<PAGE>
--------------------------
OMB APPROVAL
OMB Number: 3235-0060
Expires: December 31, 1997
Estimated average burden
hours per response....5.00
--------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of eariest event report) May 28, 1996
---------------------------------
Security Chicago Corp.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-11401 36-3236203
- ------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
196 East Pearson, Chicago, Illinois 60611
- ------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (312) 280-0360
---------------------------
- ------------------------------------------------------------------------------
(Former name or former adress, if changed since last report.)
Page 1 of 4
<PAGE>
FORM 8-K
SECURITY CHICAGO CORP.
ITEM 5. Other Events.
-------------
On May 28, 1996, Security Chicago Corp. (the "Registrant") entered into an
Agreement and Plan of Merger (the "Agreement") with TDI Financial Corp. ("TDI")
and its subsidiary, Alpha Acquisition Corp. ("Alpha"), pursuant to which the
Registrant will be merged with Alpha, and the current shareholders of the
Registrant will receive $60.00 per share in cash as consideration for their
shares of the Common Stock of the Registrant.
Consummation of the transaction contemplated by the Agreement (the
"Transaction") is subject to the approval of Federal and State bank regulators,
inasmuch as the Registrant is a bank holding company. Consummation of the
Transaction is also subject to the approval of the shareholders of the
Registrant.
The terms and conditions of the Transaction are set forth in the Agreement,
a copy of which is attached hereto as Exhibit A. Also Attached hereto as
exhibits are the letter, dated May 28, 1996, sent by the Chairman of the
Registrant to the Registrant's shareholders announcing the signing of the
Agreement (Exhibit B), and the press release, dated May 29, 1996, that was
jointly issued by the Registrant and TDI with respect to the Transaction
(Exhibit C).
Page 2 of 4
<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 hereunto duly authorized.
SECURITY CHICAGO CORP.
------------------------------------
(Registrant)
Date June 3, 1996 /s/ Thomas R. Beverlin
--------------------------------- ------------------------------------
(Signature)*
Thomas R. Beverlin,
Executive Vice President
*Print name and title of the signing officer under his signature.
Page 3 of 4
<PAGE>
FORM 8-K
SECURITY CHICAGO CORP.
LIST OF EXHIBITS
Exhibit A -- Agreement and Plan of Merger, dated May 28, 1996, by and among
the Registrant, TDI Financial Corp. and Alpha Acquisition Corp.
Exhibit B -- Letter, dated May 28, 1996, from the Chairman of the Registrant
to the shareholders of the Registrant.
Exhibit C -- Press Release, dated May 29, 1996, jointly issued by the
Registrant and TDI Financial Corp.
Page 4 of 4
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
by and among
TDI FINANCIAL CORPORATION
ALPHA ACQUISITION CORP.
and
SECURITY CHICAGO CORP.
