UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Cole Taylor Financial Group, Inc.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
193 298 10 6
(CUSIP Number)
Jeffrey Taylor
62 Lakewood
Highland Park, IL 60035
(847) 433-7780
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
June 12, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box /X/.
Check the following box if a fee is being paid with the statement / /. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
SCHEDULE 13D
CUSIP No. 193 298 10 6
1 NAMES OF REPORTING PERSONS S.S. OR
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Sidney J. Taylor, both individually and as Trustee - see Exhibit 1
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7 SOLE VOTING POWER
NUMBER OF SHARES
BENEFICIALLY 689,749
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 0
PERSON 9 SOLE DISPOSITIVE POWER
WITH
0
10 SHARED DISPOSITIVE POWER
3,953,253
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
689,749
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* /X/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.5%
14 TYPE OF REPORTING PERSON*
IN and 00
*SEE INSTRUCTIONS BEFORE FILLING OUT!
SCHEDULE 13D
CUSIP No. 193 298 10 6
1 NAMES OF REPORTING PERSONS S.S. OR
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Iris Taylor, as Trustee - see Exhibit 1
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7 SOLE VOTING POWER
NUMBER OF SHARES
BENEFICIALLY 2,531,000
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 0
PERSON 9 SOLE DISPOSITIVE POWER
WITH
0
10 SHARED DISPOSITIVE POWER
3,953,253
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,531,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* /X/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.5%
14 TYPE OF REPORTING PERSON*
IN and 00
*SEE INSTRUCTIONS BEFORE FILLING OUT!
SCHEDULE 13D
CUSIP No. 193 298 10 6
1 NAMES OF REPORTING PERSONS S.S. OR
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Jeffrey Taylor
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7 SOLE VOTING POWER
NUMBER OF SHARES
BENEFICIALLY 236,012
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 0
PERSON 9 SOLE DISPOSITIVE POWER
WITH
0
10 SHARED DISPOSITIVE POWER
3,953,253
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
236,012
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* /X/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.5%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
SCHEDULE 13D
CUSIP No. 193 298 10 6
1 NAMES OF REPORTING PERSONS S.S. OR
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Bruce Taylor
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7 SOLE VOTING POWER
NUMBER OF SHARES
BENEFICIALLY 276,012
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 0
PERSON 9 SOLE DISPOSITIVE POWER
WITH
0
10 SHARED DISPOSITIVE POWER
3,953,253
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
276,012
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* /X/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.8%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
SCHEDULE 13D
CUSIP No. 193 298 10 6
1 NAMES OF REPORTING PERSONS S.S. OR
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Cindy Bleil
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7 SOLE VOTING POWER
NUMBER OF SHARES
BENEFICIALLY 126,880
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 0
PERSON 9 SOLE DISPOSITIVE POWER
WITH
0
10 SHARED DISPOSITIVE POWER
3,953,253
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
126,880
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* /X/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.8%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
SCHEDULE 13D
CUSIP No. 193 298 10 6
1 NAMES OF REPORTING PERSONS S.S. OR
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Susan Taylor
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7 SOLE VOTING POWER
NUMBER OF SHARES
BENEFICIALLY 40,000
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 0
PERSON 9 SOLE DISPOSITIVE POWER
WITH
0
10 SHARED DISPOSITIVE POWER
3,953,253
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
40,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* /X/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.3%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
SCHEDULE 13D
CUSIP No. 193 298 10 6
1 NAMES OF REPORTING PERSONS S.S. OR
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Melvin E. Pearl, as Trustee - see Exhibit 1
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7 SOLE VOTING POWER
NUMBER OF SHARES
BENEFICIALLY 53,600
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 0
PERSON 9 SOLE DISPOSITIVE POWER
WITH
0
10 SHARED DISPOSITIVE POWER
3,953,253
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
53,600
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* /X/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.4%
14 TYPE OF REPORTING PERSON*
00
*SEE INSTRUCTIONS BEFORE FILLING OUT!
ITEM 1. SECURITY AND ISSUER
Common Stock, par value $.01 per share, of Cole Taylor Financial Group,
Inc., 350 East Dundee Road, Wheeling, IL 60090
ITEM 2. IDENTITY AND BACKGROUND
(a) Sidney J. Taylor
(b) 350 East Dundee Road, Wheeling, IL 60090
(c) Investor
(d) None
(e) None
(f) United States
(a) Iris Taylor
(b) 350 East Dundee Road, Wheeling, IL 60090
(c) Investor
(d) None
(e) None
(f) United States
(a) Jeffrey Taylor
(b) 350 East Dundee Road, Wheeling, IL 60090
(c) Chairman of the Board, Chief Executive Officer, Cole Taylor
Financial Group, Inc., 350 East Dundee Road, Wheeling, IL 60090
(d) None
(e) None
(f) United States
(a) Bruce Taylor
(b) 350 East Dundee Road, Wheeling, IL 60090
(c) President of Cole Taylor Financial Group, Inc., 350 East Dundee
Road, Wheeling, IL 60090
(d) None
(e) None
(f) United States
(a) Cindy Bleil
(b) 350 East Dundee Road, Wheeling, IL 60090
(c) Investor
(d) None
(e) None
(f) United States
(a) Susan Taylor
(b) 350 East Dundee Road, Wheeling, IL 60090
(c) Investor
(d) None
(e) None
(f) United States
(a) Melvin Pearl
(b) 525 W. Monroe St., Chicago, IL 60661
(c) Attorney, Katten, Muchin & Zavis, 525 W. Monroe St., Chicago, IL
60661
(d) None
(e) None
(f) United States
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On June 12, 1996, the reporting persons entered into a Share Exchange
Agreement with Cole Taylor Financial Group, Inc. (the "Company") a copy of
which is attached as Exhibit 2 hereto (the "Share Exchange Agreement").
Pursuant to the Share Exchange Agreement and subject to the terms and
conditions thereof, the reporting persons agreed to transfer to the Company,
a number of shares of stock of the Company, including all of the shares of
stock of the Company owned beneficially or of record by them, in exchange for
the transfer to them of all of the outstanding stock of Cole Taylor Bank.
The Share Exchange Agreement is incorporated herein by reference.
ITEM 4. PURPOSE OF TRANSACTION.
See Item 3. The Share Exchange Agreement is incorporated herein by
reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Taylor Family Group 3,953,253 shares, 25.8%
consisting of:
Sidney J. Taylor 689,749 shares, 4.5%
Iris Taylor 2,531,000 shares, 16.5%
Jeffrey Taylor 236,012 shares, 1.5%
Bruce Taylor 276,012 shares, 1.8%
Cindy Bleil 126,880 shares, .8%
Susan Taylor 40,000 shares, .3%
Melvin Pearl 53,600 shares, .4%
Beneficial ownership is disclaimed by each reporting person for all shares
other than those listed under such person's name in Item 5(b)
(b) Sidney J. Taylor
Sole Voting Power: 689,749 (1)
Shared Voting Power: 0
Sole Dispositive Power: 689,749 (1)
Shared Dispositive Power: 0
Iris Taylor
Sole Voting Power: 2,531,000
Shared Voting Power: 0
Sole Dispositive Power: 2,531,000
Shared Dispositive Power: 0
Jeffrey Taylor
Sole Voting Power: 236,012 (2)
Shared Voting Power: 0
Sole Dispositive Power: 236,012 (2)
Shared Dispositive Power: 0
Bruce Taylor
Sole Voting Power: 276,012 (2)
Shared Voting Power: 0
Sole Dispositive Power: 276,012 (2)
Shared Dispositive Power: 0
Cindy Bleil
Sole Voting Power: 126,880
Shared Voting Power: 0
Sole Dispositive Power: 126,880
Shared Dispositive Power: 0
Susan Taylor
Sole Voting Power: 40,000
Shared Voting Power: 0
Sole Dispositive Power: 40,000
Shared Dispositive Power: 0
Cindy Bleil
Sole Voting Power: 53,600 (3)
Shared Voting Power: 0
Sole Dispositive Power: 53,600 (3)
Shared Dispositive Power: 0
(1) Includes 9,009 shares in the CTFG Employee Stock Ownership Plan
and/or the CTFG 401(k) Plan allocated to the reporting person.
(2) Includes 8,862 shares in the CTFG Employee Stock Ownership Plan
and/or the CTFG 401(k) Plan allocated to the reporting person.
Pursuant to the Shares Exchange Agreement, the Company has agreed
to make such shares available for distribution. Also includes
140,270 shares subject to options. Pursuant to the Share Exchange
Agreement, the Company has agreed to cause all outstanding options
to become vested and exercisable prior to the closing thereunder
and the reporting person has agreed to exercise such options.
(3) Does not include other shares beneficially owned by M. Pearl which
do not relate to the Taylor Family group.
(c) See Item 3.
(d) None
(e) Not applicable
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
See Item 3. The Share Exchange Agreement is incorporated herein by
reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 99.1 - List of Taylor Family group members and share
ownership.
Exhibit 99.2 - Share Exchange Agreement, dated June 12, 1996, among
Cole Taylor Financial Group, Inc. and members of the
Taylor Family.
Signature
After reasonable inquiry and to the best of my knowledge and belief I
certify that the information set forth in this statement is true, complete
and correct.
/s/ Sidney J. Taylor
Date: June 28, 1996 Sidney J. Taylor
/s/ Iris Taylor
Date: June 28, 1996 Iris Taylor
/s/ Jeffrey Taylor
Date: June 28, 1996 Jeffrey Taylor
/s/ Bruce Taylor
Date: June 28, 1996 Bruce Taylor
/s/ Cindy Bleil
Date: June 28, 1996 Cindy Bleil
/s/ Susan Taylor
Date: June 28, 1996 Susan Taylor
/s/ Melvin E. Pearl
Date: June 28, 1996 Melvin E. Pearl
EXHIBIT 99.1
Beneficial Ownership
Sidney Taylor
Directly 53,900
Melvin Pearl TR/BT Gift Trust 26,480
Melvin Pearl TR/Cindy Taylor 26,520
Cole Taylor Bank/FBO SJT 38,040
Melvin Pearl TR/JWT Gift Trust 26,520
Sidney J. Taylor Trust under self 509,280
ESOP 9,009
689,749
Iris Taylor
Iris Taylor TR/FBO Adam Taylor 21,720
Iris Taylor TR/Brett Daniel Taylor 11,320
Iris Taylor TR/Brian Taylor 21,720
Iris Taylor TR/Bruce Taylor 21,720
Melvin Pearl TR/Tark/Bruce Taylor 211,320
Iris Taylor TR/Cindy Taylor Bleil 21,720
Melvin Pearl TR/Tark/Cindy Taylor Bleil 211,320
Cole Taylor Bank/Tark Iris Fund 152,201
Iris Taylor TR/FBO E. Bleil 4,640
Iris Taylor TR/FBO Emily Taylor 21,760
Melvin Pearl TR/Tark/Bruce Taylor 261,320
Melvin Pearl TR/Tark/E. Bleil 261,320
Melvin Pearl TR/J. Taylor 261,320
Iris Taylor TR/FBO JWT 17,800
Melvin Pearl TR/Tark/J. Taylor 211,320
Iris Taylor TR/FBO Lisa Taylor 16,960
Iris Taylor TR/FBO Melissa Taylor 21,760
Melvin Pearl TR/FBO R. Bleil 11,320
Iris Taylor TR/FBO Ryan Taylor 1,480
Iris Taylor TR/FBO Stephanie Taylor 16,960
Taylor Family Partnership 750,000
2,531,000
Jeffrey Taylor
Directly 86,880
Options 140,270
ESOP 8,862
236,012
Bruce Taylor
Directly 126,880
Options 140,270
ESOP 8,862
276,012
Cindy Bleil
Directly 126,880
Susan Taylor
Susan Taylor Trust 40,000
Melvin Pearl
Melvin Pearl TR/Brett Daniel Taylor 8,800
Melvin Pearl TR/FBO E. Bleil 8,800
Melvin Pearl TR/FBO B. Taylor 8,800
Melvin Pearl TR/FBO Lisa Taylor 4,800
Melvin Pearl TR/FBO R. Bleil 8,800
Melvin Pearl TR/FBO Ryan Taylor 8,800
Melvin Pearl TR/FBO Stephanie Taylor 4,800
53,600
Total 3,953,253
EXHIBIT 99.2
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT is entered into this 12th day of June, 1996,
by and among Cole Taylor Financial Group, Inc. ("CTFG") and those certain
persons listed on Schedule 7(b) hereof (the "Taylor Family") and represented by
the members of the Taylor Family shown on the signature page hereof, for the
purposes described below.
