of FDB and the FDB
Subsidiaries (including, without limitation, income taxes and franchise fees)
that may become payable in future years in respect to any transactions
consummated prior to December 31, 1998. Neither FDB nor any of the FDB
Subsidiaries has and, to the best of FDB's knowledge, will not have any
liability for taxes of any nature for or in respect of the operation of its
business or ownership of its assets from December 31, 1998, up to and including
the Effective Time, except to the extent reflected on the audited FDB Financial
Statements for the year ended December 31, 1998, or on the Subsequent FDB
Financial Statements or otherwise reflected in the books and records of FDB and
the FDB Subsidiaries for the period following its then most recent of the
Subsequent FDB Financial Statements.
SECTION 5.15 TITLE TO PROPERTIES. FDB either directly or indirectly
owns all of the issued and outstanding capital stock of the FDB Subsidiaries
free and clear of all liens and encumbrances of any kind whatsoever. Each of FDB
and the FDB Subsidiaries has good and marketable title to all other assets and
properties, whether real or personal, tangible or intangible, which it purports
to own subject to no liens, mortgages, security interests, encumbrances or
charges of any kind except: (a) as noted in the FDB Financial Statements or on
Schedule 5.15 of the FDB Book of Schedules; (b) statutory liens for taxes not
yet delinquent or being contested in good faith by appropriate proceedings and
for which appropriate reserves have been established and reflected on the FDB
Financial Statements or will be reflected on the Subsequent FDB Financial
Statements; (c) pledges or liens required to be granted in connection with the
acceptance of government deposits, granted in connection with repurchase or
reverse repurchase agreements or otherwise incurred in the ordinary course of
business; and (d) minor defects and irregularities in title and encumbrances
which do not materially impair the use thereof for the purposes for which they
are held and which would not reasonably be expected to have a Material Adverse
Effect on FDB. Each of FDB and the FDB Subsidiaries as lessee has the right
under valid and subsisting leases to occupy, use, possess and control any and
all of the respective properties leased by it.
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SECTION 5.16 BROKERAGE COMMISSIONS. Except as disclosed in Schedule
5.16 of the FDB Book of Schedules, all negotiations relating to this Agreement
and the transactions contemplated herein have been and will be carried on
between FDB and BIF and its respective counsel, accountants and other
representatives in such a manner that no actions of FDB or any FDB Subsidiary or
any of its respective officers, agents or representatives shall give rise to any
claim against FDB or BIF or any of its respective Affiliates for any brokerage
commission, finder's fee, investment advisor's fee or other like payment.
SECTION 5.17 CERTIFICATE OF INCORPORATION AND BYLAWS. The copies of
the certificate of incorporation of FDB and FirsTech, the articles of
association of FNB and the charter of First Trust and the bylaws of each of FDB,
FirsTech, FNB and First Trust, as amended to date, are complete and correct and
set forth in Schedule 5.17 of the FDB Book of Schedules.
SECTION 5.18 INTERIM EVENTS. Except as disclosed on Schedule 5.18 of
the FDB Book of Schedules and as otherwise permitted hereunder, since December
31, 1998, neither FDB nor any of the FDB Subsidiaries has:
(a) Suffered any changes having a Material Adverse Effect on FDB, or
in the operation or conduct of the respective businesses of FDB or any of the
FDB Subsidiaries;
(b) Suffered any material damage, destruction or loss to any of its
respective properties whether covered by insurance or not;
(c) Declared any dividend or other distribution with respect to its
stock (except for payment of dividends and distributions from any FDB Subsidiary
to FDB or any other FDB Subsidiary), repurchased or redeemed shares of its
stock, issued any shares of its stock or sold or agreed to issue or sell any of
its stock or any right to purchase or acquire any such stock or any security
convertible into such stock or taken any action to reclassify, recapitalize or
split up its stock or issued any stock appreciation rights;
(d) Granted or agreed to grant any increase in benefits payable or
to become payable under any FDB Employee Benefit Plan;
(e) Cancelled or compromised any debt or claim other than in the
ordinary course of business;
(f) Entered into any transaction, contract or commitment other than
in the ordinary course of business;
(g) Incurred any obligation or liability (fixed or contingent) other
than obligations and liabilities incurred in the ordinary course of its
respective business;
(h) Mortgaged, pledged or subjected to a lien, security interest or
other encumbrance any of its assets except to tax and other liens which arise by
operation of law and with respect to which payment is not past due and except
for pledges or liens: (i) required to be granted in connection with the
acceptance by any FDB Subsidiary of government deposits; (ii) granted in
connection with repurchase or reverse repurchase agreements; or (iii) otherwise
incurred in the ordinary course of the conduct of its respective business;
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(i) Conducted its respective business in any manner other than
substantially as it was being conducted prior to such time;
(j) Leased, sold or otherwise disposed of any of its assets except
in the ordinary course of business or leased, purchased or otherwise acquired
from third parties any assets except in the ordinary course of business;
(k) Except for the transactions contemplated by this Agreement,
merged, consolidated or agreed to merge or consolidate with or into any other
Person, or acquired or agreed to acquire any stock, equity interest or business
of any other Person;
(l) Agreed to enter into any transaction for the borrowing or
loaning of monies, other than in the ordinary course of business; or
(m) Increased the salary of any officer or the compensation or fees
payable to any director, except for normal increases in the ordinary course of
business or in accordance with any FDB Employee Benefit Plan, or entered into
any employment contract with any officer or salaried employee or installed any
employee welfare, stock option, profit sharing or other similar plan or
arrangement.
SECTION 5.19 REGULATORY FILINGS. Each of FDB and the FDB
Subsidiaries has filed in a timely manner all required filings with all proper
regulatory agencies, including, but not limited to: (a) the SEC; (b) the Federal
Reserve; (c) the OCC; (d) the FDIC and (e) the Commissioner. All such filings
with such federal and state regulatory agencies were accurate and complete in
all material respects as of the dates of the filings, and no such filing has
made any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading. Accurate and complete
copies of each document filed by FDB with the SEC since January 1, 1999, are
attached as Schedule 5.19 of the FDB Book of Schedules.
SECTION 5.20 COMPLIANCE WITH APPLICABLE LAW. Each of FDB and the FDB
Subsidiaries holds all licenses, certificates, permits, franchises and rights
from all appropriate federal, state or other public authorities necessary for
the conduct of its respective business and where failure to do so would
reasonably be expected to have a Material Adverse Effect on FDB. Each of FDB and
the FDB Subsidiaries has complied in all material respects with all applicable
federal, state and local statutes, ordinances, regulations, rules or
requirements, and neither FDB nor any FDB Subsidiary is presently charged with,
or to the knowledge of FDB, under governmental investigation with respect to,
any actual or alleged material violations of any statute, ordinance, regulation
or rule.
SECTION 5.21 COMPLIANCE WITH ERISA. All of the employee benefit
plans (as defined in Section 3(3) of ERISA) established or maintained by FDB or
any of the FDB Subsidiaries, or to which FDB or any of the FDB Subsidiaries
contributes are in compliance in all material respects with all applicable
requirements of ERISA, and are in compliance in all material respects with all
applicable requirements (including qualification and non-discrimination
requirements in effect as of the Effective Time) of the Code for obtaining the
tax benefits the Code thereupon permits with respect to such employee benefit
plans. For
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purposes of this Section, non-compliance with the Code and ERISA is material if
such non-compliance would reasonably be expected to have a Material Adverse
Effect on FDB. No such employee benefit plan has, or as of the Effective Time
will have, any amount of unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA) for which FDB or any of the FDB Subsidiaries would be
liable to any Person under Title IV of ERISA if any such employee benefit plan
were terminated as of the Effective Time, which amounts would be material to FDB
and the FDB Subsidiaries taken as a whole. Such employee benefit plans are
funded in accordance with Section 412 of the Code (if applicable). There would
be no obligations which would be material to FDB and the FDB Subsidiaries taken
as a whole under Title IV of ERISA relating to any such employee benefit plan
that is a multi-employer plan if any such plan were terminated or if FDB or the
FDB Subsidiaries withdrew from any such plan as of the Effective Time.
SECTION 5.22 COMPLIANCE WITH ENVIRONMENTAL LAWS. Each of FDB and the
FDB Subsidiaries has conducted its respective business in material compliance
with all Environmental Laws. There are no pending or, to the knowledge of FDB,
threatened actions or proceedings by any local municipality, sewerage district
or other governmental entity against FDB or any of the FDB Subsidiaries with
respect to the Environmental Laws and, to the knowledge of FDB, there is no
basis or grounds for any such action or proceeding. No environmental clearances
or other governmental approvals are required for the conduct of the business of
FDB or any of the FDB Subsidiaries or the consummation of the transactions
contemplated hereby. To the knowledge of FDB, neither FDB nor any of the FDB
Subsidiaries is the owner of any interest in real estate on which any substances
have been used, stored, deposited, treated, recycled or disposed of, which
substances if known to be present on, at or under such property, would require
clean-up, removal or some other remedial action under any Environmental Laws.
SECTION 5.23 TRUST ADMINISTRATION. Each of FDB and the FDB
Subsidiaries has properly administered, in all material respects, all accounts
for which it acts as fiduciary, including but not limited to accounts for which
it serves as a trustee, agent, custodian, personal representative, guardian or
investment advisor, in accordance with the terms of the governing documents and
applicable state and federal law and regulations and common law. None of FDB or
any FDB Subsidiary, or any director, officer or employee of FDB or any FDB
Subsidiary has committed any material breach of trust with respect to any such
fiduciary account, and the accountings for each such fiduciary account are true
and correct in all material respects and accurately reflect the assets of such
fiduciary account.
SECTION 5.24 LOAN LOSS RESERVE. The reserve for possible loan and
lease losses shown on the March 31, 1999, Call Reports for FNB and First Trust,
respectively in each case is adequate in all material respects under the
requirements of generally accepted accounting principles to provide for possible
losses, net of recoveries relating to loans previously charged off, on loans
outstanding (including, without limitation, accrued interest receivable) as of
March 31, 1999. The aggregate loan balances of FNB and of First Trust at such
date in excess of such reserves are, to the best knowledge of FDB, and based on
past loan loss experience, collectible in accordance with their terms.
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SECTION 5.25 YEAR 2000. Neither FDB nor any FDB Subsidiary has
received, and FDB has no reason to believe that it or any FDB Subsidiary will
receive, a rating of less than "satisfactory" on any Year 2000 Report of
Examination conducted by the Commissioner, the OCC, the FDIC, the Federal
Reserve or any other regulatory authority. Schedule 5.25 of the FDB Book of
Schedules contains complete and accurate copies of the plans of FDB and each FDB
Subsidiary for addressing the issues set forth in the statements of the FFIEC
dated May 5, 1997, entitled "Year 2000 Project Management Awareness," and
December 17, 1997, entitled "Safety and Soundness Guidelines Concerning the Year
2000 Business Risk," as such issues affect FDB and its Subsidiaries. FDB, each
FDB Subsidiary and their respective plans are in material compliance with the
schedule set forth in the foregoing FFIEC statements and with the foregoing
FFIEC guidelines.
SECTION 5.26 APPROVAL DELAYS. To the best of its knowledge, FDB
knows of no reason why the granting of any of the regulatory approvals referred
to in Section 12.2 would be denied or unduly delayed.