May 28, 1996
<PAGE>
INDEX OF AGREEMENT AND PLAN OF MERGER
Section Page
------- ----
1. The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Consummation of the Merger. . . . . . . . . . . . . . . . . . . . 1
(a) Closing and Effective Date . . . . . . . . . . . . . . . . . 1
(b) Certificate of Incorporation of Surviving Corporation. . . . 2
(c) By-Laws of Surviving Corporation . . . . . . . . . . . . . . 2
(d) Directors and Officers of Surviving Corporation. . . . . . . 2
(e) Continued Existence of Surviving Corporation . . . . . . . . 2
(f) Restructure of Transaction . . . . . . . . . . . . . . . . . 2
3. Conversion of Shares upon the Merger. . . . . . . . . . . . . . . 3
(a) Merger Consideration . . . . . . . . . . . . . . . . . . . . 3
(b) Conversion . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Reclassification of Seller Common. . . . . . . . . . . . . . 3
(d) Right to Receive Merger Consideration. . . . . . . . . . . . 3
4. Surrender of Certificates and Payment of Merger Consideration . . 3
(a) Appointment of Exchange Agent. . . . . . . . . . . . . . . . 3
(b) Deposit of Funds With Exchange Agent . . . . . . . . . . . . 4
(c) Payment of Merger Consideration. . . . . . . . . . . . . . . 4
(d) Surrender of Certificates. . . . . . . . . . . . . . . . . . 4
(e) Special Procedures . . . . . . . . . . . . . . . . . . . . . 5
5. Appraisal Rights. . . . . . . . . . . . . . . . . . . . . . . . . 5
6. Escheat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7. Representations, Warranties and Covenants of Purchaser. . . . . . 5
(a) Due Organization . . . . . . . . . . . . . . . . . . . . . . 5
(b) Requisite Authority. . . . . . . . . . . . . . . . . . . . . 6
(c) Absence of Conflict. . . . . . . . . . . . . . . . . . . . . 6
(d) Government Approvals . . . . . . . . . . . . . . . . . . . . 7
(e) Absence of Claims. . . . . . . . . . . . . . . . . . . . . . 7
(f) Funds to Consummate Merger; Requisite Capital. . . . . . . . 7
(g) Proxy Information. . . . . . . . . . . . . . . . . . . . . . 7
(h) Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . 7
(i) Truthfulness of Representations. . . . . . . . . . . . . . . 7
(j) Reasonable Best Efforts. . . . . . . . . . . . . . . . . . . 7
(k) Survival of Indemnification. . . . . . . . . . . . . . . . . 8
i
<PAGE>
INDEX (continued)
Section Page
------- ----
8. Representations, Warranties and Covenants of Seller . . . . . . . 8
(a) Due Organization . . . . . . . . . . . . . . . . . . . . . . 8
(b) Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Government Registration. . . . . . . . . . . . . . . . . . . 9
(d) Proper Authorization . . . . . . . . . . . . . . . . . . . . 9
(e) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 9
(f) Financial Statements . . . . . . . . . . . . . . . . . . . . 10
(g) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(i) Filing of Tax Returns; Payments; Liens. . . . . . . . . 10
(ii) Delivery of Tax Returns . . . . . . . . . . . . . . . . 12
(iii) Payment of Taxes . . . . . . . . . . . . . . . . . 12
(iv) Compromise of Claims. . . . . . . . . . . . . . . . . . 12
(v) Parachute Payments. . . . . . . . . . . . . . . . . . . 12
(h) Material Contracts . . . . . . . . . . . . . . . . . . . . . 12
(i) Real and Personal Property . . . . . . . . . . . . . . . . . 13
(j) Material Adverse Change. . . . . . . . . . . . . . . . . . . 13
(k) Catastrophic Loss. . . . . . . . . . . . . . . . . . . . . . 14
(l) Investigations and Litigation. . . . . . . . . . . . . . . . 14
(m) Accuracy of Minute Books . . . . . . . . . . . . . . . . . . 14
(n) Sufficiency of Records . . . . . . . . . . . . . . . . . . . 14
(o) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 14
(p) Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(q) Compliance With Law. . . . . . . . . . . . . . . . . . . . . 15
(r) Accuracy of Stockholder Communications . . . . . . . . . . . 15
(s) Investment Banker/Finder Fee . . . . . . . . . . . . . . . . 15
(t) Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . 16