RECITALS
WHEREAS, CTFG is the beneficial and record owner of one hundred percent
(100%) of the issued and outstanding shares of capital stock (the "Bank Stock")
of Cole Taylor Bank, an Illinois state-chartered bank, having its principal
place of business at 350 East Dundee Road, Wheeling, Illinois 60090 (the
"Bank"); and
WHEREAS, substantial disagreements have arisen between CTFG's two largest
shareholder groups concerning the future strategic direction of CTFG and, in an
effort to avoid the adverse consequences of these disagreements, the Taylor
Family has offered to exchange its shares in CTFG for shares of the Bank;
WHEREAS, the Board of Directors of CTFG (the "Board") has determined that
the transfer of all of the outstanding shares of Bank Stock and certain other
assets of CTFG in exchange for certain shares of common stock, par value $.01
per share, of CTFG (the "CTFG Stock") on the terms and subject to the conditions
set forth in this Agreement are fair to and in the best interest of CTFG and its
shareholders; and
WHEREAS, the parties desire to enter into certain other related agreements
in connection with the foregoing transactions; and
WHEREAS, the Taylor Family currently intends to cause a new bank holding
company ("Newco") to be formed to hold the Bank Stock at the Closing (as defined
below) if permitted by the Private Letter Ruling (as defined below); and
WHEREAS, the parties hereto intend that the exchange of the Bank Stock (or
Newco stock as the case may be) for CTFG Stock owned by the Taylor Family, as
described herein, qualify as a tax-free split-off under Section 355 of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual covenants and agreements herein contained, the parties hereby agree as
follows:
1. Exchange of Bank Stock.
Upon the terms and subject to the conditions set forth
in this Agreement, CTFG shall assign, transfer and deliver to the Taylor Family
(or, with respect to not more than 49.9% of the outstanding stock of the Bank,
to such party or parties as the Taylor Family shall direct) on the Closing Date
(as hereinafter defined), in exchange for a number of shares of CTFG Stock equal
to the Stock Amount (as defined below), all right, title and interest in and to
all of the Bank Stock. In the event that the Private Letter Ruling specifically
contemplates the formation of Newco and the transfer of Bank Stock to it and
such transfer occurs prior to the Closing, CTFG shall exchange and the Taylor
Family (or, with respect to not more than 49.9% of the outstanding stock of
Newco, such party or parties as the Taylor Family shall direct) shall receive
Newco stock in lieu of Bank Stock.
2. Exchange of CTFG Stock; Options; Adjustments.
2.1 Transfer and Exchange. At the Closing, in exchange for the
transfer of the Bank Stock or Newco stock to the Taylor Family (or, with respect
to not more than 49.9% of the outstanding stock of the Bank or Newco, to such
party or parties as the Taylor Family shall direct), the Taylor Family shall
assign, transfer and deliver or cause to be assigned, transferred and delivered
to CTFG a number of shares of CTFG Stock to be determined, subject to the
proviso set forth below, at the discretion of the Taylor Family (such number of
shares of CTFG Stock shall be referred to as the "Stock Amount"); provided,
however, that in no event shall the Stock Amount consist of more than 4,500,000
shares of CTFG Common Stock or less than the greater of (i) 4,000,000 shares of
CTFG Common Stock or (ii) all of the shares of CTFG Stock owned beneficially or
of record by the Taylor Family (including any shares of CTFG Stock owned after
the exercise of any options to purchase shares of CTFG Stock ("Options") and any
shares of CTFG Stock in the CTFG Employee Stock Ownership Plan (the "ESOP") and
the CTFG 401(k) Plan allocated to members of the Taylor Family) immediately
prior to the Closing.
2.2 Options. CTFG will cause all outstanding Options to become
vested and exercisable prior to the Closing. Each Taylor Family member holding
any Options shall exercise such Options at or prior to the Closing.
2.3 Change in CTFG Stock. In the event that between the date of this
Agreement and the Closing Date CTFG subdivides the outstanding shares of CTFG
Stock into a greater number of shares, or combines its outstanding shares of
CTFG Stock into a smaller number of shares, or effects a reclassification of the
CTFG Stock, or pays a dividend in shares of its capital stock, then the
consideration set forth in this Section 2 shall be adjusted so that the number
of shares of CTFG Stock to be received by CTFG shall be reduced or increased by
an amount such that the aggregate value received is not increased or decreased
as a result of such subdivision, combination, reclassification or dividend.
3. Pre-Closing Transactions.
3.1 Spin-Off of Automobile Receivables Business. Prior to the
Closing, CTFG shall cause the Bank to form a new wholly-owned subsidiary ("Auto
Sub") to which the Bank shall contribute its used automobile receivables
business, consisting of substantially all of the assets used in its used
automobile receivables business (the "UARB Assets") and (i) the Cash Component
(as defined below); plus (ii) all of the Bank's rights and obligations pursuant
to automobile loans, notes or the Bank's securities which as of the Closing Date
are collateralized primarily with used automobiles and have a fair market value
as determined in writing by KPMG Peat Marwick (or such other person upon whom
the parties hereto shall mutually agree) of no less than $30,000,000 nor more
than $31,000,000 (the "Automobile Receivables"). Immediately prior to the
Closing, CTFG shall cause the Bank employees identified on Schedule 3.1 to be
terminated by the Bank and immediately offered employment with Auto Sub. The
Bank shall be responsible for and shall indemnify CTFG for severance costs
arising out of such termination. The term "Cash Component" shall mean: (x) if
the Stock Amount is less than 4,250,000, cash in an amount equal to (A)
$60,000,000 minus (B) the amount, if any, by which the fair market value of the
Automobile Receivables exceeds $30,000,000 plus (C) the product of $33.00 and
the difference between 4,250,000 and the Stock Amount; (y) if the Stock Amount
is equal to 4,250,000, cash in an amount equal to (A) $60,000,000 minus (B) the
amount, if any, by which the fair market value of the Automobile Receivables
exceeds $30,000,000; and (z) if the Stock Amount is greater than 4,250,000, cash
in an amount equal to (A) $60,000,000 minus (B) the amount, if any, by which the
fair market value of the Automobile Receivables exceeds $30,000,000 minus (C)
the product of $33.00 and the difference between the Stock Amount and 4,250,000.
3.2 Transfer to CTFG. Immediately prior to the Closing Date, CTFG
shall cause the Bank to distribute all of the capital stock of Auto Sub to CTFG,
following which CTFG shall cause Cole Taylor Finance Co., a Delaware corporation
and a wholly-owned subsidiary of CTFG ("Finance") to be merged with and into
Auto Sub.
3.3 Investment in Alpha Capital Fund II, L.P. The Taylor Family
shall cause the Bank or Newco to purchase at Closing all of CTFG,s rights,
obligations and interest, including, without limitation, CTFG's $500,000
commitment with respect thereto (the "Alpha Interest") in Alpha Capital Fund II,
L.P., a small business investment company ("Alpha Capital Fund"), for cash in an
amount equal to CTFG's cash investment in Alpha Capital Fund, net of all partner
distributions, return of capital and like payments, made from time to time prior
to the date hereof (which was $139,831 as of May 31, 1996), plus any additional
cash investment made by CTFG in Alpha Capital Fund after the date hereof if made
with the Taylor Family's consent, plus interest on the total amount invested
beginning, as to each portion of such amount invested at different times, on the
date of such investment, at the rate of 9% per annum, compounded annually.
3.4 Sale of CT Mortgage Company, Inc. Prior to or at Closing, CTFG
shall sell and the Bank or, at the option of the Taylor Family, Newco, shall
purchase, 100% of the capital stock (the "CT Mortgage Stock") of CT Mortgage
Company, Inc. ("CT Mortgage"), a subsidiary of CTFG, for cash in an amount equal
to CTFG's aggregate cash investments in CT Mortgage, net of all distributions to
stockholders, return of capital and like payments, made from time to time prior
to the date hereof (which was $1,007,000 as of May 31, 1996), plus any
additional cash investment made by CTFG in CT Mortgage after the date hereof if
made with the Taylor Family's consent, plus interest on the total amount
invested beginning, as to each portion of such amount invested at different
times, on the date of such investment, at the rate of 9% per annum, compounded
annually. All intercompany indebtedness between CTFG and CT Mortgage reflected
on the books and records of CT Mortgage and CTFG on the Closing Date shall have
been repaid, together with interest thereon at the interest rate specified by
such indebtedness, and no intercompany indebtedness shall be incurred subsequent
to the date hereof, except in accordance with Section 9(a)(i)(E) hereof.
3.5 Formation of Newco; Transfer of Bank Stock. If specifically
contemplated by the Private Letter Ruling and requested by the Taylor Family,
prior to the closing CTFG shall form Newco and shall transfer all the Bank
shares owned by CTFG to Newco. CTFG shall not, however, be required to
effectuate this transfer unless (1) the Taylor Family shall have applied for and
obtained appropriate regulatory approval for Newco, (2) the Internal Revenue
Service shall have ruled in the Private Letter Ruling that the transfer of Bank
Stock by CTFG to Newco is a taxfree transaction to CTFG and Newco, and (3) the
New Bank Securities (as defined below) shall be issued on terms disclosed to the
Internal Revenue Service and consistent with the Private Letter Ruling.
4. Consummation of the Transactions; Closing Date. The consummation of
the transactions contemplated herein (the "Closing") and the delivery of the
certificates and acknowledgements called for by this Agreement shall take place
at the offices of Mayer, Brown & Platt, 190 South LaSalle Street, Chicago,
Illinois 60603, at such time and date (the "Closing Date,,) as shall be fixed by
mutual agreement of the Taylor Family and CTFG as promptly as practicable
following the satisfaction or waiver of the conditions set forth in Sections 11
and 12 of this Agreement.
5. Regulatory Matters.
5.1 Regulatory Approvals. The parties hereto acknowledge that
requisite approvals must be received from or notices must be given to certain
federal and state governmental bodies and agencies which may include (i) the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board");
(ii) the Federal Deposit Insurance Corporation (the "FDIC"); (iii) the Illinois
Commissioner of Banks and Trust Companies; (iv) the Federal Trade Commission,
(v) the Antitrust Division of the Department of Justice and/or (vi) any other
regulatory authorities having jurisdiction (collectively, the governmental
bodies and agencies referred to in this Section 5.1 are referred to herein as
the "Applicable Governmental Authorities"), in accordance with the laws, rules
and regulations governing or related to the Applicable Governmental Authorities
(the "Applicable Laws"). The parties hereto agree to use their reasonable best
efforts to obtain all such approvals as promptly as practicable and to give all
such notices.
5.2 Capital Infusion. The Taylor Family acknowledges that the Bank
will require additional capital upon the consummation of the transactions
contemplated by this Agreement in order to comply with the minimum capital
requirements of any applicable banking laws, regulations or any requirements of
any regulatory agencies and agrees to use its reasonable best efforts to obtain
financing sufficient to satisfy this requirement. It is understood that the
Taylor Family intends to obtain some or all of such financing from the net
proceeds of a sale of securities of the Bank (or Newco, as the case may be) (the
"New Bank Securities',); provided, that the terms of the New Bank Securities
shall have been disclosed to the Internal Revenue Service and shall be
consistent with the Private Letter Ruling. If the Taylor Family chooses to make
such a sale through a public offering, CTFG, following the direction of the
Taylor Family (except as such direction may be inconsistent with the fiduciary
duties of CTFG's directors), shall cause the Bank (or Newco, as the case may be)
to file prior to the Closing Date a registration statement (the "Registration
Statement") with the U.S. Securities and Exchange Commission (the "SEC") or a
comparable agency relating to the offer and sale of New Bank Securities. The
Registration Statement shall be in form and substance reasonably satisfactory to
the Taylor Family. CTFG shall cause the Bank to use its reasonable best efforts
to have the Registration Statement declared effective and to cause the offer
and sale of the New Bank Securities to be registered, qualified or exempted
under applicable state securities laws as soon as is reasonably practicable, but
in no event later than the Closing Date. CTFG shall cause the Bank (or Newco,
as the case may be) to use its reasonable best efforts to amend or supplement
the Registration Statement or the prospectus contained therein and to take such
actions as may be necessary to cause the Registration Statement to remain
effective until the offer and sale of the New Bank Securities has been
completed. If the New Bank Securities are offered in a manner not involving a
public offering requiring a Registration Statement, CTFG will similarly
cooperate in the preparation of documents for such offering. Unless this
Agreement has been terminated by the Taylor Family pursuant to Section 13(d),
the Taylor Family will indemnify and hold harmless CTFG against all costs and
liabilities related to the sale of the New Bank Securities, including but not
limited to all underwriting, accounting, legal, printing, filing fee and other
expenses of a public or private offering and any liabilities relating to
misstatements or omissions in the Registration Statement or other offering
documents or any part thereof. The Bank will assume such indemnity and hold
harmless agreement upon consummation of the transfer and exchange referred to in
Section 2.1 hereof.
6. Escrow. Within five business days from the date hereof, as security to
ensure the payment of any termination fee required pursuant to Section 14(c) of
this Agreement, the Taylor Family shall deposit 750,000 shares of CTFG Stock,
with executed stock transfer powers, into escrow (the "Escrow Fund") with The
Northern Trust Company (or such other entity as the parties hereto shall
reasonably agree) pursuant to an Escrow Agreement between the Taylor Family,
CTFG and The Northern Trust Company substantially in the form attached hereto as
Exhibit A.
7. Representations and Warranties of the Taylor Family. Each member of
the Taylor Family, jointly and severally, represents and warrants to CTFG that:
(a) Authorization, No Violation, Et Cetera. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby by such Taylor Family member has been duly authorized
by all necessary action on the part of such member of the Taylor Family and
this Agreement constitutes the legal, valid and binding obligation of such
Taylor Family member, enforceable against such Taylor Family member in
accordance with its terms. The execution and delivery of this Agreement by
the Taylor Family, and the consummation of the transactions contemplated by
this Agreement, will not violate the provisions of, or constitute a breach
or default under, any material agreement to which such member of the Taylor
Family is a party or is bound, or any other material license, law, order,
rule, regulation or judgment to which such member of the Taylor Family is a
party.
(b) Stock and Option Ownership. Each member of the Taylor Family
owns in the aggregate or has allocated to him or her in the ESOP and the
CTFG 401(k) Plan, as applicable, that number of shares of CTFG Stock and
Options to purchase shares of CTFG Stock as set forth opposite his, her or
its name on Schedule 7(b) hereto, and as of the Closing Date, such CTFG
Stock and Options will be free and clear of any security interests, liens,
claims, pledges, charges, voting agreements or other encumbrances of any
nature whatsoever ("Liens").
(c) Formation of Newco. In the event the Taylor Family determines to
form Newco as a bank holding company, and the Private Letter Ruling
specifically contemplates the formation of Newco and transfer of Bank Stock
to it, the Taylor Family represents that it will cooperate with CTFG in
taking all necessary corporate and other action to create and form Newco
and cause Newco to enter into, ratify and approve this Agreement and all of
the related transactions prior to the Closing Date.