ARTICLE 6
COVENANTS OF BIF
From and after the date hereof and until the Effective Time, BIF
hereby covenants and agrees with FDB as follows:
SECTION 6.1 INFORMATION, ACCESS THERETO, CONFIDENTIALITY. (a) FDB,
its representatives and agents shall, at all times during normal business hours
prior to the Closing Date, have full and continuing access to the facilities,
operations, records and properties of BIF and the BIF Subsidiaries. FDB, its
representatives and agents may, prior to the Closing Date, make or cause to be
made such reasonable investigation of the operations, records and properties of
BIF and the BIF Subsidiaries, including observation of any audit of, and
examination of any audit work papers with respect to, BIF or any BIF Subsidiary,
and of its and their financial and legal condition as FDB shall deem necessary
or advisable to familiarize itself with such records, properties and other
matters; provided, that such access or investigation shall not interfere
unnecessarily with the normal operations of BIF or any of the BIF Subsidiaries.
Upon request, each of BIF and the BIF Subsidiaries will furnish FDB or its
representatives or agents, its attorneys' responses to auditors' requests for
information, and such financial and operating data and other information
reasonably requested by FDB developed by BIF or any of the BIF Subsidiaries, its
auditors, accountants or attorneys (provided with respect to attorneys, such
disclosure shall be limited to information that would not result in the waiver
by BIF of any claim of attorney-client privilege), and will permit FDB, its
representatives or agents to discuss such information directly with any
individual or firm performing auditing or accounting functions for BIF or any of
the BIF Subsidiaries, and such auditors and accountants shall be directed to
furnish copies of any reports or financial information as developed to FDB or
its representatives or agents. No investigation by FDB shall affect the
representations and warranties made by BIF. This Section shall not require the
disclosure of any information the disclosure of which to FDB would be prohibited
by law.
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(b) Any confidential information or trade secrets received by BIF,
its employees or agents in the course of the examination described in Sections
2.10(a) or 7.1 shall be treated confidentially, and any correspondence,
memoranda, records, copies, documents and electronic or other media of any kind
containing either such confidential information, or trade secrets or both shall
be destroyed by BIF or, at FDB's request, returned to FDB in the event this
Agreement is terminated as provided in Section 13.1. Such information shall not
be used by BIF or its agents to the detriment of FDB or any FDB Subsidiary.
SECTION 6.2 CARRY ON IN REGULAR COURSE. Each of BIF and the BIF
Subsidiaries shall carry on its business diligently and substantially in the
same manner as is presently being conducted and shall not make or institute any
unusual or material change in its methods of doing business without the prior
written consent of FDB. BIF shall, and shall also cause each of the BIF
Subsidiaries to, unless otherwise consented to in writing in advance by FDB:
(a) Enter into loan transactions only in accordance with sound
credit practices and only on terms and conditions which are not materially more
favorable than those available to the borrower from competitive sources in
transactions in the ordinary course of business and consistent with prudent
banking practices and policies and regulations of applicable regulatory
authorities, and in that connection, BIF will apprise FDB of all new credits or
new lending relationships approved in excess of $1.0 million to any Person or
Persons and his, her or their Affiliates from the date hereof to the Effective
Time;
(b) Maintain all of its assets necessary for the conduct of its
business in good operating condition and repair, reasonable wear and tear and
damage by fire or unavoidable casualty excepted, and maintain policies of
insurance upon its assets and with respect to the conduct of its business in
amounts and kinds comparable to that in effect on the date hereof and pay all
premiums on such policies when due;
(c) Use all reasonable efforts to preserve its present business
organization intact, keep available the services of its present officers and
employees and preserve its present relationships with Persons having business
dealings with it;
(d) Maintain its books, accounts and records in the usual, regular
and ordinary manner, on a basis consistent with prior years and comply in all
material respects with all laws and regulations applicable to it and to the
conduct of its business;
(e) Subject to the provisions of Section 6.9, make no amendment to
its certificate of incorporation, charter or bylaws and enter into no merger or
consolidation with, or sale of a significant portion of its assets to, any other
Person;
(f) Except as otherwise permitted or required by this Agreement,
make no change in the number of shares of its capital stock issued and
outstanding, grant or make no option, warrant, call, right, commitment or any
other security or agreement of any character obligating it to issue any shares
of its capital stock and issue no other securities or evidences of indebtedness,
so long as any such permitted actions are taken prior to the Closing Date;
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(g) Except as otherwise permitted by this Agreement, make no
increase in the compensation payable or to become payable by it to any employee
except for normal periodic increases, and as may be required, or as is normal
and customary based upon past practices over the last three (3) fiscal years,
under the terms of any existing BIF Employee Benefit Plan, so long as any such
permitted actions are taken prior to the Closing Date;
(h) Except as contemplated by Schedule 5.10(c)(i) of the FDB Book of
Schedules, not make any investment of a capital nature exceeding $100,000 or
aggregate investments of a capital nature exceeding $500,000;
(i) Except as otherwise permitted or required by this Agreement and
for modifications necessary to comply with any applicable law, rule or
regulation, make no change in any BIF Employee Benefit Plan;
(j) Cause BKI, consistent with BKI's past practices, to maintain a
reserve for possible loan and lease losses which is adequate in all material
respects under the requirements of generally accepted accounting principles to
provide for possible losses, net of recoveries relating to loans previously
charged off, on loans outstanding (including, without limitation, accrued
interest receivable);
(k) Make no material change in any lease of real property;
(l) File in a timely manner all required filings with all proper
regulatory authorities and cause such filings to be true and correct in all
material respects;
(m) Enter into no employment, consulting or similar agreement or
arrangement that is not terminable, without penalty or premium, on thirty (30)
days' notice or less;
(n) File with the appropriate governmental agencies all federal,
state and local income, franchise, excise, sales, use, real and personal
property and other tax returns and reports required to be filed by it;
(o) Enter into no lease of assets having annual rental payments in
excess of $25,000 or such leases which in the aggregate have annual rental
payments exceeding $100,000;
(p) Except for the TIA Agreement, enter into no material contract
that is not terminable, without penalty or premium, on thirty (30) days' notice
or less; and
(q) Purchase or sell any investment securities other than pursuant
to its investment policy in the ordinary course of business.
With respect to any written request by BIF for FDB's consent to any
non-permitted action of BIF or any BIF Subsidiary described in this Section, BIF
shall be entitled to conclusively presume FDB has consented to any such action
unless BIF shall have received FDB's written objection to such action within
five (5) Business Days of the date of FDB's receipt of such written request.
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SECTION 6.3 SUBSEQUENT BIF FINANCIAL STATEMENTS. As soon as
available after the date hereof, BIF will furnish FDB copies of each filing made
by BIF with the SEC subsequent to May 15, 1999, the monthly unaudited
consolidated balance sheets and profit and loss statements of each of BKI and
TIA Corp prepared for its internal use, BKI's Call Reports for each quarterly
period completed prior to the Effective Time and all other financial reports or
statements submitted to regulatory authorities after the date hereof, to the
extent permitted by law (collectively, the "Subsequent BIF Financial
Statements"). The Subsequent BIF Financial Statements shall be prepared on a
basis consistent with past accounting practices and shall fairly present the
financial condition and results of operations for the dates and periods
presented, subject in the case of unaudited financial statements to year-end
audit adjustments (which changes in the aggregate would not reasonably be
expected to be materially adverse). The Subsequent BIF Financial Statements will
not include any material assets or omit to state any material liabilities,
absolute or contingent, or other facts, which inclusion or omission would render
such financial statements misleading in any material respect.
SECTION 6.4 STOCKHOLDERS' MEETING. BIF shall cause a meeting of its
stockholders to be held at the earliest practicable date after the Registration
Statement (as defined below) has been declared effective by the SEC for the
purpose of acting upon this Agreement. In connection with such stockholders'
meeting and in accordance with the Delaware Code, BIF shall recommend to its
stockholders the approval of this Agreement and the Merger and shall solicit
proxies voting in favor thereof from its stockholders.
SECTION 6.5 BIF AFFILIATE UNDERTAKING. BIF shall use all reasonable
efforts to furnish to FDB as soon as practicable after the date of this
Agreement an undertaking in the form attached as Exhibit G executed by each
Person who is identified by BIF as one of its Affiliates.
SECTION 6.6 DIVIDENDS. Between the date of this Agreement and the
Effective Time, BIF may continue to declare and pay to its stockholders, on
dates consistent with its past practices, its normal quarterly cash dividend not
to exceed $0.09 per share of BIF Common Stock, and shall declare, pay or make no
other dividend or other distribution or payment in respect of, or redemption of,
shares of BIF Common Stock, provided, however, that BIF shall not declare the
record date for any dividend, or pay or make any such dividend or other
distribution or payment, in the quarter in which the Effective Time shall occur.
It is the intent of this Section to provide that the holders of BIF Common Stock
will receive either payment of dividends on their shares of BIF Common Stock as
permitted under this Section or the payment of cash dividends as the holders of
the BIF Exchange Shares for the calendar quarter during which the Effective Time
shall occur, but will not receive and will not become entitled to receive for
the same calendar quarter both the payment of a permitted dividend as
stockholders of BIF and the payment of a cash dividend as the holders of the BIF
Exchange Shares. If BIF does not declare and pay permitted dividends on its BIF
Common Stock in a particular calendar quarter because of BIF's reasonable
expectation that the Effective Time would occur in such quarter wherein the
holders of BIF Common Stock would have become entitled to receive cash dividends
for such calendar quarter on the BIF Exchange Shares, and the Effective Time
does not in fact occur in said calendar quarter, then, as a result thereof, BIF
shall be entitled to declare and pay a permitted dividend on said shares of BIF
Common Stock for said calendar quarter as soon as reasonably practicable.
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SECTION 6.7 ENVIRONMENTAL MATTERS. FDB may in its discretion, prior
to the Closing, retain at its own expense an independent professional consultant
to perform an environmental site assessment and render to FDB a report (an
"Environmental Report") to determine if any real property in which BIF holds any
interest contains or gives evidence that any violations of Environmental Laws
have occurred on any such property. Neither FDB nor its independent professional
consultant shall enter upon any such real property in which BIF or any BIF
Subsidiary holds only a mortgagee's interest without the prior permission of BIF
and the Person in possession thereof. BIF shall not withhold such permission
unreasonably, and shall use all reasonable efforts to obtain such permission for
FDB from the Person in possession of any such mortgaged real property for which
FDB desires its independent professional consultant to conduct a site
assessment. FDB shall have no duty to act upon any information produced by such
reviews or investigations with or for the benefit of BIF, any BIF Subsidiary or
any other Person, but shall provide such information to BIF as soon as
practicable after such information becomes available to FDB.
SECTION 6.8 ADVICE OF CHANGES. Between the date hereof and the
Closing Date, BIF shall promptly advise FDB in writing of any fact, change or
event which, if existing or known at the date hereof, would have been required
to be set forth or disclosed in or pursuant to this Agreement or of any fact
which, if existing or known at the date hereof, would have made any of the
representations contained herein materially untrue, provided, however, that
receipt of notice of such facts after the date of this Agreement shall have no
effect on the truth and accuracy of the representations and warranties made in
this Agreement as of the date hereof. BIF shall also provide to FDB copies of
each written communication sent to its stockholders between the date of this
Agreement and the Closing Date.