(u) Employee Benefits. . . . . . . . . . . . . . . . . . . . . . 16
(i) Identification of Plans . . . . . . . . . . . . . . . . 16
(ii) Payment of Contributions. . . . . . . . . . . . . . . . 16
(iii) Pending Litigation . . . . . . . . . . . . . . . . 17
(iv) Fiduciary Compliance. . . . . . . . . . . . . . . . . . 17
(v) ERISA Compliance. . . . . . . . . . . . . . . . . . . . 17
(vi) Change in Control Benefits. . . . . . . . . . . . . . . 18
(vii) Consulting Agreement . . . . . . . . . . . . . . . 18
(v) Labor Contracts. . . . . . . . . . . . . . . . . . . . . . . 18
(w) Real Estate Owned. . . . . . . . . . . . . . . . . . . . . . 18
(i) Environmental Permits . . . . . . . . . . . . . . . . . 18
(ii) Environmental Claims. . . . . . . . . . . . . . . . . . 19
(iii) Environmental Compliance . . . . . . . . . . . . . 19
(x) Seller Facilities. . . . . . . . . . . . . . . . . . . . . . 19
(y) Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ii
<PAGE>
INDEX (continued)
Section Page
------- ----
(z) Investment Securities. . . . . . . . . . . . . . . . . . . . 20
(aa) Intellectual Property. . . . . . . . . . . . . . . . . . . . 21
(ab) Governmental Reports . . . . . . . . . . . . . . . . . . . . 21
(ac) Reserve for Possible Loan and Lease Losses . . . . . . . . . 21
(ad) Derivatives. . . . . . . . . . . . . . . . . . . . . . . . . 21
(ae) Trust and Fiduciary Accounts . . . . . . . . . . . . . . . . 22
(af) Affiliate Transactions . . . . . . . . . . . . . . . . . . . 22
(ag) Section 203. . . . . . . . . . . . . . . . . . . . . . . . . 22
(ah) Government Approvals . . . . . . . . . . . . . . . . . . . . 22
(ai) Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . 22
(aj) Accuracy of All Representations. . . . . . . . . . . . . . . 22
(ak) Reasonable Best Efforts. . . . . . . . . . . . . . . . . . . 22
9. Agreements with Respect to Conduct of Seller and Seller
Subsidiaries After the Date Hereof . . . . . . . . . . . . . . 22
(a) Maintenance of Business. . . . . . . . . . . . . . . . . . . 23
(b) Prompt Notification. . . . . . . . . . . . . . . . . . . . . 23
(c) Restrictions; Required Consent . . . . . . . . . . . . . . . 23
(e) No Solicitation. . . . . . . . . . . . . . . . . . . . . . . 25
(f) No Interference. . . . . . . . . . . . . . . . . . . . . . . 25
(g) Payment of Liabilities . . . . . . . . . . . . . . . . . . . 26
(h) Prohibition Against Creation of Goodwill . . . . . . . . . . 26
(i) Compliance with Law. . . . . . . . . . . . . . . . . . . . . 26
(j) Maintenance of Operating Expense Levels. . . . . . . . . . . 26
(k) Maintenance of Books and Records . . . . . . . . . . . . . . 26
(l) Insider Loans. . . . . . . . . . . . . . . . . . . . . . . . 26
10. Additional Agreements . . . . . . . . . . . . . . . . . . . . . . 26
(a) Continuing Access to Information . . . . . . . . . . . . . . 26
(b) Sharing of Filings . . . . . . . . . . . . . . . . . . . . . 27
(c) Notification . . . . . . . . . . . . . . . . . . . . . . . . 27
(d) Evidence of Title. . . . . . . . . . . . . . . . . . . . . . 27
(e) Seller Accruals and Reserves . . . . . . . . . . . . . . . . 27
(f) Resale of Seller . . . . . . . . . . . . . . . . . . . . . . 27
(g) Treatment of Seller Employee Benefit Plans . . . . . . . . . 28
(h) Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . 28
(i) Seller's New Main Banking Facility . . . . . . . . . . . . . 28
11. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 29
12. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . 29
iii
<PAGE>
INDEX (continued)
Section Page
------- ----
13. Stockholders' Approval. . . . . . . . . . . . . . . . . . . . . . 29
14. Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . 30
15. Seller Proxy Materials. . . . . . . . . . . . . . . . . . . . . . 30
(a) Preparation of Proxy Material. . . . . . . . . . . . . . . . 30
(b) Conditions to Mailing of Proxy Materials . . . . . . . . . . 31
(i) Fairness Opinion. . . . . . . . . . . . . . . . . . . . 31
(ii) Officer's Certificate . . . . . . . . . . . . . . . . . 31