(d) Broker's and Finder's Fees. No member of the Taylor Family has
incurred any obligation or liability, contingent or otherwise, to any
brokers or finders in respect of the matters provided for in this Agreement
other than to Piper, Jaffray Companies.
(e) UARB Assets. The UARB Assets are substantially all of the assets
used exclusively in or necessary for the conduct of the Bank's used
automobile receivables business.
(f) Prohibitions. Neither any member of the Taylor Family nor any of
their respective properties is subject to any order, writ, judgment,
injunction, decree, determination or award which would prevent or delay the
consummation of the transactions contemplated hereby.
(g) Transfer of Title. The transfer of the shares of CTFG
constituting the Stock Amount hereunder to CTFG will transfer to CTFG good
and valid title to the shares of CTFG constituting the Stock Amount, free
and clear of any Liens (except for Liens CTFG has permitted to attach upon
transfer at the Closing).
8. Representations and warranties of CTFG. Except as set forth below,
CTFG makes no representation or warranty with respect to the Bank, CT Mortgage
or Alpha Capital Fund and the Taylor Family acknowledges that the Bank, CT
Mortgage and the Alpha Interest are being transferred on an as is, where is
basis. Notwithstanding the foregoing, CTFG represents and warrants to the
Taylor Family that:
(a) Capital Stock. On the date hereof, the Bank has authorized,
issued and outstanding capital stock as follows:
Authorized Issued Outstanding Treasury
Common 1,500,000 1,500,000 1,500,000 0
There are no issued or outstanding warrants, options, preemptive rights, rights
of first refusal or other rights to purchase equity or debt instruments of the
Bank.
On the date hereof, CT Mortgage has authorized, issued and outstanding
capital stock as follows:
Authorized Issued Outstanding Treasury
Common 10,000 1,000 1,000 0
There are no issued or outstanding warrants, options, preemptive rights, rights
of first refusal or other rights to purchase equity or debt instruments of CT
Mortgage.
All of the issued and outstanding shares of Bank Stock and stock of CT Mortgage
are duly and validly authorized and issued. All of the outstanding shares of
Bank Stock and stock of CT Mortgage are fully paid and nonassessable and are
owned free and clear of any liens, mortgages or claims by CTFG.
On the date hereof, CTFG holds a $500,000 commitment in Alpha Capital Fund of
which $139,831 was funded as of May 31, 1996.
(b) Authorization: Validity. The consummation of the transactions
contemplated by this Agreement have been duly and validly authorized by all
necessary corporate action on the part of CTFG and this Agreement
constitutes the legal, valid and binding obligation of CTFG, enforceable
against CTFG in accordance with its terms.
(c) Broker's and Finder's Fees. Neither CTFG nor the Bank has
incurred any obligation or otherwise, to any brokers or finders in respect
of the matters provided for in this Agreement other than to The Chicago
Corporation and Sandler O'Neill & Partners, L.P.
(d) Investment Schedule. CTFG has previously delivered to the Taylor
Family a true and accurate schedule showing the amounts and dates of its
investments in CT Mortgage and Alpha Capital Fund.
(e) Prohibitions. None of CTFG, any of its subsidiaries or any of
their respective properties is subject to any order, writ, judgment,
injunction, decree, determination or award which would prevent or delay the
consummation of the transactions contemplated hereby.
(f) Title. At the Closing, CTFG will have good and valid title to
all of the Bank Stock, the CT Mortgage Stock and the Alpha Interest free
and clear of any Liens.
(g) Transfer of Title. The transfer of the Bank Shares, the CT
Mortgage Stock and the Alpha Interest hereunder to the Taylor Family, the
Bank or Newco, as the case may be, will transfer to such person good and
valid title to the Bank Shares, the CT Mortgage Stock and the Alpha
Interest, free and clear of any Liens (except for Liens the Taylor Family
has permitted to attach upon transfer at the Closing).
(h) Proposals. Except as previously disclosed in writing to the
Taylor Family, CTFG has not received since September 1, 1995 any offers or
proposals for the acquisition of CTFG, the Bank or Finance.
9. Agreements with Respect to Conduct of the Business After the Date
Hereof.
(a) Ordinary Course, Insurance, Preservation of Business.
(i) Except as otherwise agreed to in writing by the Board and
Sidney Taylor, Jeffrey Taylor and Bruce Taylor (the "Taylor
Directors") and except to the extent required to consummate the
transactions contemplated by Section 3 hereof, CTFG and the Taylor
Directors covenant and agree that they will not, prior to the earlier
of the Closing Date and the termination of this Agreement, terminate
or change the terms or conditions of employment of Jeffrey Taylor or
Bruce Taylor at CTFG, and prior to the later of (i) the Closing Date
and (ii) the termination of the Taylor Sale Period (as that term is
defined in Section 14(d) hereof), terminate or change the terms or
conditions of employment of any employees of CTFG (other than Jeffrey
Taylor or Bruce Taylor), the Bank (including Jeffrey Taylor and Bruce
Taylor) or CT Mortgage (provided that this Section 9(a)(i) shall not
apply to employees of Finance or its subsidiaries in their capacity as
such) having an annual salary of $100,000 or more per year and that
they will use their reasonable best efforts to cause each of the Bank
and CT Mortgage from and after the date of this Agreement and until
the later of (i) the Closing Date and (ii) the termination of the
Taylor Sale Period to:
(A) carry on its business only in the ordinary course and
consistent with its respective policies, procedures and practices
in substantially the same manner as heretofore conducted
(provided that it may take any action listed on Schedule
9(a)(i));
(B) except as they may terminate in accordance with their
terms or in accordance with the terms of this Agreement, keep in
full force and effect, and not commit or cause a default of any
of its obligations under, any material contracts;
(C) keep in full force and effect the insurance coverage in
effect on the date hereof to the extent that such insurance
continues to be reasonably available;
(D) use its best efforts to maintain, renew, keep in full
force and effect and preserve its business organization and
material rights and franchises, permits and licenses and to
retain its present employee force (including retaining each
Taylor Director in all of his current positions as director,
officer and employee of the Bank with no diminution of his
current duties, authority, compensation and benefits except as
otherwise provided in this Agreement), and to maintain its
existing, or substantially equivalent, credit arrangements with
banks and other financial institutions and to use its reasonable
best efforts to maintain the continuance of its general customer
relationships;
(E) continue all usual intercompany relationships and
practices to support the ongoing business activities of the Bank
and CT Mortgage in accordance with existing practices, including
funding usual working capital contributions and normal budgeted
expenditures and making reimbursements for services rendered in
accordance with existing practices, budgets and plans; and
(F) take such action as may be necessary to maintain,
preserve, renew and keep in full force and effect its corporate
existence and material rights and franchises; and duly comply in
all material respects with all laws applicable to its and to the
conduct of its business.
(ii) Except as otherwise agreed to by the Board (with the
participation of the Taylor Directors) and except to the extent
required to consummate the transactions contemplated by Section 3
hereof, CTFG covenants and agrees that it will use its reasonable best
efforts to cause each of Finance and Finance's subsidiaries from and
after the date of this Agreement and until the earlier of the Closing
Date and the termination of this Agreement to:
(A) carry on its business only in the ordinary course and
consistent with its respective policies, procedures and practices
in substantially the same manner as heretofore conducted;
(B) except as they may terminate in accordance with their
terms or in accordance with the terms of this Agreement, keep in
full force and effect, and not commit or cause a default of any
of its obligations under, any material contracts;
(C) keep in full force and effect the insurance coverage in
effect on the date hereof to the extent that such insurance
continues to be reasonably available;
(D) use its best efforts to maintain, renew, keep in full
force and effect and preserve its business organization and
material rights and franchises, permits and licenses and to
retain its present employee force, and to maintain its existing,
or substantially equivalent, credit arrangements with banks and
other financial institutions and to use its reasonable best
efforts to maintain the continuance of its general customer
relationships;
(E) continue all usual intercompany relationships and
practices to support the ongoing business activities of Finance
in accordance with existing practices, including funding usual
working capital contributions and normal budgeted expenditures
and making reimbursements for services rendered in accordance
with existing practices, budgets and plans; and
(F) take such action as may be necessary to maintain,
preserve, renew and keep in full force and effect its corporate
existence and material rights and franchises; and duly comply in
all material respects with all laws applicable to its and to the
conduct of its business.
(b) Prohibited Action Without Approval.
(i) Except as otherwise expressly provided in or permitted by
this Agreement, including the Schedules hereto, or as agreed by CTFG
(with the participation of the Taylor Directors), CTFG and the Taylor
Directors covenant and agree that they will use their reasonable best
efforts to cause the Bank and CT Mortgage, from and after the date of
this Agreement and until the earlier of the Closing and the
termination of this Agreement, not to:
(A) incur or agree to incur any obligation or liability
(absolute or contingent) other than the taking of deposits and
other liabilities incurred in the ordinary course of business and
consistent with prior practice, and liabilities arising out of,
incurred in connection with, or related to the consummation of
this Agreement; except in the ordinary course of business
consistent with past practice, assume, guarantee or endorse the
obligations of any other person; except in the ordinary course of
business consistent with past practice, mortgage or pledge any of
its assets, tangible or intangible, or create or suffer to exist
any Lien thereupon; make or permit any amendment or termination
of any material contract which would materially adversely affect
its rights thereunder; acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or
other business organization or division or substantial part
thereof; sell, transfer or otherwise dispose of any substantial
part of its assets; sell, acquire or form any branch location;
enter into, dispose or divest itself of any joint venture or
partnership or cause any business entity to become a subsidiary
or affiliate; sell or otherwise dispose of any real property
owned or operated by it except for the sale of real estate held
for sale in the ordinary course of business; enhance, expand,
modify, replace or alter any computer or data processing system
owned, leased or licensed by it (including any software
associated with any such computer or system); authorize any new
capital expenditure or expenditures or any other expenditures in
excess of $50,000, either individually or in the aggregate; make,
originate or otherwise acquire one or more loans, or one or more
loan commitments for one or more loans, or one or more lines of
credit, except in the ordinary course of business, in accordance
with prior practice and with all approvals as are required by
applicable procedures on the date hereof; or enter into any
contract, agreement, commitment or arrangement with respect to
any of the foregoing; or
(B) authorize for issuance, issue, sell, deliver (whether
through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise),
redeem or acquire for value, or agree or commit to do so, any
debt securities or any shares of the capital stock or other
equity securities, or any other securities or equity equivalents
(including, without limitation, stock appreciation rights), or
declare, issue or pay any dividend or other distribution of
assets, whether consisting of money, other personal property,
real property or other things of value, to its shareholders other
than as set forth in Section 3 or Section 9(j) hereof; or
(C) split, combine or reclassify any shares of its capital
stock; or
(D) sell or pledge or otherwise encumber any stock owned by
it in any subsidiary; amend or propose to amend its, or permit
the amendment of any subsidiary's certificate of incorporation,
charter or by-laws or any other governing document of any
subsidiary; split, combine or reclassify any shares of its
capital stock; or enter into any agreement, commitment or
arrangement with respect to any of the foregoing; or
(E) enter into, adopt or (except as may be required by law)
amend or terminate any bonus, profit sharing, compensation,
severance, termination, stock appreciation right, restricted
stock, performance unit, stock equivalent, stock purchase
agreement, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreement, trust,
plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee, increase in any manner the
compensation or benefits of any director, officer or employee or
pay any benefit not required by any plan or arrangement as in
effect as of the date hereof (including, without limitation, the
granting of stock options, restricted stock, stock appreciation
rights or performance units) or hire any employee with a salary
in excess of $150,000 per year or hire, terminate or change the
terms or conditions of employment of any employee who would be
entitled to any payment upon a change of control of the Bank or
CT Mortgage; or
(F) obligate the Bank or CT Mortgage to any intercompany
charge; or
(G) acquire or dispose of any securities or interests for
investment purposes or sell or purchase mortgage servicing
rights; or
(H) enter into any transactions other than in the ordinary
course of business; or
(I) compromise or otherwise settle or adjust any assertion
or claim of a deficiency in taxes (or interest thereon or
penalties in connection therewith) or file any appeal from an
asserted deficiency, except in a form previously approved by the
Board and the Taylor Directors, which approval shall not be
unreasonably withheld, or file any federal or state tax return
before furnishing a copy to the Taylor Directors and affording an
opportunity to consult with the filing entity; or
(J) unless the Board decides otherwise, open any new office
or close any current office of the Bank, any of the Bank's
subsidiaries or CT Mortgage at which business is conducted.
(K) take, or agree in writing or otherwise to take, any of
the actions described above in this Section 9(b)(i) or any action
which would make any of the representations or warranties of CTFG
or the Taylor Family contained in this Agreement untrue or
incorrect or would result in any of the conditions hereunder not
being satisfied.