SECTION 6.9 EXCLUSIVITY. Neither BIF, any BIF Subsidiary nor any of
their respective directors, officers, employees, professional and financial
advisors, representatives, agents and Affiliates shall, directly or indirectly,
make, encourage, facilitate, solicit, initiate or assist any inquiries,
proposals, offers or expressions of interest from, or provide any nonpublic
information or access to BIF's or any BIF Subsidiary's premises to, or
participate in any discussions or negotiations with, any Person (other than FDB
and Newco and their directors, officers, employees, professional and financial
advisors, representatives, agents and Affiliates) concerning or relating to (a)
any merger, sale of assets not in the ordinary course of business, acquisition,
business combination, change of control or other similar transaction involving
BIF or any BIF Subsidiary, or (b) any purchase or other acquisition by any
Person of five percent (5%) or more of the capital stock of BIF or of any
capital stock of any BIF Subsidiary, or (c) any issuance by any BIF Subsidiary
of any shares of its capital stock (collectively, a "Competing BIF Proposal").
BIF will promptly advise FDB of, and communicate to FDB the terms and conditions
of, and the identity of the Person making, any Competing BIF Proposal, and will
promptly furnish FDB with copies of any non-privileged documents provided to and
received from such Person, and summaries of any other communications with
respect to such Competing BIF Proposal. Upon the date of this Agreement, BIF
will terminate all discussions and negotiations that it has heretofore engaged
in or conducted with any other Person with respect to any of the above, and will
cause its directors, officers, employees, professional and financial advisors,
representatives, agents and Affiliates to also terminate the same.
Notwithstanding the foregoing, BIF may engage in discussions or negotiations
with, furnish nonpublic information concerning BIF and any BIF
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Subsidiary and their respective properties, assets and business, and grant
access to the facilities of BIF and any BIF Subsidiary, to any Person that
hereafter makes a Competing BIF Proposal that was not directly or indirectly,
after the date hereof, made, encouraged, facilitated, solicited, initiated or
assisted by BIF, any BIF Subsidiary or any of their respective directors,
officers, employees, professional or financial advisors, representatives, agents
or Affiliates (an "Unsolicited BIF Proposal"), but only to the extent that the
BIF Board of Directors shall conclude in good faith on the basis of the written
opinion of its outside counsel that the failure to take such actions would be
inconsistent with its fiduciary duties, and then only if BIF provides FDB with
prior written notice of its intent to take such actions and such notice
summarizes all material terms of the Unsolicited BIF Proposal and identifies the
Person making it.
SECTION 6.10 INFORMATION PROVIDED TO FDB. BIF agrees that none of
the information concerning BIF or any BIF Subsidiary or the Merger which is
provided or to be provided by BIF or any BIF Subsidiary to FDB for inclusion or
which is included in the Registration Statement or Proxy Statement-Prospectus
and any other documents to be filed with any governmental authority in
connection with the transactions contemplated by this Agreement will, at the
respective times such documents are filed and, in the case of the Registration
Statement, when it becomes effective and, with respect to the Proxy
Statement-Prospectus, and any amendments or supplements thereto, when mailed and
at the time of the stockholder meetings referred to in Sections 6.4 and 7.4,
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 in which they were made, not misleading.
Notwithstanding the foregoing, BIF shall have no responsibility for the truth or
accuracy of any information with respect to FDB or the FDB Subsidiaries or any
of their affiliates or associates contained in the Registration Statement or the
Proxy Statement-Prospectus.
SECTION 6.11 REASONABLE EFFORTS. Subject to the terms and conditions
of this Agreement, BIF agrees to use all reasonable efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to satisfy the
conditions set forth herein and to consummate and make effective the
transactions contemplated by this Agreement, including cooperating fully with
FDB. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
Newco with full title to all properties, assets, rights, approvals, immunities
and franchises of BIF, the proper officers and directors of BIF shall take all
such necessary action.
SECTION 6.12 TERMINATION OF BIF RIGHTS AGREEMENT. Prior to the
Effective Time, BIF shall take all actions that may be necessary to terminate
the Rights Agreement dated as of April 28, 1995, between BIF and BKI and to
redeem all rights previously issued thereunder.
SECTION 6.13 TIA AGREEMENT. BIF agrees to diligently pursue the
consummation of the transactions contemplated by the TIA Agreement prior to the
Closing Date.
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ARTICLE 7
COVENANTS OF FDB
From and after the date hereof and until the Effective Time, FDB
hereby covenants and agrees with BIF as follows:
SECTION 7.1 INFORMATION, ACCESS THERETO, CONFIDENTIALITY. (a) BIF,
its representatives and agents shall, at all times during normal business hours
prior to the Closing Date, have full and continuing access to the facilities,
operations, records and properties of FDB and the FDB Subsidiaries. BIF, its
representatives and agents may, prior to the Closing Date, make or cause to be
made such reasonable investigation of the operations, records and properties of
FDB and the FDB Subsidiaries, including observation of any audit of, and
examination of any audit work papers with respect to, FDB or any FDB Subsidiary,
and of its and their financial and legal condition as BIF shall deem necessary
or advisable to familiarize itself with such records, properties and other
matters; provided, that such access or investigation shall not interfere
unnecessarily with the normal operations of FDB or any of the FDB Subsidiaries.
Upon request, each of FDB and the FDB Subsidiaries will furnish BIF or its
representatives or agents, its attorneys' responses to auditors' requests for
information, and such financial and operating data and other information
reasonably requested by BIF developed by FDB or any of the FDB Subsidiaries, its
auditors, accountants or attorneys (provided with respect to attorneys, such
disclosure shall be limited to information that would not result in the waiver
by FDB of any claim of attorney-client privilege), and will permit BIF, its
representatives or agents to discuss such information directly with any
individual or firm performing auditing or accounting functions for FDB or any of
the FDB Subsidiaries, and such auditors and accountants shall be directed to
furnish copies of any reports or financial information as developed to BIF or
its representatives or agents. No investigation by BIF shall affect the
representations and warranties made by FDB. This Section shall not require the
disclosure of any information the disclosure of which to BIF would be prohibited
by law.
(b) Any confidential information or trade secrets received by FDB,
its employees or agents in the course of the examination described in Sections
2.10(b) or 6.1 shall be treated confidentially, and any correspondence,
memoranda, records, copies, documents and electronic or other media of any kind
containing either such confidential information, or trade secrets or both shall
be destroyed by FDB or, at BIF's request, returned to BIF in the event this
Agreement is terminated as provided in Section 13.1. Such information shall not
be used by FDB or its agents to the detriment of BIF or any BIF Subsidiary.
SECTION 7.2 CARRY ON IN REGULAR COURSE. Each of FDB and the FDB
Subsidiaries shall carry on its business diligently and substantially in the
same manner as is presently being conducted and shall not make or institute any
unusual or material change in its methods of doing business without the prior
written consent of BIF. FDB shall, and shall also cause each of the FDB
Subsidiaries to, unless otherwise consented to in writing in advance by BIF:
(a) Enter into loan transactions only in accordance with sound
credit practices and only on terms and conditions which are not materially more
favorable than those available to the borrower from competitive sources in
transactions in the ordinary course of business and
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consistent with prudent banking practices and policies and regulations of
applicable regulatory authorities, and in that connection, FDB will apprise BIF
of all new credits or new lending relationships approved in excess of $1.0
million to any Person or Persons and his, her or their Affiliates from the date
hereof to the Effective Time;
(b) Maintain all of its assets necessary for the conduct of its
business in good operating condition and repair, reasonable wear and tear and
damage by fire or unavoidable casualty excepted, and maintain policies of
insurance upon its assets and with respect to the conduct of its business in
amounts and kinds comparable to that in effect on the date hereof and pay all
premiums on such policies when due;
(c) Use all reasonable efforts to preserve its present business
organization intact, keep available the services of its present officers and
employees and preserve its present relationships with Persons having business
dealings with it;
(d) Maintain its books, accounts and records in the usual, regular
and ordinary manner, on a basis consistent with prior years and comply in all
material respects with all laws and regulations applicable to it and to the
conduct of its business;
(e) Subject to the provisions of Section 7.9, make no amendment to
its certificate of incorporation, articles of association, charter or bylaws and
enter into no merger or consolidation with, or sale of a significant portion of
its assets to, any other Person;
(f) Except as otherwise permitted or required by this Agreement,
make no change in the number of shares of its capital stock issued and
outstanding, grant or make no option, warrant, call, right, commitment or any
other security or agreement of any character obligating it to issue any shares
of its capital stock and issue no other securities or evidences of indebtedness,
so long as any such permitted actions are taken prior to the Closing Date;
(g) Except as otherwise permitted by this Agreement, make no
increase in the compensation payable or to become payable by it to any employee
except for normal periodic increases, and as may be required, or as is normal
and customary based upon past practices over the last three (3) fiscal years,
under the terms of any existing FDB Employee Benefit Plan, so long as any such
permitted actions are taken prior to the Closing Date;
(h) Not make any investment of a capital nature exceeding $100,000
or aggregate investments of a capital nature exceeding $500,000;
(i) Except as otherwise permitted by this Agreement and for
modifications necessary to comply with any applicable law, rule or regulation,
make no change in any FDB Employee Benefit Plan, PROVIDED, HOWEVER, that in a
manner reasonably acceptable to BIF, FDB shall take all steps necessary as soon
as practicable after the date of this Agreement to freeze all benefits under any
defined benefit plan sponsored by FDB;
(j) Cause each of FNB and First Trust, consistent with their
respective past practices, to maintain a reserve for possible loan and lease
losses which is adequate in all material respects under the requirements of
generally accepted accounting principles to provide
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for possible losses, net of recoveries relating to loans previously charged off,
on loans outstanding (including, without limitation, accrued interest
receivable);
(k) Make no material change in any lease of real property;
(l) File in a timely manner all required filings with all proper
regulatory authorities and cause such filings to be true and correct in all
material respects;
(m) Enter into no employment, consulting or similar agreement or
arrangement that is not terminable, without penalty or premium, on thirty (30)
days' notice or less;
(n) File with the appropriate governmental agencies all federal,
state and local income, franchise, excise, sales, use, real and personal
property and other tax returns and reports required to be filed by it;
(o) Enter into no lease of assets having annual rental payments in
excess of $25,000 or such leases which in the aggregate have annual rental
payments exceeding $100,000;
(p) Except for the TIA Agreement, enter into no material contract
that is not terminable, without penalty or premium, on thirty (30) days' notice
or less; and
(q) Purchase or sell any investment securities other than pursuant
to its investment policy in the ordinary course of business.
With respect to any written request by FDB for BIF's consent to any
non-permitted action of FDB or any FDB Subsidiary described in this Section, FDB
shall be entitled to conclusively presume BIF has consented to any such action
unless FDB shall have received BIF's written objection to such action within
five (5) Business Days of the date of BIF's receipt of such written request.
