UNITED STATES
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 (Date of earliest event reported): January 18, 1996
PREMIER FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
_________________________
Delaware 0-13425 36-2852290
(State or other jurisdiction (Commission file (I.R.S. employer
of incorporation or number) identification no.)
organization)
27 West Main Street 61032
Freeport, Illinois (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, include area code: (815) 233-3671
Not Applicable
(Former name or former address, if changed since last year)
Page 1 of 106 pages
Exhibit Index at sequentially numbered page 4.
<PAGE> 2
Item 5. Other Events.
------------
On January 18, 1996, Premier Financial Services, Inc., a
Delaware corporation ("Registrant"), and Northern Illinois Financial
Corporation, an Illinois corporation ("Northern Illinois"), announced
that they had reached an understanding on substantially all material
terms to merge their assets and operations into a new financial
services organization to be named Grand Premier Financial, Inc., as
more fully described in the Press Release filed as Exhibit 99 to this
Report. On January 22, 1996, (i) the Registrant, Northern Illinois
and Grand Premier Financial, Inc., a newly formed Delaware corporation
("GPF"), entered into an Agreement and Plan of Reorganization (the
"Merger Agreement"), providing for the merger of the Registrant and
Northern Illinois with and into GPF, and (ii) the Registrant and
Northern Illinois entered into Stock Option Agreements pursuant to
which the Registrant has granted Northern Illinois an option to
acquire, under certain circumstances, up to 19.9% of the outstanding
shares of the common stock of the Registrant, and Northern Illinois
has granted the Registrant an option to acquire, under certain
circumstances, up to 19.9% of the outstanding shares of common stock
of Northern Illinois, subject in each case to the terms and conditions
set forth therein. Copies of the Merger Agreement and the Stock
Option Agreements are filed as exhibits to this Report. Consummation
of the merger is subject to the receipt of required regulatory and
shareholder approvals and the satisfaction of other terms and
conditions set forth in the Merger Agreement.
Item 7(c). Exhibits.
--------
Exhibit 2 Agreement and Plan of Reorganization among
Northern Illinois Financial Corporation, Premier
Financial Services, Inc., and Grand Premier
Financial, Inc., dated January 22, 1996.
Exhibit 10.1 Stock Option Agreement, dated January 22, 1996,
between Northern Illinois Financial Corporation,
as issuer, and Premier Financial Services, Inc.,
as grantee.
Exhibit 10.2 Stock Option Agreement, dated January 22, 1996,
between Premier Financial Services, Inc., as
issuer, and Northern Illinois Financial
Corporation, as grantee.
Exhibit 99 Press Release dated January 18, 1996.
<PAGE> 3
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 thereunto duly authorized.
Premier Financial Services, Inc.
Dated: January 24, 1996 By: /s/ David L. Murray
------------------------------
David L. Murray
Executive Vice President and
Chief Financial Officer
<PAGE> 4
EXHIBIT INDEX
-------------
Exhibit Sequentially
Numbered Page
2 Agreement and Plan of Reorganization
among Northern Illinois Financial
Corporation, Premier Financial Services,
Inc., and Grand Premier Financial, Inc.,
dated January 22, 1996 5
10.1 Stock Option Agreement, dated January 22,
1996, between Northern Illinois Financial
Corporation, as issuer, and Premier Financial
Services, Inc., as grantee. 67
10.2 Stock Option Agreement, dated January 22,
1996, between Premier Financial Services,
Inc., as issuer, and Northern Illinois
Financial Corporation, as grantee. 85
99 Press Release dated January 18, 1996 103
EXHIBIT 2
EXECUTION COPY
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
NORTHERN ILLINOIS FINANCIAL CORPORATION,
PREMIER FINANCIAL SERVICES, INC.
AND
GRAND PREMIER FINANCIAL, INC.
DATED: JANUARY 22, 1996
<PAGE> 6
TABLE OF CONTENTS
Page
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time . . . . . . . . . . . . . . . . . . . . 2
1.3 Effects of the Merger . . . . . . . . . . . . . . . . . 2
1.4 Conversion of Northern Illinois Common Stock, Premier
Common Stock and Premier Preferred Stock; Treatment of
GPF Common Stock . . . . . . . . . . . . . . . . . . . 2
1.5 Options . . . . . . . . . . . . . . . . . . . . . . . . 5
1.6 Certificate of Incorporation . . . . . . . . . . . . . 5
1.7 By-Laws . . . . . . . . . . . . . . . . . . . . . . . . 5
1.8 Tax Consequences . . . . . . . . . . . . . . . . . . . 5
1.9 Plans for Management Succession . . . . . . . . . . . . 6
1.10 Board of Directors; Filling of Vacancies on the Board . 6
1.11 Headquarters of GPF . . . . . . . . . . . . . . . . . . 7
1.12 Share Purchase Rights Agreement . . . . . . . . . . . . 7
1.13 Closing . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 GPF to Make Shares Available . . . . . . . . . . . . . 7
2.2 Exchange of Shares . . . . . . . . . . . . . . . . . . 7
ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
REPRESENTATIONS AND WARRANTIES OF NORTHERN ILLINOIS . . . . . . . 10
3.1 Corporate Organization . . . . . . . . . . . . . . . . 10
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . 11
3.3 Certain Beneficial Owners of Northern Illinois Common
Stock and Premier Common Stock . . . . . . . . . . . . 12
3.4 Authority; No Violation . . . . . . . . . . . . . . . . 12
3.5 Consents and Approvals . . . . . . . . . . . . . . . . 13
3.6 Reports . . . . . . . . . . . . . . . . . . . . . . . . 14
3.7 Financial Statements . . . . . . . . . . . . . . . . . 14
3.8 Broker's Fees . . . . . . . . . . . . . . . . . . . . . 15
3.9 Absence of Certain Changes or Events . . . . . . . . . 15
3.10 Legal Proceedings . . . . . . . . . . . . . . . . . . . 16
3.11 Taxes and Tax Returns . . . . . . . . . . . . . . . . . 16
3.12 Employees . . . . . . . . . . . . . . . . . . . . . . . 17
3.13 SEC Reports . . . . . . . . . . . . . . . . . . . . . . 19
3.14 Compliance with Applicable Law . . . . . . . . . . . . 19
3.15 Certain Contracts . . . . . . . . . . . . . . . . . . . 19
3.16 Agreements with Regulatory Agencies . . . . . . . . . . 21
3.17 Other Activities of Northern Illinois and its
Subsidiaries . . . . . . . . . . . . . . . . . . . . . 21
3.18 Investment Securities . . . . . . . . . . . . . . . . . 22
3.19 Undisclosed Liabilities . . . . . . . . . . . . . . . . 22
3.20 Environmental Liability . . . . . . . . . . . . . . . . 22
3.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . 23
<PAGE> 7
3.22 Loan Loss Reserves . . . . . . . . . . . . . . . . . . 23
3.23 Approval Delays . . . . . . . . . . . . . . . . . . . . 23
3.24 Pooling of Interests . . . . . . . . . . . . . . . . . 23
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
REPRESENTATIONS AND WARRANTIES OF PREMIER . . . . . . . . . . . . 23
4.1 Corporate Organization . . . . . . . . . . . . . . . . 23
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . 24
4.3 Certain Beneficial Owners of Premier Common Stock and
Northern Illinois Common Stock . . . . . . . . . . . . 26
4.4 Authority; No Violation . . . . . . . . . . . . . . . . 26
4.5 Consents and Approvals . . . . . . . . . . . . . . . . 27
4.6 Reports . . . . . . . . . . . . . . . . . . . . . . . . 28
4.7 Financial Statements . . . . . . . . . . . . . . . . . 28
4.8 Broker's Fees . . . . . . . . . . . . . . . . . . . . . 29
4.9 Absence of Certain Changes or Events . . . . . . . . . 29
4.10 Legal Proceedings . . . . . . . . . . . . . . . . . . . 29
4.11 Taxes and Tax Returns . . . . . . . . . . . . . . . . . 30
4.12 Employees . . . . . . . . . . . . . . . . . . . . . . . 31
4.13 SEC Reports . . . . . . . . . . . . . . . . . . . . . . 32
4.14 Compliance with Applicable Law . . . . . . . . . . . . 32
4.15 Certain Contracts . . . . . . . . . . . . . . . . . . . 33
4.16 Agreements with Regulatory Agencies . . . . . . . . . . 34
4.17 Other Activities of Premier and its Subsidiaries . . . 34
4.18 Investment Securities . . . . . . . . . . . . . . . . . 35
4.19 Undisclosed Liabilities . . . . . . . . . . . . . . . . 35
4.20 Environmental Liability . . . . . . . . . . . . . . . . 35
4.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . 36
4.22 Loan Loss Reserves . . . . . . . . . . . . . . . . . . 36
4.23 Approval Delays . . . . . . . . . . . . . . . . . . . . 36
4.24 State Takeover Laws . . . . . . . . . . . . . . . . . . 36
4.25 Pooling of Interests . . . . . . . . . . . . . . . . . 36
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . . . . . . 36
5.1 Conduct of Businesses Prior to the Effective Time . . . 36
5.2 Forbearances . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . 39
6.1 Regulatory Matters; Cooperation with Respect to Filing 39
6.2 Access to Information . . . . . . . . . . . . . . . . . 41
6.3 Stockholders' Approvals . . . . . . . . . . . . . . . . 42
6.4 Legal Conditions to Merger . . . . . . . . . . . . . . 43
6.5 Affiliates; Publication of Combined Financial Results . 43
6.6 Listing of GPF Common Stock . . . . . . . . . . . . . . 43
6.7 Employee Benefit Plans . . . . . . . . . . . . . . . . 43
6.8 Indemnification; Directors' and Officers' Insurance . . 44
6.9 Additional Agreements . . . . . . . . . . . . . . . . . 46
6.10 Advice of Changes . . . . . . . . . . . . . . . . . . . 46
<PAGE> 8
6.11 Dividends . . . . . . . . . . . . . . . . . . . . . . . 46
6.12 No Conduct Inconsistent with this Agreement . . . . . . 47
ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 47
7.1 Conditions to Each Party's Obligation To Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . 47
7.2 Conditions to Obligations of Northern Illinois . . . . 49
7.3 Conditions to Obligations of Premier . . . . . . . . . 51
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . 52
TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . . 52
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . 52
8.2 Effect of Termination . . . . . . . . . . . . . . . . . 54
8.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . 54
8.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . 54
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 55
9.1 Non-survival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . 55
9.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . 55
9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . 55
9.4 Interpretation . . . . . . . . . . . . . . . . . . . . 56
9.5 Counterparts . . . . . . . . . . . . . . . . . . . . . 57
9.6 Entire Agreement . . . . . . . . . . . . . . . . . . . 57
9.7 Governing Law . . . . . . . . . . . . . . . . . . . . . 57
9.9 Publicity . . . . . . . . . . . . . . . . . . . . . . . 57
9.10 Assignment; Third Party Beneficiaries . . . . . . . . . 57
Exhibit A - Form of Northern Illinois Stock Option Agreement
Exhibit B - Form of Premier Stock Option Agreement
Exhibit C - Form of Amended and Restated Certificate
Incorporation of Newco
Exhibit D - Form of By-laws of Newco
Exhibit E - Form of Share Purchase Rights Agreement
Exhibit F - Form of Affiliate Letter
Exhibit G - Form of Agreement Governing Right of First Refusal
Exhibit H - Form of Opinion of Schiff Hardin & Waite
Exhibit I - Form of Opinion of Crowley Barrett & Karaba, Ltd.
<PAGE> 9
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated January 22, 1996, by and
among NORTHERN ILLINOIS FINANCIAL CORPORATION, an Illinois corporation
("Northern Illinois"), PREMIER FINANCIAL SERVICES, INC., a Delaware
corporation ("Premier"), and Grand Premier Financial, Inc., a Delaware
corporation ("GPF").
WHEREAS, the Boards of Directors of Northern Illinois,
Premier and GPF have determined that it is in the best interests of
their respective companies and their stockholders to consummate the
business combination transaction provided for herein in which Northern
Illinois and Premier will each, subject to the terms and conditions
set forth herein, merge with and into GPF (the "Merger"), so that GPF
is the resulting corporation (hereinafter sometimes called the
"Resulting Corporation") in the Merger; and
WHEREAS, it is the intent of the respective Boards of
Directors of Northern Illinois and Premier that the Merger be
structured as a "merger of equals" of Northern Illinois and Premier
and that the Resulting Corporation be governed and operated on this
basis; and
WHEREAS, as a condition to, and immediately after the
execution of, this Agreement, Northern Illinois and Premier are
entering into a Northern Illinois stock option agreement (the
"Northern Illinois Option Agreement") attached hereto as Exhibit A;
and
WHEREAS, as a condition to, and immediately after the
execution of, this Agreement, Northern Illinois and Premier are
entering into a Premier stock option agreement (the "Premier Option
Agreement"; and together with the Northern Illinois Option Agreement,
the "Option Agreements") attached hereto as Exhibit B; and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to
prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of
this Agreement, in accordance with the Delaware General Corporation
Law (the "DGCL") and the Illinois Business Corporation Act of 1983, as
amended (the "IBCA"), at the Effective Time (as defined in Section
1.2), Northern Illinois and Premier shall merge with and into GPF
which shall be the Resulting Corporation in the Merger and shall
continue its corporate existence under the laws of the State of
<PAGE> 10
Delaware. Upon consummation of the Merger, the separate corporate
existence of Northern Illinois and Premier shall terminate.
1.2 Effective Time. The Merger shall become effective upon
the later of (i) the issuance of a certificate of merger by the
Secretary of State of the State of Illinois (the "Illinois
Secretary"), following the filing of articles of merger with such
office, and (ii) the time and date on which a certificate of merger is
filed with the Secretary of State of the State of Delaware (the
"Delaware Secretary"). The parties shall each use reasonable efforts
to cause articles of merger to be filed, and a certificate of merger
to be issued, by the Illinois Secretary and a certificate of merger to
be filed with the Delaware Secretary on the Closing Date. The term
"Effective Time" shall be the date and time when the Merger becomes
effective, in accordance with this Section 1.2.
1.3 Effects of the Merger. At and after the Effective
Time, the Merger shall have the effects set forth in Sections 259 and
261 of the DGCL and Section 11.50 of the IBCA.
1.4 Conversion of Northern Illinois Common Stock, Premier
Common Stock and Premier Preferred Stock; Treatment of GPF Common
Stock. At the Effective Time, in each case, subject to Section
2.2(e), by virtue of the Merger and without any action on the part of
Northern Illinois, Premier or the holder of any of the following
securities:
(a) Each share of the common stock, no par value, of
Northern Illinois (the "Northern Illinois Common Stock") issued
and outstanding immediately prior to the Effective Time (other
than shares of Northern Illinois Common Stock with respect to
which the holders have validly asserted, and not withdrawn or
forfeited, dissenters' rights pursuant to Sections 11.65 and
11.70 of the IBCA ("Dissenting Shares")) shall be converted into
the right to receive 4.250 shares (the "Northern Illinois
Exchange Ratio") of the common stock, par value $0.01 per share,
of GPF (the "GPF Common Stock").
(b) Each share of common stock, par value $5.00 per
share, of Premier (the "Premier Common Stock") issued and
outstanding immediately prior to the Effective Time (other than
shares of Premier Common Stock held in Premier's treasury) shall
be converted into the right to receive 1.116 shares (the "Premier
Exchange Ratio") of GPF Common Stock.
(c) Each share of Series A Perpetual Preferred Stock
of Premier, par value $1.00 per share and with a stated value of
$1,000 per share (the "Premier Series A Perpetual Preferred
Stock"), issued and outstanding immediately prior to the
Effective Time (other than shares of Premier Series A Perpetual
Preferred Stock with respect to which the holders have validly
asserted, and not withdrawn, dissenters' rights pursuant to
2
<PAGE> 11
Section 262 of the DGCL) shall be converted into the right to
receive one share of Series A Perpetual Preferred Stock of GPF,
par value $0.01 per share and with a stated value of $1,000 per
share (the "GPF Series A Perpetual Preferred Stock," and together
with the GPF Series B Perpetual Preferred Stock (as defined
below) and the GPF Series C Perpetual Preferred Stock (as defined
below), the "GPF Preferred Stock"), together with accrued but
unpaid dividends on the Premier Series A Perpetual Preferred
Stock to but not including the Effective Time. The terms of the
GPF Series A Perpetual Preferred Stock shall be substantially
identical to the terms of the Premier Series A Perpetual
Preferred Stock.
(d) Each share of Premier Series B Perpetual Preferred
Stock of Premier, par value $1.00 per share and with a stated
value of $1,000 per share, with a right of conversion into shares
of Premier Common Stock (the "Premier Series B Perpetual
Preferred Stock"), issued and outstanding immediately prior to
the Effective Time (other than shares of Premier Series B
Perpetual Preferred Stock with respect to which the holders have
validly asserted, and not withdrawn, dissenters' rights pursuant
to Section 262 of the DGCL) shall be converted into the right to
receive one share of convertible preferred stock of GPF, par
value $0.01 per share and with a stated value of $1,000 per share
(the "GPF Series B Perpetual Preferred Stock"), together with
accrued but unpaid dividends on the Premier Series B Perpetual
Preferred Stock to but not including the Effective Time. The
terms of the GPF Series B Perpetual Preferred Stock shall be
substantially identical to the terms of the Premier Series B
Perpetual Preferred Stock.
(e) Each share of Series D Perpetual Preferred Stock
of Premier, par value $1.00 per share and with a stated value of
$1,000 per share (the "Series D Perpetual Preferred Stock"),
issued and outstanding immediately prior to the Effective Time
(other than shares of Premier Series D Perpetual Preferred Stock
with respect to which the holders have validly asserted, and not
withdrawn, dissenters' rights pursuant to Section 262 of the
DGCL) shall be converted into the right to receive one share of
perpetual preferred stock of GPF (the "GPF Series C Perpetual
Preferred Stock"), together with accrued but unpaid dividends on
the Premier Series D Perpetual Preferred Stock to but not
including the Effective Time. The terms of the GPF Series C
Perpetual Preferred Stock shall be substantially identical to the
terms of the Premier Series D Perpetual Preferred Stock.
(f) All of the shares of Northern Illinois Common
Stock and Premier Common Stock converted into GPF Common Stock
pursuant to this Article I shall no longer be outstanding and
shall automatically be canceled and shall cease to exist as of
the Effective Time, and each certificate (each a "Common Stock
Certificate") previously representing any such shares of Northern
3
<PAGE> 12
Illinois Common Stock or Premier Common Stock shall thereafter
represent only the right to receive (i) a certificate
representing the number of whole shares of GPF Common Stock and
(ii) cash in lieu of fractional shares into which the shares of
Northern Illinois Common Stock or Premier Common Stock
represented by such Common Stock Certificate have been converted
pursuant to this Section 1.4 and Section 2.2(e). Common Stock
Certificates previously representing shares of Northern Illinois
Common Stock and Premier Common Stock shall be exchanged for
certificates representing whole shares of GPF Common Stock and
cash in lieu of fractional shares issued in consideration
therefor upon the surrender of such Common Stock Certificates in
accordance with Section 2.2, without any interest thereon. If,
prior to the Effective Time, the outstanding shares of Northern
Illinois Common Stock or Premier Common Stock shall have been
increased, decreased, changed into or exchanged for a different
number or kind of shares or securities as a result of a
reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, or other similar
change in capitalization, then an appropriate and proportionate
adjustment shall be made to the Northern Illinois Exchange Ratio
and the Premier Exchange Ratio, respectively.
(g) At the Effective Time, all shares of Premier
Common Stock that are owned by Premier as treasury stock, if any,
shall be canceled and shall cease to exist, and no stock of GPF
or other consideration shall be delivered in exchange therefor.
(h) All of the shares of Premier Series A Perpetual
Preferred Stock, Series B Perpetual Preferred Stock, and Series D
Perpetual Preferred Stock converted into GPF Preferred Stock
pursuant to this Article I shall no longer be outstanding and
shall automatically be canceled and shall cease to exist as of
the Effective Time, and each certificate (each a "Preferred Stock
Certificate") previously representing any such shares of Premier
Preferred Stock shall thereafter represent only the right to
receive a certificate representing the number of whole shares of
corresponding GPF Preferred Stock into which the shares of
Premier Preferred Stock represented by such Preferred Stock
Certificate have been converted pursuant to this Section 1.4.
Preferred Stock Certificates previously representing shares of
Premier Preferred Stock shall be exchanged for certificates
representing whole shares of corresponding GPF Preferred Stock
issued in consideration therefor upon the surrender of such
Preferred Stock Certificates in accordance with Section 2.2
hereof, without any interest thereon.
(i) Any Dissenting Shares shall not be converted
pursuant to this Agreement, and the holders thereof shall be
entitled only to such rights as are granted by Sections 11.65 and
11.70 of the IBCA; provided that if any holder of shares of
Northern Illinois Common Stock shall fail to perfect his or her
4
<PAGE> 13
rights to payment pursuant to Section 11.70 of the IBCA, each
share of Northern Illinois Common Stock held by such holder shall
be converted into the right to receive the consideration
specified in subparagraph (a) of this Section 1.4.
(j) Each share of GPF Common Stock which is issued and
outstanding immediately prior to the Effective Time shall at the
Effective Time be automatically canceled without consideration
and without further action.
1.5 Options. At the Effective Time, each option granted by
Premier to purchase shares of Premier Common Stock which is
outstanding and unexercised immediately prior thereto shall cease to
represent a right to acquire shares of Premier Common Stock and shall
be converted automatically into an option to purchase shares of GPF
Common Stock in an amount and at an exercise price determined as
provided below, subject to the terms of the Premier benefit plans
under which they were issued (collectively, the "Premier Stock Plans")
and the agreements evidencing grants of such options thereunder:
(a) The number of shares of GPF Common Stock to be subject
to each new option shall be equal to the product of the number of
shares of Premier Common Stock subject to the original option and
the Premier Exchange Ratio, provided that any fractional shares
of GPF Common Stock resulting from such multiplication shall be
rounded to the nearest whole share; and
(b) The exercise price per share of GPF Common Stock under
the new option shall be equal to the exercise price per share of
Premier Common Stock under the original option divided by the
Premier Exchange Ratio, provided that such exercise price shall
be rounded down to the nearest whole cent.
1.6 Certificate of Incorporation. Subject to the terms and
conditions of this Agreement, at the Effective Time, an amended and
restated Certificate of Incorporation of GPF shall be filed with the
Delaware Secretary so that the Amended and Restated Certificate of
Incorporation of GPF, substantially in the form attached as Exhibit C
hereto, shall be the Amended and Restated Certificate of Incorporation
of the Resulting Corporation until thereafter amended in accordance
with applicable law.
1.7 By-Laws. Subject to the terms and conditions of this
Agreement, at the Effective Time, the By-Laws of GPF, substantially in
the form attached as Exhibit D hereto, shall be the By-Laws of the
Resulting Corporation until thereafter amended in accordance with
applicable law.
1.8 Tax Consequences. It is intended that the Merger shall
constitute a reorganization within the meaning of Section 368(a)(i)(A)
of the Code, and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code.
5
<PAGE> 14
1.9 Plans for Management Succession. At the Effective
Time, (a) Richard L. Geach shall be the Chief Executive Officer of
GPF, (b) Robert W. Hinman shall be the President and Chief Operating
Officer of GPF, and (c) David L. Murray shall be an Executive Vice
President and Chief Financial Officer of GPF. Mr. Hinman, or such
other person nominated for the office of President by the Northern
Illinois Representatives (as defined in Section 1.10), shall
immediately and without further action of the Board of Directors
become Chief Executive Officer of GPF on the date upon which Mr. Geach
ceases to be Chief Executive Officer of GPF, which date shall in no
event be later than December 31 of the third full calendar year
following the year in which the Effective Time occurs. Nothing in
this Section 1.9 shall preclude the Board of Directors of GPF from
subsequently removing any person appointed as an officer of GPF
pursuant to this Section 1.9.
1.10 Board of Directors; Filling of Vacancies on the Board.
(a) From and after the Effective Time, the Board of Directors of GPF
shall consist of sixteen (16) persons, including Mr. Geach, Mr. Hinman
and Mr. Murray. Seven (7) directors, in addition to Mr. Hinman, shall
have been selected by Northern Illinois (the "Northern Illinois
Representatives"), and six (6) directors, in addition to Mr. Geach and
Mr. Murray, shall have been selected by Premier (the "Premier
Representatives"). The Northern Illinois Representatives and the
Premier Representatives, respectively, shall be divided as equally as
practicable among the three classes of directors of GPF, in accordance
with Schedule 1.10, and shall serve in such capacities until their
successors shall have been elected or appointed and shall have
qualified in accordance with the Amended and Restated Certificate of
Incorporation of GPF and By-laws of GPF and the DGCL. Directors
chosen from among the Northern Illinois Representatives and the
Premier Representatives shall be equally represented on the executive
committee of the Board of Directors.