(iii) Mailing Date . . . . . . . . . . . . . . . . . . . 31
16. Conditions Precedent to Obligations of Purchaser and Subsidiary . 31
(a) Accuracy of Representations and Warranties . . . . . . . . . 31
(b) Performance by Seller. . . . . . . . . . . . . . . . . . . . 31
(c) No Adverse Material Change; Adverse Trends in Problem Loans. 32
(d) Seller's Operating Budget. . . . . . . . . . . . . . . . . . 32
(e) Certification by Seller. . . . . . . . . . . . . . . . . . . 32
(f) Approval by Stockholders; Dissenters . . . . . . . . . . . . 32
(g) Certification by Board of Directors. . . . . . . . . . . . . 33
(h) Receipt of Requisite Approvals . . . . . . . . . . . . . . . 33
(i) Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . 33
(j) Governmental Approval. . . . . . . . . . . . . . . . . . . . 33
(k) No Adverse Decision. . . . . . . . . . . . . . . . . . . . . 33
(l) Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 33
(m) Accountant's Letter. . . . . . . . . . . . . . . . . . . . . 33
(n) Receipt of Resignations. . . . . . . . . . . . . . . . . . . 34
(o) No Legal Prohibition . . . . . . . . . . . . . . . . . . . . 34
(p) Employee Matters . . . . . . . . . . . . . . . . . . . . . . 34
(q) Non-Competition Matters. . . . . . . . . . . . . . . . . . . 34
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(r) Funds Available For Consummation . . . . . . . . . . . . . . 34
17. Conditions Precedent to Obligations of Seller . . . . . . . . . . 34
(a) Accuracy of Representations and Warranties . . . . . . . . . 34
(b) Stockholder Approval . . . . . . . . . . . . . . . . . . . . 34
(c) Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . 34
(d) Performance by Purchaser . . . . . . . . . . . . . . . . . . 35
(e) Receipt of Requisite Approvals . . . . . . . . . . . . . . . 35
(f) Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 35
18. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 35
iv
<PAGE>
INDEX (continued)
Section Page
------- ----
19. Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . 35
20. Publicity and Reports . . . . . . . . . . . . . . . . . . . . . . 36
21. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . 36
22. Law Governing . . . . . . . . . . . . . . . . . . . . . . . . . . 36
23. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
24. Amendment and Waiver. . . . . . . . . . . . . . . . . . . . . . . 36
25. Termination of Agreement. . . . . . . . . . . . . . . . . . . . . 37
(a) Methods of Termination . . . . . . . . . . . . . . . . . . . 37
(b) Further Liability. . . . . . . . . . . . . . . . . . . . . . 38
26. Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . 38
27. Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
28. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
29. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 40
30. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
v
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as
of the 28th day of May, 1996, by and among TDI Financial Corporation, a
Delaware corporation ("Purchaser"), Alpha Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Purchaser ("Subsidiary"), and
Security Chicago Corp., a Delaware corporation ("Seller"). Seller together
with Subsidiary are sometimes referred to as the "Constituent Corporations".
W I T N E S S E T H:
WHEREAS, the parties desire that Subsidiary be merged with and into
Seller (the "Merger") upon the terms and conditions herein contained and in
accordance with the Delaware General Corporation Law (the "Delaware Law").
The Board of Directors of Seller deems the Merger advisable and in the best
interests of Seller and its stockholders and has adopted a resolution
approving this Agreement and directing that this Agreement be submitted for
the consideration at a meeting of Seller's stockholders. The respective
Boards of Directors of Purchaser and Subsidiary have adopted resolutions
approving this Agreement, and, as provided in this Agreement, Purchaser, as
the sole stockholder of Subsidiary, has approved this Agreement.