SECTION 7.3 SUBSEQUENT FDB FINANCIAL STATEMENTS. As soon as
available after the date hereof, FDB will furnish BIF copies of each filing made
by FDB with the SEC subsequent to May 15, 1999, the monthly unaudited
consolidated balance sheets and profit and loss statements of each of FNB, First
Trust and FirsTech prepared for their internal use, Call Reports of each of FNB
and First Trust for each quarterly period completed prior to the Effective Time
and all other financial reports or statements submitted to regulatory
authorities after the date hereof, to the extent permitted by law (collectively,
the "Subsequent FDB Financial Statements"). The Subsequent FDB Financial
Statements shall be prepared on a basis consistent with past accounting
practices and shall fairly present the financial condition and results of
operations for the dates and periods presented, subject in the case of unaudited
financial statements to year-end audit adjustments (which changes in the
aggregate would not reasonably be expected to be materially adverse). The
Subsequent FDB Financial Statements will not include any material assets or omit
to state any material liabilities, absolute or contingent, or other facts, which
inclusion or omission would render such financial statements misleading in any
material respect.
SECTION 7.4 STOCKHOLDERS' MEETING. FDB shall cause a meeting of its
stockholders to be held at the earliest practicable date after the Registration
Statement has been declared
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effective by the SEC for the purpose of acting upon this Agreement. In
connection with such stockholders' meeting and in accordance with the Delaware
Code, FDB shall recommend to its stockholders the approval of this Agreement and
the Merger and shall solicit proxies voting in favor thereof from its
stockholders.
SECTION 7.5 FDB AFFILIATE UNDERTAKING. FDB shall use all reasonable
efforts to furnish to BIF as soon as practicable after the date of this
Agreement an undertaking in the form attached as Exhibit G executed by each
Person who is identified by FDB as one of its Affiliates.
SECTION 7.6 DIVIDENDS. Between the date of this Agreement and the
Effective Time, FDB may continue to declare and pay to its stockholders, on
dates consistent with its past practices, its normal quarterly cash dividend not
to exceed $0.15 per share of FDB Common Stock, and shall declare, pay or make no
other dividend or other distribution or payment in respect of, or redemption of,
shares of FDB Common Stock, provided, however, that FDB shall not declare the
record date for any dividend, or pay or make any such dividend or other
distribution or payment, in the quarter in which the Effective Time shall occur.
It is the intent of this Section to provide that the holders of FDB Common Stock
will receive either payment of dividends on their shares of FDB Common Stock as
permitted under this Section or the payment of cash dividends as the holders of
the FDB Exchange Shares for the calendar quarter during which the Effective Time
shall occur, but will not receive and will not become entitled to receive for
the same calendar quarter both the payment of a permitted dividend as
stockholders of FDB and the payment of a cash dividend as the holders of the FDB
Exchange Shares. If FDB does not declare and pay permitted dividends on its FDB
Common Stock in a particular calendar quarter because of FDB's reasonable
expectation that the Effective Time would occur in such quarter wherein the
holders of FDB Common Stock would have become entitled to receive cash dividends
for such calendar quarter on the FDB Exchange Shares, and the Effective Time
does not in fact occur in said calendar quarter, then, as a result thereof, FDB
shall be entitled to declare and pay a permitted dividend on said shares of FDB
Common Stock for said calendar quarter as soon as reasonably practicable.
SECTION 7.7 ENVIRONMENTAL MATTERS. BIF may in its discretion, prior
to the Closing, retain at its own expense an independent professional consultant
to perform an environmental site assessment and render to BIF an Environmental
Report to determine if any real property in which FDB holds any interest
contains or gives evidence that any violations of Environmental Laws have
occurred on any such property. Neither BIF nor its independent professional
consultant shall enter upon any such real property in which FDB or any FDB
Subsidiary holds only a mortgagee's interest without the prior permission of FDB
and the Person in possession thereof. FDB shall not withhold such permission
unreasonably, and shall use all reasonable efforts to obtain such permission for
BIF from the Person in possession of any such mortgaged real property for which
BIF desires its independent professional consultant to conduct a site
assessment. BIF shall have no duty to act upon any information produced by such
reviews or investigations with or for the benefit of FDB, any FDB Subsidiary or
any other Person, but shall provide such information to FDB as soon as
practicable after such information becomes available to BIF.
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SECTION 7.8 ADVICE OF CHANGES. Between the date hereof and the
Closing Date, FDB shall promptly advise BIF in writing of any fact, change or
event which, if existing or known at the date hereof, would have been required
to be set forth or disclosed in or pursuant to this Agreement or of any fact
which, if existing or known at the date hereof, would have made any of the
representations contained herein materially untrue, provided, however, that
receipt of notice of such facts after the date of this Agreement shall have no
effect on the truth and accuracy of the representations and warranties made in
this Agreement as of the date hereof. FDB shall also provide to BIF copies of
each written communication sent to its stockholders between the date of this
Agreement and the Closing Date.
SECTION 7.9 EXCLUSIVITY. Neither FDB, any FDB Subsidiary nor any of
their respective directors, officers, employees, professional and financial
advisors, representatives, agents and Affiliates shall, directly or indirectly,
make, encourage, facilitate, solicit, initiate or assist any inquiries,
proposals, offers or expressions of interest from, or provide any nonpublic
information or access to FDB's or any FDB Subsidiary's premises to, or
participate in any discussions or negotiations with, any Person (other than BIF
and Newco and their directors, officers, employees, professional and financial
advisors, representatives, agents and Affiliates) concerning or relating to (a)
any merger, sale of assets not in the ordinary course of business, acquisition,
business combination, change of control or other similar transaction involving
FDB or any FDB Subsidiary, or (b) any purchase or other acquisition by any
Person of five percent (5%) or more of the capital stock of FDB or of any
capital stock of any FDB Subsidiary, or (c) any issuance by any FDB Subsidiary
of any shares of its capital stock (collectively, a "Competing FDB Proposal").
FDB will promptly advise BIF of, and communicate to BIF the terms and conditions
of, and the identity of the Person making, any Competing FDB Proposal, and will
promptly furnish BIF with copies of any non-privileged documents provided to and
received from such Person, and summaries of any other communications with
respect to such Competing FDB Proposal. Upon the date of this Agreement, FDB
will terminate all discussions and negotiations that it has heretofore engaged
in or conducted with any other Person with respect to any of the above, and will
cause its directors, officers, employees, professional and financial advisors,
representatives, agents and Affiliates to also terminate the same.
Notwithstanding the foregoing, FDB may engage in discussions or negotiations
with, furnish nonpublic information concerning FDB and any FDB Subsidiary and
their respective properties, assets and business, and grant access to the
facilities of FDB and any FDB Subsidiary, to any Person that hereafter makes a
Competing FDB Proposal that was not directly or indirectly, after the date
hereof, made, encouraged, facilitated, solicited, initiated or assisted by FDB,
any FDB Subsidiary or any of their respective directors, officers, employees,
professional or financial advisors, representatives, agents or Affiliates (an
"Unsolicited FDB Proposal"), but only to the extent that the FDB Board of
Directors shall conclude in good faith on the basis of the written opinion of
its outside counsel that the failure to take such actions would be inconsistent
with its fiduciary duties, and then only if FDB provides BIF with prior written
notice of its intent to take such actions and such notice summarizes all
material terms of the Unsolicited FDB Proposal and identifies the Person making
it.
SECTION 7.10 INFORMATION PROVIDED TO BIF. FDB agrees that none of
the information concerning FDB or any FDB Subsidiary or the Merger which is
provided or to be provided by FDB or any FDB Subsidiary to BIF for inclusion or
which is included in the Registration Statement or Proxy Statement-Prospectus
and any other documents to be filed
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with any governmental authority in connection with the transactions contemplated
by this Agreement will, at the respective times such documents are filed and, in
the case of the Registration Statement, when it becomes effective and, with
respect to the Proxy Statement-Prospectus, and any amendments or supplements
thereto, when mailed and at the time of the stockholder meetings referred to in
Sections 6.4 and 7.4, 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 in which they were
made, not misleading. Notwithstanding the foregoing, FDB shall have no
responsibility for the truth or accuracy of any information with respect to BIF
or the BIF Subsidiaries or any of their affiliates or associates contained in
the Registration Statement or the Proxy Statement-Prospectus.
SECTION 7.11 REASONABLE EFFORTS. Subject to the terms and conditions
of this Agreement, FDB agrees to use all reasonable efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to satisfy the
conditions set forth herein and to consummate and make effective the
transactions contemplated by this Agreement, including cooperating fully with
BIF. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
Newco with full title to all properties, assets, rights, approvals, immunities
and franchises of FDB, the proper officers and directors of FDB shall take all
such necessary action.
ARTICLE 8
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BIF
The obligations of BIF under this Agreement are subject, unless
waived by BIF, to the satisfaction of the following conditions on or prior to
the Effective Time:
SECTION 8.1 REPRESENTATIONS AND WARRANTIES TRUE AT EFFECTIVE TIME.
The representations and warranties made by FDB in this Agreement shall be true
and correct on and as of the Effective Time with the same effect as though such
representations and warranties had been made or given on and as of the Effective
Time, except for changes contemplated by this Agreement, and except also for
representations and warranties as of a specified time other than the Effective
Time, which shall be true and correct in all material respects at such specified
time. FDB shall have delivered to BIF a certificate of its President or any Vice
President to the same effect.
SECTION 8.2 COMPLIANCE WITH AGREEMENT. FDB shall have performed and
complied with all of its obligations under this Agreement which are to be
performed or complied with prior to or at the Effective Time and FDB shall have
delivered to BIF a certificate of its President or any Vice President to the
same effect.
SECTION 8.3 OPINION OF COUNSEL FOR FDB. BIF shall have received from
Howard & Howard Attorneys PC the opinion contemplated by Section 2.6(l), dated
as of the Closing Date, addressed to BIF.
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SECTION 8.4 PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings,
corporate or other, to be taken by FDB in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to counsel for BIF, and FDB shall
have made available to BIF for examination the originals or true and correct
copies of all records and documents relating to the business and affairs of FDB
which BIF may reasonably request in connection with said transactions.
SECTION 8.5 STATUTORY REQUIREMENTS. This Agreement shall have been
duly and validly authorized by the stockholders of FDB. Such stockholder
approval shall have been obtained in conformity with all applicable laws at a
meeting of stockholders for which proxies are solicited in compliance with
applicable laws and requirements.
SECTION 8.6 LITIGATION. Neither FDB nor any FDB Subsidiary shall be
made a party to any actions, suits, proceedings, litigation or legal proceedings
which, in the reasonable opinion of BIF, have or are likely to have a Material
Adverse Effect on FDB, and no action, suit, proceeding or claim shall have been
instituted, made or threatened by any Person relating to the Merger or the
validity or propriety of the transactions contemplated by this Agreement which
BIF reasonably believes will result in material damages or an order enjoining
the Merger or a determination that FDB failed to comply with legal requirements
of a material nature in connection with the Merger.
SECTION 8.7 ACCURACY OF FINANCIAL STATEMENTS. The FDB Financial
Statements and the Subsequent FDB Financial Statements, previously or
subsequently furnished to BIF by FDB shall not be inaccurate in any material
respect.
SECTION 8.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. From the date
hereof to the Effective Time, there shall be and have been no Material Adverse
Change in FDB or any event or occurrence reasonably likely to result in a
Material Adverse Change.