(b) Prior to the third annual meeting of the stockholders
of GPF, the Northern Illinois Representatives and the Premier
Representatives, respectively, shall have the right to designate (i)
the person or persons to fill any vacancies occurring on the Board of
Directors of GPF as the result of the death, resignation or removal of
any of the Northern Illinois Representatives or the Premier
Representatives, respectively, (ii) the person or persons to be
nominated in place of each of the Northern Illinois Representatives
and Premier Representatives, respectively, whose terms of offices
expire at each of the first three annual meetings of the stockholders
of GPF, and (iii) the person or persons to serve on the executive
committee in place of any Northern Illinois Representatives or Premier
Representatives, respectively, previously appointed to the executive
committee. For purposes of Section 1.9 and this Section 1.10, the
terms "Northern Illinois Representatives" and "Premier
Representatives" shall include any person or persons subsequently
appointed or elected directors of GPF following their designation as
nominees for director by the Northern Illinois Representatives or
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Premier Representatives, respectively, in accordance with the
preceding sentence.
1.11 Headquarters of GPF. At the Effective Time, the
headquarters and principal executive offices of GPF shall be in
Wauconda, Illinois, or in such other place as may be mutually agreed
upon by Northern Illinois and Premier prior to the Effective Time.
1.12 Share Purchase Rights Agreement. At the Effective
Time, GPF shall be a party to a Share Purchase Rights Agreement,
substantially in the form of Exhibit E hereto (the "Rights
Agreement"), and such Rights Agreement shall remain in effect from and
after the Effective Time until such Rights Agreement is amended or
terminated in accordance with its terms.
1.13 Closing. Subject to the terms and conditions of this
Agreement and the Option Agreements, including but not limited to the
provisions of Article VII of this Agreement, the closing of the Merger
(the "Closing") will take place at 10:00 a.m. on a date and at a place
to be specified by the parties, which shall be no later than the last
business day in the calendar month in which all of the conditions
precedent to the Merger set forth in Section 7.1(a), (b), (c) and (e)
have occurred, unless such date is extended by mutual agreement of the
parties (the "Closing Date").
ARTICLE II
EXCHANGE OF SHARES
2.1 GPF to Make Shares Available. At or prior to the
Effective Time, GPF shall deposit, or shall cause to be deposited,
with a bank, trust company or other entity (including any subsidiary
bank or trust company of GPF as of the Effective Time) reasonably
acceptable to each of Northern Illinois and Premier (the "Exchange
Agent"), for the benefit of the holders of Common Stock Certificates
and Preferred Stock Certificates (collectively, the "Certificates"),
for exchange in accordance with this Article II, certificates
representing the shares of GPF Common Stock and GPF Preferred Stock
and cash in lieu of any fractional shares of GPF Common Stock (such
cash and certificates for shares of GPF Common Stock and GPF Preferred
Stock, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange Fund") to be
issued pursuant to Section 1.4 and paid pursuant to Section 2.2(a) in
exchange for outstanding shares of Northern Illinois Common Stock,
Premier Common Stock or Premier Preferred Stock, respectively.
2.2 Exchange of Shares. (a) As soon as practicable after
the Effective Time, and in no event later than ten business days
thereafter, the Exchange Agent shall mail to each holder of record of
one or more Certificates a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent) and instructions for use in effecting the surrender of
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the Certificates in exchange for certificates representing the shares
of GPF Common Stock, GPF Preferred Stock and any cash in lieu of
fractional shares into which the shares of Northern Illinois Common
Stock, Premier Common Stock and Premier Preferred Stock represented by
such Certificate or Certificates shall have been converted pursuant to
this Agreement. Upon proper surrender of a Certificate for exchange
and cancellation to the Exchange Agent, together with such properly
completed letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor, as
applicable, (i) a certificate representing that number of whole shares
of GPF Common Stock or GPF Preferred Stock to which such holder of
Northern Illinois Common Stock, Premier Common Stock or Premier
Preferred Stock shall have become entitled pursuant to the provisions
of Article I, and (ii) a check representing the amount of any cash in
lieu of fractional shares and, in the case of the Premier Preferred
Stock, any accrued but unpaid dividends thereon, which such holder has
the right to receive in respect of the Certificates surrendered
pursuant to the provisions of this Article II, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or
accrued on any cash in lieu of fractional shares or on any unpaid
dividends and distributions payable to holders of Certificates.
(b) No dividends or other distributions declared with
respect to GPF Common Stock or GPF Preferred Stock with a record date
following the Effective Time shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall have
surrendered such Certificate in accordance with this Article II.
Subject to Section 2.2(e) and to the effect of applicable laws, after
the surrender of a Certificate in accordance with this Article II, the
record holder thereof shall be entitled to receive any such dividends
or other distributions with a record date following the Effective
Time, without any interest thereon, which had theretofore become
payable with respect to shares of GPF Common Stock or GPF Preferred
Stock represented by such Certificate.
(c) If any certificate representing shares of GPF Common
Stock or GPF Preferred 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 (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form
for transfer, and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other taxes required
by reason of the issuance of a certificate representing shares of GPF
Common Stock or GPF Preferred Stock in any name other than that of the
registered holder of the Certificate surrendered, or required for any
other reason, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
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(d) After the Effective Time, there shall be no transfers
on the stock transfer books of Northern Illinois of the shares of
Northern Illinois Common Stock and no transfers on the stock transfer
books of Premier of the shares of Premier Common Stock or Premier
Preferred Stock which were issued and outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates
representing such shares are presented for transfer to the Exchange
Agent, they shall be canceled and exchanged for certificates
representing shares of GPF Common Stock or GPF Preferred Stock as
provided in this Article II.
(e) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of GPF
Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to GPF Common
Stock shall be payable on or with respect to any fractional share, and
such fractional share interests shall not entitle the owner thereof to
vote or to any other rights of a stockholder of GPF. In lieu of the
issuance of any such fractional share, GPF shall pay to each former
stockholder of Northern Illinois and Premier who otherwise would be
entitled to receive such fractional share an amount in cash determined
by multiplying (i) $9.75 by (ii) the fraction of a share (rounded to
the nearest thousandth when expressed as an Arabic number) of GPF
Common Stock to which such holder would otherwise be entitled to
receive pursuant to Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed
by the stockholders of Northern Illinois and Premier for 12 months
after the Effective Time shall be paid to GPF. Any stockholders of
Northern Illinois and Premier who have not theretofore complied with
this Article II shall thereafter look only to GPF for the issuance of
certificates representing shares of GPF Common Stock or GPF Preferred
Stock and the payment of cash in lieu of any fractional shares and any
unpaid dividends and distributions on the GPF Common Stock or GPF
Preferred Stock deliverable in respect of each share of Northern
Illinois Common Stock, Premier Common Stock or Premier Preferred
Stock, as the case may be, such stockholder holds as determined
pursuant to this Agreement, in each case, without any interest
thereon. Notwithstanding the foregoing, none of GPF, Northern
Illinois, Premier, the Exchange Agent or any other person shall be
liable to any former holder of shares of Northern Illinois Common
Stock, Premier Common Stock or Premier Preferred Stock for any amount
delivered in good faith to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed
and, if reasonably required by GPF, the posting by such person of a
bond in such amount as GPF may determine is reasonably necessary as
indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for
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<PAGE> 18
such lost, stolen or destroyed Certificate the shares of GPF Common
Stock, GPF Preferred Stock and any cash in lieu of fractional shares
deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NORTHERN ILLINOIS
Except as disclosed in the Northern Illinois disclosure
schedules delivered to Premier concurrently herewith (the "Northern
Illinois Disclosure Schedules"), Northern Illinois hereby represents
and warrants to Premier as follows:
3.1 Corporate Organization. (a) Northern Illinois is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Illinois. Northern Illinois has the
corporate power and authority to own or lease all of its properties
and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character
or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to
be so licensed or qualified would not have a Material Adverse Effect
(as defined below) on Northern Illinois. Northern Illinois is duly
registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended (the "BHC Act"). True and complete copies of
the Articles of Incorporation and By-Laws of Northern Illinois, as in
effect as of the date of this Agreement, have previously been made
available by Northern Illinois to Premier. As used in this Agreement,
the term "Material Adverse Effect" means, with respect to Northern
Illinois, Premier or GPF, as the case may be, a material adverse
effect on the business, results of operations, financial condition, or
(insofar as they can reasonably be foreseen) prospects of such party
and its Subsidiaries taken as a whole. The word "Subsidiary" when
used with respect to any party means any bank, corporation,
partnership, limited liability company, or other organization, whether
incorporated or unincorporated, which is consolidated with such party
for financial reporting purposes.
(b) As of the date of this Agreement, Northern Illinois
has, as its sole direct or indirect Subsidiaries, Grand National Bank
(South Chicago Heights), a national banking association, First
National Bank of Niles, a national banking association, Grand National
Bank (Waukegan), a national banking association, Grand National Bank
(Crystal Lake), a national banking association, and American Suburban
Mortgage Corporation, an Illinois corporation (the "Northern Illinois
Subsidiaries"). On November 27, 1995, Northern Illinois filed an
application with the Office of the Comptroller of the Currency (the
"Comptroller") requesting the Comptroller's approval to effect the
merger of the Northern Illinois Subsidiaries that are organized as
national banks into a single national banking association under the
charter of Grand National Bank (Crystal Lake) and with the name of
Grand National Bank (the "Northern Illinois Subsidiary Bank Merger").
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In the event that such application is approved and the Northern
Illinois Subsidiary Bank Merger is effected prior to the Effective
Time, at the Effective Time Northern Illinois will have, as its sole
Subsidiaries, Grand National Bank and American Suburban Mortgage
Corporation. Except as set forth in Schedule 3.1(b) of the Northern
Illinois Disclosure Schedules, Northern Illinois does not own any
voting stock or equity securities of any bank, corporation,
partnership, limited liability company, or other organization, whether
incorporated or unincorporated, other than the Northern Illinois
Subsidiaries.
(c) Each Northern Illinois Subsidiary (i) is duly organized
and validly existing as a bank or corporation under the laws of its
jurisdiction of organization, (ii) is duly qualified to do business
and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the
conduct of its business requires it to be so qualified and in which
the failure to be so qualified would have a Material Adverse Effect on
Northern Illinois, and (iii) has all requisite corporate power and
authority to own or lease its properties and assets and to carry on
its business as now conducted. Except as set forth in Schedule 3.1(c)
of the Northern Illinois Disclosure Schedules, none of the Northern
Illinois Subsidiaries owns any voting stock or equity securities of
any bank, corporation, partnership, limited liability company, or
other organization, whether incorporated or unincorporated.
(d) The minute books of Northern Illinois and of each of
the Northern Illinois Subsidiaries accurately reflect in all material
respects all corporate meetings held or actions taken since January 1,
1994 by the stockholders and Boards of Directors of Northern Illinois
and each Northern Illinois Subsidiary, respectively, (including
committees of the Boards of Directors of Northern Illinois and the
Northern Illinois Subsidiaries).
3.2 Capitalization. (a) The authorized capital stock of
Northern Illinois consists of 10,000,000 shares of Northern Illinois
Common Stock, of which, as of December 31, 1995, 2,956,784 shares were
issued and outstanding and no shares were held in treasury. All of
the issued and outstanding shares of Northern Illinois Common Stock
have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. Except for the Northern
Illinois Option Agreement, Northern Illinois does not have and is not
bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or
issuance of any shares of Northern Illinois Common Stock or any other
equity securities of Northern Illinois or any securities representing
the right to purchase or otherwise receive any shares of Northern
Illinois Common Stock. No shares of Northern Illinois Common Stock
have been reserved for issuance, other than the shares of Northern
Illinois Common Stock reserved for issuance under the Northern
Illinois Option Agreement. Since December 31, 1995, Northern Illinois
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<PAGE> 20
has not issued any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock.
(b) Northern Illinois owns, directly or indirectly, all of
the issued and outstanding shares of capital stock of each of the
Northern Illinois Subsidiaries, free and clear of any liens, pledges,
charges, encumbrances and security interests whatsoever ("Liens"), and
all of such shares are duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. No Northern
Illinois Subsidiary has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character
calling for the purchase or issuance of any shares of capital stock or
any other equity security of such Northern Illinois Subsidiary or any
securities representing the right to purchase or otherwise receive any
shares of capital stock or any other equity security of such Northern
Illinois Subsidiary.
3.3 Certain Beneficial Owners of Northern Illinois Common
Stock and Premier Common Stock. Schedule 3.3 of the Northern Illinois
Disclosure Schedules sets forth the name and the number of shares of
Northern Illinois Common Stock and the percentage of the outstanding
shares of Northern Illinois Common Stock beneficially owned by any
individual, entity or group, including any "person" within the meaning
of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), known to Northern Illinois to
be the beneficial owner, alone or together with such person's
affiliates or associates (as such terms are defined in Rule 12b-2
under the Exchange Act), of 10% or more of the outstanding shares of
Northern Illinois Common Stock as of the date of this Agreement. To
the best knowledge of Northern Illinois, no person listed on Schedule
3.3 beneficially owns any shares of Premier Common Stock as of the
date of this Agreement. For purposes of this Agreement, "beneficial
ownership" shall have the meaning given such term in Rule 13d-3 under
the Exchange Act.
3.4 Authority; No Violation. (a) Northern Illinois has
full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved
by the Board of Directors of Northern Illinois. The Board of
Directors of Northern Illinois has directed that this Agreement and
the transactions contemplated hereby be submitted to Northern
Illinois' stockholders for approval at a meeting of such stockholders
and, except for the adoption of this Agreement by the affirmative vote
of the holders of two-thirds of the outstanding shares of Northern
Illinois Common Stock, no other corporate proceedings on the part of
Northern Illinois are necessary to approve this Agreement and to
consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Northern Illinois and
(assuming due authorization, execution and delivery by Premier and
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GPF) constitutes a valid and binding obligation of Northern Illinois,
enforceable against Northern Illinois in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
Northern Illinois nor the consummation by Northern Illinois of the
transactions contemplated hereby, nor compliance by Northern Illinois
with any of the terms or provisions hereof, will (i) violate any
provision of the Articles of Incorporation or By-Laws of Northern
Illinois, or (ii) assuming that the consents and approvals referred to
in Section 3.5 are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Northern Illinois or any of the Northern
Illinois Subsidiaries or any of their respective properties or assets,
or (y) violate, conflict with, result in a breach of any provision of
or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of or a right of termination
or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective
properties or assets of Northern Illinois or any of its Subsidiaries
under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Northern Illinois or any of its
Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of
clause (y) above) for such violations, conflicts, breaches or defaults
which, either individually or in the aggregate, will not have or be
reasonably likely to have a Material Adverse Effect on Northern
Illinois or GPF.
3.5 Consents and Approvals. No consents or approvals of or
filings or registrations with any court, administrative agency or
commission or other governmental authority or instrumentality (each a
"Governmental Entity") or with any third party are necessary in
connection with the execution and delivery by Northern Illinois of
this Agreement and the consummation by Northern Illinois of the Merger
and the other transactions contemplated hereby except for (a) the
filing by GPF of an application with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") under the BHC Act
and the approval of such application, (b) the filing with the
Securities and Exchange Commission (the "SEC") of a joint proxy
statement in definitive form relating to the meetings of Northern
Illinois' and Premier's stockholders to be held in connection with
this Agreement and the transactions contemplated hereby (the "Joint
Proxy Statement") and the registration statement on Form S-4 (the "S-
4") in which such Joint Proxy Statement will be included as a
prospectus, (c) the filing of a registration statement on Form 8-A
(the "8-A") registering the GPF Common Stock under Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(d) the filing of articles of merger with, and the issuance of a
certificate of merger by, the Illinois Secretary under the IBCA, and
the filing of a certificate of merger with the Delaware Secretary
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pursuant to the DGCL, (e) the filing of a consent to service of
process, an appointment of the Illinois Secretary as agent for service
of process, and an agreement with respect to any Dissenting Shares
required to be filed by GPF with the Illinois Secretary pursuant to
Section 11.35 of the IBCA, (f) such filings and approvals as are
required to be made or obtained under the securities or "Blue Sky"
laws of various states in connection with the issuance of the shares
of GPF Common Stock and GPF Preferred Stock pursuant to this
Agreement, (g) the approval of an application to list the GPF Common
Stock on The Nasdaq Stock Market's National Market, subject to
official notice of issuance, and (h) the approval of this Agreement by
the requisite vote of the stockholders of Northern Illinois and
Premier.
3.6 Reports. Northern Illinois and each of the Northern
Illinois Subsidiaries have timely filed all reports, registrations and
statements, together with any amendments required to be made with
respect thereto, that they were required to file since January 1, 1994
with (i) the Federal Reserve Board, (ii) the Federal Deposit Insurance
Corporation (the "FDIC"), (iii) any state regulatory authority (each a
"State Regulator"), (iv) the Comptroller, (vi) the SEC, and (vii) any
self-regulatory organization ("SRO") with jurisdiction over any of the
activities of Northern Illinois or any of its Subsidiaries
(collectively "Regulatory Agencies"), and all other reports and
statements required to be filed by them since January 1, 1994,
including, without limitation, any report or statement required to be
filed pursuant to the laws, rules or regulations of the United States,
any state, or any Regulatory Agency, and have paid all fees and
assessments due and payable in connection therewith, except where the
failure to file such report, registration or statement or to pay such
fees and assessments, either individually or in the aggregate, will
not have a Material Adverse Effect on Northern Illinois or GPF.
Except for normal examinations conducted by a Regulatory Agency in the
regular course of the business of Northern Illinois and the Northern
Illinois Subsidiaries, no Regulatory Agency has initiated any
proceeding or, to the best knowledge of Northern Illinois,
investigation into the business or operations of Northern Illinois or
any of the Northern Illinois Subsidiaries since January 1, 1994.
There is no unresolved written violation, written criticism, or
written exception by any Regulatory Agency with respect to any report
or statement relating to any examinations of Northern Illinois or any
of the Northern Illinois Subsidiaries, which is likely, either
individually or in the aggregate, to have a Material Adverse Effect on
Northern Illinois or GPF.
3.7 Financial Statements. Northern Illinois has previously
made available to Premier copies of (a) the consolidated balance
sheets of Northern Illinois and its Subsidiaries as of December 31,
1993 and 1994 and the related consolidated statements of income,
changes in stockholders' equity and cash flows for the fiscal years
ended December 31, 1992, 1993 and 1994, inclusive, as reported in
Northern Illinois' Annual Report on Form 10-K for the fiscal year
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ended December 31, 1994 filed with the SEC under the Exchange Act, in
each case accompanied by the audit report of Hutton, Nelson and
McDonald LLP, independent public accountants with respect to Northern
Illinois, and (b) the unaudited consolidated balance sheet of Northern
Illinois and its Subsidiaries as of September 30, 1995 and September
30, 1994 and the related unaudited consolidated statements of income,
cash flows and changes in stockholders' equity for the three- and
nine-month periods then ended as reported in Northern Illinois'
Quarterly Report on Form 10-Q for the period ended September 30, 1995
filed with the SEC under the Exchange Act (the "Northern Illinois
Third Quarter 10-Q"). The December 31, 1994 consolidated balance
sheet of Northern Illinois (including the related notes, where
applicable) fairly presents the consolidated financial position of
Northern Illinois and its Subsidiaries as of the date thereof, and the
other financial statements referred to in this Section 3.7 (including
the related notes, where applicable) fairly present the results of the
consolidated operations and changes in stockholders' equity and
consolidated financial position of Northern Illinois and its
Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth, subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and
amount; each of such statements (including the related notes, where
applicable) comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC
with respect thereto; and each of such statements (including the
related notes, where applicable) has been prepared in all material
respects in accordance with generally accepted accounting principles
("GAAP") consistently applied during the periods involved, except, in
each case, as indicated in such statements or in the notes thereto or,
in the case of unaudited statements, as permitted by Form 10-Q. The
books and records of Northern Illinois and its Subsidiaries have been,
and are being, maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting requirements and
reflect only actual transactions.
3.8 Broker's Fees. Except as set forth in Schedule 3.8,
neither Northern Illinois nor any Northern Illinois Subsidiary nor any
of their respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with the Merger or related transactions
contemplated by this Agreement or the Option Agreements.
3.9 Absence of Certain Changes or Events. (a) Except as
publicly disclosed in Northern Illinois Reports (as defined in Section
3.13) filed prior to the date hereof, since September 30, 1995, (i)
Northern Illinois and its Subsidiaries taken as a whole have not
incurred any material liability, except in the ordinary course of
their business, and (ii) no event has occurred which has had,
individually or in the aggregate, a Material Adverse Effect on
Northern Illinois or will have a Material Adverse Effect on GPF.
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(b) Except as publicly disclosed in the Northern Illinois
Reports filed prior to the date hereof, since September 30, 1995,
Northern Illinois and its Subsidiaries have carried on their
respective businesses in all material respects in the ordinary and
usual course.
(c) Since December 31, 1994, neither Northern Illinois nor
any of its Subsidiaries has (i) except for such actions as are in the
ordinary course of business consistent with past practice or except as
required by applicable law, (A) increased the wages, salaries,
compensation, pension, or other fringe benefits or perquisites payable
to any executive officer, employee, or director from the amount
thereof in effect as of December 31, 1994, or (B) granted any
severance or termination pay, entered into any contract to make or
grant any severance or termination pay, or paid any bonuses, other
than customary year-end bonuses for the 1994 and 1995 fiscal years
which did not exceed, in the aggregate, 5% of Northern Illinois' 1994
salary and employee benefits, or (ii) suffered any strike, work
stoppage, slowdown, or other labor disturbance.
3.10 Legal Proceedings. (a) Except as set forth in
Schedule 3.10(a), there are no pending or, to the best of Northern
Illinois' knowledge, threatened, legal, administrative, arbitration or
other proceedings, claims, actions or governmental or regulatory
investigations of any nature against Northern Illinois or any of its
Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement or the Northern Illinois
Option Agreement.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction (other than those that apply to similarly
situated bank holding companies or banks) imposed upon Northern
Illinois, any of its Subsidiaries or the assets of Northern Illinois
or any of its Subsidiaries.
3.11 Taxes and Tax Returns. (a) Each of Northern Illinois
and its Subsidiaries has duly filed all federal, state, county,
foreign and, to the best of Northern Illinois' knowledge, local
information returns and tax returns required to be filed by it on or
prior to the date hereof (all such returns being accurate and complete
in all material respects) and has duly paid or made provisions for the
payment of all Taxes (as defined in Section 3.11(b)) and other
governmental charges which have been incurred or are due or claimed to
be due from it by federal, state, county, foreign or local taxing
authorities on or prior to the date of this Agreement (including,
without limitation, if and to the extent applicable, those due in
respect of its properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls) other than Taxes or other
charges which are not yet delinquent or are being contested in good
faith and have not been finally determined. The income tax returns of
Northern Illinois and its Subsidiaries have never been examined by the
Internal Revenue Service (the "IRS"). There are no material disputes
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pending, or claims asserted for, Taxes or assessments upon Northern
Illinois or any of its Subsidiaries for which Northern Illinois does
not have adequate reserves, nor has Northern Illinois or any of its
Subsidiaries given any currently effective waivers extending the
statutory period of limitation applicable to any federal, state,
county or local income tax return for any period. In addition, (i)
proper and accurate amounts have been withheld by Northern Illinois
and its Subsidiaries from their employees for all prior periods in
compliance in all material respects with the tax withholding
provisions of applicable federal, state and local laws, except where
failure to do so would not have a Material Adverse Effect on Northern
Illinois, (ii) federal, state, county and local returns which are
accurate and complete in all material respects have been filed by
Northern Illinois and its Subsidiaries for all periods for which
returns were due with respect to income tax withholding, Social
Security and unemployment taxes, (iii) the amounts shown on such
federal, state, local or county returns to be due and payable have
been paid in full or adequate provision therefor has been included by
Northern Illinois in its consolidated financial statements as of
December 31, 1994, and (iv) there are no Tax liens upon any property
or assets of Northern Illinois or its Subsidiaries except liens for
current taxes not yet due. Except as set forth in Schedule 3.11,
neither Northern Illinois nor any of its Subsidiaries has been
required to include in income any adjustment pursuant to Section 481
of the Code by reason of a voluntary change in accounting method
initiated by Northern Illinois or any of its Subsidiaries, and the IRS
has not initiated or proposed any such adjustment or change in
accounting method. Except as set forth in the financial statements
described in Section 3.7, neither Northern Illinois nor any of its
Subsidiaries has entered into a transaction which is being accounted
for as an installment obligation under Section 453 of the Code.
(b) As used in this Agreement, the term "Tax" or "Taxes"
means all federal, state, county, local, and foreign income, excise,
gross receipts, gross income, ad valorem, profits, gains, property,
capital, sales, transfer, use, payroll, employment, severance,
withholding, duties, intangibles, franchise, backup withholding, and
other taxes, charges, levies or like assessments together with all
penalties and additions to tax and interest thereon.
3.12 Employees. (a) Schedule 3.12 in the Northern Illinois
Disclosure Schedules sets forth a true and complete list of each
employee benefit plan, arrangement, commitment, agreement or
understanding that is maintained as of the date of this Agreement (the
"Northern Illinois Benefit Plans") (i) by Northern Illinois or any of
its Subsidiaries or (ii) by any trade or business, whether or not
incorporated which (A) is under "common control," as described in
Section 414(c) of the Code, with Northern Illinois, or (B) is a member
of a "controlled group," as defined in Section 414(b) of the Code,
which includes Northern Illinois (a "Northern Illinois ERISA
Affiliate"), all of which together with Northern Illinois would be
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deemed a "single employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(b) Northern Illinois has heretofore delivered to Premier
true and complete copies of each of the Northern Illinois Benefit
Plans and certain related documents, including, but not limited to,
(i) the actuarial report for such Northern Illinois Benefit Plan (if
applicable) for each of the last two years, and (ii) the most recent
determination letter from the IRS (if applicable) for such Northern
Illinois Benefit Plan.