THEREFORE, for and in consideration of the premises and the mutual
agreements, representations, warranties and covenants herein contained and
for the purpose of prescribing the terms and conditions of the Merger, the
mode of carrying the Merger into effect, the manner of converting the shares
of Subsidiary into shares of the Surviving Corporation (as defined in
Paragraph 1) and the shares of Seller into cash, and such other details and
provisions as are deemed desirable in connection with the Merger, the
parties, intending to be bound, hereby agree as follows:
1. THE MERGER. At the Effective Date (as defined in Paragraph 2),
Subsidiary will be merged with and into Seller, and Seller will be the
surviving corporation ("Surviving Corporation"), in accordance with the
terms, conditions and provisions of this Agreement and the Certificate of
Merger (as defined in Paragraph 2), subject to the requisite approval of:
(i) the stockholders of Seller as required by Delaware law; and (ii) all
applicable state and federal governmental bodies and agencies ("Applicable
Governmental Authorities"), in accordance with the laws, rules and
regulations governing or related to the Applicable Governmental Authorities
("Applicable Law").
2. CONSUMMATION OF THE MERGER.
(a) CLOSING AND EFFECTIVE DATE. The delivery of the certificates
and opinions called for by this Agreement shall take place at the offices of
Vedder, Price, Kaufman & Kammholz, 222 North LaSalle Street, Chicago,
Illinois 60601-1003, and at such time as shall
<PAGE>
be fixed by mutual agreement of Purchaser and Seller on the last day of the
month following the latest of (a) approval of the transactions required to
effect the transactions contemplated by this Agreement by all the Applicable
Governmental Authorities and the approval, consent or other action of such
other governmental authorities having jurisdiction over the transactions
governed by this Agreement as may be required; (b) the expiration of any
waiting period imposed by law; and (c) satisfaction or waiver of the
conditions set forth in Paragraphs 16 and 17 of this Agreement. Upon
satisfaction of all conditions precedent to the consummation of the
transactions contemplated by this Agreement, the Constituent Corporations
shall cause the Merger to become effective on the date of the closing (the
"Closing") by executing, acknowledging and filing on that date, in accordance
with Sections 103 and 251 of the Delaware Law, a certificate of merger in
form acceptable to Purchaser and Seller and their respective counsel (the
"Certificate of Merger"). The date on which the Merger becomes effective
shall be as of the Closing and shall be referred to as the "Effective Date".
(b) CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION. The
Certificate of Incorporation of Seller shall be amended as set forth in the
form of the Certificate of Merger and, as so amended, shall continue in full
force and effect from and after the Effective Date as the Certificate of
Incorporation of the Surviving Corporation, until otherwise amended as
provided by law or by such Certificate.
(c) BY-LAWS OF SURVIVING CORPORATION. The By-Laws of Subsidiary,
as in effect on the Effective Date, shall be the By-Laws of the Surviving
Corporation from and after the Effective Date until otherwise amended as
provided by law or by such By-Laws.
(d) DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. The
directors and officers of Subsidiary on the Effective Date shall be the
directors and officers of the Surviving Corporation and shall hold office
from and after the Effective Date until their respective successors are duly
elected or appointed and qualified; provided that Purchaser and the Surviving
Corporation shall take any corporate action necessary to effectuate the
provisions of this subparagraph 2(d).
(e) CONTINUED EXISTENCE OF SURVIVING CORPORATION. Following the
Merger, the Surviving Corporation will continue its corporate existence under
Delaware Law, and the separate corporate existence of Subsidiary shall cease.
The Merger shall have the further effects set forth under the Delaware Law.
(f) RESTRUCTURE OF TRANSACTION. If necessary to expedite or
facilitate the Closing of the Merger and any other transactions contemplated
by this Agreement, the parties agree that each will take or perform any
additional reasonably necessary or advisable steps to restructure the
transaction, provided that any such restructuring will not result in any
change in the Merger Consideration (as defined in Paragraph 3(a) below)
received by holders of Seller Common or alter the tax treatment of the
transactions contemplated hereunder.