SECTION 8.9 CONSENTS AND APPROVALS. Any consents or approvals
required to be secured by the parties to this Agreement or otherwise reasonably
necessary in the opinion of BIF to consummate the transactions contemplated by
this Agreement shall have been obtained and shall be reasonably satisfactory to
BIF.
SECTION 8.10 ACCRUAL OF COSTS. On or prior to the Closing Date, the
sum of: (a) the cost of any benefits or contributions supplied or made or to be
supplied or made through the Effective Time under any of the FDB Employee
Benefit Plans; (b) the costs of any corrective action to bring any such plans
into compliance with applicable law; (c) the aggregate cost of complying with
any representation, warranty or covenant of FDB set forth in this Agreement; and
(d) all transaction costs of FDB necessary to consummate the Merger, including,
but not limited to, its share of organizational expenses of Newco and the
aggregate professional fees of attorneys, accountants and financial advisors, in
each case incurred or to be incurred by FDB through the Effective Time in
connection with this Agreement or the Merger, shall be fully paid or accrued for
in accordance with generally accepted accounting principles.
SECTION 8.11 LOAN LOSS RESERVE. At the Effective Time, the reserve
for possible loan and lease losses of each FNB and First Trust shall be adequate
in all material respects
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under the requirements of generally accepted accounting principles to provide
for possible losses, net of recoveries relating to loans previously charged off,
on loans outstanding (including, without limitation, accrued interest
receivable) as of the Closing Date and the Effective Time.
SECTION 8.12 FAIRNESS OPINION. As of the date of this Agreement and
prior to distribution of the Proxy Statement-Prospectus to the stockholders of
BIF, BIF shall have received an opinion from Keefe, Bruyette & Woods, Inc. to
the effect that the consideration to be received by BIF's stockholders in
connection with the Merger, from a financial point of view, is fair to BIF's
stockholders, and the same shall not have been withdrawn.
SECTION 8.13 EMPLOYMENT AGREEMENTS. On or prior to the Closing Date,
the Employment Agreements identified on Exhibit H, shall be amended in a manner,
or replaced with a substitute agreement, in each case reasonably satisfactory to
BIF to provide that the Merger, if consummated in accordance with the terms of
this Agreement, will not constitute a "Change of Control" as defined in such
agreements.
SECTION 8.14 ENVIRONMENTAL REPORTS. BIF shall have been granted
acceptable access to any real property in which FDB or any FDB Subsidiary has an
interest and for which BIF desired its independent professional consultant to
prepare an Environmental Report, and the results of any Environmental Report
rendered to BIF with respect to such real property shall have not disclosed any
violation of Environmental Laws which would reasonably be expected to have a
Material Adverse Effect on FDB.
ARTICLE 9
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF FDB
The obligations of FDB under this Agreement are subject, unless
waived by FDB, to the satisfaction on or prior to the Effective Time of the
following conditions:
SECTION 9.1 REPRESENTATIONS AND WARRANTIES TRUE AT EFFECTIVE TIME.
The representations and warranties made by BIF in this Agreement shall be true
and correct on and as of the Effective Time with the same effect as though such
representations and warranties had been made or given on and as of the Effective
Time, except for changes contemplated by this Agreement, and except also for
representations and warranties as of a specified time other than the Effective
Time, which shall be true and correct in all material respects at such specified
time. BIF shall have delivered to FDB a certificate of its President or any Vice
President to the same effect.
SECTION 9.2 COMPLIANCE WITH AGREEMENT. BIF shall have performed and
complied with all of its obligations under this Agreement which are to be
performed or complied with prior to or at the Effective Time and BIF shall have
delivered to FDB a certificate of its President or any Vice President to the
same effect.
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SECTION 9.3 OPINION OF COUNSEL FOR BIF. FDB shall have received from
Barack Ferrazzano Kirschbaum Perlman & Nagelberg the opinion contemplated by
Section 2.7(j), dated as of the Closing Date, addressed to FDB.
SECTION 9.4 PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings,
corporate or other, to be taken by BIF in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to counsel for FDB, and BIF shall
have made available to FDB for examination the originals or true and correct
copies of all records and documents relating to the business and affairs of BIF
which FDB may reasonably request in connection with said transactions.
SECTION 9.5 STATUTORY REQUIREMENTS. This Agreement shall have been
duly and validly authorized by the stockholders of BIF. Such stockholder
approval shall have been obtained in conformity with all applicable laws at a
meeting of stockholders for which proxies are solicited in compliance with
applicable laws and requirements.
SECTION 9.6 LITIGATION. Neither BIF nor any BIF Subsidiary shall be
made a party to any actions, suits, proceedings, litigation or legal proceedings
which, in the reasonable opinion of FDB, have or are likely to have a Material
Adverse Effect on BIF, and no action, suit, proceeding or claim shall have been
instituted, made or threatened by any Person relating to the Merger or the
validity or propriety of the transactions contemplated by this Agreement which
FDB reasonably believes will result in material damages or an order enjoining
the Merger or a determination that BIF failed to comply with legal requirements
of a material nature in connection with the Merger.
SECTION 9.7 ACCURACY OF FINANCIAL STATEMENTS. The BIF Financial
Statements and the Subsequent BIF Financial Statements, previously or
subsequently furnished to FDB by BIF shall not be inaccurate in any material
respect.
SECTION 9.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. From the date
hereof to the Effective Time, there shall be and have been no Material Adverse
Change in BIF or any event or occurrence reasonably likely to result in a
Material Adverse Change.
SECTION 9.9 CONSENTS AND APPROVALS. Any consents or approvals
required to be secured by the parties to this Agreement or otherwise reasonably
necessary in the opinion of FDB to consummate the transactions contemplated by
this Agreement shall have been obtained and shall be reasonably satisfactory to
FDB.
SECTION 9.10 ACCRUAL OF COSTS. On or prior to the Closing Date, the
sum of: (a) the cost of any benefits or contributions supplied or made or to be
supplied or made through the Effective Time under any of the BIF Employee
Benefit Plans; (b) the costs of any corrective action to bring any such plans
into compliance with applicable law; (c) the aggregate cost of complying with
any representation, warranty or covenant of BIF set forth in this Agreement; and
(d) all transaction costs of BIF necessary to consummate the Merger, including,
but not limited to, its share of organizational expenses of Newco and the
aggregate professional fees of attorneys, accountants and financial advisors, in
each case incurred or to be incurred by BIF
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through the Effective Time in connection with this Agreement or the Merger,
shall be fully paid or accrued for in accordance with generally accepted
accounting principles.
SECTION 9.11 LOAN LOSS RESERVE. At the Effective Time, the reserve
for possible loan and lease losses of BKI shall be adequate in all material
respects under the requirements of generally accepted accounting principles to
provide for possible losses, net of recoveries relating to loans previously
charged off, on loans outstanding (including, without limitation, accrued
interest receivable) as of the Closing Date and the Effective Time.
SECTION 9.12 FAIRNESS OPINION. As of the date of this Agreement and
prior to distribution of the Proxy Statement-Prospectus to the stockholders of
FDB, FDB shall have received an opinion from ABN AMRO to the effect that the FDB
Exchange Ratio is fair to FDB's stockholders from a financial point of view, and
the same shall not have been withdrawn.
SECTION 9.13 EMPLOYMENT AGREEMENTS. On or prior to the Closing Date,
the Employment Agreements identified on Exhibit I shall be amended in a manner,
or replaced with a substitute agreement, in each case reasonably satisfactory to
FDB to provide that the Merger, if consummated in accordance with the terms of
this Agreement, will not constitute a "Change of Control" as defined in such
agreements.
SECTION 9.14 ENVIRONMENTAL REPORTS. FDB shall have been granted
acceptable access to any real property in which BIF or any BIF Subsidiary has an
interest and for which FDB desired its independent professional consultant to
prepare an Environmental Report, and the results of any Environmental Report
rendered to FDB with respect to such real property shall have not disclosed any
violation of Environmental Laws which would reasonably be expected to have a
Material Adverse Effect on BIF.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS OF BOTH PARTIES
SECTION 10.1 REGISTRATION STATEMENT. The Registration Statement
shall have become effective and no stop order suspending such effectiveness
shall have been issued or threatened by the SEC that suspends the effectiveness
of the Registration Statement and no proceeding shall have been commenced or be
pending or overtly threatened for such purpose.
SECTION 10.2 OTHER APPROVALS. All actions, consents or approvals,
governmental or otherwise, which are, or in the opinion of counsel for BIF or
FDB may be, necessary to permit or enable the Resulting Corporation upon and
after the Merger, to conduct all or any part of the business of FDB or BIF, in
the manner in which such activities and businesses are conducted up to the
Effective Time, shall have been obtained without any conditions which in the
reasonable opinion of BIF or FDB are materially adverse, and shall not have been
withdrawn or stayed.
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SECTION 10.3 ORDERS, DECREES AND JUDGMENTS. Consummation of the
transactions contemplated by this Agreement shall not violate any order, decree
or judgment of any court or governmental body having competent jurisdiction.
SECTION 10.4 REGULATORY APPROVALS. BIF, FDB and Newco shall have
received any and all required approvals from the Federal Reserve and the
Commissioner and any other necessary governmental authority, for the
consummation of the transactions contemplated hereby.
SECTION 10.5 TAX OPINION. Each of FDB and BIF shall have received
from counsel, accountants or tax advisors reasonably acceptable to FDB and BIF
an opinion dated as of the Closing Date to the effect that the Merger qualifies
as a nontaxable reorganization within the meaning of Section 368(a) and related
sections of the Code.
SECTION 10.6 POOLING LETTER. Each of FDB and BIF shall have received
from accountants mutually acceptable to BIF and FDB a letter opining that Newco
may properly account for the Merger as a pooling of interests.
ARTICLE 11
ADDITIONAL COVENANTS OF THE PARTIES
SECTION 11.1 SEC REGISTRATION. Newco shall file with the SEC as soon
as practicable after the execution of this Agreement, a Registration Statement
on an appropriate form under the Securities Act covering Newco Common Stock to
be issued pursuant to this Agreement and shall use all reasonable efforts to
cause the same to become effective and thereafter, until the Effective Time or
lawful termination of this Agreement, to keep the same effective and, if
necessary, amend and supplement the same. Such Registration Statement and any
amendments and supplements thereto are referred to herein as the "Registration
Statement." The Registration Statement shall include a Proxy
Statement-Prospectus thereto reasonably acceptable to BIF and FDB (the "Proxy
Statement-Prospectus"), prepared by Newco, and reasonably acceptable to BIF and
FDB, for use in connection with the meetings of the stockholders of BIF and FDB
referred to in Sections 6.4 and 7.4, respectively, of this Agreement, all in
accordance with the rules and regulations of the SEC. Newco shall, as soon as
practicable after the execution of this Agreement, make all filings required to
obtain all Blue Sky permits, authorizations, consents or approvals required for
the issuance of the Newco Common Stock. In advance of any filing made under this
Section, FDB and BIF and their respective counsel shall be provided with the
opportunity to comment thereon, and FDB, BIF and Newco each agree promptly to
advise each other and each other's counsel of any material communication
received by it or its counsel from the SEC or any other regulatory authorities
with respect to such filings.