(c) (i) Each of the Northern Illinois Benefit Plans has
been operated and administered in all material respects with
applicable laws, including, but not limited to, ERISA and the Code,
(ii) each of the Northern Illinois Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code is so
qualified, (iii) with respect to each Northern Illinois Benefit Plan
which is subject to Title IV of ERISA, the present value of accrued
benefits under such Northern Illinois Benefit Plan, based upon the
actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such Northern Illinois Benefit Plan's
actuary with respect to such Northern Illinois Benefit Plan, did not,
as of its latest valuation date, exceed the then current value of the
assets of such Northern Illinois Benefit Plan allocable to such
accrued benefits, (iv) no Northern Illinois Benefit Plan provides
benefits, including, without limitation, death or medical benefits
(whether or not insured), with respect to current or former employees
of Northern Illinois, its Subsidiaries or any ERISA Affiliate beyond
their retirement or other termination of service, other than (A)
coverage mandated by applicable law, (B) death benefits or retirement
benefits under any "employee pension plan" (as such term is defined in
Section 3(2) of ERISA), (C) deferred compensation benefits accrued as
liabilities on the books of Northern Illinois, its Subsidiaries or the
ERISA Affiliates, or (D) benefits the full cost of which is borne by
the current or former employee (or his beneficiary), (v) no material
liability under Title IV of ERISA has been incurred by Northern
Illinois, its Subsidiaries or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material
risk to Northern Illinois, its Subsidiaries or any ERISA Affiliate of
incurring a material liability thereunder, (vi) no Northern Illinois
Benefit Plan is a "multiemployer pension plan" (as such term is
defined in Section 3(37) of ERISA), (vii) all contributions or other
amounts payable by Northern Illinois or its Subsidiaries as of the
Effective Time with respect to each Northern Illinois Benefit Plan in
respect of current or prior plan years have been paid or accrued in
accordance with GAAP and Section 412 of the Code, (viii) neither
Northern Illinois, its Subsidiaries nor any ERISA Affiliate has
engaged in a transaction in connection with which Northern Illinois,
its Subsidiaries or any ERISA Affiliate reasonably could be subject to
either a material civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a material tax imposed pursuant to Section 4975 or
4976 of the Code, and (ix) to the best knowledge of Northern Illinois,
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there are no pending, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the
Northern Illinois Benefit Plans or any trusts related thereto which
are, in the reasonable judgment of Northern Illinois, likely, either
individually or in the aggregate, to have a Material Adverse Effect on
Northern Illinois.
3.13 SEC Reports. Northern Illinois has previously made
available to Premier an accurate and complete copy of each (a) final
registration statement, prospectus, report, schedule and definitive
proxy statement filed since January 1, 1994 by Northern Illinois with
the SEC pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act (the "Northern Illinois
Reports") and prior to the date hereof and (b) communication mailed by
Northern Illinois to its stockholders since January 1, 1994 and prior
to the date hereof. None of the Northern Illinois Reports or such
communications to stockholders contained any untrue statement of a
material fact or omitted 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,
except that information as of a later date shall be deemed to modify
information as of an earlier date. Since January 1, 1994, Northern
Illinois has timely filed all Northern Illinois Reports and other
documents required to be filed by it under the Securities Act and the
Exchange Act, and, as of their respective dates, all Northern Illinois
Reports complied in all material respects with the published rules and
regulations of the SEC with respect thereto.
3.14 Compliance with Applicable Law. Northern Illinois and
each of its Subsidiaries hold all licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and have complied with and are
not in default under any, applicable laws, statutes, orders, rules,
regulations, policies and/or guidelines of any Governmental Entity
relating to Northern Illinois or any of its Subsidiaries, except where
the failure to hold such license, franchise, permit or authorization
or such noncompliance or default would not, individually or in the
aggregate, have a Material Adverse Effect on Northern Illinois.
3.15 Certain Contracts. (a) Except as set forth in
Schedule 3.15 of the Northern Illinois Disclosure Schedules, neither
Northern Illinois nor any of its Subsidiaries is a party to or bound
by:
(i) any contract, arrangement, commitment or understanding
(whether written or oral) with respect to the employment of any
directors, officers or employees other than in the ordinary
course of business consistent with past practice;
(ii) any contract, arrangement, commitment or understanding
(whether written or oral) which, upon the consummation of the
transactions contemplated by this Agreement will (either alone or
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upon the occurrence of any additional acts or events) result in
any payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise)
becoming due from Northern Illinois, Premier, GPF or any of their
respective Subsidiaries to any officer, director or employee
thereof;
(iii) any contract, arrangement, commitment or
understanding (whether written or oral) which is a "material
contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been filed or incorporated by reference in
the Northern Illinois Reports;
(iv) any contract, arrangement, commitment or understanding
(whether written or oral)which materially restricts the conduct
of any line of business by Northern Illinois;
(v) any contract, arrangement, commitment or understanding
(whether written or oral) with a labor union or guild (including
any collective bargaining agreement); or
(vi) any contract, arrangement, commitment or understanding
(whether written or oral), including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this
Agreement, or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated
by this Agreement.
Northern Illinois has previously made available to Premier true and
correct copies of all employment and deferred compensation agreements
which are in writing and to which Northern Illinois is a party. Each
contract, arrangement, commitment or understanding of the type
described in this Section 3.15(a), whether or not set forth in the
Northern Illinois Disclosure Schedules, is referred to herein as a
"Northern Illinois Contract", and neither Northern Illinois nor any of
its Subsidiaries knows of, or has received notice of, any violation of
the above by any of the other parties thereto, which, individually or
in the aggregate, would have a Material Adverse Effect on Northern
Illinois or GPF.
(b) (i) Each Northern Illinois Contract is valid and binding on
Northern Illinois or any of its Subsidiaries, as applicable, and is in
full force and effect, (ii) Northern Illinois and each of its
Subsidiaries has performed all obligations required to be performed by
it to date under each Northern Illinois Contract, except where such
noncompliance, individually or in the aggregate, would not have a
Material Adverse Effect on Northern Illinois, and (iii) no event or
condition exists which constitutes or, after notice or lapse of time
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or both, would constitute, a default on the part of Northern Illinois
or any of its Subsidiaries under any such Northern Illinois Contract,
except where any such default, individually or in the aggregate, would
not have a Material Adverse Effect on Northern Illinois or GPF.
3.16 Agreements with Regulatory Agencies. Neither Northern
Illinois nor any of its Subsidiaries is subject to any cease-and-
desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or
is a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or has been since January 1,
1994, a recipient of any supervisory letter from, or since January 1,
1994, has adopted any board resolutions at the request of any
Regulatory Agency or other Governmental Entity that currently
restricts the conduct of its business or that relates to its capital
adequacy, its credit policies, its management or its business (each,
whether or not set forth in the Northern Illinois Disclosure
Schedules, a "Northern Illinois Regulatory Agreement"), nor has
Northern Illinois or any of its Subsidiaries been advised since
January 1, 1994, by any Regulatory Agency or other Governmental Entity
that it is considering issuing or requesting any such Northern
Illinois Regulatory Agreement.
3.17 Other Activities of Northern Illinois and its
Subsidiaries.
(a) Neither Northern Illinois nor any of its Subsidiaries
that is neither a bank, a bank operating subsidiary or a bank service
corporation directly or indirectly engages in any activity prohibited
by the Federal Reserve Board. Without limiting the generality of the
foregoing, no equity investment of Northern Illinois and each Northern
Illinois Subsidiary that is not a bank, bank operating subsidiary or a
bank service corporation is prohibited by the Federal Reserve Board.
(b) Each Northern Illinois Subsidiary that engages in
personal trust, corporate trust and other fiduciary activities ("Trust
Activities") engages in such Trust Activities with requisite authority
under the applicable law of Governmental Entities and in accordance in
all material respects with the terms of the agreements and instruments
governing such Trust Activities and applicable law and regulation
(specifically including, but not limited to, applicable law governing
such Northern Illinois Subsidiary's performance of its fiduciary
obligations and Section 9 of Title 12 of the Code of Federal
Regulations); there is no investigation or inquiry by any Governmental
Entity pending, or to the best knowledge of Northern Illinois,
threatened, against or affecting Northern Illinois or any Northern
Illinois Subsidiary relating to the compliance by Northern Illinois or
any Northern Illinois Subsidiary with sound fiduciary principles and
applicable regulations; and except where any such failure would not
have a Material Adverse Effect on Northern Illinois, each employee of
a Northern Illinois Subsidiary had the authority to act in the
capacity in which he or she acted with respect to Trust Activities, in
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each case, in which such employee held himself or herself out as a
representative of a Northern Illinois Subsidiary; and each Northern
Illinois Subsidiary has established policies and procedures for the
purpose of complying with applicable laws of Governmental Entities
relating to Trust Activities, has followed such policies and
procedures in all material respects and has performed appropriate
internal audit reviews of, and has engaged independent accountants to
perform audits of, Trust Activities, which audits since January 1,
1994 have disclosed no material violations of applicable laws of
Governmental Entities or such policies and procedures.
3.18 Investment Securities. Each of Northern Illinois and
its Subsidiaries has good and marketable title to all securities held
by it (except securities sold under repurchase agreements or held in
any fiduciary or agency capacity), free and clear of any Lien, except
to the extent such securities are pledged in the ordinary course of
business consistent with prudent banking practices to secure
obligations of Northern Illinois or any of the Northern Illinois
Subsidiaries. Such securities are valued on the books of Northern
Illinois and the Northern Illinois Subsidiaries in accordance with
GAAP.
3.19 Undisclosed Liabilities. Except for those liabilities
that are fully reflected or reserved against on the consolidated
balance sheet of Northern Illinois included in the Northern Illinois
Third-Quarter 10-Q and for liabilities incurred in the ordinary course
of business consistent with past practice, since September 30, 1995
neither Northern Illinois nor any of the Northern Illinois
Subsidiaries has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or
to become due) that, either alone or when combined with all similar
liabilities, has had, or could reasonably be expected to have, a
Material Adverse Effect on Northern Illinois.
3.20 Environmental Liability. There are no legal,
administrative, arbitration or other proceedings, claims, actions,
causes of action, private environmental investigations or remediation
activities or governmental investigations of any nature pending or, to
the best of Northern Illinois' knowledge, threatened against Northern
Illinois seeking to impose, or that could reasonably result in the
imposition, on Northern Illinois of any liability or obligation
arising under common law or under any local, state or federal
environmental statute, regulation or ordinance including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"). To the best of Northern
Illinois' knowledge, there is no reasonable basis for any such
proceeding, claim, action or governmental investigation that would
impose any such liability or obligation. Northern Illinois is not
subject to any agreement, order, judgment, decree, letter or
memorandum by or with any court, governmental authority, regulatory
agency or third party imposing any such liability or obligation.
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3.21 Insurance. Schedule 3.21 in the Northern Illinois
Disclosure Schedules describes all policies of insurance in which
Northern Illinois or any of the Northern Illinois Subsidiaries is
named as an insured party or which otherwise relate to or cover any
assets or properties of Northern Illinois or any of the Northern
Illinois Subsidiaries. Each of such policies is in full force and
effect, and the coverage provided under such properties complies with
the requirements of any contracts binding on Northern Illinois or any
of the Northern Illinois Subsidiaries relating to such assets or
properties.
3.22 Loan Loss Reserves. Except as set forth in Schedule
3.22, the reserve for possible loan losses shown on the September 30,
1995 call reports filed for each of the Northern Illinois Subsidiaries
is adequate in all material respects under the requirements of GAAP to
provide for possible losses, net of recoveries relating to loans
previously charged off, on loans outstanding (including accrued
interest receivable) as of September 30, 1995. The aggregate loan
balances of each of the Northern Illinois Subsidiaries at such date in
excess of such reserves are, to the best knowledge and belief of
Northern Illinois, collectible in accordance with their terms.
3.23 Approval Delays. Northern Illinois knows of no reason
why any of the Requisite Regulatory Approvals (as defined in Section
7.1(c)) should be denied or unduly delayed.
3.24 Pooling of Interests. As of the date of this
Agreement, Northern Illinois has no reason to believe that the Merger
will not qualify as a "pooling of interests" for accounting purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PREMIER
Except as disclosed in the Premier disclosure schedules
delivered to Northern Illinois concurrently herewith (the "Premier
Disclosure Schedules"), Premier hereby represents and warrants to
Northern Illinois as follows:
4.1 Corporate Organization. (a) Premier is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Delaware. Premier has the corporate power and
authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing
or qualification necessary, except where the failure to be so licensed
or qualified would not have a Material Adverse Effect on Premier.
Premier is duly registered as a bank holding company under the BHC
Act. True and complete copies of the Restated Certificate of
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Incorporation and By-Laws of Premier, as in effect as of the date of
this Agreement, have previously been made available by Premier to
Northern Illinois.
(b) As of the date of this Agreement, Premier, has as its
sole direct or indirect Subsidiaries, First Bank North, an Illinois
state bank, First Bank South, an Illinois state bank, First National
Bank of Northbrook, a national banking association, First Security
Bank of Cary Grove, an Illinois state bank, Premier Acquisition
Company, a Delaware corporation and an intermediate holding company
for First National Bank of Northbrook and First Security Bank of Cary
Grove, Premier Operating Systems, Inc., an Illinois corporation,
Premier Trust Services, Inc., an Illinois trust company, and Premier
Insurance Services, Inc., an Illinois corporation (the "Premier
Subsidiaries"). Premier does not own, directly or indirectly, any
voting stock or equity securities of any bank, corporation,
partnership, limited liability company, or other organization, whether
incorporated or unincorporated, other than the Premier Subsidiaries.
(c) Each Premier Subsidiary (i) is duly organized and
validly existing as a bank, trust company or corporation under the
laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether federal,
state, local or foreign) where its ownership or leasing of property or
the conduct of its business requires it to be so qualified and in
which the failure to be so qualified would have a Material Adverse
Effect on Premier, and (iii) has all requisite corporate power and
authority to own or lease its properties and assets and to carry on
its business as now conducted. None of the Premier Subsidiaries owns
any voting stock or equity securities of any bank, corporation,
partnership, limited liability company, or other organization, whether
incorporated or unincorporated, except that First Bank North owns all
of the issued and outstanding capital stock of Premier Trust Services,
Inc.
(d) The minute books of Premier and of each of the Premier
Subsidiaries accurately reflect in all material respects all corporate
meetings held or actions taken since January 1, 1994 of the
stockholders and Boards of Directors of Premier and each Premier
Subsidiary, respectively, (including committees of the Boards of
Directors of Premier and the Premier Subsidiaries).
4.2 Capitalization. (a) The authorized capital stock of
Premier consists of 15,000,000 shares of Premier Common Stock, of
which, as of December 31, 1995, 6,544,347 shares were issued and
outstanding, and 1,000,000 shares of Preferred Stock, par value $1.00
per share (the "Premier Preferred Stock", of which (i) 7,000 shares
were designated and 5,000 shares were issued and outstanding as
Premier Series A Perpetual Preferred Stock, (ii) 7,250 shares were
designated and issued and outstanding as Premier Series B Perpetual
Preferred Stock, and (iii) 2,000 shares were designated and issued and
outstanding as Premier Series D Perpetual Preferred Stock. During the
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fiscal year ended December 31, 1994, (i) Premier redeemed all 1,950
shares of Premier Series C Perpetual Preferred Stock, with a par value
of $1.00 and a stated value of $1,000 per share, that had previously
been authorized and issued, and such shares reverted to authorized but
unissued shares of Premier Preferred Stock in accordance with the
terms of the Certificate of Designation establishing the Premier
Series C Perpetual Preferred Stock, and (ii) 1,300 shares of Premier
Series D Perpetual Preferred Stock were converted into 1,300 shares of
Premier Series B Perpetual Perpetual Preferred Stock and such 1,300
shares of Series D Perpetual Preferred Stock reverted to authorized
but unissued shares of Premier Preferred Stock, in accordance with the
terms and conditions of the Certificate of Designation establishing
the Premier Series D Perpetual Preferred Stock. As of December 31,
1995, no shares of Premier Common Stock were held in treasury. On
December 31, 1995, no shares of Premier Common Stock or Premier
Preferred Stock were reserved for issuance, except for (i) 397,799
shares of Premier Common Stock reserved for issuance upon the exercise
of stock options pursuant to the Premier Stock Plans, (ii) 763,157
shares of Premier Common Stock reserved for issuance upon the
conversion of the Series B Perpetual Preferred Stock, (iii) the shares
of Premier Common Stock issuable pursuant to the Premier Option
Agreement, and (iv) 200,000 shares of Premier Common Stock reserved
for issuance pursuant to the Premier Benefit plans, other than the
stock option plans. All of the issued and outstanding shares of
Premier Common Stock and Premier Preferred Stock have been duly
authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the
ownership thereof. As of the date of this Agreement, except for the
Premier Option Agreement, certain provisions of the Certificates of
Designation of the Premier Series B Perpetual Preferred Stock and the
Premier Series D Perpetual Preferred Stock, and the Premier Stock
Plans, Premier does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of
any character calling for the purchase or issuance of any shares of
Premier Common Stock or Premier Preferred Stock or any other equity
securities of Premier or any securities representing the right to
purchase or otherwise receive any shares of Premier Common Stock or
Premier Preferred Stock. Assuming compliance by Northern Illinois and
GPF with Article I of this Agreement, after the Effective Time, there
will not be any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character by which Premier or any of
the Premier Subsidiaries will be bound calling for the purchase or
issuance of any shares of the capital stock of Premier. Premier has
previously provided Northern Illinois with a list of the option
holders, the date of each option to purchase Premier Common Stock
granted, the number of shares subject to each such option, the
expiration date of each such option, and the price at which each such
option may be exercised under an applicable Premier Stock Plan. Since
September 30, 1995, Premier has not issued any shares of its capital
stock or any securities convertible into or exercisable for any shares
of its capital stock, other than pursuant to the exercise of employee
stock options granted prior to such date.
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(b) Premier owns, directly or indirectly, all of the issued
and outstanding shares of capital stock of each of the Premier
Subsidiaries, free and clear of any Liens, except that 100% of the
capital stock of Premier Acquisition Company, First Bank North, First
Bank South, First National Bank of Northbrook and First Security Bank
of Cary Grove have been pledged to Firstar Bank-Milwaukee to secure
Premier's obligations under a $15 million revolving credit facility
maturing in January, 1999. All of the shares of capital stock of each
of the Premier Subsidiaries are duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. No Premier
Subsidiary has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling
for the purchase or issuance of any shares of capital stock or any
other equity security of such Premier Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Premier Subsidiary.
4.3 Certain Beneficial Owners of Premier Common Stock and
Northern Illinois Common Stock. Schedule 4.3 of the Premier
Disclosure Schedules sets forth the name and the number of shares of
Premier Common Stock and the percentage of the outstanding shares of
Premier Common Stock beneficially owned by any individual, entity or
group, including any "person" within the meaning of Sections 13(d)(3)
or 14(d)(2) of the Exchange Act, known to Premier to be the beneficial
owner, alone or together with such person's affiliates or associates
(as such terms are defined in Rule 12b-2 under the Exchange Act), of
10% or more of the outstanding shares of Premier Common Stock as of
the date of this Agreement. To the best knowledge of Premier, no
person listed on Schedule 4.3 beneficially owns any shares of Northern
Illinois Common Stock as of the date of this Agreement.
4.4 Authority; No Violation. (a) Premier has full
corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved
by the Board of Directors of Premier. The Board of Directors of
Premier has directed that this Agreement and the transactions
contemplated hereby be submitted to Premier's shareholders for
approval at a meeting of such shareholders and, except for the
adoption of this Agreement by the affirmative vote of the holders of a
majority of the outstanding shares of Premier Common Stock, no other
corporate proceedings on the part of Premier are necessary to approve
this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by
Premier and (assuming due authorization, execution and delivery by
Northern Illinois and GPF) constitutes a valid and binding obligation
of Premier, enforceable against Premier in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
Premier nor the consummation by Premier of the transactions
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<PAGE> 35
contemplated hereby, nor compliance by Premier with any of the terms
or provisions hereof, will (i) violate any provision of the Restated
Certificate of Incorporation or By-Laws of Premier, or (ii) assuming
that the consents and approvals referred to in Section 4.5 are duly
obtained, (x) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Premier or
any of the Premier Subsidiaries or any of their respective properties
or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default
(or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance
required by, or result in the creation of any Lien upon any of the
respective properties or assets of Premier or any of the Premier
Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Premier or any of
the Premier Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected, except (in
the case of clause (y) above) for such violations, conflicts, breaches
or defaults which, either individually or in the aggregate, will not
have or be reasonably likely to have a Material Adverse Effect on
Premier or GPF.
4.5 Consents and Approvals. Except as set forth in
Schedule 4.5, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary in
connection with the execution and delivery by Premier of this
Agreement and the consummation by Premier of the Merger and the other
transactions contemplated hereby except for (a) the filing by GPF of
applications and notices, as applicable, with the Federal Reserve
Board under the BHC Act and approval of such applications and notices,
(b) the filing of any required applications or notices with any state
or foreign agencies and the approval of such applications and notices,
(c) the filing with the SEC of the Joint Proxy Statement and the S-4
in which such Joint Proxy Statement will be included as a prospectus,
(d) the filing of an 8-A registering the GPF Common Stock under
Section 12(g) of the Exchange Act, (e) the filing of a certificate of
merger with the Delaware Secretary pursuant to the DGCL and the filing
of articles of merger with, and the issuance of a certificate of
merger by, the Illinois Secretary under the IBCA, (f) the filing of a
consent to service of process, an appointment of the Illinois
Secretary as agent for service of process, and an agreement with
respect to the Dissenting Shares required to be filed by GPF with the
Illinois Secretary pursuant to Section 11.35 of the IBCA, (g) such
filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of GPF Common Stock and GPF Preferred Stock
pursuant to this Agreement, (h) the approval of an application to list
the GPF Common Stock on The Nasdaq Stock Market's National Market,
subject to official notice of issuance, and (i) the approval of this
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<PAGE> 36
Agreement by the requisite vote of the stockholders of Northern
Illinois and Premier.
4.6 Reports. Premier and each of the Premier Subsidiaries
have timely filed all reports, registrations and statements, together
with any amendments required to be made with respect thereto, that
they were required to file since January 1, 1994 with the Regulatory
Agencies, and all other reports and statements required to be filed by
them since January 1, 1994, including, without limitation, any report
or statement required to be filed pursuant to the laws, rules or
regulations of the United States, any state, or any Regulatory Agency,
and have paid all fees and assessments due and payable in connection
therewith, except where the failure to file such report, registration
or statement or to pay such fees and assessments, either individually
or in the aggregate, will not have a Material Adverse Effect on
Premier. Except for normal examinations conducted by a Regulatory
Agency in the regular course of the business of Premier or the Premier
Subsidiaries, no Regulatory Agency has initiated any proceeding or, to
the best knowledge of Premier, investigation into the business or
operations of Premier or any of the Premier Subsidiaries since January
1, 1994. There is no unresolved written violation, written criticism,
or written exception by any Regulatory Agency with respect to any
report or statement relating to any examinations of Premier or any of
the Premier Subsidiaries, which is likely, either individually or in
the aggregate, to have a Material Adverse Effect on Premier or GPF.
4.7 Financial Statements. Premier has previously made
available to Northern Illinois copies of (a) the consolidated balance
sheets of Premier and its Subsidiaries as of December 31, 1993 and
1994 and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the fiscal years ended
December 31, 1992, 1993 and 1994, inclusive, as reported in Premier's
Annual Report on Form 10-K for the fiscal year ended December 31, 1994
filed with the SEC under the Exchange Act, in each case accompanied by
the audit report of KPMG Peat Marwick LLP, independent public
accountants with respect to Premier, and (b) the unaudited
consolidated balance sheet of Premier and its Subsidiaries as of
September 30, 1995 and September 30, 1994 and the related unaudited
consolidated statements of income, cash flows and changes in
stockholders' equity for the three- and nine-month periods then ended
as reported in Premier's Quarterly Report on Form 10-Q for the period
ended September 30, 1995 filed with the SEC under the Exchange Act
(the "Premier Third Quarter 10-Q"). The December 31, 1994
consolidated balance sheet of Premier (including the related notes,
where applicable) fairly presents the consolidated financial position
of Premier and its Subsidiaries as of the date thereof, and the other
financial statements referred to in this Section 4.7 (including the
related notes, where applicable) fairly present the results of the
consolidated operations and changes in stockholders' equity and
consolidated financial position of Premier and its Subsidiaries for
the respective fiscal periods or as of the respective dates therein
set forth, subject, in the case of the unaudited statements, to
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recurring audit adjustments normal in nature and amount; each of such
statements (including the related notes, where applicable) comply in
all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto;
and each of such statements (including the related notes, where
applicable) has been prepared in all material respects in accordance
with GAAP consistently applied during the periods involved, except, in
each case, as indicated in such statements or in the notes thereto or,
in the case of unaudited statements, as permitted by Form 10-Q. The
books and records of Premier and its Subsidiaries have been, and are
being, maintained in all material respects in accordance with GAAP and
any other applicable legal and accounting requirements and reflect
only actual transactions.
4.8 Broker's Fees. Except as set forth in Schedule 4.8,
neither Premier nor any Premier Subsidiary nor any of their respective
officers or directors has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by
this Agreement or the Option Agreements.
