<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
June 12, 1996
--------------------------------
(Date of earliest event reported)
Cole Taylor Financial Group, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-23854 36-3235321
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
350 East Dundee Road, Suite 300
Wheeling, Illinois 60090-3199
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(Address of principal executive offices) (Zip Code)
(847) 537-0020
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(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. Other Events.
-------------
On June 12, 1996, Cole Taylor Financial Group, Inc. (the "Company")
entered into a Share Exchange Agreement (the "Share Exchange Agreement")
among the Company and certain members of the Taylor family. The Share
Exchange Agreement is attached as an exhibit hereto and the full text of the
Share Exchange Agreement is incorporated herein by reference.
On June 13, 1996, the Company issued a press release announcing the
transactions contemplated by the Share Exchange Agreement. The press release
is attached as an exhibit hereto and the full text of the press release is
incorporated herein by reference.
ITEM 7. Financial Statements, Pro Forma Financial Information
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and Exhibits.
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Exhibit No. Exhibit
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99(c)(1) Press Release dated June 13, 1996.
99(c)(2) Share Exchange Agreement dated as of June 12, 1996
among Cole Taylor Financial Group, Inc. and certain
members of the Taylor family.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COLE TAYLOR FINANCIAL GROUP, INC.
(Registrant)
Date: June 19, 1996 By: /s/ James I. Kaplan
------------------------
James I. Kaplan
General Counsel and
Corporate Secretary
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- --------
99(c)(1) Press Release dated June 13, 1996.
99(c)(2) Share Exchange Agreement dated as of June 12, 1996
among Cole Taylor Financial Group, Inc. and
certain members of the Taylor family.
<PAGE>
COLE TAYLOR FINANCIAL GROUP, INC.
350 E. DUNDEE ROAD
WHEELING, IL 60090
(847) 459-1111
NASDAQ: CTFG
AT COLE TAYLOR: AT THE FINANCIAL RELATIONS BOARD:
Jim Kaplan Michael Rosenbaum Jeff Wescott Bess Gallanis
General Counsel General Info. General Info. Media Inq.
(847) 808-6269 (312) 640-6666 (312) 640-6732 (312) 640-6737
FOR IMMEDIATE RELEASE
WEDNESDAY, JUNE 12, 1996
COLE TAYLOR FINANCIAL GROUP TO SPLIT-OFF
BANK UNIT TO TAYLOR FAMILY:
HOLDING COMPANY TO BECOME PURE PLAY IN SUBPRIME AUTO FINANCE
Wheeling, Illinois, June 12, 1996 - Cole Taylor Financial Group, Inc.
(Nasdaq: CTFG) today announced a definitive agreement to split off its
Cole Taylor Bank subsidiary to an investment group headed by Cole Taylor
Financial Group Chairman Jeffrey Taylor, President Bruce Taylor, and
company director and co-founder Sidney Taylor.
The transaction, expected to close early in 1997, would enable the
holding company to focus exclusively on the subprime automobile finance
business. Operating as Reliance Acceptance Corporation, the auto finance
subsidiary has demonstrated substantial growth rates in earnings and assets
since its incorporation as a separate operation in 1992. Thomas Barlow,
president and chief executive officer of Reliance, and Howard Silverman,
chairman of Reliance's board of directors and a member of the holding
company board, will maintain their leadership roles in the surviving
publicly held company.
The non-taxable transaction, approved unanimously by the holding
company board, would create both a pure-play investment in the subprime
auto finance industry and the bank would become the Chicago area's largest,
privately held bank. Upon closing of the transaction, the Taylors will
leave their positions with the holding company and focus exclusively on the
bank, now the 13th largest in the greater Chicago area.
Under terms of the agreement, the holding company will receive between
4.0 and 4.5 million shares of Cole Taylor Financial Group stock from the
Taylor group, plus the transfer from the bank of its automobile receivables
business, principally consisting of cash and sales finance receivables,
secured by automobiles. The value of the cash and receivables to be
transferred will vary from approximately $82.0 million if the Taylor Group
exchanges 4.5 million holding company shares, to approximately $98.0
million if the Taylor Group exchanges 4.0 million holding company shares.