SECTION 11.2 COOPERATION. Each of FDB and BIF and their respective
Subsidiaries and Newco will fully and promptly cooperate with each other and
their respective counsel and accountants in connection with any steps to be
taken as part of their obligations under this Agreement.
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SECTION 11.3 CUSTOMER AND EMPLOYEE RELATIONSHIPS. Each of FDB and
BIF agrees that its respective representatives may jointly:
(a) participate in meetings or discussions with officers and
employees of BIF and FDB and their Subsidiaries in connection with employment
opportunities with Newco after the Effective Time; and
(b) contact Persons having dealings with BIF or FDB or any of its
respective Subsidiaries for the purpose of informing such Persons of the
services to be offered by Newco after the Effective Time.
SECTION 11.4 POOLING TREATMENT. The parties agree to cooperate and
to take such actions as are reasonably necessary to permit Newco properly to
account for the transaction contemplated by this Agreement as a
pooling-of-interests.
SECTION 11.5 EXPENSES. Except as otherwise provided herein, all
costs and expenses incurred by a party hereto shall be borne by such party,
including the fees of their respective accountants and attorneys. Organizational
expenses of Newco and reasonable expenses incurred in its performance of this
Agreement (but not including attorneys fees) shall be divided equally between
BIF and FDB and shall be considered expenses of each for purposes of Sections
8.11 and 9.11.
SECTION 11.6 PUBLICITY. Prior to the Effective Time, the parties
hereto will consult with each other before issuing any press releases or
otherwise making any public statements with respect to this Agreement or the
transactions contemplated hereby and shall not issue any such press release or
make any such public statement without the prior consent of the other parties,
except as may be required by law.
SECTION 11.7 NEWCO EMPLOYEE BENEFITS. FDB and BIF agree to cooperate
to determine prior to the Closing the types of benefits to be offered after the
Effective Time by Newco to former employees of BIF and FDB who become employees
of Newco.
SECTION 11.8 DIRECTOR AND OFFICER LIABILITY COVERAGE. FDB and BIF
agree to cooperate to attempt to obtain after the Effective Time directors' and
officers' liability insurance coverage for the officers and directors of Newco,
to the extent the same is economically practicable. Any such coverage shall be
on substantially the same terms and conditions and provide the same coverage
against personal liability for actions taken after the Effective Time as the
most protective coverage which is currently provided to officers and directors
of either BIF or FDB. Such coverage may be provided through an insurance policy
or through an agreement by Newco to indemnify such officers and directors. FDB
and BIF also agree to cooperate to attempt to obtain as of the Effective Time
and to maintain in effect for a period of not less than three (3) years after
the Effective Time directors' and officers' liability insurance coverage for the
officers and directors of each of FDB and BIF with respect to actions taken by
them prior to the Effective to the extent the same is economically practicable
("Tail Coverage"). Notwithstanding any such Tail Coverage, the parties further
agree that after the Effective Time Newco will indemnify the current and past
officers and directors of FDB and BIF for all actions taken by them prior to the
Effective Time in their
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respective capacities as officers and directors of FDB and BIF to the same
extent as the indemnification provided by FDB or BIF to its respective officers
and directors as of the time immediately prior to the Effective Time.
SECTION 11.9 ACTIONS BY NEWCO. Prior to the date hereof, FDB and BIF
have incorporated Newco under Illinois law, and Newco has issued one half of
Newco's capital stock to each of BIF and FDB. BIF and FDB agree that from and
after the date hereof they shall each cause Newco to take all other corporate
and other actions that are necessary for Newco to comply with its respective
obligations under this Agreement and to effectuate the Merger and the other
transactions contemplated by this Agreement.
SECTION 11.10 EMPLOYMENT AGREEMENT. FDB and BIF shall cause Newco to
enter into an employment agreement, to become effective at the Effective Time,
with Phillip Wise which will embody the terms set forth in Exhibit J hereto.
ARTICLE 12
REGULATORY APPROVALS
SECTION 12.1 INITIAL FILINGS. FDB and BIF shall use all reasonable
efforts to make as soon as practicable all appropriate initial filings necessary
to obtain the regulatory approvals referred to in Section 12.2 at such time as
they reasonably believe that such filings would be accepted and approved by the
appropriate regulatory agencies. FDB and BIF shall in good faith pursue the
regulatory approvals necessary to consummate the transactions contemplated in
this Agreement. FDB and BIF and their respective counsel shall be provided with
a copy of each application or document filed with federal or state regulatory
officials to obtain such approvals.
SECTION 12.2 NECESSARY APPROVALS. FDB and BIF shall mutually agree
upon the parties who will have primary responsibility for preparation of the
Registration Statement and for the necessary applications for regulatory
approval of the transactions contemplated in this Agreement, including, but not
limited to, the preparation of an application or any amendment thereto or any
other required statements or documents filed or to be filed by any party with:
(a) the Federal Reserve pursuant to the BHCA; and (b) any other party or
governmental authority pursuant to any applicable law or regulation, for
authority to consummate the transactions contemplated by this Agreement. Each of
FDB and BIF agrees to cooperate with the other and to use all reasonable efforts
to assist the other in preparing the Registration Statement and such
applications and in pursuit of such approvals.
ARTICLE 13
TERMINATION AND ABANDONMENT
SECTION 13.1 TERMINATION OF AGREEMENT. This Agreement may be
terminated only as set forth below:
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(a) by mutual consent of the Boards of Directors of BIF and FDB,
each evidenced by appropriate written resolutions; or
(b) by BIF by giving written notice of such termination to FDB, (i)
if there has been (A) a material breach of any covenant herein (except for
breaches of Section 7.4 or 7.9, which are separately addressed in Section
13.1(e)) on the part of FDB which has not been cured or adequate assurance of
cure given, in either case within thirty (30) Business Days following notice of
such breach from BIF, unless such breach or failure is a result of the failure
by BIF to perform and comply in all material respects with any of its material
obligations under this Agreement which are to be performed or complied with by
it prior to or on the date required hereunder; or (B) a breach of a
representation or warranty of FDB herein which (individually or, together with
other such breaches, in the aggregate) affect or could reasonably be expected to
have a Material Adverse Effect on Newco following the consummation of the
Merger, and which, in the reasonable opinion of the BIF Board of Directors, by
its nature cannot be cured on or prior to the Termination Date, or (ii) if there
shall have occurred after the date of this Agreement, any change in any law,
rule or regulation, or after the date of this Agreement there shall have been
any decision or action by any court, government or governmental agency
(including, without limitation, any bank regulatory authority), that could
reasonably be expected to prevent or delay consummation of the Merger beyond the
Termination Date; or
(c) by FDB by giving written notice of such termination to BIF, (i)
if there has been (A) a material breach of any covenant herein (except for
breaches of Section 6.4 or 6.9 which are separately addressed in Section
13.1(f)) on the part of BIF which has not been cured or adequate assurance of
cure given, in either case within thirty (30) Business Days following notice of
such breach from FDB, unless such breach or failure is a result of the failure
by FDB to perform and comply in all material respects with any of its material
obligations under this Agreement which are to be performed or complied with by
it prior to or on the date required hereunder; or (B) a breach of a
representation or warranty of BIF herein which (individually or, together with
other such breaches, in the aggregate) affect or could reasonably be expected to
affect in a material and adverse manner the business and affairs of Newco, on a
consolidated basis, following the consummation of the Merger, and which, in the
reasonable opinion of the FDB Board of Directors, by its nature cannot be cured
on or prior to the Termination Date, or (ii) if there shall have occurred after
the date of this Agreement, any change in any law, rule or regulation, or after
the date of this Agreement there shall have been any decision or action by any
court, government or governmental agency (including, without limitation, any
bank regulatory authority), that could reasonably be expected to prevent or
delay consummation of the Merger beyond the Termination Date; or
(d) by BIF or FDB, by giving written notice of such termination to
the other party or parties, if (i) the Federal Reserve, the Commissioner or any
other applicable governmental authority whose approval is required for
consummation of the Merger has denied approval of the Merger and such denial has
become final and nonappealable, (ii) any application, filing or notice for a
regulatory approval has been withdrawn at the request or recommendation of the
applicable governmental authority and a petition for rehearing shall not have
been granted or an amended application shall not have been accepted for filing
by the applicable governmental authority within the sixty (60) day period
following such withdrawal, or (iii) the Effective Time shall not
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have occurred at or before 11:59 p.m. on the Termination Date, provided, however
(and without limiting the applicability, if any, of the provisions of Section
13.2 below, with respect to the occurrence of any event described in clauses (i)
or (ii) above), that the right to terminate this Agreement under this Section
13.1(d) shall not be available to any party hereto whose failure to fulfill any
of its obligations (excluding warranties and representations) under this
Agreement has been the cause of or resulted in the occurrence of the event
described in clause (iii) above; or
(e) by BIF, by giving written notice of such termination to FDB, and
subject to the special termination fee set forth in Section 13.5(a), (i) if FDB
breaches its obligations under Section 7.9, or (ii) if FDB breaches any of its
obligations under Section 7.4 to call a stockholders' meeting to vote on, and to
recommend to its stockholders to vote to approve, this Agreement and the
transactions contemplated hereby, including the Merger; or
(f) by FDB, by giving written notice of such termination to BIF, and
subject to the special termination fee set forth in Section 13.5(b), (i) if BIF
breaches its obligations under Section 6.9, or (ii) if BIF breaches any of its
obligations under Section 6.4 to call a stockholders' meeting to vote on, and to
recommend to its stockholders to vote to approve, this Agreement and the
transactions contemplated hereby, including the Merger.
(g) by BIF, by giving written notice of such termination to FDB, and
subject to the special termination fee set forth in Section 13.5(c), if BIF
receives an Unsolicited BIF Proposal that is determined in good faith by the BIF
Board of Directors, after consultation with BIF's financial advisor, is on terms
that are more favorable to the stockholders of BIF than the Merger and has a
reasonable prospect of being consummated in accordance with its terms (a
"Superior BIF Proposal"); provided, however, that BIF shall not be permitted to
terminate this Agreement pursuant to this Section 13.1(g) unless BIF shall have
given FDB five (5) Business Days' prior written notice thereof (or, if there are
less than five (5) Business Days remaining prior to the Closing, written notice
prior to the Closing) of its intent to so terminate this Agreement pursuant to
this Section 13.1(g), together with a summary of the terms of, and the identity
of the Person making, such Superior BIF Proposal; or
(h) by FDB, by giving written notice of such termination to BIF, and
subject to the special termination fee set forth in Section 13.5(d), if FDB
receives an Unsolicited FDB Proposal that is determined in good faith by the FDB
Board of Directors, after consultation with FDB's financial advisor, is on terms
that are more favorable to the stockholders of FDB than the Merger and has a
reasonable prospect of being consummated in accordance with its terms (a
"Superior FDB Proposal"), provided, however, that FDB shall not be permitted to
terminate this Agreement pursuant to this Section 13.1(h) unless FDB shall have
given BIF five (5) Business Days' prior written notice thereof (or, if there are
less than five (5) Business Days remaining prior to the Closing, written notice
prior to the Closing) of its intent to so terminate this Agreement pursuant to
this Section 13.1(h), together with a summary of the terms of, and the identity
of the Person making, such Superior FDB Proposal; or
(i) by BIF, by giving written notice of such termination to FDB, and
subject to the special termination fee set forth in Section 13.5(b), if the
fairness opinion provided for in Section 8.12 shall have been withdrawn prior to
the Closing; or
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(j) by FDB, by giving written notice of such termination to BIF, and
subject to the special termination fee set forth in Section 13.5(a), if the
fairness opinion provided for in Section 9.12 shall have been withdrawn prior to
the Closing; or
(k) by BIF as provided in Section 2.10(b); or
(l) by FDB as provided in Section 2.10(a).