4.9 Absence of Certain Changes or Events. (a) Except as
publicly disclosed in Premier Reports (as defined in Section 4.13)
filed prior to the date hereof, since September 30, 1995, (i) Premier
and its Subsidiaries taken as a whole have not incurred any material
liability, except in the ordinary course of their business, and (ii)
no event has occurred which has had, individually or in the aggregate,
a Material Adverse Effect on Premier or will have a Material Adverse
Effect on GPF.
(b) Except as publicly disclosed in the Premier Reports
filed prior to the date hereof, since September 30, 1995, Premier and
its Subsidiaries have carried on their respective businesses in all
material respects in the ordinary and usual course.
(c) Since December 31, 1994, neither Premier nor any of its
Subsidiaries has (i) except as set forth in Schedule 4.9 and except
for such actions as are in the ordinary course of business consistent
with past practice or required by applicable law, (A) increased the
wages, salaries, compensation, pension, or other fringe benefits or
perquisites payable to any executive officer, employee, or director
from the amount thereof in effect as of December 31, 1994, or (B)
granted any severance or termination pay, entered into any contract to
make or grant any severance or termination pay, or paid any bonuses,
other than customary year-end bonuses for the 1994 and 1995 fiscal
years which did not exceed, in the aggregate, 5% of Premier's 1994
salary and employee benefits, or (ii) suffered any strike, work
stoppage, slowdown, or other labor disturbance.
4.10 Legal Proceedings. (a) Except as set forth in
Schedule 4.10, there are no pending or, to the best of Premier's
knowledge, threatened, legal, administrative, arbitration or other
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proceedings, claims, actions or governmental or regulatory
investigations of any nature against Premier or any of the Premier
Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement or the Premier Option
Agreement.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction (other than those that apply to similarly
situated bank holding companies or banks) imposed upon Premier, any of
the Premier Subsidiaries or the assets of Premier or any of the
Premier Subsidiaries.
4.11 Taxes and Tax Returns. (a) Each of Premier and its
Subsidiaries has duly filed all federal, state, county, foreign and,
to the best of Premier's knowledge, local information returns and tax
returns required to be filed by it on or prior to the date hereof (all
such returns being accurate and complete in all material respects) and
has duly paid or made provisions for the payment of all Taxes and
other governmental charges which have been incurred or are due or
claimed to be due from it by federal, state, county, foreign or local
taxing authorities on or prior to the date of this Agreement
(including, without limitation, if and to the extent applicable, those
due in respect of its properties, income, business, capital stock,
deposits, franchises, licenses, sales and payrolls) other than Taxes
or other charges which are not yet delinquent or are being contested
in good faith and have not been finally determined. The income tax
returns of Premier and its Subsidiaries have been examined by the IRS
and any liability with respect thereto has been satisfied for all
years to and including 1987, and either no material deficiencies were
asserted as a result of such examination for which Premier does not
have adequate reserves or all such deficiencies were satisfied. There
are no material disputes pending, or claims asserted for, Taxes or
assessments upon Premier or any of its Subsidiaries for which Premier
does not have adequate reserves, nor has Premier or any of its
Subsidiaries given any currently effective waivers extending the
statutory period of limitation applicable to any federal, state,
county or local income tax return for any period. In addition, (A)
proper and accurate amounts have been withheld by Premier and its
Subsidiaries from their employees for all prior periods in compliance
in all material respects with the tax withholding provisions of
applicable federal, state and local laws, except where failure to do
so would not have a Material Adverse Effect on Premier, (B) federal,
state, county and local returns which are accurate and complete in all
material respects have been filed by Premier and its Subsidiaries for
all periods for which returns were due with respect to income tax
withholding, Social Security and unemployment taxes, (C) the amounts
shown on such federal, state, local or county returns to be due and
payable have been paid in full or adequate provision therefor has been
included by Premier in its consolidated financial statements as of
December 31, 1994, and (D) there are no Tax liens upon any property or
assets of Premier or its Subsidiaries except liens for current taxes
not yet due. Neither Premier nor any of its Subsidiaries has been
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required to include in income any adjustment pursuant to Section 481
of the Code by reason of a voluntary change in accounting method
initiated by Premier or any of its Subsidiaries, and the IRS has not
initiated or proposed any such adjustment or change in accounting
method. Except as set forth in the financial statements described in
Section 4.7, neither Premier nor any of its Subsidiaries has entered
into a transaction which is being accounted for as an installment
obligation under Section 453 of the Code.
4.12 Employees. (a) Schedule 4.12 in the Premier Disclosure
Schedules sets forth a true and complete list of each employee
benefit plan, arrangement, commitment, agreement or understanding that
is maintained as of the date of this Agreement (the "Premier Benefit
Plans") (i) by Premier or any of its Subsidiaries or (ii) by any trade
or business, whether or not incorporated, which (A) is under "common
control," as described in Section 414(c) of the Code, with Premier, or
(B) is a member of a "controlled group," as defined in Section 414(c)
of the Code, which includes Premier (a "Premier ERISA Affiliate"), all
of which together with Premier would be deemed a "single employer"
within the meaning of Section 4001 of ERISA.
(b) Premier has heretofore delivered to Northern Illinois
true and complete copies of each of the Premier Benefit Plans and
certain related documents, including, but not limited to, (i) the
actuarial report for such Premier Benefit Plan (if applicable) for
each of the last two years, and (ii) the most recent determination
letter from the IRS (if applicable) for such Premier Benefit Plan.
(c) (i) Each of the Premier Benefit Plans has been operated
and administered in all material respects with applicable laws,
including, but not limited to, ERISA and the Code, (ii) each of the
Premier Benefit Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified, (iii) with respect to each
Premier Benefit Plan which is subject to Title IV of ERISA, the
present value of accrued benefits under such Premier Benefit Plan,
based upon the actuarial assumptions used for funding purposes in the
most recent actuarial report prepared by such Premier Benefit Plan's
actuary with respect to such Premier Benefit Plan, did not, as of its
latest valuation date, exceed the then current value of the assets of
such Premier Benefit Plan allocable to such accrued benefits, (iv)
except as set forth in Schedule 4.12, no Premier Benefit Plan provides
benefits, including, without limitation, death or medical benefits
(whether or not insured), with respect to current or former employees
of Premier, its Subsidiaries or any ERISA Affiliate beyond their
retirement or other termination of service, other than (A) coverage
mandated by applicable law, (B) death benefits or retirement benefits
under any "employee pension plan" (as such term is defined in Section
3(2) of ERISA), (C) deferred compensation benefits accrued as
liabilities on the books of Premier, its Subsidiaries or the ERISA
Affiliates, or (D) benefits the full cost of which is borne by the
current or former employee (or his beneficiary), (v) no material
liability under Title IV of ERISA has been incurred by Premier, its
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Subsidiaries or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to
Premier, its Subsidiaries or any ERISA Affiliate of incurring a
material liability thereunder, (vi) no Premier Benefit Plan is a
"multiemployer pension plan" (as such term is defined in Section 3(37)
of ERISA), (vii) all contributions or other amounts payable by Premier
or its Subsidiaries as of the Effective Time with respect to each
Premier Benefit Plan in respect of current or prior plan years have
been paid or accrued in accordance with GAAP and Section 412 of the
Code, (viii) neither Premier, its Subsidiaries nor any ERISA Affiliate
has engaged in a transaction in connection with which Premier, its
Subsidiaries or any ERISA Affiliate reasonably could be subject to
either a material civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a material tax imposed pursuant to Section 4975 or
4976 of the Code, and (ix) to the best knowledge of Premier, there are
no pending, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the Premier
Benefit Plans or any trusts related thereto which are, in the
reasonable judgment of Premier, likely, either individually or in the
aggregate, to have a Material Adverse Effect on Premier.
4.13 SEC Reports. Premier has previously made available to
Northern Illinois an accurate and complete copy of each (a) final
registration statement, prospectus, report, schedule and definitive
proxy statement filed since January 1, 1994 by Premier with the SEC
pursuant to the Securities Act or the Exchange Act (the "Premier
Reports") and prior to the date hereof and (b) communication mailed by
Premier to its stockholders since January 1, 1994 and prior to the
date hereof. None of the Premier Reports or such communications to
stockholders contained any untrue statement of a material fact or
omitted 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, except that
information as of a later date shall be deemed to modify information
as of an earlier date. Since January 1, 1994, Premier has timely
filed all Premier Reports and other documents required to be filed by
it under the Securities Act and the Exchange Act, and, as of their
respective dates, all Premier Reports complied in all material
respects with the published rules and regulations of the SEC with
respect thereto.
4.14 Compliance with Applicable Law. Premier and each of
its Subsidiaries hold all licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and have complied with and are
not in default under any, applicable laws, statutes, orders, rules,
regulations, policies and/or guidelines of any Governmental Entity
relating to Premier or any of its Subsidiaries, except where the
failure to hold such license, franchise, permit or authorization or
such noncompliance or default would not, individually or in the
aggregate, have a Material Adverse Effect on Premier.
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4.15 Certain Contracts. (a) Except as set forth in
Schedule 4.15 of the Premier Disclosure Schedules, neither Premier nor
any of its Subsidiaries is a party to or bound by:
(i) any contract, arrangement, commitment or understanding
(whether written or oral) with respect to the employment of any
directors, officers or employees other than in the ordinary
course of business consistent with past practice;
(ii) any contract, arrangement, commitment or understanding
(whether written or oral) which, upon the consummation of the
transactions contemplated by this Agreement will (either alone or
upon the occurrence of any additional acts or events) result in
any payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise)
becoming due from Premier, Northern Illinois, GPF, or any of
their respective Subsidiaries to any officer, director or
employee thereof;
(iii) any contract, arrangement, commitment or
understanding (whether written or oral) which is a "material
contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been filed or incorporated by reference in
the Premier Reports;
(iv) any contract, arrangement, commitment or understanding
(whether written or oral) which materially restricts the conduct
of any line of business by Premier;
(v) any contract, arrangement, commitment or understanding
(whether written or oral) with a labor union or guild (including
any collective bargaining agreement); or
(vi) any contract, arrangement, commitment or understanding
(whether written or oral), including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this
Agreement, or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated
by this Agreement.
Premier has previously made available to Northern Illinois true and
correct copies of all employment and deferred compensation agreements
which are in writing and to which Premier is a party. Each contract,
arrangement, commitment or understanding of the type described in this
Section 4.15(a), whether or not set forth in the Premier Disclosure
Schedules, is referred to herein as a "Premier Contract", and neither
Premier nor any of its Subsidiaries knows of, or has received notice
of, any violation of the above by any of the other parties thereto
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which, individually or in the aggregate, would have a Material Adverse
Effect on Premier or GPF.
(b) (i) Each Premier Contract is valid and binding on Premier
or any of its Subsidiaries, as applicable, and is in full force and
effect, (ii) Premier and each of its Subsidiaries has performed all
obligations required to be performed by it to date under each Premier
Contract, except where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect on Premier, and
(iii) no event or condition exists which constitutes or, after notice
or lapse of time or both, would constitute, a default on the part of
Premier or any of its Subsidiaries under any such Premier Contract,
except where any such default, individually or in the aggregate, would
not have a Material Adverse Effect on Premier or GPF.
4.16 Agreements with Regulatory Agencies. Neither Premier
nor any of its Subsidiaries is subject to any cease-and-desist or
other order issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any
order or directive by, or has been since January 1, 1994, a recipient
of any supervisory letter from, or since January 1, 1994, has adopted
any board resolutions at the request of any Regulatory Agency or other
Governmental Entity that currently restricts the conduct of its
business or that relates to its capital adequacy, its credit policies,
its management or its business (each, whether or not set forth in the
Premier Disclosure Schedules, a "Premier Regulatory Agreement"), nor
has Premier or any of its Subsidiaries been advised since January 1,
1994, by any Regulatory Agency or other Governmental Entity that it is
considering issuing or requesting any such Premier Regulatory
Agreement.
4.17 Other Activities of Premier and its Subsidiaries.
(a) Neither Premier nor any of its Subsidiaries that is
neither a bank, a bank operating subsidiary or a bank service
corporation directly or indirectly engages in any activity prohibited
by the Federal Reserve Board. Without limiting the generality of the
foregoing, no equity investment of Premier and each Premier Subsidiary
that is not a bank, a bank operating subsidiary or a bank service
corporation is prohibited by the Federal Reserve Board.
(b) Each Premier Subsidiary that engages in Trust
Activities engages in such Trust Activities with requisite authority
under the applicable law of Governmental Entities and in accordance in
all material respects with the terms of the agreements and instruments
governing such Trust Activities and applicable law and regulation,
including applicable law governing such Premier Subsidiary's
performance of its fiduciary obligations; there is no investigation or
inquiry by any Governmental Entity pending, or to the best knowledge
of Premier, threatened, against or affecting Premier or any Premier
Subsidiary relating to the compliance by Premier or any Premier
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Subsidiary with sound fiduciary principles and applicable regulations;
and except where any such failure would not have a Material Adverse
Effect on Premier, each employee of a Premier Subsidiary had the
authority to act in the capacity in which he or she acted with respect
to Trust Activities, in each case, in which such employee held himself
or herself out as a representative of a Premier Subsidiary; and each
Premier Subsidiary has established policies and procedures for the
purpose of complying with applicable laws of Governmental Entities
relating to Trust Activities, has followed such policies and
procedures in all material respects and has performed appropriate
internal audit reviews of, and has engaged independent accountants to
perform audits of, Trust Activities, which audits since January 1,
1994 have disclosed no material violations of applicable laws of
Governmental Entities or such policies and procedures.
4.18 Investment Securities. Each of Premier and its
Subsidiaries has good and marketable title to all securities held by
it (except securities sold under repurchase agreements or held in any
fiduciary or agency capacity), free and clear of any Lien, except to
the extent such securities are pledged in the ordinary course of
business consistent with prudent banking practices to secure
obligations of Premier or any of the Premier Subsidiaries. Such
securities are valued on the books of Premier and the Premier
Subsidiaries in accordance with GAAP.
4.19 Undisclosed Liabilities. Except for those liabilities
that are fully reflected or reserved against on the consolidated
balance sheet of Premier included in the Premier Third-Quarter 10-Q
and for liabilities incurred in the ordinary course of business
consistent with past practice, since September 30, 1995 neither
Premier nor any of the Premier Subsidiaries has incurred any liability
of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that, either alone or when
combined with all similar liabilities, has had, or could reasonably be
expected to have, a Material Adverse Effect on Premier.
4.20 Environmental Liability. There are no legal,
administrative, arbitration or other proceedings, claims, actions,
causes of action, private environmental investigations or remediation
activities or governmental investigations of any nature pending or, to
the best of Premier's knowledge, threatened against Premier seeking to
impose, or that could reasonably result in the imposition, on Premier
of any liability or obligation arising under common law or under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, CERCLA. To the best of Premier's
knowledge, there is no reasonable basis for any such proceeding,
claim, action or governmental investigation that would impose any such
liability or obligation. Premier is not subject to any agreement,
order, judgment, decree, letter or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any
such liability or obligation.
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4.21 Insurance. Schedule 4.21 in the Premier Disclosure
Schedules describes all policies of insurance in which Premier or any
of the Premier Subsidiaries is named as an insured party or which
otherwise relate to or cover any assets or properties of Premier or
any of the Premier Subsidiaries. Each of such policies is in full
force and effect, and the coverage provided under such properties
complies with the requirements of any contracts binding on Premier or
any of the Premier Subsidiaries relating to such assets or properties.
4.22 Loan Loss Reserves. The reserve for possible loan
losses shown on the September 30, 1995 call reports filed for each of
the Premier Subsidiaries which is a Subsidiary bank is adequate in all
material respects under the requirements of GAAP to provide for
possible losses, net of recoveries relating to loans previously
charged off, on loans outstanding (including accrued interest
receivable) as of September 30, 1995. The aggregate loan balances at
such date in excess of such reserves of each of the Premier
Subsidiaries which is a bank Subsidiary are, to the best knowledge and
belief of Premier, collectible in accordance with their terms.
4.23 Approval Delays. Premier knows of no reason why any of
the Requisite Regulatory Approvals (as defined in Section 7.1(c))
should be denied or unduly delayed.
4.24 State Takeover Laws. The Board of Directors of Premier
has approved the transactions contemplated by this Agreement and the
Option Agreements such that the provisions of Section 203 of the DGCL
will not apply to this Agreement or the Option Agreements or any of
the transactions contemplated hereby or thereby.
4.25 Pooling of Interests. As of the date of this
Agreement, Premier has no reason to believe that the Merger will not
qualify as a "pooling of interests" for accounting purposes.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time.
During the period from the date of this Agreement to the Effective
Time, except as expressly contemplated or permitted by this Agreement
(including the Premier Disclosure Schedules and the Northern Illinois
Disclosure Schedules) or the Option Agreements, each of Premier and
Northern Illinois shall, and shall cause each of their respective
Subsidiaries to, (a) conduct its business in the usual, regular and
ordinary course consistent with past practice, (b) use reasonable
efforts to maintain and preserve intact its business organization,
employees and advantageous business relationships and retain the
services of its key officers and key employees, and (c) take no action
which would adversely affect or delay the ability of either Premier or
Northern Illinois to obtain any necessary approvals of any Regulatory
Agency or other governmental authority required for the transactions
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contemplated hereby or to perform its covenants and agreements under
this Agreement or the Option Agreements.
5.2 Forbearances. During the period from the date of this
Agreement to the Effective Time, except as set forth in the Premier
Disclosure Schedules or the Northern Illinois Disclosure Schedules, as
the case may be, and, except as expressly contemplated or permitted by
this Agreement or the Option Agreements, neither Premier nor Northern
Illinois shall, or shall permit any of their respective Subsidiaries
to, without the prior written consent of the other:
(a) other than in the ordinary course of business
consistent with past practice, (i) incur any indebtedness for
borrowed money (other than short-term indebtedness incurred in
the ordinary course of business consistent with past practice,
indebtedness of Premier to any of the Premier Subsidiaries or of
any of the Premier Subsidiaries to Premier, or indebtedness of
Northern Illinois to any of the Northern Illinois Subsidiaries or
of any of the Northern Illinois Subsidiaries to Northern
Illinois, it being understood and agreed that incurrence of
indebtedness in the ordinary course of business shall include,
without limitation, the creation of deposit liabilities,
purchases of Federal funds, sales of certificates of deposit and
entering into repurchase agreements), (ii) assume, guarantee,
endorse or otherwise as an accommodation become responsible for
the obligations of any other individual, corporation or other
entity, or (iii) make any loan or advance;
(b) (i) adjust, split, combine or reclassify any capital
stock, (ii) make, declare or pay any dividend or make any other
distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any
securities or obligations convertible into or exchangeable for
any shares of its capital stock (except, (A) in the case of
Northern Illinois, for regular quarterly cash dividends for the
first three calendar quarters at a rate not in excess of $0.17
per share, and for the fourth calendar quarter at a rate not in
excess of $0.29 per share, of Northern Illinois Common Stock, (B)
in the case of Premier Common Stock, for regular quarterly cash
dividends on Premier Common Stock at a rate not in excess of
$0.06 per share of Premier Common Stock, (C) in the case of
Premier Preferred Stock, for regular quarterly cash dividends
thereon at the rates set forth in the applicable certificate of
designation for such securities, and (D) dividends paid by any of
the Subsidiaries of each of Northern Illinois and Premier to
Northern Illinois or Premier or any of their Subsidiaries,
respectively); provided, however, that in the event that the
Effective Time occurs later than July 16, 1996 (the "Series A
Redemption Date"), Premier shall have the right to redeem all of
the shares of Premier Series A Perpetual Preferred Stock for a
redemption price per share equal to the stated value, per share,
of the Series A Perpetual Preferred Stock, together with all
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accrued and unpaid dividends due thereon to and including the
Series A Redemption Date, in accordance with the terms and
conditions of the Certificate of Designation establishing the
Premier Series A Perpetual Preferred Stock, (iii) grant any stock
appreciation rights or grant any individual, corporation or other
entity any right to acquire any shares of its capital stock
(except for options to purchase stock granted in the ordinary
course of business consistent with past practice pursuant to the
Premier Stock Plans) or (iv) issue any additional shares of
capital stock except pursuant to (A) the exercise of stock
options or warrants outstanding as of the date hereof, (B) the
conversion of shares of Premier Series B Perpetual Preferred
Stock in accordance with its terms, or (C) the Option Agreements;
(c) sell, transfer, mortgage, encumber or otherwise dispose
of any of its properties or assets to any individual, corporation
or other entity other than a Subsidiary, or cancel, release or
assign any indebtedness to any such person or any claims held by
any such person, except in the ordinary course of business
consistent with past practice or pursuant to contracts or
agreements in force at the date of this Agreement;
(d) except for transactions in the ordinary course of
business consistent with past practice or pursuant to contracts
or agreements in force at the date of this Agreement, make any
material investment either by purchase of stock or securities,
contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other
entity other than a Subsidiary thereof;
(e) except for transactions in the ordinary course of
business consistent with past practice, enter into or terminate
any material contract or agreement, or make any change in any of
its material leases or contracts, other than renewals of
contracts and leases without material adverse changes of terms;
(f) other than in the ordinary course of business
consistent with past practice, increase in any manner the
compensation or fringe benefits of any of its employees or pay
any pension or retirement allowance not required by any existing
plan or agreement to any such employees or become a party to,
amend or commit itself to any pension, retirement, profit-sharing
or welfare benefit plan or agreement or employment agreement with
or for the benefit of any employee;
(g) accelerate the vesting of any stock options or other
stock-based compensation, except in accordance with the terms of
an applicable Premier Stock Plan and in a manner consistent with
past practice;
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(h) settle any claim, action or proceeding involving money
damages, except in the ordinary course of business consistent
with past practice;
(i) take any action that would prevent or impede the Merger
from qualifying (i) for "pooling of interests" accounting
treatment or (ii) as a reorganization within the meaning of
Section 368 of the Code; provided, however, that nothing
contained herein shall limit the ability of Premier or Northern
Illinois to exercise its rights under the Northern Illinois
Option Agreement or the Premier Option Agreement, as the case may
be;
(j) amend its certificate of incorporation or articles of
incorporation, as the case may be, or its bylaws, except, in the
case of the Northern Illinois Subsidiaries, in connection with
the Northern Illinois Subsidiary Bank Merger;
(k) other than in prior consultation with the other party
to this Agreement, restructure or materially change its
investment securities portfolio or its gap position, through
purchases, sales or otherwise, or the manner in which the
portfolio is classified or reported;
(l) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties
set forth in this Agreement being or becoming untrue in any
material respect at any time prior to the Effective Time, or in
any of the conditions to the Merger set forth in Article VII not
being satisfied or in a violation of any provision of this
Agreement, except, in every case, as may be required by
applicable law; or
(m) agree to, or make any commitment to, take any of the
actions prohibited by this Section 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters; Cooperation with Respect to Filing.
(a) Premier and Northern Illinois shall promptly prepare and file with
the SEC the Joint Proxy Statement, and shall cause GPF promptly (i) to
prepare and file with the SEC the S-4, in which the Joint Proxy
Statement will be included as a prospectus, and the 8-A, and (ii) to
prepare and file an application with the Federal Reserve Board under
the BHC Act for approval to consummate the transactions contemplated
by this Agreement. Each of GPF, Premier and Northern Illinois shall
use all reasonable efforts to have the S-4 and the 8-A declared
effective under the Securities Act and the Exchange Act as promptly as
practicable after such filing and to have the application filed with
the Federal Reserve Board approved, and Premier and Northern Illinois
shall mail or deliver the Joint Proxy Statement to their respective
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stockholders. Premier and Northern Illinois shall also cause GPF to
use all reasonable efforts to obtain all necessary state securities
law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement, and Premier and Northern
Illinois shall furnish all information concerning Premier and the
holders of the Premier Common Stock and Premier Preferred Stock, and
Northern Illinois and the holders of the Northern Illinois Common
Stock, respectively, as may be reasonably requested in connection with
any such action.
(b) The parties hereto shall cooperate with each other and
shall each use reasonable efforts to promptly prepare and file all
necessary documentation, to effect all applications, notices,
petitions and filings, to obtain as promptly as practicable all
permits, consents, approvals and authorizations of all third parties
and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (including,
without limitation, the Merger), and to comply with the terms and
conditions of all such permits, consents, approvals and authorizations
of all such Governmental Entities. Premier and Northern Illinois
shall have the right to review in advance, and, to the extent
practicable, each will consult the other on, in each case subject to
applicable laws relating to the exchange of information, all the
information relating to Premier or Northern Illinois, as the case may
be, and any of their respective Subsidiaries, which appears in any
filing made with, or written materials submitted to, any third party
or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto shall act reasonably and as promptly as
practicable. The parties hereto agree that they will consult with
each other with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions
contemplated by this Agreement, and each party will keep the other
apprised of the status of matters relating to completion of the
transactions contemplated herein.