2
<PAGE>
3. CONVERSION OF SHARES UPON THE MERGER.
(a) MERGER CONSIDERATION. On the Effective Date, each issued and
outstanding share of Common Stock, $5.00 par value, of Seller ("Seller
Common"), other than Dissenting Shares, as hereinafter defined, shall,
without further action, cease to be an issued and outstanding share of
Seller, and shall become and be converted into a right to receive Sixty
Dollars ($60.00) per share (the "Merger Consideration"). Any and all shares
of Seller Common held as treasury stock of the Seller shall be cancelled and
retired without further consideration.
(b) CONVERSION. On the Effective Date, all issued and outstanding
shares of Common Stock, $1.00 par value, of Subsidiary shall be converted
into 100 validly issued, fully paid and nonassessable shares of the Common
Stock of Surviving Corporation. The certificate(s) which formerly
represented the outstanding shares of Subsidiary shall, from and after the
Effective Date, represent, and for all purposes be evidence of ownership of,
the number of shares of the class of the Surviving Corporation set forth
above in the immediately preceding sentence.
(c) RECLASSIFIACTION OF SELLER COMMON. In the event that between
the date of this Agreement and the Effective Date, Seller subdivides the
outstanding shares of Seller Common into a greater number of shares, or
combines its outstanding shares of Seller Common into a smaller number of
shares, or effects a reclassification of Seller Common, or pays a dividend in
shares of its capital stock, then the Merger Consideration shall be adjusted
so that the amount of cash to be received with respect to each share of
Seller Common shall be reduced or increased by an amount such that the
aggregate amount of cash received by each holder of Seller Common is not
increased or decreased as a result of such subdivision, combination,
reclassification or dividend.
(d) RIGHT TO RECEIVE MERGER CONSIDERATION. After the Effective
Date and until surrendered for payment, each outstanding stock certificate
which, prior to the Effective Date, represented shares of Seller Common shall
be deemed for all purposes to represent the right to receive an amount of
cash equal to the product of the Merger Consideration multiplied by the
number of shares represented by such certificate, provided that, subject to
the applicable provisions of Paragraph 4(d), in any matters relating to such
certificates, Purchaser and Subsidiary may rely conclusively upon the record
of stockholders maintained by Seller containing the names and addresses of
the holders of record of Seller Common on the Effective Date.
4. SURRENDER OF CERTIFICATES AND PAYMENT OF MERGER CONSIDERATION.
(a) APPOINTMENT OF EXCHANGE AGENT. Prior to the Closing, LaSalle
National Trust, N.A. or another exchange agent selected by Purchaser, and
reasonably acceptable to Seller (the "Exchange Agent"), shall be appointed to
act as the Exchange Agent in connection with the Merger.
3
<PAGE>
(b) DEPOSIT OF FUNDS WITH EXCHANGE AGENT. Immediately prior to
the Effective Date (and in all events prior to the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware), Purchaser
shall deposit, or cause to be deposited, with the Exchange Agent, in trust
for the stockholders (the "Stockholders") of Seller immediately prior to the
Effective Date, other than holders of Dissenting Shares, immediately
available funds in an amount sufficient to pay the Merger Consideration in
respect of all shares of Seller Common converted pursuant to Paragraph 3(a).
All deposits with the Exchange Agent pursuant to this Paragraph 4 are
referred to as the "Exchange Fund". The Exchange Fund shall not be used for
any purpose except as expressly provided in this Agreement.
(c) PAYMENT OF MERGER CONSIDERATION. As soon as practicable after
the Effective Date but in any event as required by Paragraph 4(e), Purchaser
and Seller shall cause the Exchange Agent to remit to each of the
Stockholders who has surrendered to the Exchange Agent (or any forwarding
agent which may be appointed by Purchaser) a certificate or certificates
representing shares of Seller Common together with any other documentation
that reasonably may be required by Purchaser and Seller or the Exchange
Agent, an amount equal to the product of the Merger Consideration and the
number of shares of Seller Common represented by the certificate or
certificates so surrendered. Remittances of Merger Consideration by the
Exchange Agent to the Stockholders shall be made without interest and shall
be by bank check; provided, however, that any Stockholder entitled to receive
more than U.S. $250,000 in Merger Consideration with respect to such
Stockholder's shares of Seller Common may elect to receive such remittance by
wire transfer of immediately available funds in accordance with instructions
given by such Stockholder.