(ii) Except as otherwise expressly provided in or permitted by
this Agreement or as agreed by the Board (with the participation of
the Taylor Directors), CTFG will use its reasonable best efforts to
cause Finance, from and after the date of this Agreement and until the
earlier of the Closing and the termination of this Agreement, not to:
(A) incur or agree to incur any obligation or liability
(absolute or contingent) other than liabilities incurred in the
ordinary course of business and consistent with prior practice,
and liabilities arising out of, incurred in connection with, or
related to the consummation of this Agreement; except in the
ordinary course of business consistent with past practice,
assume, guarantee or endorse the obligations of any other person;
except in the ordinary course of business consistent with past
practice, mortgage or pledge any of its assets, tangible or
intangible, or create or suffer to exist any Lien thereupon; make
or permit any amendment or termination of any material contract
which would materially adversely affect its rights thereunder;
acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business
organization or division or substantial part thereof; sell,
transfer or otherwise dispose of any substantial part of its
assets; enter into, dispose or divest itself of any joint venture
or partnership or cause any business entity to become a
subsidiary or affiliate; sell or otherwise dispose of any real
property owned or operated by it except for the sale of real
estate held for sale in the ordinary course of business; except
as identified on Schedule 9(b)(ii)(A), enhance, expand, modify,
replace or alter any computer or data processing system owned,
leased or licensed by it (including any software associated with
any such computer or system); authorize any new capital
expenditure or expenditures or, except as identified on Schedule
9(b)(ii)(A), any other expenditures in excess of $50,000, either
individually or in the aggregate; make, originate or otherwise
acquire one or more loans, or one or more loan commitments for
one or more loans, or one or more lines of credit, except in the
ordinary course of business, in accordance with prior practice
and with all approvals as are required by applicable procedures
on the date hereof; or enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
or
(B) authorize for issuance, issue, sell, deliver (whether
through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise),
redeem or acquire for value, or agree or commit to do so, any
debt securities or any shares of the capital stock or other
equity securities, or any other securities or equity equivalents
(including, without limitation, stock appreciation rights),
except pursuant to any employee benefit plan of Finance as in
effect as of the date hereof, or amend any of the terms of any
such securities or agreements outstanding as of the date hereof;
or
(C) split, combine or reclassify any shares of its capital
stock; or
(D) sell or pledge or otherwise encumber any stock owned by
it in any subsidiary; (b) amend or propose to amend its, or
permit the amendment of any subsidiary's certificate of
incorporation, charter or by-laws or any other governing document
of any subsidiary; (c) split, combine or reclassify any shares of
its capital stock; or (d) enter into any agreement, commitment or
arrangement with respect to any of the foregoing; or
(E) enter into, adopt or (except as may be required by law)
amend or terminate any bonus, profit sharing, compensation,
severance, termination, stock appreciation right, restricted
stock, performance unit, stock equivalent, stock purchase
agreement, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreement, trust,
plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee, increase in any manner the
compensation or benefits of any director, officer or employee or
pay any benefit not required by any plan or arrangement as in
effect as of the date hereof (including, without limitation, the
granting of stock options, restricted stock, stock appreciation
rights or performance units) or hire any employee with a salary
in excess of $150,000 per year or hire, terminate or change the
terms or conditions of employment of any employee who would be
entitled to any payment upon a change of control of the Bank or
CT Mortgage; or
(F) obligate Finance to any intercompany charge other than
in the ordinary course of business consistent with past practice;
or
(G) acquire or dispose of any securities or interests for
investment purposes or sell or purchase mortgage servicing
rights; or
(H) enter into any transactions other than in the ordinary
course of business; or
(I) compromise or otherwise settle or adjust any assertion
or claim of a deficiency in taxes (or interest thereon or
penalties in connection therewith) or file any appeal from an
asserted deficiency; or
(J) take, or agree in writing or otherwise to take, any of
the actions described above in this Section 9 (b) (ii) .
(c) No Solicitation.
(1) CTFG will immediately cease any existing discussions or
negotiations with any third parties conducted prior to the date
hereof with respect to any Acquisition Proposal (as defined
below). CTFG shall not, directly or indirectly, through any
officer, director, employee, representative or agent or any of
its subsidiaries, (i) solicit, initiate, continue or encourage
any inquiries, proposals or offers that constitute, or could
reasonably be expected to lead to, a proposal or offer for a
merger, consolidation, business combination, sale of substantial
assets, sale of shares of capital stock (including, without
limitation, by way of a tender offer) or similar transactions
involving CTFG, the Bank or any of CTFG's subsidiaries, other
than the transactions contemplated by this Agreement (any of the
foregoing inquiries or proposals being referred to in this
Agreement as an "Acquisition Proposal"), (ii) solicit, initiate,
continue or engage in negotiations or discussions concerning, or
provide any non-public information or data to any person or
entity relating to, any Acquisition Proposal, or (iii) agree to,
approve or recommend any Acquisition Proposal; provided, that
nothing contained in this Section 9(c) shall prevent CTFG from
furnishing non-public information or data to, or entering into
discussions or negotiations with, any person in connection with
an unsolicited Acquisition Proposal by such person or
recommending an unsolicited Acquisition Proposal to the
stockholders of CTFG, if and only to the extent that (1) CTFG's
directors determine in good faith that such action is required
for the discharge of their fiduciary duties to stockholders under
applicable law if so advised by independent counsel, and (2) CTFG
advises the Taylor Family of all such nonpublic information
delivered to such person concurrently with its delivery to the
requesting party.
(2) CTFG shall notify the Taylor Directors immediately (and
in no event later than 24 hours) after receipt by CTFG of any
Acquisition Proposal or any request for non-public information in
connection with an Acquisition Proposal or for access to the
properties, books or records of CTFG by any person or entity that
informs CTFG that it is considering making, or has made, an
Acquisition Proposal.
(d) Liabilities. After the date hereof and prior to the Closing
Date, CTFG and the Taylor Directors shall use their reasonable best efforts
to cause the Bank, Finance, CT Mortgage and each of their subsidiaries to
pay or discharge their current liabilities when the same become due and
payable, except for such liabilities as may be subject to a good faith
dispute or counterclaim.
(e) Goodwill. After the date hereof and prior to the Closing Date,
CTFG and the Taylor Directors shall use their reasonable best efforts to
cause each of the Bank, Finance, CT Mortgage and each of their subsidiaries
not to enter into any transaction which will create goodwill on its books
and records under generally accepted accounting principles.
(f) Insider Lending. After the date hereof and prior to the Closing
Date, CTFG and the Taylor Directors shall use their reasonable best efforts
to cause each of the Bank, Finance, CT Mortgage and each of their
subsidiaries not to change or modify any of its current practices relating
to the lending of money, secured or unsecured, to its affiliated persons,
including but not limited to its directors, officers and employees.
(g) No Violation. After the date hereof and prior to the Closing
Date, CTFG and the Taylor Directors shall use their reasonable best efforts
to cause each of the Bank, Finance, CT Mortgage and each of their
subsidiaries not to take any action which knowingly violates any statute,
code, ordinance, rule, regulation or judgment, order, writ, arbitral award,
injunction or decree of any court, governmental agency or body or
arbitrator, domestic or foreign, having jurisdiction over its properties.
(h) Operating Expenses. After the date hereof and prior to the
Closing Date, CTFG and the Taylor Directors shall use their reasonable best
efforts to cause each of the Bank, Finance, CT Mortgage and each of their
subsidiaries not to increase the level of its operating expenses in any
material respect.
(i) Accounting. After the date hereof and prior to the Closing Date,
CTFG and the Taylor Directors shall use their reasonable best efforts to
cause each of the Bank, Finance, CT Mortgage and each of their subsidiaries
to maintain its books, accounts and records in accordance with generally
accepted accounting principles. CTFG and the Taylor Directors shall use
their reasonable best efforts to cause the Bank, Finance, CT Mortgage and
each of their subsidiaries not to make any change in any method of
accounting or accounting practice, or any change in the method used in
allocating income, charging costs or accounting for income, except as may
be required by law, regulation or generally accepted accounting principles.
CTFG and the Taylor Directors shall use their reasonable best efforts to
cause the Bank, Finance, CT Mortgage and each of their subsidiaries not to
change any practice or policy with respect to the charging off of loans or
the maintenance of its reserves for possible loan losses, except as
required by law, regulation or generally accepted accounting principles.
(j) Dividends. Except as required otherwise by law, the parties
acknowledge and agree that, from the date hereof through the Closing Date,
the Bank will pay monthly dividends to CTFG equal to one-half of Bank
earnings with an adjustment in December, 1996 so that the cumulative
dividends to CTFG for calendar year 1996 are equal to $10,100,000; provided
further, that if the Closing Date occurs prior to January 1, 1997, the
maximum amounts of dividends which may be paid in calendar year 1996 shall
be reduced by $27,671.23 for each day after the Closing Date and prior to
January 1, 1997; and provided further, that such dividends will be $880,000
per month of calendar year 1997 ($10,560,000 for all of calendar year 1997)
if the Closing Date has not occurred prior to December 31, 1996 and, if the
Closing Date does not occur at the end of a month, the dividends paid shall
be pro-rated on a daily basis through the Closing Date.
(k) Lenders, Consents. After the date hereof and prior to the
Closing Date, CTFG and the Taylor Directors will use their reasonable best
efforts to cause CTFG, the Bank and Finance to obtain any waivers,
consents, amendments or approvals required to prevent any default,
acceleration or other adverse effect upon CTFG, the Bank or Finance under
any indenture, credit agreement, note or other indebtedness of CTFG, the
Bank or Finance.
10. Additional Agreements.
(a) Continuing Access to Information. CTFG shall permit the Taylor
Family and its authorized representatives reasonable access during regular
business hours to the Bank's properties and those of the Bank's
subsidiaries and CT Mortgage. The Bank shall make its and its
subsidiaries, directors, management and other employees and agents and
authorized representatives (including counsel and independent public
accountants) available to confer with the Taylor Family and its authorized
representatives at reasonable times and upon reasonable request, and CTFG
shall, and shall cause the Bank and its subsidiaries and CT Mortgage to
disclose and make available to the Taylor Family, and shall use its
reasonable best efforts to cause its agents and authorized representatives
to disclose and make available to the Taylor Family, all books, papers and
records relating to the assets, properties, operations, obligations and
liabilities of the Bank and its subsidiaries and CT Mortgage.
(b) Notification of Change. CTFG shall promptly notify the Taylor
Directors and the Taylor Directors shall promptly notify the Board of any
material change in the ordinary course of business or in the operation of
the properties of the Bank or any of its subsidiaries or CT Mortgage and of
any governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the
threat of litigation involving the Bank or its subsidiaries or CT Mortgage
which is known to CTFG and which is material or which might have a material
adverse effect, or of any other material breach by CTFG, the Bank or any of
its subsidiaries or CT Mortgage of any representation, warranty, covenant
or agreement set forth in this Agreement, and will keep the Taylor Family
promptly and fully informed of such events. CTFG will consult with the
Taylor Directors before taking any steps to comply with suggestions made by
any Applicable Governmental Authorities which could reasonably be
considered significant to the Bank or CT Mortgage.
(c) Information for Regulatory Filings. CTFG promptly shall furnish
the Taylor Directors, and the Taylor Directors shall furnish the Board,
with any information relating to CTFG, the Bank or any of its subsidiaries
or CT Mortgage which is required under any applicable law or regulation for
inclusion in any filing that the Taylor Family, on the one hand, or CTFG,
on the other hand, is required to make with any regulatory or supervisory
authority (including the SEC and State securities authorities) in order to
consummate the transactions contemplated by this Agreement. CTFG
represents and warrants to the Taylor Family that all information so
furnished by it shall be true and correct in all material respects without
omission of any material fact required to be stated to make the information
stated therein not misleading and the Taylor Family represents and warrants
to CTFG that all information furnished by it relating to the transactions
contemplated by this Agreement or relating to its ownership interest in
CTFG shall be true and correct in all material respects without omission of
any material fact required to be stated to make the information stated
therein not misleading.
(d) Regulatory Approvals. As promptly as practicable, and in any
event no later than August 31, 1996, the Taylor Directors will submit any
necessary applications to the Applicable Governmental Authorities for
approval of the transactions contemplated hereby, including but not limited
to, the Federal Reserve Board, FDIC and the Illinois Commissioner of
Banks. The Bank and CTFG shall cooperate with and shall assist the Taylor
Directors in the preparation and filing of all such applications.
(e) Private Letter Ruling. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary, proper or advisable to obtain a private
letter ruling from the Internal Revenue Service (the "IRS") that the
exchange of Bank (or, as the case may be, Newco) Stock for CTFG Stock held
by the Taylor Family members constitutes a tax-free transaction under
Section 355 of the Internal Revenue Code, and that the transfer of Bank
Stock to Newco constitutes a tax-free transaction to CTFG and Newco (the
"Private Letter Ruling"); provided, however, that no party shall be
required to make any representation or take any action having an effect
inconsistent with the limitations set forth on Schedule 10(e). CTFG will
agree to any changes in the structure of the transactions contemplated
herein required by the IRS before it will issue the Private Letter Ruling
so long as such changes do not materially affect the benefits or impact
(economic or otherwise) of, or legal risks associated with, those
transactions on CTFG, Finance or any of their subsidiaries, affiliates,
shareholders, or employees other than the Bank or the members of the Taylor
Family. CTFG and Finance agree in particular that if necessary they will
either eliminate intercompany debt between them prior to the Closing or,
alternatively, convert obligations of Finance to CTFG into a term
promissory note with a minimum term of 10 years. Except as set forth in
Schedule 10(e), neither party shall take action that is intended to cause
the transactions contemplated herein not to qualify as a tax-free exchange
under the Internal Revenue Code. All contacts with the IRS shall be
coordinated through the Taylor Family and its representatives. Counsel for
CTFG shall be entitled to attend all meetings with and participate in all
material discussions with the IRS in connection with the ruling process,
and shall review (prior to submission) all written material submitted to
the IRS.
(f) CTFG Shareholder Approval.