In addition to its own resources, the Taylor group will seek additional
financial resources to support the transaction and bank expansion plans.
"In addition to the opportunities we see for Reliance in the auto
finance market, the reduction in shares outstanding should enhance
shareholders' opportunity to benefit from any future growth," Silverman
added.
Silverman noted that shareholders could benefit from stronger returns
per share following the transaction, as a result of the shares in the
split-off being retired.
The transaction must be approved by shareholders and is subject to a
ruling of the Internal Revenue Service that the transaction qualifies as a
tax free transaction, plus approvals from the Board of Governors of the
Federal Reserve System and the Federal Deposit Insurance Corporation.
Complete details of the transaction will be included in a proxy statement
to be mailed in advance of the stockholders meeting that will be called to
approve the transaction.
"This transaction follows a lengthy board investigation into
strategies for maximizing value to shareholders of Cole Taylor Financial
Group," said Jeffrey Taylor. "We believe the split of the companies and
the structure of the transaction will accomplish this goal."
The finance company subsidiary previously reported net income of
$198,000 for 1993, $4,296,000 for 1994, $9,612,000 for 1995, and $3,625,000
for the first quarter ended March 31, 1996. Today, Reliance operates 37
branch offices in 14 states, serving major car dealerships by financing
their receivables on used car sales. Reliance has a stated goal of opening
an average of 12 new branches each year.
Barlow has approximately 30 years of auto finance experience, while
Silverman served previously as Chairman and CEO of First Illinois Bank
Corporation, and as Chairman of its subsidiary Mercury Finance Company, the
nation's largest participant in the highly fragmented subprime finance
market.
"Clearly," said Taylor, "Cole Taylor Financial Group has the right
management in place to maximize opportunities in its chosen market.
Equally important, Reliance has recruited an extremely talented and
experienced team of managers and other employees."
The Taylor Group will continue its 60-year commitment to banking in
the Chicago market. Cole Taylor Bank, with 10 branches in the city and
suburbs, is a $1.8 billion institution serving owner operated businesses
and consumers.
"As bank mergers and consolidation strain the ties between bankers and
customers, we see a fertile growth opportunity for an independent, locally
owned bank with true commitment to long-term relationships with customers,
communities, and employees," said Bruce Taylor, president of Cole Taylor
Bank. "We have committed ourselves, personally, professionally, and
financially, to serving our hometown market."
During the board's study of strategic alternatives during the past six
months, several potential transactions were considered by an independent
board committee and by the board as a whole. CTFG is being advised by the
investment banking firms of The Chicago Corporation and Sandler O'Neill &
Partners, L.P. The Taylor Group is being advised by Piper Jaffray Inc.
Cole Taylor Financial Group, Inc. is the holding company for Cole
Taylor Bank and Cole Taylor Finance Co. The Bank currently operates ten
branches in Cook and DuPage counties in Illinois. Cole Taylor Finance Co.
is a consumer finance company operating 37 branch offices in 14 states
under the name of Reliance Acceptance Corp. The company's shares trade on
the NASDAQ National Market under the symbol CTFG.
For more information on Cole Taylor Financial Group, Inc. via
facsimile at no cost, dial 1-800-PRO-INFO and enter the company code --
CTFG.
<PAGE>
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 tax-
free transaction to CTFG and Newco, and (3) the New Bank
Securities (as defined below) shall be issued on terms disclosed
to the Internal Revenue Service and consistent with the Private
Letter Ruling.
4. Consummation of the Transactions; Closing Date. The
consummation of the transactions contemplated herein (the
"Closing") and the delivery of the certificates and
acknowledgements called for by this Agreement shall take place at
the offices of 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
CMF 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
indemnifies 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 reslate 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 non-
feasibility 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.
* * *
<PAGE>
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 Taylor
------------------------------
Jeffrey Taylor
/s/ Bruce Taylor
------------------------------
Bruce Taylor
/s/ Iris Taylor
------------------------------
Iris Taylor
<PAGE>
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 12, 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.
37 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
<PAGE>
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.
<PAGE>
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.
* * *
<PAGE>
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: __________________