(d) SURRENDER OF CERTIFICATES. Subject to Paragraph 4(e) below,
prior to the Effective Date, Purchaser and Seller will cause the Surviving
Corporation or the Exchange Agent to mail to each Stockholder a letter of
transmittal, which among other matters shall specify how the surrender of
stock certificates in exchange for the Merger Consideration shall be effected
(the "Letter of Transmittal"). There shall be no obligation to deliver the
Merger Consideration in respect of any shares of Seller Common until (and
then only to the extent that) the holder thereof surrenders its certificate
or certificates representing the shares of Seller Common for exchange as
provided in this Paragraph 4, or, in lieu thereof, delivers to the Exchange
Agent an appropriate affidavit of loss and an indemnity agreement as may be
required in any such case by Purchaser in its reasonable discretion (which
discretion Purchaser may delegate to the Exchange Agent). If any payment for
shares of Seller Common is to be made in a name other than that in which the
certificate for Seller Common surrendered for exchange is registered, it
shall be a condition to the payment that the certificate so surrendered shall
be properly endorsed or otherwise in proper form for transfer, that all
signatures shall be guaranteed by a member firm of any national securities
exchange in the United States or the National Association of Securities
Dealers, Inc., or by a commercial bank or trust company having an office in
the United States, and that the person requesting the payment shall either
(i) pay to the Exchange Agent any transfer or other taxes required by reason
of the payment to a person other than the registered holder of the
certificate surrendered or (ii) establish to the reasonable satisfaction of
the Exchange Agent that such taxes have been paid or are not payable.
4
<PAGE>
From and after the Effective Date, there shall be no transfers on the stock
transfer books of Seller of any shares of Seller Common outstanding
immediately prior to the Effective Date and any such shares of Seller Common
presented to the Exchange Agent shall be cancelled in exchange for the
aggregate Merger Consideration payable with respect thereto as provided in
Paragraph 3 above.
(e) SPECIAL PROCEDURES. Purchaser and Seller agree, pursuant to a
written agreement with the Exchange Agent, to implement reasonable procedures
so that each Stockholder shall have the opportunity to surrender his or her
certificates and Letter of Transmittal prior to the Effective Date and
receive the Merger Consideration in exchange therefor forthwith at the
Effective Date all as otherwise in accordance with this Paragraph 4. Without
limiting the generality of the foregoing, upon the request of any Stockholder
made prior to the Closing, Purchaser and Seller shall cause to be furnished
to such Stockholder prior to the Closing the Letter of Transmittal and any
other documents necessary to effect the surrender of such Stockholder's
certificates in exchange for the Merger Consideration represented thereby.
5. APPRAISAL RIGHTS. A "Dissenting Share" shall mean a share of
Seller Common held by any person who properly exercises (including timely
perfection and timely compliance with all other requirements under Section
262 of the Delaware Law) any appraisal rights under the Delaware Law with
respect to such share. The holder of any Dissenting Share shall have the
rights, subject to the limitations, provided by Section 262 of the Delaware
Law. If at any time a holder of Dissenting Shares shall lose or withdraw his
or her rights to appraisal with respect to his or her shares of Seller
Common, then (i) such shares shall be converted into the right to receive the
Merger Consideration in respect of such shares, and (ii) subject to Paragraph
6, the Surviving Corporation shall deposit with the Exchange Agent, so that
the Exchange Agent may pay, upon compliance with the foregoing provisions
hereof for payment and receipt of, the Merger Consideration in respect of
such shares.