(i) CTFG, acting through the Board, shall in accordance with
applicable law and subject to the fiduciary duties of the Board under
applicable law (as determined in good faith after consultation with
independent counsel), as soon as practicable following the execution
of this Agreement:
(x) duly call, give notice of, convene and hold an annual
or special meeting of its shareholders (the "Shareholders Meeting")
for the purpose of considering and taking action upon this Agreement;
(y) prepare and file with the SEC a proxy or information
statement (as amended or supplemented, the "Proxy Statement") to be
mailed to CTFG's shareholders in connection with the Shareholders
Meeting and include in the Proxy Statement the recommendation of the
Board that shareholders of CTFG vote in favor of the approval and
adoption of this Agreement and the transactions contemplated hereby;
and
(z) use its reasonable best efforts (A) to obtain and
furnish the information required to be included by it in the Proxy
Statement and, after consultation with the Taylor Family, respond
promptly to any comments made by the SEC with respect to the Proxy
Statement and any preliminary version thereof and cause the Proxy
Statement to be mailed to its shareholders at the earliest practicable
time and (B) to obtain the necessary approvals by its shareholders of
this Agreement and the transactions contemplated hereby.
(ii) CTFG and the Taylor Family shall cooperate in the
preparation of the Proxy Statement. The Proxy Statement shall not, at
the time filed with the SEC, at the time mailed to the Company's
shareholders, at the time of the Shareholders Meeting or at the
Closing Date, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
(iii) At the Shareholders Meeting, the members of the Taylor
Family will vote all shares of CTFG Stock owned or controlled by them
in favor of this Agreement and the transactions contemplated hereby.
(g) Compliance with Tax and Regulatory Representations.
(i) Each party hereto will comply with any covenants it makes in
connection with the Private Letter Ruling or with any Applicable
Governmental Authority to ensure the tax-free nature of the
transactions contemplated hereby. CTFG, for the two-year period
following the Closing Date, will cause Auto Sub to continue the
operation of the used automobile receivables business previously
operated by the Bank through undertaking the following actions: (v)
purchasing the same type of automobile receivables previously
purchased by the Bank (except that such receivables may be
collateralized by used automobiles only), (w) maintaining a portfolio
of at least $30,000,000 in face amount value of such receivables (net
of unearned finance charge); (x) continuing to underwrite, collect and
process such receivables; (y) to the extent practicable, purchasing
receivables from the same automobile dealerships from which the Bank
previously purchased such receivables, and (z) to the extent
practicable, retaining the employees specified in Schedule 3.1
transferred from the Bank to conduct the Auto Sub business.
(ii) For the two-year period following the Closing Date, unless
the Taylor Family has obtained a written opinion from nationally
recognized tax counsel, which opinion shall be reasonably satisfactory
in form and substance to tax counsel for CTFG, that the desired
transactions and any transaction related thereto will neither affect
the qualification of the exchange of the Bank Stock (or the Newco
Stock, as the case may be) for the CTFG Stock under Section 355 of the
Code nor affect the validity of the Private Letter Ruling (a "Tax
Opinion"), (x) no Taylor Family member will sell, exchange, transfer
or enter into any transaction reducing economic risk with respect to,
the Bank Stock received in the split-off, (y) the Taylor Family will
cause the Bank to continue the active conduct of its banking business,
and (z) the Taylor Family will not permit either the Bank or Newco (if
Newco is formed) to (A) merge or consolidate with or into any other
corporation, (B) liquidate or partially liquidate, (C) sell or
transfer any significant part of its assets, (D) redeem or otherwise
purchase any of its capital stock, or (E) except as specifically
contemplated by the Private Letter Ruling, issue additional shares of
its capital stock; provided, however, that, regardless of whether the
Taylor Family has obtained a Tax Opinion, the Taylor Family shall not
enter into any agreement, arrangement or understanding for transfer of
control of the Bank or Newco (a "Transfer Arrangement") for one year
following the Closing Date and, if the Taylor Family enters into a
Transfer Arrangement more than one year but less than two years
following the Closing Date, the Taylor Family shall remain responsible
for ensuring that, and shall obtain a written contractual commitment
from the other parties to the Transfer Arrangement that they will
ensure that, the Bank and Newco comply with this Section 10(g)(ii)
except to the extent that the Tax Opinion also opines that the
qualification of the exchange of the Bank Stock (or the Newco Stock,
as the case may be) for the CTFG Stock under Section 355 and the
validity of the Private Letter Ruling will not be affected by the
particular actions specified in the Tax opinion.
(iii) For the two-year period following the Closing Date, unless
CTFG has obtained a written opinion from nationally recognized tax
counsel, which opinion shall be reasonably satisfactory in form and
substance to tax counsel for the Taylor Family, that the desired
transactions and any transaction related thereto will neither affect
the qualification of the exchange of the Bank Stock (or the Newco
Stock, as the case may be) for the CTFG Stock under Section 355 of the
Code nor affect the validity of the Private Letter Ruling, (x) CTFG
will not sell, exchange or transfer the capital stock of Auto Sub, (y)
CTFG will not permit Auto Sub to (A) merge or consolidate with or into
any other corporation (other than a merger of Finance with and into
Auto Sub), (B) liquidate or partially liquidate, or (C) sell or
transfer any significant part of the UARB Assets and (Z) CTFG will not
redeem or repurchase any shares of CTFG Stock (except for purchases of
up to 16 percent of the outstanding CTFG Stock as described in
Schedule 10(e) or such greater amounts as may be consistent with the
Private Letter Ruling).
(iv) CTFG and the Bank shall immediately amend their existing
tax allocation agreement so that (A) the allocation of federal, state
and local tax liabilities through the Closing between CTFG and its
subsidiaries on the one hand and Bank on the other shall continue in a
manner consistent with past practice, except that, beginning with the
date of the execution of this Agreement, all tax benefits associated
with the exercise or buyout of all compensatory options on CTFG
shares, whether held by employees or former employees of the Bank or
otherwise, shall inure solely to the benefit of CTFG; and (B) any
claims or liabilities arising from audits (including audits commenced
or completed after the Closing) of preclosing periods shall be borne
by the party (i.e., the Bank and CT Mortgage on the one hand or CTFG
and its continuing subsidiaries on the other) to whom the adjustment
is attributable. The party financially responsible for a proposed
audit adjustment shall be afforded the opportunity to determine and
direct the defense of the particular matter at its own expense and the
matter shall be settled or compromised only with such party's consent.
(v) Each of the Bank and/or Newco and CTFG shall deliver a
certificate of an officer as to compliance with such covenants to the
other on the last day of each calendar quarter until such ongoing
covenants have terminated.
(h) Deconsolidation. After the Closing, CTFG and the Taylor
Directors agree to take such steps in accordance with generally accepting
accounting principles to deconsolidate the Bank from CTFG for accounting
purposes. The parties acknowledge that any Options exercised immediately
prior to Closing pursuant to this Agreement are Options of CTFG, and shall
be treated as such for tax, accounting and deconsolidation purposes.
(i) Lease Arrangements. If requested by CTFG, for 90 days after the
Closing Date, the Bank will sublease to CTFG the space currently utilized
by CTFG on terms reasonably acceptable to the parties hereto. On the
Closing Date, CTFG will assign to the Bank any leases, licenses, and real
or personal property used by or adjacent to the Bank properties but owned
by CTFG or Reliance Acceptance Corporation for no additional
consideration. All property (including leases and real property) owned
by the Bank on the date hereof shall be and remain the property of the
Bank on and after the Closing Date.
(j) Employees. CTFG hereby assumes all liability (and indemnities
the Bank and the Taylor Family against such liability) for any payments
which, as a result of the Closing, are owed to the persons listed on
Schedule 10(j)(i) or full-time employees of Finance or its subsidiaries.
The Taylor Family will cause the Bank to assume all liability (and to
indemnify CTFG and its subsidiaries against such liability) for any
severance or change of control payments which, as a result of the Closing,
are owed to any employee of CTFG, the Bank or any of their affiliates other
than the persons listed on Schedule 10(j)(i) and other than full-time
employees of Finance or any of its subsidiaries. On the Closing Date, the
employees of CTFG other than the persons listed on Schedule 10(j)(i) and
persons who are also full-time employees of Finance or any of its
subsidiaries will remain or become employees of the Bank.
(k) CT Mortgage Comfort. CTFG has made, and through the Closing Date
will continue in the normal course of business in accordance with prior
practice to make, representations and provide indemnification, guarantees
as customarily required by mortgage investors to assure the validity of
mortgages sold and other assurances to purchasers of mortgages and
mortgage-backed securities from CT Mortgage and the Bank. After the
Closing the Bank will indemnify and hold harmless CTFG from any liability
with respect thereto.
(l) Finance Comfort. CTFG has made and will make representations and
provide indemnification and other assurances and make-well agreements to
purchasers of securities and mortgages from, and creditors of, Finance.
The parties acknowledge that the Bank has no responsibility for such
agreements and CTFG will indemnify and hold the Bank and CT Mortgage
harmless from any liability with respect thereto.
(m) Insurance Policies. The Bank may purchase from CTFG any
insurance policies owned by CTFG and providing coverage with respect to the
Bank or any of its officers at the greater of the book value of such
policies or the cash value of such policies. CTFG may purchase from the
Bank any insurance policies owned by the Bank and providing coverage with
respect to CTFG, any of its subsidiaries or any of their respective
officers at the greater of the book value of such policies or the cash
value of such policies.
(n) Employee Benefit Plans. CTFG's obligations to CTFG employees who
will become Bank employees at Closing, provided such obligations are
incurred prior to the Closing (including a pro rata portion of obligations
accruing with the passage of time in accordance with usual practice but for
which cash or other contributions are not then required) pursuant to its
benefit plans, including the CTFG 1996 incentive plan and the CTFG 401(k)
Plan, will be and remain the responsibility of CTFG, and any accrued and
unpaid amounts will be paid in full at or prior to the Closing. CTFG shall
amend the ESOP and the CTFG 401(k) Plan to vest in full, effective as of
the Closing Date, the account balances of employees who are or will become
employees of the Bank at Closing ("Bank Employees"). On or before the
Closing Date, CTFG shall cause the applicable employers to make
contributions to the ESOP sufficient to prepay the portion of the
outstanding ESOP loan attributable to the Bank Employees and shall cause
the allocation to the accounts of such Bank Employees of the shares of CTFG
Stock that are released from the suspense account by reason of such loan
prepayment. CTFG shall cause the ESOP and the CTFG 401(k) Plan to make
available lump sum distributions on the Closing Date to participants in the
ESOP and the CTFG 401(k) Plan who terminate employment with the CTFG
Controlled Group (as defined below) on or before the Closing Date;
provided, however, that distributions from the CTFG 401(k) Plan to
participants who remain or on the Closing Date become employees of Bank or
CT Mortgage shall be subject to the requirements of Section 401(k)(10) of
the Code. For purposes of the preceding sentence, "CTFG Controlled Group"
shall mean CTFG and any other corporation, trade or business or
organization (whether or not incorporated) that, along with CTFG, is
treated as a single employer under sections 414(b), 414(c) or 414(m) of the
Code. The parties agree that, prior to the Closing, they will come to
agreement on any other employee benefit plan matters that need to be
resolved.
11. Conditions Precedent to Obligations of the Taylor Family. The
obligations of the Taylor Family to effect the transactions contemplated hereby
shall be subject to the fulfillment at the Closing Date of each of the following
conditions (any one or more of which may be waived by the Taylor Family, but
only in writing):
(a) Status as of Closing Date. All representations and warranties of
CTFG contained in this Agreement shall be true in all material respects
when made and at and as of the Closing Date, as though such representations
and warranties were made at and as of the Closing Date (except where the
failure to be so true has been caused by the Taylor Family), and CTFG shall
have performed and satisfied in all material respects all covenants and
agreements required by this Agreement to be performed and satisfied on or
prior to the Closing Date (except where the failure to be so performed or
satisfied has been caused by the Taylor Family), and at the Closing Date
there shall be delivered to the Taylor Family a certificate signed by an
officer of CTFG dated as of the Closing Date to the foregoing effect.
(b) Required Action. All action required to be taken by or on the
part of CTFG and the Bank to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the Boards of
Directors of CTFG and the Bank.
(c) Regulatory Approvals. Any applicable waiting periods under any
Applicable Laws shall have expired or been terminated and the transactions
contemplated by this Agreement shall have been approved by all Applicable
Governmental Authorities and such approval shall not contain or be subject
to any terms or conditions that the Taylor Family reasonably deems
materially burdensome. The IRS shall have issued rulings that (i) the
exchange of Bank (or, as the case may be, Newco) Stock for CTFG Stock held
by the Taylor Family members will be a tax-free transaction under Section
355 of the Code, and (ii) that if the transfer of Bank Stock to Newco is
part of the transaction, that transfer will be a tax-free transaction to
CTFG and Newco.
(d) No Order Preventing Consummation. There shall not be any order,
injunction or decree of any such court or any governmental agency,
department or other regulatory body prohibiting the consummation of the
transactions contemplated hereby.
(e) Material New Litigation. After the date of this Agreement there
shall have been no litigation filed which could reasonably be expected to
have a material adverse effect on the business or financial condition (a
"Material Adverse Effect") of the Bank and its subsidiaries, taken as a
whole.
(f) No Action to Prevent or Restrict Transactions. No statute, rule,
regulation or policy shall have been proposed, promulgated or enacted by
any governmental or regulatory agency of competent jurisdiction which
prevents or restricts the transactions contemplated hereby.
(g) Pre-Closing Transactions. The transactions set forth in Section
3 hereof shall have occurred.
(h) Shareholder Approval. Shareholders of CTFG holding at least a
majority of the outstanding shares of CTFG Stock shall have approved the
transactions contemplated by this Agreement.
(i) Consents. All required approvals, consents and authorizations of
any third parties in connection with the transactions contemplated hereby
shall have been obtained except such approvals, consents and authorizations
which if not obtained would not individually or in the aggregate would not
have a Material Adverse Effect on the Bank and its subsidiaries, taken as a
whole.