(c) Premier and Northern Illinois shall, upon request,
furnish each other and GPF with all information concerning themselves,
their Subsidiaries, directors, officers and stockholders and such
other matters as may be reasonably necessary or advisable in
connection with the Joint Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of
Premier, Northern Illinois or GPF or any of their respective
Subsidiaries to any Governmental Entity in connection with the Merger
and the other transactions contemplated by this Agreement. Premier
covenants and agrees that none of the information which is furnished
by Premier for inclusion, or which is included, in the S-4, the Joint
Proxy Statement or any other statement, filing, notice or application
made by or on behalf of Premier, Northern Illinois or GPF or any of
their respective Subsidiaries to any Governmental Entity in connection
with the Merger and the other transactions contemplated by this
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Agreement will, at the respective times such documents are filed and,
in the case of the S-4, when it becomes effective and, with respect to
the Joint Proxy Statement, when mailed or at the time of the meetings
of the stockholders of Premier and Northern Illinois, be false or
misleading with respect to any material fact or shall omit to state
any material fact necessary in order to make the statements therein,
in light of the circumstances in which they were made, not misleading.
Northern Illinois covenants and agrees that none of the information
which is furnished by Northern Illinois for inclusion, or which is
included, in the S-4, the Joint Proxy Statement or any other
statement, filing, notice or application made by or on behalf of
Premier, Northern Illinois or GPF or any of their respective
Subsidiaries to any Governmental Entity in connection with the Merger
and the other transactions contemplated by this Agreement will, at the
respective times such documents are filed and, in the case of the S-4,
when it becomes effective and, with respect to the Joint Proxy
Statement, when mailed or at the time of the meetings of the
stockholders of Premier and Northern Illinois, be false or misleading
with respect to any material fact or shall omit to state any material
fact necessary in order to make the statements therein, in light of
the circumstances in which they were made, not misleading.
Notwithstanding the foregoing, Premier shall have no responsibility
for the truth or accuracy of any information with respect to Northern
Illinois or the Northern Illinois Subsidiaries included in the S-4,
the Joint Proxy Statement, or any other statement, filing, notice or
application filed with any Governmental Entity in connection with the
Merger and the other transactions contemplated by this Agreement, and
Northern Illinois shall have no responsibility for the truth or
accuracy of any information with respect to Premier or the Premier
Subsidiaries included in the S-4, the Joint Proxy Statement, or any
other statement, filing, notice or application filed with any
Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement.
(d) Premier, Northern Illinois and GPF shall promptly
advise one another upon receiving any communication from any
Governmental Entity whose consent or approval is required for
consummation of the transactions contemplated by this Agreement which
causes such party to believe that there is a reasonable likelihood
that any Requisite Regulatory Approval will not be obtained or that
the receipt of any such approval will be materially delayed.
6.2 Access to Information. (a) Upon reasonable notice and
subject to applicable laws relating to the exchange of information,
each of Premier and Northern Illinois shall, and shall cause each of
their respective Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of the other party,
access, during normal business hours during the period prior to the
Effective Time, to all its properties, books, contracts, commitments
and records and, during such period, each of Premier and Northern
Illinois shall, and shall cause their respective Subsidiaries to, make
available to the other party (i) a copy of each report, schedule,
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registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities
laws or federal or state banking laws (other than reports or documents
which Premier or Northern Illinois, as the case may be, is not
permitted to disclose under applicable law) and (ii) all other
information concerning its business, properties and personnel as such
party may reasonably request. Neither Premier nor Northern Illinois
nor any of their respective Subsidiaries shall be required to provide
access to or to disclose information where such access or disclosure
would violate or prejudice the rights of Premier's or Northern
Illinois', as the case may be, customers, jeopardize the attorney-
client privilege of the institution in possession or control of such
information or contravene any law, rule, regulation, order, judgment,
decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The parties hereto will make appropriate
substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(b) Each of Premier and Northern Illinois shall hold all
information furnished by or on behalf of the other party or any of
such party's Subsidiaries or representatives pursuant to Section
6.2(a) in confidence and shall return all documents containing any
information concerning the properties, business and assets of each
other party that may have been obtained in the course of negotiations
or examination of the affairs of each other party either prior or
subsequent to the execution of this Agreement (other than such
information as shall be in the public domain or otherwise
ascertainable from public or outside sources). Each of Premier and
Northern Illinois shall use such information solely for the purpose of
conducting business, legal and financial reviews of the other party
and for such other purposes as may be related to this Agreement.
(c) No investigation by either of the parties or their
respective representatives shall affect the representations and
warranties of the other set forth herein. Without limitation of the
foregoing, each party shall promptly notify the other party of any
information obtained by such party during the course of any due
diligence conducted by such party or its representatives in accordance
with Section 8.1(b) or (c) which is materially inconsistent with any
representation or warranty made by the other party under this
Agreement; provided, however, that either party's failure to provide
such notice to the other party shall not, in turn, be deemed to
constitute a material breach of such party's obligations under this
Agreement.
6.3 Stockholders' Approvals. Each of Premier and Northern
Illinois shall call a meeting of its stockholders to be held as soon
as reasonably practicable for the purpose of voting upon this
Agreement, and each shall use reasonable efforts to cause such
meetings to occur on the same date.
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6.4 Legal Conditions to Merger. Each of Premier and
Northern Illinois shall, and shall cause its Subsidiaries to, use
reasonable efforts (a) to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal
requirements which may be imposed on such party or its Subsidiaries
with respect to the Merger and, subject to the conditions set forth in
Article VII hereof, to consummate the transactions contemplated by
this Agreement and (b) to obtain (and to cooperate with the other
party to obtain) any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity and any other third party
which is required to be obtained by Premier or Northern Illinois or
any of their respective Subsidiaries in connection with the Merger and
the other transactions contemplated by this Agreement.
6.5 Affiliates; Publication of Combined Financial Results.
(a) Each of Premier and Northern Illinois shall use reasonable
efforts to cause each director, executive officer and other person who
is an "affiliate" (for purposes of Rule 145 under the Securities Act
and for purposes of qualifying the Merger for "pooling of interests"
accounting treatment) of such party to deliver to the other party
hereto, not later than 30 days after the date of this Agreement, a
written agreement, in the form of Exhibit F, providing that such
person will not sell, pledge, transfer or otherwise dispose of (i) any
shares of Premier Common Stock or Northern Illinois Common Stock held
by such "affiliate," except to the extent and under the conditions
permitted therein, during the period commencing 30 days prior to the
Merger and ending at the time of the publication of financial results
covering at least 30 days of combined operations of Premier and
Northern Illinois, and (ii) any shares of GPF Common Stock to be
received by such "affiliate" in the Merger, except in compliance with
the applicable provisions of the Securities Act and the rules and
regulations thereunder.
(b) GPF shall use reasonable efforts to publish as promptly
as reasonably practical but in no event later than 90 days after the
end of the first month after the Effective Time in which there are at
least 30 days of post-Merger combined operations (which month may be
the month in which the Effective Time occurs), combined sales and net
income figures as contemplated by and in accordance with the terms of
SEC Accounting Series Release No. 135.
6.6 Listing of GPF Common Stock. GPF shall file an
application with The Nasdaq Stock Market for approval to list the
shares of GPF Common Stock on The Nasdaq Stock Market's National
Market, subject to official notice of issuance, and the parties shall
each use reasonable efforts to have such application approved prior to
the Effective Time.
6.7 Employee Benefit Plans. (a) From and after the
Effective Time, unless otherwise mutually determined, the Premier
Benefit Plans and Northern Illinois Benefit Plans in effect as of the
date of this Agreement shall remain in effect with respect to
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employees of Premier or Northern Illinois (or their Subsidiaries)
covered by such plans at the Effective Time until such time as GPF
shall, subject to applicable law, the terms of this Agreement and the
terms of such plans, adopt new benefit plans with respect to employees
of GPF and its Subsidiaries (the "New Benefit Plans"). Prior to the
Closing Date, Premier and Northern Illinois shall cooperate in
reviewing, evaluating and analyzing the Premier Benefit Plans and
Northern Illinois Benefit Plans with a view towards developing
appropriate New Benefit Plans for the employees covered thereby
subsequent to the Merger. It is the intention of Premier and Northern
Illinois to develop New Benefit Plans, effective as of the Effective
Time, which, among other things, (i) treat similarly situated
employees on a substantially equivalent basis, taking into account all
relevant factors, including, without limitation, duties, geographic
location, tenure, qualifications and abilities, and (ii) do not
discriminate between employees of GPF who were covered by Premier
Benefit Plans, on the one hand, and those covered by Northern Illinois
Benefit Plans, on the other, at the Effective Time.
(b) The foregoing notwithstanding, GPF agrees to honor in
accordance with their terms all benefits vested as of the date hereof
under the Premier Benefit Plans or the Northern Illinois Benefit Plans
or under other contracts, arrangements, commitments, or understandings
described in the Premier Disclosure Schedules and the Northern
Illinois Disclosure Schedules.
(c) Nothing in this Section 6.7 shall be interpreted as
preventing GPF from amending, modifying or terminating any Premier
Benefit Plans, Northern Illinois Benefit Plans, or other contracts,
arrangements, commitments or understandings, in accordance with their
terms and applicable law, following the Effective Time.
6.8 Indemnification; Directors' and Officers' Insurance.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action,
suit, proceeding or investigation in which any individual who is now,
or has been at any time prior to the date of this Agreement, or who
becomes prior to the Effective Time, a director or officer or employee
of Premier, Northern Illinois or any of their Subsidiaries (the
"Indemnified Parties"), is, or is threatened to be, made a party based
in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he or she is or was a director,
officer or employee of Premier, Northern Illinois or any of their
Subsidiaries or any of their respective predecessors, or (ii) this
Agreement, the Option Agreements or any of the transactions
contemplated hereby or thereby, whether in any case asserted or
arising before or after the Effective Time, the parties hereto agree
to cooperate and use reasonable efforts to defend against and respond
thereto. It is understood and agreed that after the Effective Time,
GPF shall indemnify and hold harmless, as and to the fullest extent
permitted by law, each such Indemnified Party against any losses,
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claims, damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of
any claim, suit, proceeding or investigation incurred by each
Indemnified Party to the fullest extent permitted by law upon receipt
of any undertaking required by applicable law), judgments, fines and
amounts paid in settlement in connection with any such threatened or
actual claim, action, suit, proceeding or investigation, and in the
event of any such threatened or actual claim, action, suit, proceeding
or investigation (whether asserted or arising before or after the
Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with GPF; provided, however,
that (A) GPF shall have the right to assume the defense thereof and
upon such assumption GPF shall not be liable to any Indemnified Party
for any legal expenses of other counsel or any other expenses
subsequently incurred by any Indemnified Party in connection with the
defense thereof, except that if GPF elects not to assume such defense
or counsel for the Indemnified Parties reasonably advises the
Indemnified Parties that there are issues which raise conflicts of
interest between GPF and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to them after
consultation with GPF, and GPF shall pay the reasonable fees and
expenses of such counsel for the Indemnified Parties, (B) GPF shall be
obligated pursuant to this paragraph to pay for only one firm of
counsel for all Indemnified Parties, unless an Indemnified Party shall
have reasonably concluded, based on the advice of counsel, that there
is a material conflict of interest between the interests of such
Indemnified Party and the interests of one or more other Indemnified
Parties and that the interests of such Indemnified Party will not be
adequately represented unless separate counsel is retained, in which
case, GPF shall be obligated to pay for such separate counsel, (C) GPF
shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld) and
(D) GPF shall have no obligation hereunder to any Indemnified Party
when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law. Any
Indemnified Party wishing to claim Indemnification under this Section
6.8, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify GPF thereof, provided that the failure to
so notify shall not affect the obligations of GPF under this Section
6.8 except to the extent such failure to notify materially prejudices
GPF. GPF's obligations under this Section 6.8 continue in full force
and effect for a period of three years from the Effective Time (or the
period of the applicable statute of limitations, if longer); provided,
however, that all rights to indemnification in respect of any claim (a
"Claim") asserted or made within such period shall continue until the
final disposition of such Claim.
(b) Premier and Northern Illinois shall each use reasonable
efforts (i) to obtain, after the Effective Time, directors' and
officers' liability insurance coverage for the officers and directors
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of GPF, to the extent that the same is economically practicable, and
(ii) either to cause the individuals serving as officers and directors
of Premier, Northern Illinois or their Subsidiaries immediately prior
to the Effective Time to be covered for a period of three years from
the Effective Time (or the period of the applicable statute of
limitations, if longer) by the directors' and officers' liability
insurance policies maintained by Premier and Northern Illinois,
respectively, or to substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are not
less advantageous than the policies previously maintained by Premier
and Northern Illinois, respectively) with respect to acts or omissions
occurring prior to the Effective Time which were committed by such
officers and directors in their capacity as such; provided, however,
that in no event shall GPF be required to expend more than $50,000 per
year (the "Insurance Amount") to maintain or procure insurance
coverage pursuant to clause (ii) of this sentence, and provided
further that if GPF is unable to maintain or obtain the insurance
called for by clause (ii) of this sentence, GPF shall use reasonable
efforts to obtain as much comparable insurance as available for the
Insurance Amount.
(c) In the event GPF or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then,
and in each such case, to the extent necessary, proper provision shall
be made so that the successors and assigns of GPF assume the
obligations set forth in this section.
(d) The provisions of this Section 6.8 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified
Party and his or her heirs and representatives.
6.9 Additional Agreements. 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 GPF with full title to
all properties, assets, rights, approvals, immunities and franchises
of any of the parties to the Merger, the proper officers and directors
of each party to this Agreement and their respective Subsidiaries
shall take all such necessary action as may be reasonably requested
by, and at the sole expense of, GPF.
6.10 Advice of Changes. Premier and Northern Illinois shall
promptly advise the other party of any change or event having a
Material Adverse Effect on it or which it believes would or would be
reasonably likely to cause or constitute a material breach of any of
its representations, warranties or covenants contained herein.
6.11 Dividends. After the date of this Agreement, each of
Premier and Northern Illinois shall coordinate with the other the
declaration of any dividends in respect of Premier Common Stock and
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Northern Illinois Common Stock and the record dates and payment dates
relating thereto, it being the intention of the parties hereto that
holders of Premier Common Stock or Northern Illinois Common Stock
shall not receive two dividends, or fail to receive one dividend, for
any quarter with respect to their shares of Premier Common Stock
and/or Northern Illinois Common Stock and any shares of GPF Common
Stock any such holder receives in exchange therefor in the Merger.
6.12 No Conduct Inconsistent with this Agreement. Neither
Premier nor Northern Illinois shall (a) solicit, encourage or
authorize any individual, corporation or other entity to solicit from
any third party any inquiries or proposals relating to the disposition
of the business or assets, or the acquisition of its capital stock, or
the merger of it or any of its Subsidiaries with any corporation or
other entity other than as provided by this Agreement, except pursuant
to a written direction from a regulatory authority, or (b) negotiate
with or entertain any proposals from any other person for any such
transaction wherein the business, assets or capital stock of it or any
of its Subsidiaries would be acquired, directly or indirectly, by any
party other than GPF, except pursuant to a written direction from any
regulatory authority or upon the receipt of an unsolicited offer from
a third party where the Board of Directors of the party receiving such
offer reasonably believes, upon the written advice of counsel, that
its fiduciary duties require it to enter into discussions with such
party. Each party shall promptly notify the other of all of the
relevant details relating to all inquiries and proposals which it may
receive relating to any proposed disposition of the business or
assets, or the acquisition of its capital stock, or the merger of it
or any of its Subsidiaries with any corporation or other entity other
than as provided by this Agreement.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time
of the following conditions:
(a) Stockholder Approval. This Agreement and the
transactions contemplated hereby shall have been approved and
adopted by the respective requisite affirmative votes of the
holders of Northern Illinois Common Stock and Premier Common
Stock entitled to vote thereon.
(b) Nasdaq-NMS Listing. The shares of GPF Common Stock
which shall be issued to the stockholders of Northern Illinois
and Premier upon consummation of the Merger shall have been
authorized for listing on The Nasdaq Stock Market's National
Market, subject to official notice of issuance.
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(c) Other Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been
obtained, on terms and conditions reasonably satisfactory to each
of Northern Illinois and Premier, and shall remain in full force
and effect and all statutory waiting periods in respect thereof
shall have expired (all such approvals and the expiration of all
such waiting periods being referred to herein as the "Requisite
Regulatory Approvals").
(d) Registration Statements. The S-4 and the 8-A shall
have become effective under the Securities Act and the Exchange
Act, respectively, and no stop order suspending the effectiveness
of the S-4 or the 8-A shall have been issued and no proceedings
for that purpose shall have been initiated or threatened by the
SEC.
(e) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger or any of
the other transactions contemplated by this Agreement shall be in
effect. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced
by any Governmental Entity which prohibits, materially restricts
or makes illegal consummation of the Merger.
(f) Federal Tax Opinion. Northern Illinois and Premier
shall each have received an opinion of their respective counsel,
in form and substance reasonably satisfactory to each, dated as
of the Effective Time, substantially to the effect that, on the
basis of facts, representations and assumptions set forth in such
opinion which are consistent with the state of facts existing at
the Effective Time:
(i) The Merger will constitute a tax free
reorganization under Section 368(a)(i)(A) of the Code, and
Northern Illinois and Premier will each be a party to the
reorganization;
(ii) No gain or loss will be recognized by Northern
Illinois or Premier, as the case may be, as a result of the
Merger;
(iii) No gain or loss will be recognized by the
stockholders of Northern Illinois or Premier, as the case
may be, who exchange their Northern Illinois Common Stock or
Premier Common Stock or Premier Preferred Stock, as the case
may be, solely for GPF Common Stock or GPF Preferred Stock
pursuant to the Merger (except with respect to cash received
in lieu of a fractional share interest in GPF Common Stock);
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(iv) The tax basis of the GPF Common Stock or GPF
Preferred Stock received by stockholders who exchange all of
their Northern Illinois Common Stock or all of their Premier
Common Stock or Premier Preferred Stock, as the case may be,
solely for GPF Common Stock or GPF Preferred Stock in the
Merger will be the same as the tax basis of the Northern
Illinois Common Stock or the Premier Common Stock or Premier
Preferred Stock, as the case may be, surrendered in exchange
therefor (reduced by any amount allocable to a fractional
share interest for which cash is received); and
(v) The holding period of the GPF Common Stock or GPF
Preferred Stock received by stockholders of Northern
Illinois or Premier, as the case may be, in the Merger will
include the period during which the shares of Northern
Illinois Common Stock or Premier Common Stock or Premier
Preferred Stock, as the case may be, surrendered in exchange
therefor were held; provided, such Northern Illinois Common
Stock or Premier Common Stock or Premier Preferred Stock, as
the case may be, was held as a capital asset by the holder
of such Northern Illinois Common Stock or Premier Common
Stock or Premier Preferred Stock, as the case may be, at the
Effective Time.
In rendering such opinion, counsel may require and rely upon
representations contained in certificates of officers of Northern
Illinois or Premier, as the case may be, and others.
(g) Pooling of Interests. Northern Illinois and Premier
shall each have received a letter from their respective
independent accountants addressed to Northern Illinois or
Premier, as the case may be, to the effect that the Merger will
qualify for "pooling of interests" accounting treatment.
(h) Right of First Refusal. GPF and Howard A. McKee shall
have entered into an agreement, substantially in the form of
Exhibit G, pursuant to which Mr. McKee shall have granted GPF a
right of first refusal to acquire shares of GPF Common Stock
beneficially owned by Mr. McKee, under the circumstances and
subject to the terms and conditions set forth therein.
7.2 Conditions to Obligations of Northern Illinois. The
obligation of Northern Illinois to effect the Merger is also subject
to the satisfaction, or waiver by Northern Illinois, at or prior to
the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Premier set forth in this Agreement shall be true
and correct in all material respects as of the date of this
Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date. Northern Illinois
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shall have received a certificate signed on behalf of Premier by
the Chief Executive Officer and the Chief Financial Officer of
Premier to the foregoing effect.
(b) Performance of Obligations of Premier. Premier shall
have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the
Closing Date, and Northern Illinois shall have received a
certificate signed on behalf of Premier by the Chief Executive
Officer and the Chief Financial Officer of Premier to such
effect.
(c) No Material Adverse Change. Since the date of this
Agreement, (i) no event shall have occurred which has had a
Material Adverse Effect on Premier, and (ii) no condition (other
than general economic or competitive conditions generally
affecting bank holding companies and banks of a size or in
locations comparable to those of Premier and the Premier
Subsidiaries), event, circumstances, fact or other occurrence
shall have occurred that may reasonably be expected to have or
result in such a Material Adverse Effect on Premier.
(d) Changes in Ownership of Premier Common Stock;
Acquisition of Northern Illinois Common Stock. Since the date of
this Agreement, no individual, entity or group identified in
Schedule 4.3 of the Premier Disclosure Schedules shall have
acquired beneficial ownership of (i) any additional shares of
Premier Common Stock, other than shares acquired by a Premier
Subsidiary in a fiduciary capacity for the benefit of third
parties or shares acquired pursuant to the terms and conditions
of any Premier Stock Plan, or (ii) any shares of Northern
Illinois Common Stock.
(e) Opinion of Counsel to Premier. Northern Illinois shall
have received from Schiff Hardin & Waite, counsel to Premier, an
opinion, dated the Closing Date, in substantially the form of
Exhibit H.
(f) Comfort Letter. Northern Illinois shall have received
from KPMG Peat Marwick "comfort letters" dated the date of
mailing of the Joint Proxy Statement and the Closing Date,
covering matters customary to transactions such as the Merger and
in form and substance reasonably satisfactory to Northern
Illinois.
(g) Fairness Opinion. Northern Illinois shall have
received from Prairie Capital Services, Inc., a fairness opinion,
dated the date of mailing of the Joint Proxy Statement and in
form and substance reasonably satisfactory to Northern Illinois,
to the effect that the consideration to be received in the Merger
by the stockholders of Northern Illinois is fair, from a
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financial point of view, to the stockholders of Northern
Illinois.
7.3 Conditions to Obligations of Premier. The obligation
of Premier to effect the Merger is also subject to the satisfaction,
or waiver by Premier, at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. The representations
and warranties of Northern Illinois set forth in this Agreement
shall be true and correct in all material respects as of the date
of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date. Premier shall
have received a certificate signed on behalf of Northern Illinois
by the Chief Executive Officer and the Chief Financial Officer of
Northern Illinois to the foregoing effect.
(b) Performance of Obligations of Northern Illinois.
Northern Illinois shall have performed in all material respects
all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and Premier shall have
received a certificate signed on behalf of Northern Illinois by
the Chief Executive Officer and the Chief Financial Officer of
Northern Illinois to such effect.
(c) No Material Adverse Change. Since the date of this
Agreement, (i) no event shall have occurred which has had a
Material Adverse Effect on Northern Illinois, and (ii) no
condition (other than general economic or competitive conditions
generally affecting bank holding companies and banks of a size or
in locations comparable to those of Northern Illinois and the
Northern Illinois Subsidiaries), event, circumstances, fact or
other occurrence shall have occurred that may reasonably be
expected to have or result in such a Material Adverse Effect on
Northern Illinois.
(d) Changes in Ownership of Northern Illinois Common Stock;
Acquisition of Premier Common Stock. Since the date of this
Agreement, no individual, entity or group identified in Schedule
3.3 of the Northern Illinois Disclosure Schedules shall have
acquired beneficial ownership of (i) any additional shares of
Northern Illinois Common Stock or (ii) any shares of Premier
Common Stock.
(e) Opinion of Counsel to Northern Illinois. Premier shall
have received from Crowley Barrett & Karaba Ltd., counsel to
Northern Illinois, an opinion, dated the Closing Date, in
substantially the form of Exhibit I.
(f) Comfort Letter. Premier shall have received from
Hutton, Nelson and McDonald LLP "comfort letters" dated the date
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of mailing of the Joint Proxy Statement and the Closing Date,
covering matters customary to transactions such as the Merger and
in form and substance reasonably satisfactory to Northern
Illinois.
(g) Fairness Opinion. Premier shall have received from The
Chicago Corporation a fairness opinion, dated the date of mailing
of the Joint Proxy Statement and in form and substance reasonably
satisfactory to Premier, to the effect that the consideration to
be received in the Merger by the stockholders of Premier is fair,
from a financial point of view, to the stockholders of Premier.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated prior to
the Effective Time:
(a) at any time, whether before or after approval of the
matters presented in connection with the Merger by the
stockholders of Premier or Northern Illinois, by written
agreement between Premier and Northern Illinois, if the Board of
Directors of each so determines;
(b) by Premier, by written notice to Northern Illinois,
within 35 days of the date of this Agreement, provided that:
(i) such notice is given prior to the occurrence of an
"Initial Triggering Event," as such term is defined in the
Premier Option Agreement, and Premier determines, in its
sole discretion, in the light of information discovered in
the course of its investigation of Northern Illinois and the
Northern Illinois Subsidiaries, that the transactions
contemplated by this Agreement would not be in the best
interests of Premier; or
(ii) such notice is given after a "Third-Party Initial
Triggering Event" (as defined below) and Premier is able to
demonstrate (A) that the occurrence of such Third-Party
Initial Triggering Event was not due, in whole or in part,
to a breach of Premier's obligations under Section 6.12. of
this Agreement, and (B) that the occurrence of such Third-
Party Initial Triggering Event was not a material factor in
its decision to provide such notice. A "Third-Party Initial
Triggering Event" shall mean any of the events described in
Section 2(b)(iii)(A) or (B) (other than the formation of a
group that includes an "Existing 15% Shareholder"), Section
2(b)(iv), or Section 2(b)(vi) of the Option Agreements.