SECTION 13.2 EFFECT OF TERMINATION OR ABANDONMENT. In the event of
the lawful termination of this Agreement and the abandonment of the Merger
pursuant to Section 13.1, this Agreement shall become null and void, BIF shall
bear all BIF Transactional Expenses, FDB shall bear all FDB Transactional
Expenses, and there shall be no liability of one party to the other or any
restrictions on the future activities on the part of any party hereto, or its
directors, officers or stockholders, except for the obligations of BIF and FDB
concerning confidentiality referred to in Sections 6.1 and 7.1, respectively,
and except as provided under Sections 13.3, 13.4 and 13.5.
SECTION 13.3 PAYMENTS TO FDB. Subject to the further provisions of
this Section, if: (a) FDB lawfully terminates this Agreement pursuant to Section
13.1(c) or (f); or (b) BIF lawfully terminates this Agreement pursuant to
Section 13.1(i), then in either case, BIF shall pay to FDB, upon its written
demand, the FDB Transactional Expenses in an amount not to exceed $500,000, and
an additional sum equal to $1,500,000 (the "BIF Base Termination Fee"), by wire
transfer of immediately available funds to such account as FDB shall designate.
Such sums shall constitute liquidated damages and the receipt thereof shall be
the sole and exclusive remedy of FDB and the FDB Subsidiaries against BIF, the
BIF Subsidiaries, and their respective officers, directors, employees and
stockholders for any claims arising from or relating in any way to this
Agreement or the transactions contemplated herein; provided, however, that
nothing herein shall preclude or bar FDB from asserting or enforcing any such
claim against any Person other than BIF, the BIF Subsidiaries and their
respective officers, directors, employees and stockholders. Notwithstanding the
foregoing, this Section 13.3 shall not require (x) BIF to pay any BIF Base
Termination Fee or FDB Transactional Expenses if the Merger is not consummated
as a result of the termination of this Agreement by the mutual consent of FDB
and BIF pursuant to Section 13.1(a), or as a result of the lawful termination of
this Agreement by FDB or BIF pursuant to Section 13.1(d), or as a result of the
lawful termination of this Agreement by FDB pursuant to Section 2.10(a) or
Section 13.1(c)(ii); or (y) BIF to pay any BIF Base Termination Fee if the
Merger is not consummated as a result of the lawful termination of this
Agreement by FDB pursuant to Section 13.1(c)(i)(B), and such termination is
based solely upon a material but unintentional breach by BIF of any
representation or warranty, provided, however, in such event, BIF shall remain
obligated to pay the FDB Transactional Expenses, but only up to a maximum amount
of $250,000.
SECTION 13.4 PAYMENTS TO BIF. Subject to the further provisions of
this Section, if: (a) BIF lawfully terminates this Agreement pursuant to Section
13.1(b) or (e); or (b) FDB lawfully terminates this Agreement pursuant to
Section 13.1(j), then in either case, FDB shall pay to BIF, upon its written
demand, the BIF Transactional Expenses in an amount not to exceed
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$500,000, and an additional sum equal to $1,500,000 (the "FDB Base Termination
Fee"), by wire transfer of immediately available funds to such account as BIF
shall designate. Such sums shall constitute liquidated damages and the receipt
thereof shall be the sole and exclusive remedy of BIF and the BIF Subsidiaries
against FDB, the FDB Subsidiaries and their respective officers, directors,
employees and stockholders for any claims arising from or relating in any way to
this Agreement or the transactions contemplated herein; provided, however, that
nothing herein shall preclude or bar BIF from asserting or enforcing any such
claim against any Person other than FDB, the FDB Subsidiaries and their
respective officers, directors, employees and stockholders. Notwithstanding the
foregoing, this Section 13.4 shall not require (x) FDB to pay any FDB Base
Termination Fee or BIF Transactional Expenses if the Merger is not consummated
as a result of the termination of this Agreement by the mutual consent of FDB
and BIF pursuant to Section 13.1(a), or as a result of the lawful termination of
this Agreement by FDB or BIF pursuant to Section 13.1(d), or as a result of the
lawful termination of this Agreement by BIF pursuant to Section 2.10(b) or
Section 13.1(b)(ii); or (y) FDB to pay any FDB Base Termination Fee if the
Merger is not consummated as a result of the lawful termination of this
Agreement by BIF pursuant to Section 13.1(b)(i)(B), and such termination is
based solely upon a material but unintentional breach by FDB of any
representation or warranty, provided, however, in such event, FDB shall remain
obligated to pay the BIF Transactional Expenses, but only up to a maximum amount
of $250,000.
SECTION 13.5 SPECIAL TERMINATION FEES. (a) If this Agreement is
lawfully terminated by BIF pursuant to Section 13.1(b)(i) or (e), or by FDB
pursuant to Section 13.1(j), and within twelve (12) months after such
termination FDB shall enter into a letter of intent or definitive written
agreement with any Person (other than BIF and its Affiliates) with respect to an
acquisition of not less than thirty-five percent (35%) of the outstanding shares
of FDB Common Stock or all or substantially all of the assets of FDB or FNB, and
after giving credit for any prior payment under Section 13.4, FDB shall pay to
BIF, within ten (10) Business Days after the execution of such letter of intent
or definitive agreement, the amount of $3.0 million plus the BIF Transactional
Expenses up to $500,000 by wire transfer of immediately available funds to such
account as BIF shall designate. Notwithstanding the foregoing, this Section
13.5(a) shall not apply in the event that BIF lawfully terminates this Agreement
pursuant to Section 13.1(b)(i)(B) unless FDB intentionally breached or caused
the applicable warranty or representation to be breached.
(b) If this Agreement is lawfully terminated by FDB pursuant to
Section 13.1(c)(i) or (f), or by BIF pursuant to Section 13.1(i), and within
twelve (12) months after such termination BIF shall enter into a letter of
intent or definitive written agreement with any Person (other than FDB and its
Affiliates) with respect to an acquisition of not less than thirty-five percent
(35%) of the outstanding shares of BIF Common Stock or all or substantially all
of the assets of BIF or BKI, and after giving credit for any prior payment under
Section 13.3, BIF shall pay to FDB, within ten (10) Business Days after the
execution of such letter of intent or definitive agreement, the amount of $3.0
million plus the FDB Transactional Expenses up to $500,000 by wire transfer of
immediately available funds to such account as FDB shall designate.
Notwithstanding the foregoing, this Section 13.5(b) shall not apply in the event
that FDB lawfully terminates this Agreement pursuant to Section 13.1(c)(i)(B)
unless BIF intentionally breached or caused the applicable warranty or
representation to be breached.
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(c) If this Agreement is terminated by BIF pursuant to Section
13.1(g), and in lieu of any payment under Sections 13.3 or 13.5 (b), BIF shall
pay to FDB, within ten (10) Business Days after the occurrence of any such
termination by BIF pursuant to Section 13.1(g), the amount of $4.0 million plus
the FDB Transactional Expenses up to $500,000 by wire transfer of immediately
available funds to such account as FDB shall designate.
(d) If this Agreement is terminated by FDB pursuant to Section
13.1(h), and in lieu of any payment under Sections 13.4 or 13.5(a), FDB shall
pay to BIF, within ten (10) Business Days after the occurrence of any such
termination by FDB pursuant to Section 13.1(h), the amount of $4.0 million plus
the FDB Transactional Expenses up to $500,000 by wire transfer of immediately
available funds to such account as BIF shall designate.
(e) All payments made pursuant to this Section shall constitute
liquidated damages and the receipt thereof shall be the sole and exclusive
remedy of the receiving party against the party making such payment, its
Affiliates and their respective directors, officers and stockholders for any
claims arising out of or relating in any way to this Agreement or the
transactions contemplated herein; provided, however, that nothing herein shall
preclude or bar the party receiving such payment from asserting or enforcing any
such claim against any Person other than the party making such payment, such
party's Affiliates and their respective officers, directors, employees and
stockholders.
ARTICLE 14
MISCELLANEOUS
SECTION 14.1 GOVERNING LAW. All questions concerning the
construction, validity and interpretation of this Agreement, and the performance
of the obligations imposed by this Agreement shall be governed by the internal
laws of the State of Illinois applicable to contracts made and wholly to be
performed in such state without regard to conflicts of laws, except that the law
of the state of Delaware shall apply to all matters of corporate law and except
to the extent superseded by federal law.
SECTION 14.2 ASSIGNMENT. Neither this Agreement nor any of the
rights or obligations hereunder may be assigned, in whole or in part, by any of
the parties hereto without the prior written consent of the other parties hereto
and any purported assignment in violation hereof shall be void and of no effect.
SECTION 14.3 AMENDMENT AND MODIFICATION. The parties may by written
agreement signed by FDB and FDB: (a) extend the time for the performance of any
of the obligations or other acts of the parties hereto; (b) waive any
inaccuracies in the representations or warranties contained in this Agreement or
in any document delivered pursuant to this Agreement; and (c) waive compliance
with or modify, amend or supplement any of the conditions, covenants,
agreements, representations or warranties contained in this Agreement or waive
or modify performance of any of the obligations of any of the parties hereto,
which are for the benefit of the waiving party, provided, however, that no such
modification, amendment or supplement agreed to after authorization of this
Agreement by the stockholders of FDB or FDB shall affect
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the rights of such respective stockholders in any manner which is materially
adverse to such stockholders. The failure of any party hereto to enforce at any
time any provision of this Agreement shall not be construed to be a waiver of
such provision, nor in any way affect the validity of this Agreement or any part
hereof or the right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to constitute
a waiver of any other or subsequent breach.
SECTION 14.4 NOTICES. All notices, requests and other communications
hereunder shall be in writing (which shall include telecopier communication) and
shall be deemed to have been duly given if delivered by hand or by overnight
express delivery service, mailed certified or registered mail with first class
postage prepaid or telecopied if confirmed immediately thereafter by also
mailing a copy of any notice, request or other communication by certified or
registered mail with first class postage prepaid:
(a) If to FDB or Newco, to:
First Decatur Bancshares, Inc.
130 N. Water Street
Decatur, Illinois 62523-1376
Attention: John W. Luttrell
Chairman of the Board
Telephone: (217) 424-1111
Telecopier: (217) 425-8356
with copies to:
Howard & Howard Attorneys PC
321 Liberty Street, Suite 200
Peoria, Illinois 61602
Attention: Theodore L. Eissfeldt, Esq.
Telephone: (309) 672-1483
Telecopier: (309) 672-1568
or to such other Person and place as FDB shall furnish to FDB in writing; or
(b) if to BIF or Newco, to:
BankIllinois Financial Corporation
100 West University Avenue
Box 128
Champaign, Illinois 61820-3511
Attention: Gregory B. Lykins
Chairman of the Board
Telephone: (217) 351-6500
Telecopier: (217) 351-7188
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with copies to:
Barack Ferrazzano Kirschbaum Perlman & Nagelberg
333 West Wacker
Suite 2700
Chicago, Illinois 60606
Attention: James J. Brennan, Esq.