12. Conditions Precedent to Obligations of CTFG. The obligations of CTFG
to effect the transactions contemplated hereby shall be subject to the
fulfillment at the Closing Date of each of the following conditions (any one or
more of which may be waived by CTFG, but only in writing):
(a) Status as of Closing Date. All representations and warranties of
the Taylor Family contained in this Agreement shall be true in all material
respects when made and at and as of the Closing Date, as though such
representations and warranties were made at and as of the Closing Date
(except where the failure to be so true has been caused by CTFG), and the
Taylor Family and Taylor Directors shall have performed and satisfied in
all material respects all covenants and agreements required by this
Agreement to be performed and satisfied on or prior to the Closing Date
(except where the failure to be so performed or satisfied has been caused
by CTFG), and at the Closing Date there shall be delivered to CTFG
certificates dated as of the Closing Date and signed by Jeffrey Taylor, as
representative of the Taylor Family, to the foregoing effect.
(b) Required Action. All action required to be taken by or on the
part the Taylor Family to authorize the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated
hereby shall have been duly and validly taken by the Taylor Family and, if
appropriate, by the Board of Directors of Newco.
(c) Regulatory Approvals. Any applicable waiting periods under any
Applicable Laws shall have expired or been terminated, and the transactions
contemplated by this Agreement shall have been approved by all Applicable
Governmental Authorities and such approval shall not contain or be subject
to any terms or conditions that CTFG reasonably deems materially
burdensome. The IRS shall have issued rulings that (i) the exchange of
Bank (or, as the case may be, Newco) Stock for CTFG Stock held by the
Taylor Family members will be a tax-free transaction under Section 355 of
the Code, and (ii) that if the transfer of Bank Stock to Newco is part of
the transaction, that transfer will be a tax-free transaction to CTFG and
Newco.
(d) No Order Preventing Consummation. There shall not be any order,
injunction or decree of any such court or any governmental agency,
department or other regulatory body of competent jurisdiction prohibiting
the consummation of the transactions contemplated hereby.
(e) No Action to Prevent or Restrict Transactions. No statute, rule,
regulation or policy shall have been proposed, promulgated or enacted by
any governmental or regulatory agency of competent jurisdiction which
prevents or restricts or could prevent or restrict the transactions
contemplated hereby.
(f) Pre-Closing Transactions. The transactions set forth in Section
3 hereof shall have occurred.
(g) Material New Litigation. After the date of this Agreement there
shall have been no litigation filed which could reasonably be expected to
have a Material Adverse Effect on CTFG and its subsidiaries (other than the
Bank), taken as a whole.
(h) Shareholder Approval. Shareholders of CTFG holding at least a
majority of the outstanding shares of CTFG Stock shall have approved the
transactions contemplated by this Agreement.
(i) Consents. All required approvals, consents and authorizations of
any third parties in connection with the transactions contemplated hereby
shall have been obtained except such approvals, consents and authorizations
which if not obtained would not individually or in the aggregate would not
have a Material Adverse Effect on CTFG and its subsidiaries (other than the
Bank), taken as a whole.
13. Termination. This Agreement may be terminated at any time prior to
the Closing, notwithstanding approval thereof by the stockholders of CTFG:
(a) by mutual written consent of the Taylor Family and CTFG;
(b) by the Taylor Family or CTFG if any court of competent
jurisdiction or other governmental body located or having jurisdiction
within the United States shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby and such order,
decree, ruling or other action shall have become final and nonappealable;
(c) by the Taylor Family or CTFG if the approval of any Applicable
Governmental Authorities has been denied or if any approval of any
Applicable Governmental Authorities contain or are subject to any terms or
conditions that the Taylor Family or CTFG reasonably deems to be materially
burdensome; provided, however, that neither the Taylor Family nor CTFG
shall terminate this Agreement pursuant to this Section 13(c) until the
other party has had a reasonable opportunity (but not to exceed 60 days) to
persuade the relevant Applicable Governmental Authority to change its
decision; and further provided that neither party may terminate this
Agreement pursuant to this Section 13(c) if it has not complied with all
reasonable requests of the other party in connection with the other party's
efforts to obtain such approval;
(d) provided that the party seeking termination pursuant to this
Section 13(d) shall have performed and satisfied in all material respects
all covenants and agreements required by this Agreement to be performed and
satisfied by it on or prior to the date of termination (except where the
failure to be so performed or satisfied has been caused by the other
party), by the Taylor Family or CTFG if the other party shall have breached
in any material respect any of its covenants or agreements contained in
this Agreement required to be complied with prior to the date of such
termination, which failure to comply has not been cured within thirty days
(but in no event later than June 30, 1997) following receipt by such other
party of written notice of such failure to comply;
(e) provided that CTFG shall have performed and satisfied in all
material respects all covenants and agreements required by this Agreement
to be performed and satisfied by it on or prior to the date of termination
(except where the failure to be so performed or satisfied has been caused
by the Taylor Family), by CTFG if the Taylor Family has failed to submit a
request for the Private Letter Ruling to the Internal Revenue Services
prior to July 31, 1996 or an application to any Applicable Governmental
Authority whose approval is required for the transactions contemplated
herein prior to August 31, 1996;
(f) by the Taylor Family or CTFG if the Closing has not occurred
prior to June 30, 1997 (provided, however, that a party may not terminate
this Agreement under this Section 13(f) if that party has caused the
Closing not to occur in breach of this Agreement);
(g) by either CTFG or the Taylor Family if the IRS has finally
determined not to issue the Private Letter Ruling or has issued an adverse
ruling (provided, however, that neither the Taylor Family nor CTFG shall
terminate this Agreement pursuant to this Section 13(g) until the other
party has had a reasonable opportunity (but not to exceed 60 days) to
persuade the IRS to change its decision);
(h) by CTFG, prior to the Shareholders Meeting, after CTFG's receipt
of an Acquisition Proposal if the Board determines, based on the advice of
independent counsel, that such action is required for the discharge of its
fiduciary duties to shareholders under applicable law;
(i) by the Taylor Family if the Board shall have withdrawn or
modified in a manner adverse to the Taylor Family its approval of this
Agreement or its recommendation that CTFG's shareholders approve the
transactions contemplated hereby or if CTFG shall have entered into an
agreement providing for an Acquisition Proposal or the Board shall have
resolved to do any of the foregoing;
(j) by the Taylor Family if the Shareholders Meeting has not occurred
prior to November 1, 1996 (provided, however, that the Taylor Family may
not terminate this Agreement under this Section 13(j) if the Taylor Family
has caused the Shareholders Meeting not to occur prior to November 1, 1996;
(k) by either CTFG or the Taylor Family if shareholders of CTFG
holding a majority of CTFG's outstanding common stock do not approve the
transactions contemplated herein at the Shareholders Meeting; or
(l) by CTFG if the Taylor Family has not complied with its
obligations under Section 6 within five business days after the execution
of this Agreement (provided, however, that CTFG may not terminate this
Agreement pursuant to this Section 13(l) if CTFG has prevented such
compliance by the Taylor Family).
14. Effect of Termination. (a) If this Agreement is terminated pursuant
to Section 13(h), or pursuant to Section 13(i) under circumstances where the
actions of CTFG or the Board which triggered the right of the Taylor Family to
terminate this Agreement pursuant to Section 13(i) were permitted by Section
9(c) and not otherwise a breach of this Agreement, CTFG shall immediately pay
the Taylor Family as an exclusive remedy liquidated damages in an amount equal
to (i) its out of pocket expenses paid to lawyers, accountants, investment
bankers or other experts plus (ii) three percent of the fair market value
(determined as of the date this Agreement is terminated) of the Acquisition
Proposal that gave rise to the termination of this Agreement.
(b) If this Agreement is terminated by the Taylor Family pursuant to
Section 13(d), CTFG shall immediately pay the Taylor Family as an exclusive
remedy liquidated damages equal to $15 million.
(c) If this Agreement is terminated pursuant to (i) Section 13(c)
other than because of a failure to obtain the approval of the Applicable
Governmental Authorities resulting from a failure to comply with the
Community Reinvestment Act or fair lending statutes, (ii) pursuant to
Section 13(f) where the failure to have closed before the applicable date
was caused by (x) a failure to have obtained the Private Letter Ruling, (y)
a failure to obtain the financing required by Section 5.2, or (z) the
failure to have obtained the approval of the Applicable Governmental
Authorities for any reason other than a failure to comply with the
Community Reinvestment Act or fair lending statutes or (iii) pursuant to
Section 13(g) (a termination pursuant to (i), (ii) or (iii) of this Section
14(c) being a "Triggering Termination"), then CTFG will be entitled,
subject to adjustment pursuant to, and in the manner provided by, Section
14(d), to receive from the Taylor Family, as an exclusive remedy,
liquidated damages in an amount equal to $15 million.
(d) If this Agreement is terminated as a result of a Triggering
Termination, CTFG agrees to immediately use its reasonable best efforts to
solicit bids from third parties for the sale of all of the equity interest
in the Bank (the "Bank Sale Process"). The Taylor Family shall use its
reasonable best efforts to support the Bank Sale Process. If members of
the Taylor Family are members of the Board, those Board members shall
direct the Bank Sale Process, which power of direction shall include the
right to choose an investment banker to represent CTFG (with such
investment banker to be retained and compensated by CTFG on customary
terms) in connection with the Bank Sale Process. The Nominating Committee
of the Board shall restate any Taylor Director for reelection as a director
of CTFG if his present term will expire before the end of the Bank Sale
Process. If, during the nine month period after a Triggering Termination,
CTFG receives a Sufficient Bona Fide Offer to acquire all of the equity
interest in the Bank that the Taylor Family wishes the Board to consider,
the obligation of the Taylor Family to pay CTFG $15 million pursuant to
Section 14(c) shall be reduced (provided that in no event shall such
obligation ever be less than zero) by the amount by which the Sufficient
Bona Fide Offer would provide CTFG with gross proceeds with a fair market
value in excess of $235 million, and CTFG shall be entitled to receive the
amount payable under Section 14(c), as reduced pursuant to this sentence.
The Board shall be under no obligation to accept a Sufficient Bona Fide
Offer that the Taylor Family wishes the Board to consider; provided,
however, that should the Board decide to reject a Sufficient Bona Fide
Offer, the obligation of the Taylor Family to pay CTFG $15 million shall
nonetheless be reduced as provided for in the preceding sentence. If no
Sufficient Bona Fide Offer that the Taylor Family wishes the Board to
consider has been made during the nine months after a Triggering
Termination, the full $15 million payable under Section 14(c) shall be
payable to CTFG. A "Sufficient Bona Fide Offer" shall be an offer for all
of the equity interest in the Bank from a financially reliable third party
(or parties) and subject only to customary terms and conditions that, if
accepted, would be likely to be consummated and that, if consummated, would
provide CTFG with gross proceeds with a fair market value in excess of $235
million. Notwithstanding the foregoing, the Board, without the
participation of any member of the Taylor Family, may resolve not to pursue
the Bank Sale Process, to terminate the Bank Sale Process (with or without
an agreement to sell all of the equity interest in the Bank) or to enter
into an agreement providing for the merger or disposition of the stock or
assets of CTFG prior to the expiration of the nine month period following a
Triggering Termination, in which case the obligation of the Taylor Family
to pay CTFG $15 million pursuant to Section 14(c) shall be extinguished.
Any amounts payable under Section 14(c) or this Section 14(d) may be paid,
at the option of the Taylor Family, in cash, in CTFG Stock valued at the
Market Value as of the date of such payment, or in a combination of cash
and CTFG Stock valued at the Market Value (as defined below) as of the date
of such payment and shall be paid within seven days from the expiration of
the Taylor Sale Period. Should any such amounts not be paid by the Taylor
Family within such seven days, the amount shall be paid from the Escrow
Fund to the extent the Escrow Fund is sufficient for this purpose and
immediately by the Taylor Family directly to the extent the Escrow Fund is
insufficient for this purpose. Should the Taylor Family pay such
liquidated damages from another source, CTFG agrees to issue joint written
instructions with the Taylor Family to effectuate the release of the Escrow
Fund to the Taylor Family. The term "Market Value" on any date shall mean
the average of the last quoted trading price of CTFG Stock on the Nasdaq
Stock Market for the five preceding Nasdaq Stock Market trading days. The
"Taylor Sale Period" shall be the shorter of (i) the nine month period
after a Triggering Termination, (ii) the period beginning with a Triggering
Termination and ending with a decision by the Board to not pursue or to
terminate the Bank Sale Process or (iii) the period beginning with a
Triggering Termination and ending on the date the Taylor Directors present
a Sufficient Bona Fide Offer to the Board.
(e) In the event of the termination of this Agreement pursuant to
Section 13, this Agreement shall forthwith become void and have no effect,
other than as provided in this Section 14, in the second to last sentence
of Section 5.2, in Section 9 (provided that, in the absence of a Triggering
Termination, Section 9 shall become void and have no effect upon the
termination of this Agreement), in Section 17 and in Section 24. No
termination of this Agreement and nothing contained in this Section 14(e)
shall relieve any party from liability for any breach of this Agreement
except insofar as liquidated damages are paid by any party pursuant to
Sections 14(a), 14(b) or 14(c). The parties acknowledge that the
liquidated damages specified in Section 14(a), 14(b) and 14(c) are not a
penalty, and are reasonable in light of the anticipated or actual harm, the
difficulty of proof of loss, and the inconvenience and nonfeasibility of
otherwise obtaining an adequate remedy.