(c) by Northern Illinois, by written notice to Premier,
within 35 days of the date of this Agreement, provided that:
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(i) such notice is given prior to the occurrence of an
"Initial Triggering Event," as such term is defined in the
Northern Illinois Option Agreement, and Northern Illinois
determines, in its sole discretion, in the light of
information discovered in the course of its investigation of
Premier and the Premier Subsidiaries, that the transactions
contemplated by this Agreement would not be in the best
interests of Northern Illinois; or
(ii) such notice is given after a Third-Party Initial
Triggering Event and Northern Illinois is able to
demonstrate (A) that the occurrence of such Third-Party
Initial Triggering Event was not due, in whole or in part,
to a breach of Northern Illinois' obligations under Section
6.12. of this Agreement, and (B) that the occurrence of such
Third-Party Initial Triggering Event was not a material
factor in its decision to provide such notice.
(d) at any time, whether before or after approval of the
matters presented in connection with the Merger by the
stockholders of Premier or Northern Illinois, by either the Board
of Directors of Premier or the Board of Directors of Northern
Illinois if (i) any Governmental Entity which must grant a
Requisite Regulatory Approval (A) has denied approval of the
Merger and such denial has become final and nonappealable or (B)
has advised the parties of its unwillingness to grant such a
Requisite Regulatory Approval on terms and conditions reasonably
acceptable to the parties, notwithstanding the parties'
fulfillment of their obligations to take reasonable efforts to
obtain such Requisite Regulatory Approval, or (ii) any
Governmental Entity of competent jurisdiction shall have issued a
final nonappealable order permanently enjoining or otherwise
prohibiting the consummation of the transactions contemplated by
this Agreement;
(e) by either the Board of Directors of Premier or the
Board of Directors of Northern Illinois if the Merger shall not
have been consummated on or before the first anniversary of the
date of this Agreement, unless the failure of the Closing to
occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the
covenants and agreements of such party set forth herein;
(f) by either the Board of Directors of Premier or the
Board of Directors of Northern Illinois (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) if there shall have been a material breach of any of the
covenants or agreements or any of the representations or
warranties set forth in this Agreement on the part of the other
party, which breach is not cured within 45 days following written
notice to the party committing such breach, or which breach, by
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its nature or timing, cannot be cured prior to the Closing Date;
or
(g) by either Premier or Northern Illinois if any approval
of the stockholders of Premier or Northern Illinois required for
the consummation of the Merger shall not have been obtained by
reason of the failure to obtain the required vote at a duly held
meeting of stockholders or at any adjournment or postponement
thereof.
8.2 Effect of Termination. In the event of termination of
this Agreement by either Premier or Northern Illinois as provided in
Section 8.1, this Agreement shall forthwith become void and have no
effect, and none of Premier, Northern Illinois, any of their
respective Subsidiaries or any of the officers or directors of any of
them shall have any liability of any nature whatsoever hereunder, or
in connection with the transactions contemplated hereby, except that
(i) Sections 6.2(b), 8.2, 9.2 and 9.3, shall survive any termination
of this Agreement, and (ii) notwithstanding anything to the contrary
contained in this Agreement, neither Premier nor Northern Illinois
shall be relieved or released from any liabilities or damages arising
out of its willful breach of any provision of this Agreement.
8.3 Amendment. Subject to compliance with applicable law,
this Agreement may be amended by the parties hereto, by action taken
or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with
the Merger by the stockholders of Premier or Northern Illinois;
provided, however, that after any approval of the transactions
contemplated by this Agreement by the respective stockholders of
Premier or Northern Illinois there may not be, without further
approval of such stockholders, any amendment of this Agreement which
changes the amount or the form of the consideration to be delivered to
the holders of Premier Common Stock or Northern Illinois Common Stock
hereunder other than as contemplated by this Agreement. This
Agreement may not be amended except by an instrument in writing signed
on behalf of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their
respective Board of Directors, may, to the extent legally allowed, (a)
extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein; provided, however, that
after any approval of the transactions contemplated by this Agreement
by the respective stockholders of Premier or Northern Illinois, there
may not be, without further approval of such stockholders, any
extension or waiver of this Agreement or any portion thereof which
reduces the amount or changes the form of the consideration to be
delivered to the holders of Premier Common Stock or Northern Illinois
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Common Stock hereunder other than as contemplated by this Agreement.
Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed
on behalf of such party, but such extension or waiver or failure to
insist on strict compliance with an obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect
to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Non-survival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and
agreements in this Agreement or in any instrument delivered pursuant
to this Agreement (other than pursuant to the Option Agreements, which
shall terminate in accordance with their terms) shall survive the
Effective Time, except for those covenants and agreements contained
herein and therein which by their terms apply in whole or in part
after the Effective Time.
9.2 Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expense, provided,
however, that (i) all attorneys' fees incurred by the parties in
connection with the preparation and negotiation of this Agreement, the
related agreements and documents contemplated hereby and the
transactions contemplated herein, including any attorneys' fees
incurred in connection with the preparation and filing of the Joint
Proxy Statement, the S-4, the 8-A, or any other notice, filing, or
application with any Governmental Entity, Regulatory Agency or SRO to
be made by GPF or jointly by Northern Illinois and Premier, (ii) the
costs and expenses of printing and mailing the Joint Proxy Statement,
(iii) all filing and other fees paid to the SEC, the Federal Reserve
Board, or any State Regulatory Agency in connection with the Merger
and the transactions contemplated by this Agreement, and (iv) all
filing and other fees relating to the listing of the GPF Common Stock
on The Nasdaq Stock Market's National Market, shall constitute
expenses of GPF and shall be borne equally by Northern Illinois and
Premier in the event that this Agreement is terminated prior to the
Effective Time.
9.3 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (with confirmation), mailed by registered or
certified mail (return receipt requested) or delivered by an express
courier (with confirmation) to the parties at the following addresses
(or at such other address for a party as shall be specified by like
notice):
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(a) if to Northern Illinois, to:
Northern Illinois Financial Corporation
486 West Liberty Street
Wauconda, Illinois 60084-2489
Attention: Robert W. Hinman
President and Chief Executive Officer
Telephone: 708-487-1818
Telecopier: 708-487-1896
with a copy to:
Crowley Barrett & Karaba, Ltd.
20 South Clark Street
Suite 2310
Chicago, Illinois 60603
Attention: Thomas F. Karaba
Telephone: 312-726-2468
Telecopier: 312-726-2741
and
(b) if to Premier, to:
Premier Financial Services, Inc.
27 West Main Street
Suite 101
Freeport, Illinois 61032
Attention: Richard L. Geach
President and Chief Executive Officer
Telephone: 815-233-3770
Telecopier: 815-233-3697
with a copy to:
Schiff Hardin & Waite
7200 Sears Tower
Chicago, Illinois 60606
Attention: Gary L. Mowder
Telephone: 312-258-5514
Telecopier: 312-258-5600
9.4 Interpretation. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be
to a section of or exhibit or schedule to this Agreement unless
otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation".
No provision of this Agreement shall be construed to require Northern
Illinois, Premier or any of their respective Subsidiaries or
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<PAGE> 65
affiliates to take any action which would violate any applicable law,
rule or regulation.
9.5 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same counterpart.
9.6 Entire Agreement. This Agreement (including the
documents and the instruments referred to herein) constitutes the
entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect
to the subject matter hereof other than the Option Agreements.
9.7 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Illinois,
without regard to any applicable conflicts of law, except to the
extent that the law of the state of Delaware shall apply to certain
matters of corporate law relating to Premier, GPF and the Merger and
except to the extent superseded by federal law.
9.8 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
9.9 Publicity. Except as otherwise required by applicable
law or the rules of The Nasdaq Stock Market, neither Northern Illinois
nor Premier shall, or shall permit any of its Subsidiaries to, issue
or cause the publication of any press release or other public
announcement with respect to, or otherwise make any public statement
concerning, the transactions contemplated by this Agreement without
the consent of the other party, which consent shall not be
unreasonably withheld.
9.10 Assignment; Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations of the
parties under this Agreement shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and
assigns. Except as otherwise specifically provided in Section 6.8,
this Agreement (including the documents and instruments referred to
herein) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
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IN WITNESS WHEREOF, Premier, Northern Illinois and GPF have
caused this Agreement to be executed by their respective officers
thereunto duly authorized as of the date first above written.
PREMIER FINANCIAL SERVICES, INC. NORTHERN ILLINOIS FINANCIAL
CORPORATION
By: /s/ Richard L. Geach By: /s/ Robert W. Hinman
---------------------------- ----------------------------
Richard L. Geach Robert W. Hinman
President and Chief President and Chief
Executive Officer Executive Officer
GRAND PREMIER FINANCIAL, INC.
By: /s/ Richard L. Geach
----------------------------
Richard L. Geach
Chief Executive Officer
By: /s/ Robert W. Hinman
----------------------------
Robert W. Hinman
President
58
EXHIBIT 10.1
EXECUTION COPY
STOCK OPTION AGREEMENT, dated January 22, 1996, between
Northern Illinois Financial Corporation, an Illinois corporation
("Issuer"), and Premier Financial Services, Inc., a Delaware
corporation ("Grantee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Grantee, Issuer and Grand Premier Financial, Inc.,
a Delaware corporation ("GPF"), have entered into an Agreement and
Plan of Reorganization of even date herewith (the "Merger Agreement"),
which agreement has been executed by the parties hereto immediately
prior to this Stock Option Agreement (the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the
Merger Agreement and in consideration therefor, Issuer has agreed to
grant Grantee the Option (as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Merger
Agreement, the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms
hereof, up to 588,400 fully paid and nonassessable shares of Issuer's
Common Stock, without par value ("Common Stock"), at a price of $30
per share (the "Option Price"); provided, however, that in no event
shall the number of shares of Common Stock for which this Option is
exercisable exceed 19.9% of the Issuer's issued and outstanding shares
of Common Stock without giving effect to any shares subject to or
issued pursuant to the Option. The number of shares of Common Stock
that may be received upon the exercise of the Option and the Option
Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common
Stock are either (i) issued or otherwise become outstanding after the
date of this Agreement (other than pursuant to this Agreement) or (ii)
redeemed, repurchased, retired or otherwise cease to be outstanding
after the date of the Agreement (such event a "Change in Shares
Outstanding Event"), the number of shares of Common Stock subject to
the Option shall be increased or decreased, as appropriate, so that,
after such Change in Shares Outstanding Event, such number equals
19.9% of the number of shares of Common Stock then issued and
outstanding without giving effect to any shares subject or issued
pursuant to the Option. Nothing contained in this Section 1(b) or
elsewhere in this Agreement shall be deemed to authorize Issuer to
issue or redeem, repurchase, or retire shares of Common Stock or to <PAGE>
<PAGE> 68
authorize either the Issuer or the Grantee otherwise to breach any
provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise
the Option, in whole or part, and from time to time, if, but only if,
both an Initial Triggering Event (as hereinafter defined) and a
Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent written
notice of such exercise (as provided in subsection (e) of this Section
2) prior to the date that is 90 days after the date that Holder is
notified of such Subsequent Triggering Event pursuant to section 2(d)
herein. Each of the following shall be an Exercise Termination Event:
(i) the Effective Time (as defined in the Merger Agreement); (ii)
termination of the Merger Agreement in accordance with its terms if
such termination occurs pursuant to Section 8.1(c) or prior to the
occurrence of an Initial Triggering Event, other than a termination by
Grantee pursuant to Section 8.1(f) of the Merger Agreement, or (iii)
the passage of 12 months after termination of the Merger Agreement
(other than pursuant to Section 8.1(c)) if such termination follows,
or occurs at the same time as, the occurrence of an Initial Triggering
Event or is a termination by Grantee pursuant to Section 8.1(f) of the
Merger Agreement; provided, however, that if an Initial Triggering
Event (or an additional Initial Triggering Event) shall occur
following termination of the Merger Agreement in accordance with this
clause (iii), the Exercise Termination Event shall be the passage of
12 months from the occurrence of the Last Initial Triggering Event,
but in no event the passage of more than 18 months from the date of
termination of the Merger Agreement. The "Last Initial Triggering
Event" shall mean the last Initial Triggering Event to occur. The
term "Holder" shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any
of the following events or transactions occurring after the date
hereof:
(i) Issuer or any of its Subsidiaries (each an
"Issuer Subsidiary"), without having received Grantee's prior written
consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person (the
term "person" for purposes of this Agreement having the meaning
assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the rules and
regulations thereunder) other than GPF, Grantee or any of its
Subsidiaries (each a "Grantee Subsidiary") or the Board of Directors
of Issuer shall have recommended that the stockholders of Issuer
approve or accept any Acquisition Transaction. For purposes of this
Agreement, "Acquisition Transaction" shall mean (w) a merger or
consolidation, or any similar transaction, involving Issuer or any
Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC")) of
Issuer, (x) a purchase, lease or other acquisition or assumption of
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all or a substantial portion of the assets or deposits of Issuer or
any Significant Subsidiary of Issuer, (y) a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or otherwise) of securities representing 15% or more of the voting
power of Issuer or any Significant Subsidiary of Issuer, or (z) any
substantially similar transaction; provided, however, that any
transaction described in this sentence that is expressly permitted by
the Merger Agreement shall not be deemed to be an Acquisition
Transaction;
(ii) Issuer or any Issuer Subsidiary, without
having received Grantee's prior written consent, shall have
authorized, recommended, proposed or publicly announced its intention
to authorize, recommend or propose, to engage in an Acquisition
Transaction with any person other than GPF, Grantee or a Grantee
Subsidiary, or the Board of Directors of Issuer shall have publicly
withdrawn or modified, or publicly announced its intent to withdraw or
modify, in any manner adverse to Grantee, its recommendation that the
stockholders of Issuer approve the transactions contemplated by the
Merger Agreement;
(iii) (A) Any person, other than an Excluded
Person (as hereinafter defined) or an Existing 15% Shareholder (as
hereinafter defined), alone or together with such person's affiliates
and associates (such terms for purposes of this Agreement having the
meanings assigned thereto in Rule 12b-2 under the 1934 Act) shall have
acquired beneficial ownership or the right to acquire beneficial
ownership of 15% or more of the shares of Common Stock then
outstanding (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the
1934 Act and the rules and regulations thereunder); (B) any group
(such term for purposes of this Agreement having the meaning assigned
thereto in Section 13(d)(3) of the 1934 Act), other than a group of
which any Excluded Person is a member, shall have acquired beneficial
ownership or the right to acquire beneficial ownership of 15% or more
of the shares of Common Stock then outstanding; (C) any Existing 15%
Shareholder, alone or together with such person's affiliates and
associates, shall have acquired beneficial ownership or the right to
acquire beneficial ownership of shares of Common Stock in addition to
the shares of Common Stock beneficially owned by such Existing 15%
Shareholder as of the date hereof; provided, however, that in the
event that an Existing 15% Shareholder or any associate or affiliate
thereof inadvertently acquires beneficial ownership of shares of
Common Stock in addition to the shares of Common Stock beneficially
owned by such Existing 15% Shareholder as of the date hereof and such
Existing 15% Shareholder or associate or affiliate thereof divests
such additional shares as promptly as practicable upon written notice
by the Grantee, such inadvertent acquisition shall not be deemed to
constitute an Initial Triggering Event pursuant to this Section
2(b)(iii)(C). For purposes of this Agreement, "Excluded Person" shall
mean GPF, Grantee, any Grantee Subsidiary, any employee benefit plan
maintained by the Issuer or an Issuer Subsidiary as of the date of
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<PAGE> 70
this Agreement, or any Issuer Subsidiary acting in a fiduciary
capacity in the ordinary course of its business. "Existing 15%
Shareholder" shall mean any person, other than an Excluded Person, who
as of the date hereof beneficially owns 15% or more of the outstanding
Common Stock.
(iv) Any person other than GPF, Grantee or any
Grantee Subsidiary shall have made a bona fide proposal to Issuer or
its stockholders by public announcement or written communication that
is or becomes the subject of public disclosure to (A) engage in an
Acquisition Transaction or (B) commence a tender or exchange offer the
consummation of which would result in such person acquiring beneficial
ownership of securities representing 15% or more of Issuer's voting
power;
(v) After an overture is made by a third party
(other than an Excluded Person) to Issuer or its stockholders to
engage in an Acquisition Transaction, Issuer shall have breached any
covenant or obligation contained in the Merger Agreement and such
breach (x) would entitle Grantee to terminate the Merger Agreement and
(y) shall not have been cured prior to the Notice Date (as defined
below); or
(vi) Any person other than GPF, Grantee or any
Grantee Subsidiary, other than in connection with a transaction to
which Grantee has given its prior written consent, shall have filed an
application or notice with the Federal Reserve Board, or other federal
or state bank regulatory authority, which application or notice has
been accepted for processing, for approval to engage in an Acquisition
Transaction.
(c) The term "Subsequent Triggering Event" shall mean
either of the following events or transactions occurring after the
date hereof:
(i) The acquisition (A) by an person (other than
an Excluded Person or Existing 15% Shareholder) or group (other than a
group of which an Excluded Person is a member) of beneficial ownership
of 20% or more of the then outstanding Common Stock or (B) by an
Existing 15% Shareholder of any shares of Common Stock in addition to
the shares of Common Stock beneficially owned by such Existing 15%
Shareholder on the date hereof; provided, however, that in the event
that an Existing 15% Shareholder or any associate or affiliate
thereof inadvertently acquires beneficial ownership of shares of
Common Stock in addition to the shares of Common Stock beneficially
owned by such Existing 15% Shareholder as of the date hereof and such
Existing 15% Shareholder or associate or affiliate thereof divests
such additional shares as promptly as practicable upon written notice
by the Grantee, such inadvertent acquisition shall not be deemed to
constitute a Subsequent Triggering Event pursuant to this Section
2(c)(i)(B);
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(ii) The occurrence of the Initial Triggering
Event described in paragraph (i) of subsection (b) of this Section 2,
except that the percentage referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of
the occurrence of any Initial Triggering Event or Subsequent
Triggering Event of which it has notice (together, a "Triggering
Event"), it being understood that the giving of such notice by Issuer
shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes
to exercise the Option, it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date")
specifying (i) the total number of shares it will purchase pursuant to
such exercise and (ii) a place and date not earlier than three
business days nor later than 60 business days from the Notice Date for
the closing of such purchase (the "Closing Date"); provided that if
prior notification to or approval of the Federal Reserve Board or any
other regulatory agency is required in connection with such purchase,
the Holder shall promptly file the required notice or application for
approval and shall expeditiously process the same and the period of
time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification periods have
expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any
exercise of the Option shall be deemed to occur on the Notice Date
relating thereto.
(f) At the closing referred to in subsection (e) of
this Section 2, the Holder shall pay to Issuer the aggregate purchase
price for the shares of Common Stock purchased pursuant to the
exercise of the Option in immediately available funds by wire transfer
to a bank account designated by Issuer, provided that failure or
refusal of Issuer to designate such a bank account shall not preclude
the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery
of immediately available funds as provided in subsection (f) of this
Section 2, Issuer shall deliver to the Holder a certificate or
certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option should be exercised in part
only, a new Option evidencing the rights of the Holder thereof to
purchase the balance of the shares purchasable hereunder, and the
Holder shall deliver to Issuer a copy of this Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise dispose
of such shares in violation of applicable law or the provisions of
this Agreement.
(h) Certificates for Common Stock delivered at a
closing hereunder may be endorsed with a restrictive legend that shall
read substantially as follows:
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<PAGE> 72
"The transfer of the shares represented by this certificate
is subject to certain provisions of an agreement between the
registered holder hereof and Issuer and to resale
restrictions arising under the Securities Act of 1933, as
amended. A copy of such agreement is on file at the
principal office of Issuer and will be provided to the
holder hereof without charge upon receipt by Issuer of a
written request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933
Act"), in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the Holder shall have
delivered to Issuer a copy of a letter from the staff of the SEC, or
an opinion of counsel, in form and substance reasonably satisfactory
to Issuer, to the effect that such legend is not required for purposes
of the 1933 Act; (ii) the reference to the provisions to this
Agreement in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the shares have
been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of
such reference; and (iii) the legend shall be removed in its entirety
if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
(i) Upon the giving by the Holder to Issuer of the
written notice of exercise of the Option provided for under subsection
(e) of this Section 2 and the tender of the applicable purchase price
in immediately available funds, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder.
Issuer shall pay all expenses, and any and all United States federal,
state and local taxes and other charges that may be payable in
connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its
assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but
unissued or treasury shares of Common Stock so that the Option may be
exercised without additional authorization of Common Stock after
giving effect to all other options, warrants, convertible securities
and other rights to purchase Common Stock; (ii) that it will not, by
charter amendment or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be
required (including (x) complying with all premerger notification,
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reporting and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in the
event, under the Bank Holding Company Act of 1956, as amended (the
"BHCA"), or the Change in Bank Control Act of 1978, as amended, or any
state banking law, prior approval of or notice to the Federal Reserve
Board or to any state regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in
preparing such applications or notices and providing such information
to the Federal Reserve Board or such state regulatory authority as
they may require) in order to permit the Holder to exercise the Option
and Issuer duly and effectively to issue shares of Common Stock
pursuant hereto; and (iv) promptly to take all action provided herein
to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal office
of Issuer, for other Agreements providing for Options of different
denominations entitling the holder thereof to purchase, on the same
terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable
hereunder. The terms "Agreement" and "Option" as used herein include
any Stock Option Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon
receipt by Issuer of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Agreement, and (in the
case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new
Agreement of like tenor and date. Any such new Agreement executed and
delivered shall constitute an additional contractual obligation on the
part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares
of Common Stock that are purchasable upon exercise of the Option
pursuant to Section 1 of this Agreement, the number of shares of
Common Stock purchasable upon the exercise of the Option and the
Option Price shall be subject to adjustment from time to time as
provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions on or in
respect of the Common Stock that would be prohibited under the terms
of the Merger Agreement, or the like, the type and number of shares of
Common Stock purchasable upon exercise hereof and the Option Price
shall be appropriately adjusted in such manner as shall fully preserve
the economic benefits provided hereunder and proper provision shall be
made in any agreement governing any such transaction to provide for
such proper adjustment and the full satisfaction of the Issuer's
obligations hereunder.
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6. Upon the occurrence of a Subsequent Triggering Event
that occurs prior to an Exercise Termination Event, Issuer shall, at
the request of Grantee delivered within 90 days of such Subsequent
Triggering Event (whether on its own behalf or on behalf of any
subsequent holder of this Option (or part thereof) or any of the
shares of Common Stock issued pursuant hereto), promptly prepare and
file a registration statement under the 1933 Act covering this Option
and any shares issued and issuable pursuant to this Option and shall
use reasonable efforts to cause such registration statement to become
effective in order to permit the sale or other disposition of this
Option and any shares of Common Stock issued upon total or partial
exercise of this Option ("Option Shares") in accordance with any plan
of disposition requested by Grantee. Issuer will use reasonable
efforts to cause such registration statement to become effective.
Grantee shall have the right to demand two such registrations. The
foregoing notwithstanding, if, at the time of any request by Grantee
for registration of the Option or Option Shares as provided above,
Issuer is in registration with respect to an underwritten public
offering of shares of Common Stock, and if in the good faith judgment
of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering, the inclusion of
the Holder's Option or Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer,
the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; and
provided, however, that after any such required reduction the number
of Option Shares to be included in such offering for the account of
the Holder shall constitute at least 25% of the total number of shares
to be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then the Issuer shall
file a registration statement for the balance as promptly as practical
and no reduction shall thereafter occur. Each such Holder shall
provide all information reasonably requested by Issuer for inclusion
in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall
become a party to any underwriting agreement relating to the sale of
such shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements
customarily included in secondary offering underwriting agreements for
the Issuer. Upon receiving any request under this Section 6 from any
Holder, Issuer agrees to send a copy thereof to any other person known
to Issuer to be entitled to registration rights under this Section 6,
in each case by promptly mailing the same, postage prepaid, to the
address of record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no event
shall Issuer be obligated to effect more than two registrations
pursuant to this Section 6 by reason of the fact that there shall be
more than one Grantee as a result of any assignment or division of
this Agreement.
7. (a) Immediately prior to the occurrence of a
Repurchase Event (as defined below), (i) following a request of the
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Holder, delivered prior to an Exercise Termination Event, Issuer (or
any successor thereto) shall repurchase the Option from the Holder at
a price (the "Option Repurchase Price") equal to the amount by which
(A) the Market/Offer price (as defined below) exceeds (B) the Option
Price, multiplied by the number of shares for which this Option may
then be exercised and (ii) at the request of the owner of Option
Shares from time to time (the "Owner"), delivered within 90 days of
such occurrence (or such later period as provided in Section 10),
Issuer shall repurchase such number of the Option Shares from the
Owner as the Owner shall designate at a price (the "Option Share
Repurchase Price") equal to the Market/Offer Price multiplied by the
number of Option Shares so designated. The term "Market/Offer Price"
shall mean the highest of (i) the price per share of Common Stock at
which a tender offer or exchange offer therefor has been made, (ii)
the price per share of Common Stock to be paid by any third party
pursuant to an agreement with Issuer, (iii) the highest known sale
price for shares of Common Stock within the six-month period
immediately preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required
repurchase of Option Shares, taking into account the sale prices, if
any, for shares of Common Stock reported in the National Association
of Securities Dealers' Electronic Bulletin Board Service or the
National Quotation Bureau's "pink sheets" during such six-month
period, or (iv) in the event of a sale of all or a substantial portion
of Issuer's assets, the sum of the price paid in such sale for such
assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized investment banking firm
mutually selected by the Holder or the Owner, as the case may be, on
the one hand, and the Issuer, on the other, divided by the number of
shares of Common Stock of Issuer outstanding at the time of such sale.