Dennis R. Wendte, Esq.
Telephone: (312) 984-3100
Telecopier: (312) 984-3220
or to such other Person or place as FDB or FDB shall furnish to FDB or FDB shall
furnish to FDB and FDB in writing. Except as otherwise provided herein, all such
notices, requests or other communications shall be effective: (i) if delivered
by hand, when delivered; (ii) if mailed in the manner provided in this Section,
five (5) Business Days after deposit with the United States Postal Service;
(iii) if delivered by overnight express delivery service, on the next Business
Day after deposit with such service; (iv) if by telecopier, on the next Business
Day if also confirmed by mail in the manner provided in this Section.
SECTION 14.5 HEADINGS. The table of contents and the captions and
headings of articles, sections, schedules and exhibits appearing in or attached
to this Agreement have been inserted solely for convenience of reference and
shall not be considered a part of this Agreement nor shall any of them affect
the meaning or interpretation of this Agreement or any of its provisions.
SECTION 14.6 ENTIRE AGREEMENT. This Agreement and any documents
executed by the parties pursuant to this Agreement and referred to herein
constitute the entire understanding and agreement of the parties hereto and
supersede all other prior agreements and understandings, written or oral,
relating to such subject matter between the parties, except for the Joint
Confidentiality Agreement between FDB and FDB dated July 9, 1999. This Agreement
and every representation, warranty, covenant, agreement and provision hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
SECTION 14.7 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement unless the
consummation of the transactions contemplated hereby is adversely affected
thereby.
SECTION 14.8 FURTHER INSTRUMENTS. The parties hereto will, at or
before the Effective Time, execute and deliver such further instruments as may
be reasonably requested by any other party which are necessary to or appropriate
with respect to the consummation of the transactions contemplated by this
Agreement.
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SECTION 14.9 COUNTERPARTS. This Agreement and any amendments thereto
may be executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
SECTION 14.10 ALL REASONABLE EFFORTS. Each party represents and
warrants that it will use all reasonable efforts to bring about the transactions
contemplated by this Agreement as soon as practicable provided that this Section
shall not obligate FDB or FDB to remedy any breach of any of its
representations, warranties and covenants herein. In the event that any party
becomes aware of the occurrence or impending occurrence of any event which would
constitute or cause a breach by it of any of the representations or warranties
herein, or would have constituted or caused a breach by it of any of the
representations or warranties herein, had such an event occurred or been known
prior to the date hereof, said party shall immediately give detailed and written
notice thereof to the other party.
SECTION 14.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as
otherwise expressly provided herein, the covenants, representations and
warranties contained in this Agreement shall survive only until the Effective
Time.
SECTION 14.12 NO THIRD PARTY BENEFICIARIES. This Agreement is not
intended to and shall not create any rights in or confer any benefits upon any
Person or entity other than the parties hereto.
[THIS SPACE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers as of the day and year first written
above.
ATTEST: FIRST DECATUR BANCSHARES, INC.
By: /s/ Pete Grosso By: /s/ John W. Luttrell
--------------------------------- ---------------------------------
Name: Pete Grosso John W. Luttrell
Secretary Chairman
ATTEST: BANKILLINOIS FINANCIAL
CORPORATION
By: /s/ Teresa M. Marsh By: /s/ Gregory B. Lykins
--------------------------------- ---------------------------------
Name: Teresa M. Marsh Gregory B. Lykins
Secretary Chairman
ATTEST: MAIN STREET TRUST, INC.
By: /s/ Teresa M. Marsh By: /s/ Van A. Dukeman
--------------------------------- ---------------------------------
Name: Teresa M. Marsh Name: Van A. Dukeman
Secretary President & CEO
61
EXHIBIT 99.1
[LOGO] [LOGO]
BANKILLINOIS FINANCIAL CORPORATION * FIRST DECATUR BANCSHARES, INC.
CONTACT: CONTACT:
GREGORY B. LYKINS, Chairman JOHN W. LUTTRELL, Chairman & CEO
VAN A. DUKEMAN, President & CEO PHILIP C. WISE, President
BankIllinois Financial Corporation First Decatur Bancshares, Inc.
P. O. Box 4028, Champaign, IL 61824-4028 130 N. Water St., Decatur, IL 62523
PHONE: 217.351.6506 PHONE: 217.425.8221
FAX: 217.351.6651 FAX: 217.425.8312
RELEASE DATE: AUGUST 13, 1999
FOR IMMEDIATE RELEASE
BANKILLINOIS FINANCIAL CORPORATION,
FIRST DECATUR BANCSHARES, INC.
AGREE TO MERGE
MERGER OF TWO STRONG COMMUNITY-BANKING ORGANIZATIONS
WILL CREATE BILLION DOLLAR CENTRAL ILLINOIS FINANCIAL SERVICES COMPANY
BankIllinois Financial Corporation ("BIFC") and First Decatur Bancshares, Inc.
("FDB"), today announced the signing of a definitive merger agreement which
provides for the merger of the two companies into a newly-organized bank holding
company to be known as MAIN STREET TRUST, INC." ("MAIN STREET").
BIFC is the parent company of BankIllinois in Champaign, Illinois, and FDB is
the parent company of First National Bank of Decatur, First Trust Bank of
Shelbyville and FirsTech, Inc. of Decatur. These subsidiaries, including the
three banks, will retain their current names and separate charters after the
merger of their parent companies.
The merger was announced in a joint statement issued by Gregory B. Lykins, the
Chairman of BIFC, Van A. Dukeman, the President and CEO of BIFC, John W.
Luttrell, the Chairman and CEO of FDB, and Phillip C. Wise, the President of
FDB. They said the transaction will be a "merger of equals," with the
stockholders of each company exchanging their existing shares of stock for
shares of stock in Main Street.
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Stockholders of BIFC will receive one share of MAIN STREET for each share of
BIFC, and stockholders of FDB will receive 1.638 shares of MAIN STREET for each
share of FDB. BIFC, which currently has approximately 5,775,000 fully diluted
shares outstanding, last traded at $23.75 per share. FDB, which currently has
approximately 2,780,000 fully diluted shares outstanding, last traded at $29.00
per share. The transaction will be accounted for as a "pooling of interests",
and is expected to be immediately accretive to the consolidated operating
earnings of BIFC and FDB. The merger is expected to close in late 1999 or early
2000. The transaction is structured to be a tax-free exchange for stockholders
of both companies.
As of June 30, 1999, BIFC and FDB had combined total banking assets of over $1
billion, combined stockholders' equity of $115 million, and a total of eighteen
(18) offices located throughout Champaign, Macon and Shelby Counties. After the
merger, MAIN STREET's deposit market share in Champaign, Macon and Shelby
Counties will be approximately 17% of total deposits, ranking it #1 in this
combined area. In addition to banking assets, the combined Trust & Investments
Divisions of the two organizations will have over $1 billion in trust and
investment assets under management.
Luttrell said that "we are enthusiastic about the prospect of joining forces to
create the premier financial services organization in Central Illinois." He
noted that "the two organizations are a perfect fit - we are each focused on
serving our local communities, have similar values, cultures and business
philosophies, and have had a very positive relationship for many years, often
pooling our resources to make larger loans to local customers." "Through these
and other efforts," he said, "we have developed a very consistent and trusting
relationship."
Luttrell added that "The Champaign and Decatur banks have each provided banking
services to their respective communities for over 125 years, and the Shelbyville
bank for over 90 years. We will continue this tradition of community banking in
our respective market areas."
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Dukeman said, "the new combined organization will have a better opportunity for
enhanced growth than would have occurred on an independent basis." He said that,
"in today's competitive financial services environment, where large out of area
banks are acquiring local community banks and other non-banking competitors are
entering our markets, the affiliation of two very well-capitalized and
profitable community banks will allow us to compete even more effectively and
serve our clients even better. The larger organization will expand our ability
to serve the needs of our clients, particularly in our niches of investment
management, business banking, mortgage banking, and bill processing services
(FirsTech, Inc.) We see this as a tremendous opportunity for both organizations,
and our respective stockholders, customers, employees, and the communities in
which we operate."
The Board of the Directors of Main Street will consist of seven directors from
BIFC and six directors from FDB. Mr. Luttrell, 67, will be Chairman of Main
Street. Mr. Lykins, 52, will be Vice Chairman of Main Street, and will succeed
Mr. Luttrell as Chairman within three years. Mr. Dukeman, 40, will be Main
Street's President and CEO. Mr. Wise, 60, will serve as Executive Vice President
of Main Street.
Mr. Lykins said he believes that the future for the combined organization is
excellent. "We are very confident of the economy of the Midwest and look forward
to delivering financial services within and outside of Illinois. We are also
confident that organizing our people into a unified team, our combined market
presence, and the strong capital position of the new company will allow us to
continue to provide Champaign, Macon and Shelby Counties with local
decision-making and quality financial services."
The merger is subject to the approval of the stockholders of both companies,
registration of Main Street's stock with the Securities and Exchange Commission,
regulatory approvals of state and federal banking agencies and other conditions.
Each organization will continue to use its existing Y2K compliant data
processing system beyond year-end 1999.
3
# # #
THE FOLLOWING SUMMARY FINANCIAL DATA IS A PART OF THE PRESS RELEASE.
<PAGE>
SUMMARY FINANCIAL DATA
BIFC FDB
YTD JUNE 30, 1999 YTD JUNE 30, 1999
----------------- -----------------
Earnings Summary:
Basic Earnings Per Share $ 0.67 $ 1.13
Diluted Earnings Per Share $ 0.65 $ 1.13
Net Income (in millions) $3,756 $3,128
Return on Average Assets 1.39% 1.39%
Balance Sheet Data (in millions):
Total Loans $ 319 $ 229
Total Deposits 394 372
Total Assets 540 461
Shareholders' Equity 61 53
# # # # # # # # # # # # # # # # # # # # # # #
NOTE: This news release contains forward-looking statements which are
subject to numerous assumptions, risk and uncertainties. Actual
results could differ from those contained in or implied by such
forward-looking statements for a variety of factors including: (1)
developments in general economic conditions, including interest rate
and currency fluctuations, market fluctuations and perceptions, and
inflation; (2) changes in the economy which could materially change
anticipated credit quality trends and the ability to generate loans
and deposits; (3) a failure of the capital markets to function
consistently with customary levels; (4) a delay in or an inability
to execute strategic initiatives designed to grow revenues and/or
manage expenses; (5) legislative developments, including changes in
laws concerning taxes, banking, securities, insurance and other
aspects of the industry; (6) changes in the competitive environment
for financial services organizations and the company's ability to
adapt to such changes; and (7) the company's ability and resources
to effect articulated business strategies and manage risks
associated with the Year 2000.
4
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BANKILLINOIS FINANCIAL CORPORATION FIRST DECATUR BANCSHARES, INC.
Legal Counsel: Barack, Ferrazzano, Kirschbaum, Howard & Howard
Perlman, & Nagelberg
Investment
Bankers: Keefe, Bruyette & Woods ABN*AMRO