15. Indemnification. (a) The Taylor Family shall indemnify and hold
harmless CTFG and its affiliates from and against any and all losses, damages,
claims, liabilities or obligations (including attorneys fees and interest)
("Losses") with respect to (i) any breach of any representation, warranty or
agreement of the Taylor Family contained in this Agreement and (ii) any
brokerage fees, commissions or finders' fees payable on the basis of any action
taken or caused to be taken by the Taylor Family. After the Closing, the Taylor
Family shall cause the Bank to indemnify and hold harmless CTFG and its
affiliates from and against any and all Losses (x) whenever incurred, arising or
accrued, relating to the Bank or CT Mortgage or CTFG's ownership of securities
in the Bank, CT Mortgage or Alpha Capital Fund or (y) incurred, arising or
accrued prior to the Closing and relating to Auto Sub. In addition, after the
Closing, the Taylor Family shall indemnify and hold harmless CTFG from and
against 25% of any Losses, including, without limitation, any costs or expenses
of defense or settlement of any suits, actions or proceedings initiated by third
parties and any judgments in such suits, actions or proceedings relating to the
transactions contemplated by this Agreement and any Losses relating to disputes
regarding option terminations or limitations (collectively, "Transaction
Challenge Losses"); provided, however, that Transaction Challenge Losses shall
be net of any insurance proceeds paid to, or for the benefit of, CTFG or members
of the Board, and provided, further, that, for purposes of computing what the
Taylor Family owes under this sentence, any attorneys fees or expenses,
settlements or judgments paid separately by the Taylor Family in connection with
suits, actions or proceedings relating to the transactions contemplated by this
Agreement or regarding Option limitations or terminations (net of any insurance
proceeds paid to, or for the benefit of, the Taylor Family) shall (A) be
considered part of Transaction Challenge Losses and (B) constitute a credit
against any amounts that the Taylor Family owes under this sentence (with such
credit not to exceed such amounts that the Taylor Family owes under this
sentence).
(b) CTFG shall indemnify and hold harmless the Taylor Family, its
affiliates, and the Bank from and against any and all Losses with respect to (i)
any breach of any representation, warranty or agreement of CTFG contained in
this Agreement and (ii) any brokerage fees, commissions or finders' fees payable
on the basis of any action taken or caused to be taken by CTFG. In addition,
after the Closing, CTFG shall indemnify and hold harmless the Taylor Family from
and against any and all Losses (x) whenever incurred, arising or accrued,
relating to CTFG (except for matters for which the Taylor Family is indemnifying
CTFG pursuant to this Agreement) or Finance or (y) incurred, arising or accrued
after the Closing and relating to Auto Sub.
(c) As soon as reasonably practicable after becoming aware of a claim for
indemnification under this Agreement, the person claiming a right to
indemnification (the "Indemnified Person") shall promptly give notice to the
person from whom indemnification is being sought (the "Indemnifying Person") of
such claim and the amount of indemnification claimed hereunder; provided that
the failure of the Indemnified Person to give notice shall not relieve the
Indemnifying Person of its obligations under this Agreement except to the extent
(if any) that the Indemnifying Person shall have been prejudiced thereby.
(d) With respect to claims for indemnification arising out of a claim, or
the commencement of any suit action or proceeding asserted by a person not a
party to this Agreement, the Indemnifying Person may, at its own expense (i)
participate in the defense of any such claim, suit, action or proceeding and
(ii) upon notice to the Indemnified Person and the Indemnifying Person's
delivering to the Indemnified Person a written agreement that the Indemnified
Person is entitled to indemnification pursuant to this Section 15 for all Losses
arising out of such claim, suit, action or proceeding, at any time during the
course of any such claim, suit, action or proceeding, assume the defense
thereof; provided that (y) the Indemnifying Person's counsel is reasonably
satisfactory to the Indemnified Person, and (z) the Indemnifying Person shall
thereafter consult with the Indemnified Person upon the Indemnified Person's
reasonable request for such consultation from time to time with respect
thereto. If the Indemnifying Person assumes such defense, the Indemnified
Person shall have the right (but not the obligation) to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Person. Whether or not the
Indemnifying Person chooses to defend or prosecute any such claim, suit,
action or proceeding, all parties shall cooperate in the defense or
prosecution thereof. Neither the Indemnifying Person nor the Indemnified
Person shall settle any matter subject to indemnification under this
Agreement without the consent of the other, which consent shall not be
unreasonably withheld.
16. Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use reasonable best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable on the part of such party, to consummate
and make effective the transactions contemplated by this Agreement at the
earliest practicable date, including the obtaining of all required consents,
approvals, waivers, exemptions, amendments and authorizations, give all notices,
and make or effect all filings, registrations, applications, designations and
declarations, including, but not limited to, those described herein, and each
party shall cooperate fully with the other (including by providing any necessary
information) with respect to the foregoing. Each of the parties agrees not to
enter into, or agree to enter into, any transaction or perform, or agree to
perform, any act which would result in any of the representations or warranties
on the part of such party not being true and correct in all material respects at
and as of the time immediately after the occurrence of any such transaction or
event or on the Closing Date or that would be likely to jeopardize the
consummation of the transactions contemplated hereby. In case at any time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and/or directors of CTFG, the Bank and Newco and
the members of the Taylor Family will take all such necessary action.
17. Payment of Expenses. Except as otherwise specifically set forth
herein, each party hereto shall pay its own fees and expenses incident to
preparing for, entering into, and carrying out this Agreement and the
transactions contemplated hereby. The fees and expenses of CTFG and Finance,
including any brokers', finders', investment bankers', attorneys', filing,
accountants' or tax advisors' fees (collectively, "Fees") are to be borne by
CTFG, and the Fees of the Bank and the Taylor Family are to be borne by the
Taylor Family.
18. Publicity and Reports. CTFG shall coordinate all publicity relating
to the transactions contemplated by this Agreement and, except as otherwise
required by law or as required to secure the financing referred to in Section
5.2, the Taylor Family shall not issue any press release, publicity statement or
other public notice relating to this Agreement or any of the transactions
contemplated hereby, or communicate with analysts or the investment community,
without obtaining the prior consent of the Board, which consent shall not be
unreasonably withheld. All press releases, publicity statements, communications
with analysts or the investment community, or other public notice by CTFG
relating to this Agreement or any of the transactions contemplated hereby shall
be submitted for the approval of the full Board, including Sidney J. Taylor,
Jeffrey W. Taylor and Bruce W. Taylor. Each party shall obtain the prior
consent of the other party, which consent shall not be unreasonably withheld, to
the form and content of any application or report made to any regulatory
authority, taxing authority or similar agency in each case which relates to any
of the transactions contemplated by this Agreement and to any proxy or
information statement or other material to be delivered to CTFG shareholders.
19. Survival of Representations and Warranties. The representations and
warranties in Sections 7(a), 7(b), 7(d), 7(g), 8(a), 8(b), 8(c), 8(f) and 8(g),
and the covenants and agreements, made herein shall survive the Closing to the
fullest extent permitted under the applicable statute of limitations. All other
representations and warranties contained in this Agreement shall not survive
beyond the Closing.
20. Binding Effect. Neither this Agreement nor any rights, duties or
obligations hereunder shall be assignable by CTFG or the Taylor Family, in whole
or in part, and any attempted assignment in violation of this prohibition shall
be null and void; provided, however, that this Agreement shall be assignable by
the Taylor Family to an affiliate of the Taylor Family without the consent of
CTFG, but no such assignment shall relieve the Taylor Family of its obligations
hereunder if such assignee does not perform such obligations. Subject to the
foregoing, all of the terms and provisions hereof shall be binding upon, and
inure to the benefit of, the successors and assigns of the parties hereto.
21. Law Governing. This Agreement will be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware. The parties hereto agree that the exclusive place of jurisdiction for
any action, suit or proceeding relating to this Agreement shall be in the courts
of the State of Delaware sitting in Wilmington, Delaware and each such party
hereby irrevocably and unconditionally agrees to submit to the jurisdiction of
such courts for the purposes of any such action, suit or proceeding. Each party
hereto irrevocably waives any objection it may have to the venue of any action,
suit or proceeding brought in such courts or to the convenience of the forum.
Final judgment in any such action, suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by the suit on the judgment, a certified
or true copy of which shall be conclusive evidence of the fact and amount of any
indebtedness or liability of any party therein described.
22. Counterparts. This Agreement may be executed in several counterparts
and one or more separate documents, all of which together shall constitute one
and the same instrument with the same force and effect as though all of the
parties had executed the same document.
23. Amendment and Waiver. Any of the terms or conditions of this
Agreement may be waived, amended or modified in whole or in part at any time
before or after the receipt of any approvals, to the extent authorized by
applicable law, by a writing signed by CTFG and the representatives of the
Taylor Family.
24. CTFG Action. From and after the date of this Agreement any amendment
of this Agreement, any action or inaction of CTFG or any of its subsidiaries
relating to this Agreement (other than as set forth in Sections 9(a)(ii), 9(b)
and 18), including any termination of this Agreement by CTFG or any extension by
CTFG of the time for performance of any of the acts or obligations of the Taylor
Family or any waiver of CTFG's rights hereunder, will require the concurrence of
the Board or a duly authorized committee thereof by a majority of those voting
(assuming a quorum is present), without the vote of any member of the Taylor
Family.
25. Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of the Taylor Family and CTFG and their respective
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
26. Notices. Any notice of communication required or permitted hereunder
shall be sufficiently given if in writing and (a) delivered in person or (b)
mailed by certified or registered mail, postage prepaid, as follows:
If to CTFG, addressed to:
Cole Taylor Financial Group, Inc.
350 East Dundee Road
Wheeling, Illinois 60090
Attn: James Kaplan
With a copy addressed to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attn: Robert A. Helman and Scott J. Davis
With a copy addressed to:
Katten, Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attn: Steven A. Shapiro
If to the Taylor Family, addressed to:
Mr. Jeffrey Taylor
62 Lakewood
Highland Park, Illinois 60035
With a copy addressed to:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
Attn: Mark L. Yeager
27. Entire Agreement. All exhibits and lists referred to in this
Agreement are integral parts hereof, and this Agreement, such exhibits and
related lists, constitute the entire agreement among the parties hereto with
respect to the matters contained herein and therein, and supersede all prior
agreements and understandings between the parties with respect thereto.
28. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
* * *
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
COLE TAYLOR FINANCIAL GROUP, INC.
By: /s/ Howard B. Silverman
Name: Howard B. Silverman
Title: Director
"Taylor Family" Representatives
/s/ Sidney Taylor
Sidney Taylor
/s/ Jeffrey W. Taylor
Jeffrey Taylor
/s/ Bruce Taylor
Bruce Taylor
Iris Taylor
EXHIBIT A
ESCROW AGREEMENT
ESCROW AGREEMENT, made this ____ day of June, 1996, by and among Cole
Taylor Financial Group, Inc., a Delaware corporation ("CTFG"), those certain
persons listed on Schedule 7(b) of that certain Share Exchange Agreement dated
June __, 1996 by and among CTFG and such persons (the "Taylor Family") and
represented by the members of the Taylor Family shown on the signature page
hereof and The Northern Trust Company (the "Escrow Agent").
WHEREAS, CTFG and the Taylor Family have entered into a Share Exchange
Agreement (the "Agreement") in respect of the sale by CTFG of all the issued and
outstanding shares of capital stock and ownership interests in Cole Taylor Bank
(the "Bank") to the Taylor Family; and
WHEREAS, the Agreement requires that 750,000 shares of CTFG common stock
(the "Escrow Amount") be deposited in escrow by the Taylor Family pending
resolution of certain matters; and
WHEREAS, the Taylor Family agreed to and is prepared to place the Escrow
Amount in escrow with Escrow Agent; and
WHEREAS, the Escrow Agent is prepared to accept the deposit of the Escrow
Amount in escrow.
NOW THEREFORE, the parties agree as follows:
1. Escrow Agent shall open an escrow account on the date hereof in the joint
names of CTFG and the Taylor Family, entitled "CTFG/Taylor Agreement Escrow
Account".
2. The Taylor Family shall deliver the Escrow Amount to Escrow Agent for
deposit into the Escrow Account effective as of the date of the opening of said
Escrow Account.
3. Escrow Agent shall hold the Escrow Amount in escrow until such time as it
receives (i) a final order or judgment of a court of competent jurisdiction
directing the disposition of the Escrow Amount or any part thereof, together
with an opinion of counsel to CTFG or counsel to the Taylor Family to the effect
that such order or judgment is final and not subject to appeal or (ii) joint
written notice from CTFG and the persons whose names appear below as
representatives of the Taylor Family in which event Escrow Agent shall
distribute the Escrow Amount in accordance with the final order or judgment or
the joint written notice, as the case may be. The Escrow Agent shall hold any
interest, dividends, distributions or other earnings on the Escrow Amount for
the sole benefit of the Taylor Family and shall pay such amounts as instructed
in writing from time to time by the Taylor Family.
4. Any cash funds deposited in the Escrow Account shall be invested by Escrow
Agent in CTFG securities, government securities or certificates of deposit as
instructed by the Taylor Family. CTFG Stock deposited in the Escrow Account
shall be held for investment and shall not be sold or transferred except
pursuant to the requirements of this Escrow Agreement.
5. The duties and responsibilities of the Escrow Agent shall be limited to
those expressly set forth in this Agreement. No implied duties or discretionary
powers may be imputed to it by the terms of this Agreement, or otherwise. The
Escrow Agent shall not be subject to, nor obliged to recognize, any other
instrument governing the rights or duties of the other parties to this
Agreement, even though reference thereto may be made in this Agreement.
6. The Escrow Agent may disregard any and all notices or instructions received
from any source, except only (i) such notices or instructions as are
specifically provided for in this Agreement and (ii) orders or process of any
court of competent jurisdiction. If from time to time any property held
pursuant to this Agreement becomes subject to any order, judgment, decree,
injunction or other judicial process of any court of competent jurisdiction
("Order"), the Escrow Agent may comply with any such Order without liability to
any person, even though such Order may thereafter be annulled, reversed,
modified or vacated.