In determining the Market/Offer Price, the value of consideration
other than cash shall be determined by a nationally recognized
investment banking firm mutually selected by the Holder or Owner, as
the case may be, on the one hand, and the Issuer, on the other.
(b) The Holder and the Owner, as the case may be, may
exercise its right to require Issuer to repurchase the Option and any
Option Shares pursuant to this Section 7 by surrendering for such
purpose to Issuer, at its principal office, a copy of this Agreement
or certificates for Option Shares, as applicable, accompanied by a
written notice or notices stating that the Holder or the Owner, as the
case may be, elects to require Issuer to repurchase this Option and/or
the Option Shares in accordance with the provisions of this Section 7.
Within the later to occur of (x) five business days after the
surrender of the Option and/or certificates representing Option Shares
and the receipt of such notice or notices relating thereto and (y) the
time that is immediately prior to the occurrence of a Repurchase
Event, Issuer shall deliver or cause to be delivered to the Holder the
Option Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof that Issuer is not
then prohibited under applicable law and regulation from so
delivering.
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(c) To the extent that Issuer is prohibited under
applicable law or regulation from repurchasing the Option and/or the
Option Shares in full, Issuer shall immediately so notify the Holder
and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the
portion of the Option Repurchase Price and the Option Share Repurchase
price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer
so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to paragraph (b) of this
Section 7 is prohibited under applicable law or regulation from
delivering to the Holder and/or the Owner, as appropriate, the Option
Repurchase Price and the Option Share Repurchase Price, respectively,
in full (and Issuer hereby undertakes to use its best efforts to
obtain all required regulatory and legal approvals and to file any
required notices as promptly as practicable in order to accomplish
such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to
the extent of the prohibition, whereupon, in the latter case, Issuer
shall promptly (i) deliver to the Holder and/or the Owner, as
appropriate, that portion of the Option Repurchase Price or the Option
Share Repurchase Price that Issuer is not prohibited from delivering;
and (ii) deliver, as appropriate, either (A) to the Holder, a new
Stock Option Agreement evidencing the right of the Holder to purchase
that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock
Option Agreement was exercisable at the time of delivery of the notice
of repurchase by a fraction, the numerator of which is the Option
Repurchase Price less the portion thereof theretofore delivered to the
Holder and the denominator of which is the Option Repurchase Price, or
(B) to the Owner, a certificate for the Option Shares it is then so
prohibited from repurchasing.
(d) For purposes of this Section 7, a Repurchase Event
shall be deemed to have occurred (i) upon the consummation of any
merger, consolidation or similar transaction involving Issuer or any
purchase, lease or other acquisition of all or a substantial portion
of the assets of Issuer, other than any such transaction which would
not constitute an Acquisition Transaction pursuant to the provisos to
Section 2(b)(i) hereof or (ii) upon the acquisition by any person of
beneficial ownership of 50% or more of the then outstanding shares of
Common Stock, provided that no such event shall constitute a
Repurchase Event unless a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event. The parties hereto
agree that Issuer's obligations to repurchase the Option or Option
Shares under this Section 7 shall not terminate upon the occurrence of
an Exercise Termination Event unless no Subsequent Triggering Event
shall have occurred prior to the occurrence of an Exercise Termination
Event.
8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate with or
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merge into any person, other than Grantee or one of its Subsidiaries,
and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee
or one of its Subsidiaries, to merge into Issuer and Issuer shall be
the continuing or surviving corporation, but, in connection with such
merger, the then outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of Common
Stock shall after such merger represent less than 50% of the
outstanding voting shares and voting share equivalents of the merged
company, or (iii) to sell or otherwise transfer all or substantially
all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing
such transaction shall make proper provision so that the Option shall,
upon the consummation of any such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an
option (the "Substitute Option"), at the election of the Holder, of
either (x) the Acquiring Corporation (as hereinafter defined) or (y)
any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or merger
with Issuer (if other than Issuer), (ii) Issuer in a merger in
which Issuer is the continuing or surviving person, and (iii) the
transferee of all or substantially all of Issuer's assets.
(2) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon exercise
of the Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer
Price, as defined in Section 7.
(4) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of the
shares of Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided that if Issuer is the
issuer of the Substitute Option, the Average Price shall be
computed with respect to a share of common stock issued by the
person merging into Issuer or by any company which controls or is
controlled by such person, as the Holder may elect; provided,
further, that in the event that the Substitute Common Stock is
not listed on a national securities exchange or the Nasdaq Stock
Market, the term "Average Price" shall mean the weighted average
of the known sale prices per share for shares of Substitute
Common Stock within the one-year period immediately preceding the
consolidation, merger or sale in question, taking into account
the sale prices, if any, for shares of Substitute Common Stock
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reported in the National Association of Securities Dealers'
Electronic Bulletin Board Service or the National Quotation
Bureau's "pink sheets" during such one-year period.
(c) The Substitute Option shall have the same terms as
the Option, provided, that if the terms of the Substitute Option
cannot, for legal reasons, be the same as the Option, such terms shall
be as similar as possible and in no event less advantageous to the
Holder. The issuer of the Substitute Option shall also enter into an
agreement with the then Holder or Holders of the Substitute Option in
substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for
such number of shares of Substitute Common Stock as is equal to the
Assigned Value multiplied by the number of shares of Common Stock for
which the Option is then exercisable, divided by the Average Price.
The exercise price of the Substitute Option per share of Substitute
Common Stock shall then be equal to the Option Price multiplied by a
fraction, the numerator of which shall be the number of shares of
Common Stock for which the Option is then exercisable and the
denominator of which shall be the number of shares of Substitute
Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more than
19.9% of the shares of common stock of the issuer of the Substitute
Option (the "Substitute Option Issuer") outstanding prior to exercise
of the Substitute Option. In the event that the Substitute Option
would be exercisable for more than 19.9% of the shares of common stock
of the Substitute Option Issuer outstanding prior to exercise but for
this clause (e), the Substitute Option Issuer shall make a cash
payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in value
shall be determined by a nationally recognized investment banking firm
selected by the Holder or the Owner, as the case may be, and
reasonably acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction
described in subsection (a) of this Section 8 unless the Acquiring
Corporation and any person that controls the Acquiring Corporation
assume in writing all the obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute
Option (the "Substitute Option Holder"), the Substitute Option Issuer
shall repurchase the Substitute Option from the Substitute Option
Holder at a price (the "Substitute Option Repurchase Price") equal to
(x) the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option,
multiplied by the number of shares of Substitute Common Stock for
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which the Substitute Option may then be exercised plus (y) Grantee's
reasonable out-of-pocket expenses (to the extent not previously
reimbursed), and at the request of the owner (the "Substitute Share
Owner") of shares of Substitute Common Stock (the "Substitute
Shares"), the Substitute Option Issuer shall repurchase the Substitute
Shares at a price (the "Substitute Share Repurchase Price") equal to
(x) the Highest Closing Price multiplied by the number of Substitute
Shares so designated plus (y) Grantee's reasonable Out-of-Pocket
Expenses (to the extent not previously reimbursed). The term "Highest
Closing Price" shall mean the highest closing price for shares of
Substitute Common Stock within the six-month period immediately
preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share
Owner gives notice of the required repurchase of the Substitute
Shares, as applicable; provided, however, that in the event that the
Substitute Common Stock is not listed on a national securities
exchange or the Nasdaq Stock Market, the term "Highest Closing Price"
shall mean the highest known sale price for shares of Substitute
Common Stock within the six-month period immediately preceding the
date that the Substitute Option Holder gives notice of the required
repurchase of the Substitute Option or the Substitute Share Owner
gives notice of the required repurchase of the Substitute Shares, as
applicable, taking into account the sale prices, if any, for shares of
Substitute Common Stock reported in the National Association of
Securities Dealers' Electronic Bulletin Board Service or the National
Quotation Bureau's "pink sheets" during such six-month period.
(b) The Substitute Option Holder and the Substitute
Share Owner, as the case may be, may exercise its respective right to
require the Substitute Option Issuer to repurchase the Substitute
Option and the Substitute Shares pursuant to this Section 9 by
surrendering for such purpose to the Substitute Option Issuer, at its
principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and
certificates for Substitute Shares accompanied by a written notice or
notices stating that the Substitute Option Holder or the Substitute
Share Owner, as the case may be, elects to require the Substitute
Option Issuer to repurchase the Substitute Option and/or the
Substitute Shares in accordance with the provisions of this Section 9.
As promptly as practicable, and in any event within five business days
after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or
notices relating thereto, the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute Option Holder the
Substitute Option Repurchase Price and/or to the Substitute Share
Owner the Substitute Share Repurchase Price therefor or, in either
case, the portion thereof which the Substitute Option Issuer is not
then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation from repurchasing the
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Substitute Option and/or the Substitute Shares in part or in full, the
Substitute Option Issuer following a request for repurchase pursuant
to this Section 9 shall immediately so notify the Substitute Option
Holder and/or the Substitute Share Owner and thereafter deliver or
cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion
of the Substitute Share Repurchase Price, respectively, which it is no
longer prohibited from delivering, within five business days after the
date on which the Substitute Option Issuer is no longer so prohibited;
provided, however, that if the Substitute Option Issuer is at any time
after delivery of a notice of repurchase pursuant to subsection (b) of
this Section 9 prohibited under applicable law or regulation from
delivering to the Substitute Option Holder and/or the Substitute Share
Owner, as appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its best efforts to receive all
required regulatory and legal approvals as promptly as practicable in
order to accomplish such repurchase), the Substitute Option Holder or
Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Shares either in whole or to the
extent of the prohibition, whereupon, in the latter case, the
Substitute Option Issuer shall promptly (i) deliver to the Substitute
Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share
Repurchase Price that the Substitute Option Issuer is not prohibited
from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right
of the Substitute Option Holder to purchase that number of shares of
the Substitute Common Stock obtained by multiplying the number of
shares of the Substitute Common Stock for which the surrendered
Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the
Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the
denominator of which is the Substitute Option Repurchase Price, or (B)
to the Substitute Share Owner, a certificate for the Substitute Common
Shares it is then so prohibited from repurchasing.
10. The 90-day period for exercise of certain rights under
Sections 2, 6, 7 and 13 shall be extended: (i) to the extent necessary
to obtain all regulatory approvals for the exercise of such rights,
and for the expiration of all statutory waiting periods; and (ii) to
the extent necessary to avoid liability under Section 16(b) of the
1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been
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duly and validly authorized by the Board of Directors of Issuer and no
other corporate proceedings on the part of Issuer are necessary to
authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and
delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from
the date hereof through the termination of this Agreement in
accordance with its terms will have reserved for issuance upon the
exercise of the Option, that number of shares of Common Stock equal to
the maximum number of shares of Common Stock at any time and from time
to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims,
liens, encumbrance and security interests and not subject to any
preemptive rights.
(c) Neither the execution and delivery of this
Agreement by Issuer nor the consummation by Issuer of the transactions
contemplated hereby, nor compliance by Issuer with any of the terms or
provisions hereof, will (i) violate any provision of the Articles of
Incorporation or By-Laws of Issuer or (ii) assuming that the consents
and approvals referred to in Section 3.5 of the Merger Agreement are
duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to
Issuer or any of the Issuer Subsidiaries or any of their respective
properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any Lien upon
any of the respective properties or assets of Issuer or any of the
Issuer Subsidiaries under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Issuer or any of
the Issuer Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals
or consents referred to herein, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of
Grantee. This Agreement has been duly executed and delivered by
Grantee.
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(b) The Option is not being, and any shares of Common
Stock or other securities acquired by Grantee upon exercise of the
Option will not be, acquired with a view to the public distribution
thereof and will not be transferred or otherwise disposed of except in
a transaction registered or exempt from registration under the
Securities Act.
13. Neither of the parties hereto may assign any of its
rights or obligations under this Option Agreement or the Option
created hereunder to any other person, without the express written
consent of the other party, except that in the event a Subsequent
Triggering Event shall have occurred prior to an Exercise Termination
Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period
as provided in Section 10); provided, however, that until the date 15
days following the date on which the Federal Reserve Board approves an
application by Grantee under the BHCA to acquire the shares of Common
Stock subject to the Option, Grantee may not assign its rights under
the Option except in (i) a widely dispersed public distribution, (ii)
a private placement in which no one party acquires the right to
purchase in excess of 2% of the voting shares of Issuer, (iii) an
assignment to a single party (e.g., a broker or investment banker) for
the purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal
Reserve Board.
14. Each of Grantee and Issuer will use its best efforts to
make all filings with, and to obtain consents of, all third parties
and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement, including without
limitation making application to list or quote the shares of Common
Stock issuable hereunder on any stock exchange or interdealer
quotation system on which the Common Stock is listed or quoted and
applying to the Federal Reserve Board under the BHCA for approval to
acquire the shares issuable hereunder, but Grantee shall not be
obligated to apply to state banking authorities for approval to
acquire the shares of Common Stock issuable hereunder until such time,
if ever, as it deems appropriate to do so.
15. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be
enforceable by either party hereto through injunctive or other
equitable relief.
16. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state
regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants
and restrictions contained in this Agreement shall remain in full
force and effect, and shall in no way be affected, impaired or
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invalidated. If for any reason such court or regulatory agency
determines that the Holder is not permitted to acquire, or Issuer is
not permitted to repurchase pursuant to Section 7, the full number of
shares of Common Stock provided in Section 1(a) hereof (as adjusted
pursuant to Section 1(b) or 5 hereof), it is the express intention of
Issuer to allow the Holder to acquire or to require Issuer to
repurchase the greatest lesser number of shares as may be permissible,
without any amendment or modification hereof.
17. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by registered or certified mail
(return receipt requested) or delivered by an express courier (with
confirmation) at the respective addresses of the parties set forth in
the Merger Agreement (or at such other address for a party as shall be
specified by like notice).
18. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, regardless of the
laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
19. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
20. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses incurred
by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
21. Except as otherwise expressly provided herein or in the
Merger Agreement, this Agreement contains the entire agreement between
the parties with respect to the transactions contemplated hereunder
and supersedes all prior arrangements or understandings with respect
thereof, written or oral. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party,
other than the parties hereto, and their respective successors except
as assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned thereto in the Merger
Agreement.
17
<PAGE> 84
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
PREMIER FINANCIAL SERVICES, INC.
By: /s/ Richard L. Geach
----------------------------
Richard L. Geach
President and Chief
Executive Officer
NORTHERN ILLINOIS FINANCIAL
CORPORATION
By: /s/ Robert W. Hinman
----------------------------
Robert W. Hinman
President and Chief
Executive Officer
18
EXHIBIT 10.2
EXECUTION COPY
STOCK OPTION AGREEMENT, dated January 22, 1996, between
Premier Financial Services, Inc., a Delaware corporation ("Issuer"),
and Northern Illinois Financial Corporation, an Illinois corporation
("Grantee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Grantee, Issuer and Grand Premier Financial, Inc.,
a Delaware corporation ("GPF"), have entered into an Agreement and
Plan of Reorganization of even date herewith (the "Merger Agreement"),
which agreement has been executed by the parties hereto immediately
prior to this Stock Option Agreement (the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the
Merger Agreement and in consideration therefor, Issuer has agreed to
grant Grantee the Option (as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Merger
Agreement, the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms
hereof, up to 1,302,325 fully paid and nonassessable shares of
Issuer's Common Stock, par value $5.00 per share ("Common Stock"), at
a price of $9 per share (the "Option Price"); provided, however, that
in no event shall the number of shares of Common Stock for which this
Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock without giving effect to any shares
subject to or issued pursuant to the Option. The number of shares of
Common Stock that may be received upon the exercise of the Option and
the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common
Stock are either (i) issued or otherwise become outstanding after the
date of this Agreement (other than pursuant to this Agreement) or (ii)
redeemed, repurchased, retired or otherwise cease to be outstanding
after the date of the Agreement (such event a "Change in Shares
Outstanding Event"), the number of shares of Common Stock subject to
the Option shall be increased or decreased, as appropriate, so that,
after such Change in Shares Outstanding Event, such number equals
19.9% of the number of shares of Common Stock then issued and
outstanding without giving effect to any shares subject or issued
pursuant to the Option. Nothing contained in this Section 1(b) or
elsewhere in this Agreement shall be deemed to authorize Issuer to
issue or redeem, repurchase, or retire shares of Common Stock or to
<PAGE> 86
authorize either the Issuer or the Grantee otherwise to breach any
provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise
the Option, in whole or part, and from time to time, if, but only if,
both an Initial Triggering Event (as hereinafter defined) and a
Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent written
notice of such exercise (as provided in subsection (e) of this Section
2) prior to the date that is 90 days after the date that Holder is
notified of such Subsequent Triggering Event pursuant to section 2(d)
herein. Each of the following shall be an Exercise Termination Event:
(i) the Effective Time (as defined in the Merger Agreement); (ii)
termination of the Merger Agreement in accordance with its terms if
such termination occurs pursuant to Section 8.1(b) or prior to the
occurrence of an Initial Triggering Event, other than a termination by
Grantee pursuant to Section 8.1(f) of the Merger Agreement, or (iii)
the passage of 12 months after termination of the Merger Agreement
(other than pursuant to Section 8.1(b)) if such termination follows,
or occurs at the same time as, the occurrence of an Initial Triggering
Event or is a termination by Grantee pursuant to Section 8.1(f) of the
Merger Agreement; provided, however, that if an Initial Triggering
Event (or an additional Initial Triggering Event) shall occur
following termination of the Merger Agreement in accordance with this
clause (iii), the Exercise Termination Event shall be the passage of
12 months from the occurrence of the Last Initial Triggering Event,
but in no event the passage of more than 18 months from the date of
termination of the Merger Agreement. The "Last Initial Triggering
Event" shall mean the last Initial Triggering Event to occur. The
term "Holder" shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any
of the following events or transactions occurring after the date
hereof:
(i) Issuer or any of its Subsidiaries (each an
"Issuer Subsidiary"), without having received Grantee's prior written
consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person (the
term "person" for purposes of this Agreement having the meaning
assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the rules and
regulations thereunder) other than GPF, Grantee or any of its
Subsidiaries (each a "Grantee Subsidiary") or the Board of Directors
of Issuer shall have recommended that the stockholders of Issuer
approve or accept any Acquisition Transaction. For purposes of this
Agreement, "Acquisition Transaction" shall mean (w) a merger or
consolidation, or any similar transaction, involving Issuer or any
Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC")) of
Issuer, (x) a purchase, lease or other acquisition or assumption of
2
<PAGE> 87
all or a substantial portion of the assets or deposits of Issuer or
any Significant Subsidiary of Issuer, (y) a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or otherwise) of securities representing 15% or more of the voting
power of Issuer or any Significant Subsidiary of Issuer, or (z) any
substantially similar transaction; provided, however, that any
transaction described in this sentence that is expressly permitted by
the Merger Agreement shall not be deemed to be an Acquisition
Transaction;
(ii) Issuer or any Issuer Subsidiary, without
having received Grantee's prior written consent, shall have
authorized, recommended, proposed or publicly announced its intention
to authorize, recommend or propose, to engage in an Acquisition
Transaction with any person other than GPF, Grantee or a Grantee
Subsidiary, or the Board of Directors of Issuer shall have publicly
withdrawn or modified, or publicly announced its intent to withdraw or
modify, in any manner adverse to Grantee, its recommendation that the
stockholders of Issuer approve the transactions contemplated by the
Merger Agreement;
(iii) (A) Any person, other than an Excluded
Person (as hereinafter defined) or an Existing 15% Shareholder (as
hereinafter defined), alone or together with such person's affiliates
and associates (such terms for purposes of this Agreement having the
meanings assigned thereto in Rule 12b-2 under the 1934 Act) shall have
acquired beneficial ownership or the right to acquire beneficial
ownership of 15% or more of the shares of Common Stock then
outstanding (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the
1934 Act and the rules and regulations thereunder); (B) any group
(such term for purposes of this Agreement having the meaning assigned
thereto in Section 13(d)(3) of the 1934 Act), other than a group of
which any Excluded Person is a member, shall have been formed that
acquires beneficial ownership or the right to acquire beneficial
ownership of 15% or more of the shares of Common Stock then
outstanding; (C) any Existing 15% Shareholder, alone or together with
such person's affiliates and associates, shall have acquired
beneficial ownership or the right to acquire beneficial ownership of
shares of Common Stock in addition to the shares of Common Stock
beneficially owned by such Existing 15% Shareholder as of the date
hereof. For purposes of this Agreement, "Excluded Person" shall mean
GPF, Grantee, any Grantee Subsidiary, any employee benefit plan
maintained by the Issuer or an Issuer Subsidiary as of the date of
this Agreement, any Issuer Subsidiary acting in a fiduciary capacity
in the ordinary course of its business, or the trustee and
beneficiaries of any blind voting trust under which certain shares of
Common Stock and preferred stock of the Issuer that are convertible
into Common Stock are held in accordance with the June 15, 1993 order
(the "Order") of the Federal Reserve Bank of Chicago (the "Federal
Reserve Bank") approving the transaction in which such shares were
issued. "Existing 15% Shareholder" shall mean any person, other than
3
<PAGE> 88
an Excluded Person, who as of the date hereof beneficially owns 15% or
more of the outstanding Common Stock.
(iv) Any person other than GPF, Grantee or any
Grantee Subsidiary shall have made a bona fide proposal to Issuer or
its stockholders by public announcement or written communication that
is or becomes the subject of public disclosure to (A) engage in an
Acquisition Transaction or (B) commence a tender or exchange offer the
consummation of which would result in such person acquiring beneficial
ownership of securities representing 15% or more of Issuer's voting
power;
(v) After an overture is made by a third party
(other than an Excluded Person) to Issuer or its stockholders to
engage in an Acquisition Transaction, Issuer shall have breached any
covenant or obligation contained in the Merger Agreement and such
breach (x) would entitle Grantee to terminate the Merger Agreement and
(y) shall not have been cured prior to the Notice Date (as defined
below); or
(vi) Any person other than GPF, Grantee or any
Grantee Subsidiary, other than in connection with a transaction to
which Grantee has given its prior written consent, shall have filed an
application or notice with the Federal Reserve Board, or other federal
or state bank regulatory authority, which application or notice has
been accepted for processing, for approval to engage in an Acquisition
Transaction.
(c) The term "Subsequent Triggering Event" shall mean
either of the following events or transactions occurring after the
date hereof:
(i) The acquisition (A) by any person (other than
an Excluded Person or Existing 15% Shareholder) or group (other than a
group of which an Excluded Person is a member) of beneficial ownership
of 20% or more of the then outstanding Common Stock or (B) by an
Existing 15% Shareholder of any shares of Common Stock in addition to
the shares of Common Stock beneficially owned by such Existing 15%
Shareholder on the date hereof;
(ii) The occurrence of the Initial Triggering
Event described in paragraph (i) of subsection (b) of this Section 2,
except that the percentage referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of
the occurrence of any Initial Triggering Event or Subsequent
Triggering Event of which it has notice (together, a "Triggering
Event"), it being understood that the giving of such notice by Issuer
shall not be a condition to the right of the Holder to exercise the
Option.
4
<PAGE> 89
(e) In the event the Holder is entitled to and wishes
to exercise the Option, it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date")
specifying (i) the total number of shares it will purchase pursuant to
such exercise and (ii) a place and date not earlier than three
business days nor later than 60 business days from the Notice Date for
the closing of such purchase (the "Closing Date"); provided that if
prior notification to or approval of the Federal Reserve Board or any
other regulatory agency is required in connection with such purchase,
the Holder shall promptly file the required notice or application for
approval and shall expeditiously process the same and the period of
time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification periods have
expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any
exercise of the Option shall be deemed to occur on the Notice Date
relating thereto.
(f) At the closing referred to in subsection (e) of
this Section 2, the Holder shall pay to Issuer the aggregate purchase
price for the shares of Common Stock purchased pursuant to the
exercise of the Option in immediately available funds by wire transfer
to a bank account designated by Issuer, provided that failure or
refusal of Issuer to designate such a bank account shall not preclude
the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery
of immediately available funds as provided in subsection (f) of this
Section 2, Issuer shall deliver to the Holder a certificate or
certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option should be exercised in part
only, a new Option evidencing the rights of the Holder thereof to
purchase the balance of the shares purchasable hereunder, and the
Holder shall deliver to Issuer a copy of this Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise dispose
of such shares in violation of applicable law or the provisions of
this Agreement.
(h) Certificates for Common Stock delivered at a
closing hereunder may be endorsed with a restrictive legend that shall
read substantially as follows:
"The transfer of the shares represented by this certificate
is subject to certain provisions of an agreement between the
registered holder hereof and Issuer and to resale
restrictions arising under the Securities Act of 1933, as
amended. A copy of such agreement is on file at the
principal office of Issuer and will be provided to the
holder hereof without charge upon receipt by Issuer of a
written request therefor."