7. Whenever the Escrow Agent should receive or become aware of any conflicting
demands or claims with respect to this Agreement or the rights of any of the
parties hereto or any property held hereunder, the Escrow Agent may without
liability refrain from any action until the conflict has been resolved or,
alternatively, may tender into the registry or custody of any court which the
Escrow Agent determines to have jurisdiction all money or property in its hands
under this Agreement, together with such legal pleadings as it deems
appropriate, less a reasonable allowance for its outside legal fees and other
reasonable out-of-pocket expenses, and thereupon be discharged from all further
duties and liabilities under this Agreement. Any inaction or filing of
proceedings pursuant to this section shall not deprive the Escrow Agent of its
compensation during such inaction or prior to such filing.
8. Unless otherwise specifically indicated herein the Escrow Agent shall
proceed as soon as practicable to collect any checks or other collection items
at any time deposited hereunder. All such collections shall be subject to the
usual collection agreement regarding items received by its commercial banking
department for deposit or collection. The Escrow Agent shall have no duty (1)
to collect from any party any money, securities or documents required to be
deposited with it, (2) to notify anyone of any payment or maturity under the
terms of any instrument deposited hereunder, or (3) to take any legal action to
enforce payment of any check, note or security deposited with it.
9. Except as may be specifically provided herein concerning investments of
cash, the Escrow Agent shall have no liability to pay interest on any money held
pursuant to this Agreement. The Escrow Agent may use its own bond department in
purchasing or selling securities. The Escrow Agent shall not be liable for any
depreciation or change in the value of such documents or securities or any
property evidenced thereby or for any losses incurred in liquidating securities
or other property to satisfy a distribution request. All distributions provided
for hereunder shall be made by the Escrow Agent from the Escrow Amount or any
interest, dividends, distributions or other earnings thereon, subject to any
unpaid fees and unreimbursed out-of-pocket expenses of the Escrow Agent
permitted by this Agreement which are then outstanding, in the order that proper
requests therefor are received by the Escrow Agent. In no event shall the
Escrow Agent be required to seek contributions from any source or to advance its
own funds in order to satisfy a distribution request.
10. The Escrow Agent shall not be responsible for any recitals of fact in this
Agreement, or for the sufficiency, form, execution, validity or genuineness of
any documents or securities deposited under this Agreement or for any signature,
endorsement or any lack of endorsement thereon, or for the accuracy of any
description therein, or for the identity, authority or rights of the persons
executing or delivering the same or this Agreement.
11. The Escrow Agent shall be fully protected in relying without investigation
upon any written notice, demand, certificate or document which it in good faith
believes to be genuine, as to the truth and accuracy of the statements made
therein, the identity and authority of the persons executing the same and the
validity of any signature thereon. Although the Escrow Agent may demand
specific authorizations (including corporate resolutions, incumbency
certificates and the like) or identification from a party or its representative
prior to taking any action hereunder, no such demand shall constitute a waiver
or deprive the Escrow Agent of the protections afforded by this paragraph.
12. The Escrow Agent shall not be personally liable for any act taken or
omitted by it under this Agreement in good faith and in the exercise of its own
best judgment. In no event shall the Escrow Agent be liable to any person for
special, indirect or consequential damages of any kind, even if it is advised of
the possibility thereof. The parties shall jointly and severally indemnify,
defend and hold harmless the Escrow Agent from and against any and all claims
that may be asserted against the Escrow Agent by any third parties and any and
all liability, loss, cost or expense (including outside attorneys' fees in a
reasonable amount) that may be incurred by the Escrow Agent as a result of any
such claim or otherwise as a result of acting as Escrow Agent hereunder unless
due to bad faith, gross negligence or wilful misconduct. The obligations of the
parties under this paragraph shall survive termination of this Agreement and
distribution of the Deposit.
13. The Escrow Agent may engage nationally recognized legal counsel to advise
it concerning any of its duties in connection with this Agreement, or in case it
becomes involved in litigation on account of being Escrow Agent under this
Agreement, and reliance on the advice of such counsel shall fully protect the
Escrow Agent except for any action taken by Escrow Agent in bad faith or do to
its gross negligence or willful misconduct.
14. The Escrow Agent shall be entitled to a fee of $3,000, payable in advance
for each 12-month period or any part thereof, without proration plus
reimbursement for its reasonable expenses, including outside attorneys' fees in
a reasonable amount. The fees and expenses of the Escrow Agent shall be paid by
CTFG.
15. Any notices or communication required or permitted hereunder shall be
sufficiently given if in writing and (a) delivered in person, (b) mailed by
certified or registered mail, postage prepaid or (c) transmitted by facsimile,
as follows:
If to Escrow Agent, addressed to:
The Northern Trust Company
50 South LaSalle Street
Chicago, IL 60675
Attn: Frank D. Szymanek
Facsimile: (312) 557-2704
If to CTFG, addressed to:
Cole Taylor Financial Group, Inc.
350 East Dundee Road
Wheeling, IL 60090
Attn: James I. Kaplan
Facsimile: (847) 808-9145
With a copy addressed to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, IL 60603
Attn: Scott J. Davis
Facsimile: (312) 701-7711
If to the Taylor Family, addressed to:
Mr. Jeffrey Taylor
62 Lakewood
Highland Park, IL 60035
Fax: (847) ___-____
With a copy addressed to:
McDermott, Will & Emery
227 West Monroe Street
Chicago, IL 60606
Attn: Mark L. Yeager
Fax: (312) 984-2099
Whenever under this Agreement the time for giving a notice or performing an
act falls upon a Saturday, Sunday, or holiday, such time shall be extended to
the next business day.
16. Any Escrow Agent may resign by written notice to the other parties to this
Agreement. Any such resignation shall be effective upon delivery of the
property then held in escrow to the successor Escrow Agent, whereupon the
resigning Escrow Agent shall be discharged of any further duties under this
Agreement. If an Escrow Agent resigns, the other parties shall appoint a
successor Escrow Agent; provided that if no successor is appointed within 30
days after resignation, the resigning Escrow Agent may appoint as successor any
corporation with trust powers in the United States or may tender the Deposit
into court as provided in paragraph 4.3 hereof.
17. The Escrow Agent shall not be responsible for any delays or failure to
perform caused by circumstances reasonably beyond its control, including but not
limited to breaches by other parties of their obligations hereunder, delays by
messengers or other independent contractors, mechanical or computer failures,
malfunctioning or breakdowns in public utilities, securities exchanges, Federal
Reserve Banks, or securities depositories; interference by governmental units;
strikes, lockouts, or civil disobedience; fires or other casualties, acts of God
or other similar occurrences.
18. The rights and duties of CTFG and the Taylor Family to each other shall be
governed by the laws of the state of Delaware. The rights and duties of the
Escrow Agent shall be determined in accordance with the laws of the State of
Illinois without reference to its conflict of law principles. This Agreement
shall be deemed to be a contract made and to be performed in the State of
Illinois.
19. This Agreement may be amended from time to time by written instrument
executed by all the parties other than the Escrow Agent; provided that duties
and liabilities of the Escrow Agent may not thereby be changed without its prior
written consent.
20. This Agreement shall benefit, and be binding upon, only the parties hereto
and their respective heirs, estates, successors and assigns (each a "Party").
Nothing in this Agreement shall be construed to give any right against the
Escrow Agent to any person who is not a Party. The Escrow Agent shall have no
duty, express or implied, to any non-Party and no such person shall be deemed a
"third party beneficiary" of this Agreement.
21. The Escrow Agent shall furnish CTFG and the Taylor Family upon the request
of either CTFG or the Taylor Family with a report showing receipts and
disbursements during the period and a priced list of (publicly traded) assets.
Valuations appearing on such reports or otherwise utilized hereunder may be
obtained from third parties generally recognized as sources of pricing
information, but the Escrow Agent shall not be liable for the accuracy of
valuations furnished by recognized pricing sources.
22. This Agreement contains the entire agreement among the parties hereto with
respect to the subject matter hereof and may not be amended or modified in any
manner except by an instrument signed by all parties hereto.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
COLE TAYLOR FINANCIAL GROUP, INC.
By:
Name:
Title:
"TAYLOR FAMILY" REPRESENTATIVES
Sidney Taylor
Jeffrey Taylor
Bruce Taylor
Iris Taylor
THE NORTHERN TRUST COMPANY
By:
Name:
Title:
Schedule 3.1
1. Tom Collins
2. ____________________*
3. ____________________*
4. _____________________*
* To be selected by Tom Collins from persons currently reporting to him.
Schedule 7(b)
TAYLOR FAMILY
Directly Owned Shares
Sidney Taylor 53,900
Jeffrey Taylor 86,880
Bruce Taylor 126,880
Cindy Bleil 126,880
Directly Owned Shares
Iris Taylor TR FBO Adam Taylor 21,720
Melvin Pearl TR/BT Gift Trust 26,480
Melvin Pearl TR/Brett Daniel Taylor 8,800
Iris Taylor TR/Brett Daniel Taylor 11,320
Iris Taylor TR/Brian Taylor 21,720
Iris Taylor TR/Bruce Taylor 21,720
Melvin Pearl TR/Tark/Bruce Taylor 211,320
Iris Taylor TR/Cindy Taylor Bleil 21,720
Melvin Pearl TR/Tark/Cindy Taylor Bleil 211,320
Melvin Pearl TR/Cindy Taylor 26,520
Cole Taylor Bank/FBO SJT 38,040
Cole Taylor Bank/Tark Iris Fund 152,200
Melvin Pearl TR/FBO E. Bleil 8,800
Iris Taylor TR/FBO E. Bleil 4,640
Melvin Pearl TR/FBO E. B. Taylor 8,800
Iris Taylor TR/FBO Emily Taylor 21,760
Melvin Pearl TR/Tark/Bruce Taylor 261,320
Melvin Pearl TR/Tark/C. Bleil 261,320
Melvin Pearl TR/Tark/J. Taylor 261,320
Melvin Pearl TR/JWT Gift Trust 26,520
Iris Taylor TR/FBO JWT 17,800
Melvin Pearl TR/Tark/J.Taylor 211,320
Melvin Pearl TR/FBO Lisa Taylor 4,800
Iris Taylor TR/FBO Lisa Taylor 16,960
Iris Taylor TR/FBO Melissa Taylor 21,760
Melvin Pearl TR/FBO R. Bleil 8,800
Iris Taylor TR/FBO R. Bleil 11,320
Melvin Pearl TR/FBO Ryan Taylor 8,800
Iris Taylor TR/FBO Ryan Taylor 1,480
Iris Taylor TR/FBO Stephanie Taylor 16,960
Melvin Pearl TR/FBO Stephanie Taylor 4,800
Taylor Family Partnership 750,000
Sidney J. Taylor Trust under self 509,280
Susan Taylor Trust 40,000
CTFG Stock Options Owned
Jeffrey Taylor 140,270
Bruce Taylor 140,270
ESOP Shares
Sidney Taylor 9,008.6824
Jeffrey Taylor 8,861.9830
Bruce Taylor 8,861.9961
SCHEDULE 9(A)(I)
1. Complete the installation of the FAST teller and platform automation
systems.
2. Complete the NCS trust accounting system conversion.
3. Open up to five CT Mortgage offices, each on a month to month lease with a
maximum rental expense for each office of $1000 per month.
4. Manage the Bank's asset and liability position in accordance with
established policies and past practices, including without limitation the
purchase and sale of securities.
5. Purchase or sell mortgage servicing rights in bulk up to a maximum total
value of $100,000 per month.
6. Originate and sell mortgages and related servicing rights without
limitation.
7. Expend the amounts necessary to maintain, renovate, and redecorate the
Bank's premises within the limits established by the Bank's 1996 Capital
Expenditure Budget of $1,950,000.
8. Purchase land trust portfolios up to $500,000 in purchase price per
transaction.
9. Expend the amounts indicated in the 1996 Technology Capital Investment plan
of $400,000 for PC and infrastructure upgrades.
10. Dispose of assets acquired through the disposition of problem loans.
11. With the approval of the CTFG compensation committee, implement the
Supplemental Mortgage Incentive Program and the Bank 1996 Incentive program
and the stock options granted as a condition of hiring to Thomas S.
McCarton of 3500 shares and Gil Johnson of 2000 shares.
12. Fund up to the amounts budgeted for 1996 contributions to the CTFG profit
sharing, 401k, ESOP, and Incentive Plans.
13. Prior to Closing liquidate sufficient assets to generate the cash required
at Closing.
Schedule 9(b)(ii)(A)
1. Finance may effect the conversion of certain computer software systems as
previously proposed to its board of directors.
2. Finance may furnish each new office which is opened with computer
equipment, furniture and leasehold improvements not to exceed $15,000 per
office opened.
SCHEDULE 10(e) -- [IRS REPRESENTATIONS]
1. No continuing shareholder of CTFG shall be required to give any
representation indicating that such shareholder does not have a plan or
intention to sell or dispose of its CTFG shares, or otherwise limiting the
ability of such shareholder to dispose of its shares at any time, and management
of CTFG shall not be required to make any representation with respect to the
plan or intention of any continuing 5 percent or greater CTFG shareholder to
sell or dispose of such holder's CTFG shares.
2. The obligations of CTFG, Finance and Auto Sub with respect to the
automobile receivables business transferred from the Bank shall be limited to
the obligations described in Section 10(g)(i), and neither CTFG, Finance or Auto
Sub shall be required to make any covenant or representation inconsistent with
such limitations.
3. Nothing in the Private Letter Ruling, representations or covenants
shall restrict CTFG's ability to repurchase, immediately following the exchange
of the Bank Stock (or Newco Stock, as the case may be) for the CTFG Stock, up to
16 percent of the CTFG Stock then outstanding, it being understood that
permission to redeem a greater percentage will, if possible, be obtained under
the Private Letter Ruling.
Schedule 10(1)(i)
Irwin Cole
Howard B. Silverman
William S. Race
Thomas Barlow