5
<PAGE> 90
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933
Act"), in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the Holder shall have
delivered to Issuer a copy of a letter from the staff of the SEC, or
an opinion of counsel, in form and substance reasonably satisfactory
to Issuer, to the effect that such legend is not required for purposes
of the 1933 Act; (ii) the reference to the provisions to this
Agreement in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the shares have
been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of
such reference; and (iii) the legend shall be removed in its entirety
if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
(i) Upon the giving by the Holder to Issuer of the
written notice of exercise of the Option provided for under subsection
(e) of this Section 2 and the tender of the applicable purchase price
in immediately available funds, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder.
Issuer shall pay all expenses, and any and all United States federal,
state and local taxes and other charges that may be payable in
connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its
assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but
unissued or treasury shares of Common Stock so that the Option may be
exercised without additional authorization of Common Stock after
giving effect to all other options, warrants, convertible securities
and other rights to purchase Common Stock; (ii) that it will not, by
charter amendment or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be
required (including (x) complying with all premerger notification,
reporting and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in the
event, under the Bank Holding Company Act of 1956, as amended (the
"BHCA"), or the Change in Bank Control Act of 1978, as amended, or any
state banking law, prior approval of or notice to the Federal Reserve
Board or to any state regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in
preparing such applications or notices and providing such information
to the Federal Reserve Board or such state regulatory authority as
6
<PAGE> 91
they may require) in order to permit the Holder to exercise the Option
and Issuer duly and effectively to issue shares of Common Stock
pursuant hereto; and (iv) promptly to take all action provided herein
to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal office
of Issuer, for other Agreements providing for Options of different
denominations entitling the holder thereof to purchase, on the same
terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable
hereunder. The terms "Agreement" and "Option" as used herein include
any Stock Option Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon
receipt by Issuer of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Agreement, and (in the
case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new
Agreement of like tenor and date. Any such new Agreement executed and
delivered shall constitute an additional contractual obligation on the
part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares
of Common Stock that are purchasable upon exercise of the Option
pursuant to Section 1 of this Agreement, the number of shares of
Common Stock purchasable upon the exercise of the Option and the
Option Price shall be subject to adjustment from time to time as
provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions on or in
respect of the Common Stock that would be prohibited under the terms
of the Merger Agreement, or the like, the type and number of shares of
Common Stock purchasable upon exercise hereof and the Option Price
shall be appropriately adjusted in such manner as shall fully preserve
the economic benefits provided hereunder and proper provision shall be
made in any agreement governing any such transaction to provide for
such proper adjustment and the full satisfaction of the Issuer's
obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event
that occurs prior to an Exercise Termination Event, Issuer shall, at
the request of Grantee delivered within 90 days of such Subsequent
Triggering Event (whether on its own behalf or on behalf of any
subsequent holder of this Option (or part thereof) or any of the
shares of Common Stock issued pursuant hereto), promptly prepare and
file a registration statement under the 1933 Act covering this Option
and any shares issued and issuable pursuant to this Option and shall
use reasonable efforts to cause such registration statement to become
7
<PAGE> 92
effective in order to permit the sale or other disposition of this
Option and any shares of Common Stock issued upon total or partial
exercise of this Option ("Option Shares") in accordance with any plan
of disposition requested by Grantee. Issuer will use reasonable
efforts to cause such registration statement to become effective.
Grantee shall have the right to demand two such registrations. The
foregoing notwithstanding, if, at the time of any request by Grantee
for registration of the Option or Option Shares as provided above,
Issuer is in registration with respect to an underwritten public
offering of shares of Common Stock, and if in the good faith judgment
of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering, the inclusion of
the Holder's Option or Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer,
the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; and
provided, however, that after any such required reduction the number
of Option Shares to be included in such offering for the account of
the Holder shall constitute at least 25% of the total number of shares
to be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then the Issuer shall
file a registration statement for the balance as promptly as practical
and no reduction shall thereafter occur. Each such Holder shall
provide all information reasonably requested by Issuer for inclusion
in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall
become a party to any underwriting agreement relating to the sale of
such shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements
customarily included in secondary offering underwriting agreements for
the Issuer. Upon receiving any request under this Section 6 from any
Holder, Issuer agrees to send a copy thereof to any other person known
to Issuer to be entitled to registration rights under this Section 6,
in each case by promptly mailing the same, postage prepaid, to the
address of record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no event
shall Issuer be obligated to effect more than two registrations
pursuant to this Section 6 by reason of the fact that there shall be
more than one Grantee as a result of any assignment or division of
this Agreement.
7. (a) Immediately prior to the occurrence of a
Repurchase Event (as defined below), (i) following a request of the
Holder, delivered prior to an Exercise Termination Event, Issuer (or
any successor thereto) shall repurchase the Option from the Holder at
a price (the "Option Repurchase Price") equal to the amount by which
(A) the Market/Offer price (as defined below) exceeds (B) the Option
Price, multiplied by the number of shares for which this Option may
then be exercised and (ii) at the request of the owner of Option
Shares from time to time (the "Owner"), delivered within 90 days of
such occurrence (or such later period as provided in Section 10),
Issuer shall repurchase such number of the Option Shares from the
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<PAGE> 93
Owner as the Owner shall designate at a price (the "Option Share
Repurchase Price") equal to the Market/Offer Price multiplied by the
number of Option Shares so designated. The term "Market/Offer Price"
shall mean the highest of (i) the price per share of Common Stock at
which a tender offer or exchange offer therefor has been made, (ii)
the price per share of Common Stock to be paid by any third party
pursuant to an agreement with Issuer, (iii) the highest closing price
for shares of Common Stock reported on the Nasdaq Stock Market's
National Market within the six-month period immediately preceding the
date the Holder gives notice of the required repurchase of this Option
or the Owner gives notice of the required repurchase of Option Shares,
as the case may be, or (iv) in the event of a sale of all or a
substantial portion of Issuer's assets, the sum of the price paid in
such sale for such assets and the current market value of the
remaining assets of Issuer as determined by a nationally recognized
investment banking firm mutually selected by the Holder or the Owner,
as the case may be, on the one hand, and the Issuer, on the other,
divided by the number of shares of Common Stock of Issuer outstanding
at the time of such sale. In determining the Market/Offer Price, the
value of consideration other than cash shall be determined by a
nationally recognized investment banking firm mutually selected by the
Holder or Owner, as the case may be, on the one hand, and the Issuer,
on the other.
(b) The Holder and the Owner, as the case may be, may
exercise its right to require Issuer to repurchase the Option and any
Option Shares pursuant to this Section 7 by surrendering for such
purpose to Issuer, at its principal office, a copy of this Agreement
or certificates for Option Shares, as applicable, accompanied by a
written notice or notices stating that the Holder or the Owner, as the
case may be, elects to require Issuer to repurchase this Option and/or
the Option Shares in accordance with the provisions of this Section 7.
Within the later to occur of (x) five business days after the
surrender of the Option and/or certificates representing Option Shares
and the receipt of such notice or notices relating thereto and (y) the
time that is immediately prior to the occurrence of a Repurchase
Event, Issuer shall deliver or cause to be delivered to the Holder the
Option Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof that Issuer is not
then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under
applicable law or regulation from repurchasing the Option and/or the
Option Shares in full, Issuer shall immediately so notify the Holder
and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the
portion of the Option Repurchase Price and the Option Share Repurchase
price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer
so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to paragraph (b) of this
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<PAGE> 94
Section 7 is prohibited under applicable law or regulation from
delivering to the Holder and/or the Owner, as appropriate, the Option
Repurchase Price and the Option Share Repurchase Price, respectively,
in full (and Issuer hereby undertakes to use its best efforts to
obtain all required regulatory and legal approvals and to file any
required notices as promptly as practicable in order to accomplish
such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to
the extent of the prohibition, whereupon, in the latter case, Issuer
shall promptly (i) deliver to the Holder and/or the Owner, as
appropriate, that portion of the Option Repurchase Price or the Option
Share Repurchase Price that Issuer is not prohibited from delivering;
and (ii) deliver, as appropriate, either (A) to the Holder, a new
Stock Option Agreement evidencing the right of the Holder to purchase
that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock
Option Agreement was exercisable at the time of delivery of the notice
of repurchase by a fraction, the numerator of which is the Option
Repurchase Price less the portion thereof theretofore delivered to the
Holder and the denominator of which is the Option Repurchase Price, or
(B) to the Owner, a certificate for the Option Shares it is then so
prohibited from repurchasing.
(d) For purposes of this Section 7, a Repurchase Event
shall be deemed to have occurred (i) upon the consummation of any
merger, consolidation or similar transaction involving Issuer or any
purchase, lease or other acquisition of all or a substantial portion
of the assets of Issuer, other than any such transaction which would
not constitute an Acquisition Transaction pursuant to the provisos to
Section 2(b)(i) hereof or (ii) upon the acquisition by any person of
beneficial ownership of 50% or more of the then outstanding shares of
Common Stock, provided that no such event shall constitute a
Repurchase Event unless a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event. The parties hereto
agree that Issuer's obligations to repurchase the Option or Option
Shares under this Section 7 shall not terminate upon the occurrence of
an Exercise Termination Event unless no Subsequent Triggering Event
shall have occurred prior to the occurrence of an Exercise Termination
Event.
8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate with or
merge into any person, other than Grantee or one of its Subsidiaries,
and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee
or one of its Subsidiaries, to merge into Issuer and Issuer shall be
the continuing or surviving corporation, but, in connection with such
merger, the then outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of Common
Stock shall after such merger represent less than 50% of the
outstanding voting shares and voting share equivalents of the merged
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<PAGE> 95
company, or (iii) to sell or otherwise transfer all or substantially
all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing
such transaction shall make proper provision so that the Option shall,
upon the consummation of any such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an
option (the "Substitute Option"), at the election of the Holder, of
either (x) the Acquiring Corporation (as hereinafter defined) or (y)
any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or merger
with Issuer (if other than Issuer), (ii) Issuer in a merger in
which Issuer is the continuing or surviving person, and (iii) the
transferee of all or substantially all of Issuer's assets.
(2) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon exercise
of the Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer
Price, as defined in Section 7.
(4) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of the
shares of Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided that if Issuer is the
issuer of the Substitute Option, the Average Price shall be
computed with respect to a share of common stock issued by the
person merging into Issuer or by any company which controls or is
controlled by such person, as the Holder may elect; provided,
further, that in the event that the Substitute Common Stock is
not listed on a national securities exchange or the Nasdaq Stock
Market, the term "Average Price" shall mean the weighted average
of the known sale prices per share for shares of Substitute
Common Stock within the one-year period immediately preceding the
consolidation, merger or sale in question, taking into account
the sale prices, if any, for shares of Substitute Common Stock
reported in the National Association of Securities Dealers'
Electronic Bulletin Board Service or the National Quotation
Bureau's "pink sheets" during such one-year period.
(c) The Substitute Option shall have the same terms as
the Option, provided, that if the terms of the Substitute Option
cannot, for legal reasons, be the same as the Option, such terms shall
be as similar as possible and in no event less advantageous to the
Holder. The issuer of the Substitute Option shall also enter into an
agreement with the then Holder or Holders of the Substitute Option in
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substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for
such number of shares of Substitute Common Stock as is equal to the
Assigned Value multiplied by the number of shares of Common Stock for
which the Option is then exercisable, divided by the Average Price.
The exercise price of the Substitute Option per share of Substitute
Common Stock shall then be equal to the Option Price multiplied by a
fraction, the numerator of which shall be the number of shares of
Common Stock for which the Option is then exercisable and the
denominator of which shall be the number of shares of Substitute
Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more than
19.9% of the shares of common stock of the issuer of the Substitute
Option (the "Substitute Option Issuer") outstanding prior to exercise
of the Substitute Option. In the event that the Substitute Option
would be exercisable for more than 19.9% of the shares of common stock
of the Substitute Option Issuer outstanding prior to exercise but for
this clause (e), the Substitute Option Issuer shall make a cash
payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in value
shall be determined by a nationally recognized investment banking firm
selected by the Holder or the Owner, as the case may be, and
reasonably acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction
described in subsection (a) of this Section 8 unless the Acquiring
Corporation and any person that controls the Acquiring Corporation
assume in writing all the obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute
Option (the "Substitute Option Holder"), the Substitute Option Issuer
shall repurchase the Substitute Option from the Substitute Option
Holder at a price (the "Substitute Option Repurchase Price") equal to
(x) the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option,
multiplied by the number of shares of Substitute Common Stock for
which the Substitute Option may then be exercised plus (y) Grantee's
reasonable out-of-pocket expenses (to the extent not previously
reimbursed), and at the request of the owner (the "Substitute Share
Owner") of shares of Substitute Common Stock (the "Substitute
Shares"), the Substitute Option Issuer shall repurchase the Substitute
Shares at a price (the "Substitute Share Repurchase Price") equal to
(x) the Highest Closing Price multiplied by the number of Substitute
Shares so designated plus (y) Grantee's reasonable Out-of-Pocket
Expenses (to the extent not previously reimbursed). The term "Highest
Closing Price" shall mean the highest closing price for shares of
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<PAGE> 97
Substitute Common Stock within the six-month period immediately
preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share
Owner gives notice of the required repurchase of the Substitute
Shares, as applicable; provided, however, that in the event that the
Substitute Common Stock is not listed on a national securities
exchange or the Nasdaq Stock Market, the term "Highest Closing Price"
shall mean the highest known sale price for shares of Substitute
Common Stock within the six-month period immediately preceding the
date that the Substitute Option Holder gives notice of the required
repurchase of the Substitute Option or the Substitute Share Owner
gives notice of the required repurchase of the Substitute Shares, as
applicable, taking into account the sale prices, if any, for shares of
Substitute Common Stock reported in the National Association of
Securities Dealers' Electronic Bulletin Board Service or the National
Quotation Bureau's "pink sheets" during such six-month period.
(b) The Substitute Option Holder and the Substitute
Share Owner, as the case may be, may exercise its respective right to
require the Substitute Option Issuer to repurchase the Substitute
Option and the Substitute Shares pursuant to this Section 9 by
surrendering for such purpose to the Substitute Option Issuer, at its
principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and
certificates for Substitute Shares accompanied by a written notice or
notices stating that the Substitute Option Holder or the Substitute
Share Owner, as the case may be, elects to require the Substitute
Option Issuer to repurchase the Substitute Option and/or the
Substitute Shares in accordance with the provisions of this Section 9.
As promptly as practicable, and in any event within five business days
after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or
notices relating thereto, the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute Option Holder the
Substitute Option Repurchase Price and/or to the Substitute Share
Owner the Substitute Share Repurchase Price therefor or, in either
case, the portion thereof which the Substitute Option Issuer is not
then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation from repurchasing the
Substitute Option and/or the Substitute Shares in part or in full, the
Substitute Option Issuer following a request for repurchase pursuant
to this Section 9 shall immediately so notify the Substitute Option
Holder and/or the Substitute Share Owner and thereafter deliver or
cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion
of the Substitute Share Repurchase Price, respectively, which it is no
longer prohibited from delivering, within five business days after the
date on which the Substitute Option Issuer is no longer so prohibited;
provided, however, that if the Substitute Option Issuer is at any time
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<PAGE> 98
after delivery of a notice of repurchase pursuant to subsection (b) of
this Section 9 prohibited under applicable law or regulation from
delivering to the Substitute Option Holder and/or the Substitute Share
Owner, as appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its best efforts to receive all
required regulatory and legal approvals as promptly as practicable in
order to accomplish such repurchase), the Substitute Option Holder or
Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Shares either in whole or to the
extent of the prohibition, whereupon, in the latter case, the
Substitute Option Issuer shall promptly (i) deliver to the Substitute
Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share
Repurchase Price that the Substitute Option Issuer is not prohibited
from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right
of the Substitute Option Holder to purchase that number of shares of
the Substitute Common Stock obtained by multiplying the number of
shares of the Substitute Common Stock for which the surrendered
Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the
Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the
denominator of which is the Substitute Option Repurchase Price, or (B)
to the Substitute Share Owner, a certificate for the Substitute Common
Shares it is then so prohibited from repurchasing.
10. The 90-day period for exercise of certain rights under
Sections 2, 6, 7 and 13 shall be extended: (i) to the extent necessary
to obtain all regulatory approvals for the exercise of such rights,
and for the expiration of all statutory waiting periods; and (ii) to
the extent necessary to avoid liability under Section 16(b) of the
1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of Issuer and no
other corporate proceedings on the part of Issuer are necessary to
authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and
delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from
the date hereof through the termination of this Agreement in
accordance with its terms will have reserved for issuance upon the
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<PAGE> 99
exercise of the Option, that number of shares of Common Stock equal to
the maximum number of shares of Common Stock at any time and from time
to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims,
liens, encumbrance and security interests and not subject to any
preemptive rights.
(c) Neither the execution and delivery of this
Agreement by Issuer nor the consummation by Issuer of the transactions
contemplated hereby, nor compliance by Issuer with any of the terms or
provisions hereof, will (i) violate any provision of the Restated
Certificate of Incorporation or By-Laws of Issuer or (ii) assuming
that the consents and approvals referred to in Section 4.5 of the
Merger Agreement are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Issuer or any of the Issuer Subsidiaries or
any of their respective properties or assets, or (y) violate, conflict
with, result in a breach of any provision of or the loss of any
benefit under, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in
the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of
any Lien upon any of the respective properties or assets of Issuer or
any of the Issuer Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which
Issuer or any of the Issuer Subsidiaries is a party, or by which they
or any of their respective properties or assets may be bound or
affected.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals
or consents referred to herein, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of
Grantee. This Agreement has been duly executed and delivered by
Grantee.
(b) The Option is not being, and any shares of Common
Stock or other securities acquired by Grantee upon exercise of the
Option will not be, acquired with a view to the public distribution
thereof and will not be transferred or otherwise disposed of except in
a transaction registered or exempt from registration under the
Securities Act.
13. Neither of the parties hereto may assign any of its
rights or obligations under this Option Agreement or the Option
created hereunder to any other person, without the express written
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<PAGE> 100
consent of the other party, except that in the event a Subsequent
Triggering Event shall have occurred prior to an Exercise Termination
Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period
as provided in Section 10); provided, however, that until the date 15
days following the date on which the Federal Reserve Board approves an
application by Grantee under the BHCA to acquire the shares of Common
Stock subject to the Option, Grantee may not assign its rights under
the Option except in (i) a widely dispersed public distribution, (ii)
a private placement in which no one party acquires the right to
purchase in excess of 2% of the voting shares of Issuer, (iii) an
assignment to a single party (e.g., a broker or investment banker) for
the purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal
Reserve Board.
14. Each of Grantee and Issuer will use its best efforts to
make all filings with, and to obtain consents of, all third parties
and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement, including without
limitation making application to list or quote the shares of Common
Stock issuable hereunder on any stock exchange or interdealer
quotation system on which the Common Stock is listed or quoted and
applying to the Federal Reserve Board under the BHCA for approval to
acquire the shares issuable hereunder, but Grantee shall not be
obligated to apply to state banking authorities for approval to
acquire the shares of Common Stock issuable hereunder until such time,
if ever, as it deems appropriate to do so.
15. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be
enforceable by either party hereto through injunctive or other
equitable relief.
16. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state
regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants
and restrictions contained in this Agreement shall remain in full
force and effect, and shall in no way be affected, impaired or
invalidated. If for any reason such court or regulatory agency
determines that the Holder is not permitted to acquire, or Issuer is
not permitted to repurchase pursuant to Section 7, the full number of
shares of Common Stock provided in Section 1(a) hereof (as adjusted
pursuant to Section 1(b) or 5 hereof), it is the express intention of
Issuer to allow the Holder to acquire or to require Issuer to
repurchase the greatest lesser number of shares as may be permissible,
without any amendment or modification hereof.
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17. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by registered or certified mail
(return receipt requested) or delivered by an express courier (with
confirmation) at the respective addresses of the parties set forth in
the Merger Agreement (or at such other address for a party as shall be
specified by like notice).
18. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, regardless of the
laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
19. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
20. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses incurred
by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
21. Except as otherwise expressly provided herein or in the
Merger Agreement, this Agreement contains the entire agreement between
the parties with respect to the transactions contemplated hereunder
and supersedes all prior arrangements or understandings with respect
thereof, written or oral. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party,
other than the parties hereto, and their respective successors except
as assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned thereto in the Merger
Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
PREMIER FINANCIAL SERVICES, INC.
By: /s/ Richard L. Geach
----------------------------
Richard L. Geach
President and Chief
Executive Officer
NORTHERN ILLINOIS FINANCIAL
CORPORATION
By: /s/ Robert W. Hinman
----------------------------
Robert W. Hinman
President and Chief
Executive Officer
18
EXHIBIT 99
----------
NEWS RELEASE FOR:
NORTHERN ILLINOIS FINANCIAL CORPORATION AND
PREMIER FINANCIAL SERVICES, INC.
For more information, contact:
In Northeastern Illinois In Northwestern Illinois
Robert Hinman Richard Geach/David Murray
(708) 487-1818 (815) 233-3770/(815) 233-3773
GRAND PREMIER FINANCIAL, INC. TO BE FORMED BY PROPOSED MERGER
BETWEEN NORTHERN ILLINOIS FINANCIAL CORPORATION AND
PREMIER FINANCIAL SERVICES, INC.
Proposed Merger of Equals Will Result in
New Financial Services Firm with Assets of $1.6 Billion
January 18, 1996 -- Northern Illinois Financial Corporation and
Premier Financial Services, Inc. today announced that they have
reached an understanding on substantially all material terms to merge
their assets and operations into a new financial services organization
to be named Grand Premier Financial, Inc.
The new company will be headquartered in Wauconda, Illinois. The
Grand Premier Financial, Inc. network will include Grand National
Banks, Premier's First Banks, which will be renamed Grand National
Banks, Premier Trust Services and Premier Insurance Services.
Grand Premier Financial, Inc. will have assets of $1.6 billion,
with facilities ranging in location from Lake Michigan to the
Mississippi River.
Northern Illinois Financial Corporation, based in Wauconda, Ill.,
is the parent company of four community banking organizations: Grand
National Bank of Crystal Lake, Grand National Bank of Niles, Grand
National Bank of South Chicago Heights and Grand National Bank of
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<PAGE> 104
Grand Premier Financial, Inc.
Page 2
Waukegan. It maintains a diversified network of 17 banking offices,
which include loan facilities and supermarket branches throughout
northeastern Illinois.
Premier Financial Services, Inc. (NASDAQ-PREM), based in
Freeport, Ill., is a multiline financial services company with
interests in banking, trust, insurance and investments. It has
locations in Cook, Lake, McHenry and DeKalb counties as well as seven
northwestern Illinois counties -- Jo Daviess, Stephenson, Carroll,
Whiteside, Lee, Ogle and Winnebago.
Customer, Employee, Shareholder Benefits
- ----------------------------------------
Richard L. Geach, president and CEO of Premier Financial
Services, Inc., will become chief executive officer of Grand Premier
Financial, Inc.; Robert W. Hinman, president and CEO of Northern
Illinois Financial Corporation, will be the chief operating officer;
and David L. Murray, executive vice president/CFO of Premier Financial
Services, Inc., will become chief financial officer of the new
company.
In the proposed merger, which is subject to director, shareholder
and regulatory approval, Northern Illinois Financial Corporation
shareholders will receive 4.25 shares of Grand Premier Financial, Inc.
for each share held. Premier Financial Services, Inc. shareholders
will receive 1.116 shares of Grand Premier Financial, Inc. for each
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Grand Premier Financial, Inc.
Page 3
share held. The transaction will be accounted for as a pooling of
interests and will qualify as a tax-free exchange of shares.
On a pro forma basis the new company will have $875 million in
total loans outstanding. Its deposits under management will be $1.35
billion and total assets will be $1.65 billion. As of December 31,
1995, the new company had capital in excess of 9 percent of its
assets, a ratio that will place Grand Premier Financial, Inc. in the
ranks of well-capitalized financial organizations nationwide,
according to Geach.
"We came to this understanding because the obvious synergies
between our two companies will provide significant new opportunities
for our customers, employees and shareholders.
"We estimate that within three years the pre-tax cost savings
could be as much as $4 million annually.
"Customers will almost immediately benefit from access to more
products and financial services. With our combined higher lending
limit, for example, we're able to serve larger customers locally --
customers who, in the past, might have turned to large money-center
banks," Geach said.
"Employees will have access to more business resources with which
to work, as well as expanded opportunities for professional growth,"
Hinman explained.
"We anticipate our shareholders will benefit from enhanced value
derived from higher future earnings growth and the significant cost
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<PAGE> 106
Grand Premier Financial, Inc.
Page 4
savings we project over the next three years. Shareholders also will
benefit from the financial strength of the combined company. Our
credit portfolio quality and capital ratios are superior to most
competitive institutions. This strength gives us the resources needed
to expand our customer base throughout northern Illinois," Geach said.
Tailored, Quality Service Focus
- -------------------------------
"At a time when so many banks and financial services
organizations are joining forces mainly for the sake of becoming
larger, the merger that will create Grand Premier Financial, Inc. is
grounded in different motives," Hinman said.
"Not only do our products and people fit together well, both of
our organizations have established reputations for localized, focused
customer service. Together, we will continue to tailor services and
products to the needs of our customers," Geach said.
Hinman added: "Put simply, we are talking about persistent
emphasis on service and product quality, more choices. Whether it's a
matter of meeting with customers outside of normal banking hours or
upgrading our technology to offer customers faster, more efficient
access to accounts on a 24-hour basis, our dedication to service
quality will be a defining factor at all 35 locations of the Grand
Premier Financial, Inc. network."
# # #