6. ESCHEAT. Any portion of the Exchange Fund which remains unclaimed
by the Stockholders as of the third anniversary of the Effective Time shall
be delivered to the Surviving Corporation, upon demand of the Surviving
Corporation, and the Stockholders shall thereafter look only to the Surviving
Corporation for payment of the Merger Consideration with respect to their
shares of Seller Common. Notwithstanding anything in Paragraph 4 or
elsewhere in this Agreement to the contrary, neither the Exchange Agent nor
any party hereto shall be liable to a former holder of Seller Common for any
cash delivered to a public official pursuant to applicable escheat or
abandoned property laws.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER. Purchaser
and Subsidiary each hereby represents, warrants and covenants to Seller that:
(a) DUE ORGANIZATION. Each of Purchaser and Subsidiary is a
corporation duly organized and validly existing under the laws of the State
of Delaware. Subject to Purchaser becoming registered with the Board of
Governors of the Federal Reserve System ("Federal Reserve") as a bank holding
company and also registered with the Office of Banks and Real
5
<PAGE>
Estate of the State of Illinois (the "Commissioner") as a bank holding
company under the laws of the State of Illinois, each of Purchaser and
Subsidiary will have all requisite power and authority to own, lease and
operate its properties and assets and to carry on its business as presently
conducted. Neither the scope of the business of Purchaser or Subsidiary, nor
the location of any of the properties of Purchaser or Subsidiary, requires
that Purchaser or Subsidiary be licensed to do business in any jurisdiction
other than the States of Delaware and Illinois.
(b) REQUISITE AUTHORITY. Each of Purchaser and Subsidiary has all
requisite corporate power and authority to enter into this Agreement (and, in
the case of Subsidiary, the Certificate of Merger) and to consummate the
Merger and the transactions contemplated hereby and thereby. The respective
Boards of Directors of Purchaser and Subsidiary have adopted resolutions
approving this Agreement. Purchaser, as the sole stockholder of Subsidiary,
has adopted resolutions irrevocably approving and adopting this Agreement.
The execution and delivery by Purchaser and Subsidiary of this Agreement and
the Certificate of Merger and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of Purchaser and Subsidiary, and this Agreement
and, in the case of Subsidiary, the Certificate of Merger, have been duly
executed and delivered by Purchaser and Subsidiary and constitute a valid and
binding obligation of Purchaser and Subsidiary, enforceable against each of
Purchaser and Subsidiary in accordance with its terms except as such
enforceability may be limited by (i) bankruptcy, insolvency, moratorium, and
other similar laws affecting creditors' rights generally, and (ii) general
principles of equity regardless of whether asserted in a proceeding in equity
or at law.
(c) ABSENCE OF CONFLICT. Neither the execution and delivery by
Purchaser or Subsidiary of this Agreement, the consummation of the
transactions contemplated herein, nor compliance by Purchaser or Subsidiary
with any of the provisions hereof, will: (i) conflict with or result in a
breach of any provision of the Certificate of Incorporation or Bylaws of
Purchaser or Subsidiary; (ii) constitute a breach of or result in a default,
or give rise to any rights of termination, cancellation or acceleration under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, franchise, license, permit, agreement or other instrument or
obligation to which Purchaser or Subsidiary is a party, or by which Purchaser
or Subsidiary or any of their respective properties or assets are bound; or
(iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Purchaser or Subsidiary or any of their respective
properties or assets. No consent of, approval of, notice to or filing with
any local, state, federal governmental body or agency (collectively,
"Applicable Governmental Authorities") having jurisdiction over any aspect of
the business or assets of Purchaser or Subsidiary, and no consent of,
approval of or notice to or filing with any other person, including any
corporation, partnership, limited liability company, or other entity of any
kind whatsoever (a "Person") is required in connection with the execution and
delivery by Purchaser or Subsidiary of this Agreement or the consummation by
Purchaser of the transactions contemplated hereby, except such approvals of
the Federal Reserve and the Commissioner (collectively, the "Regulatory
Approvals").
6
<PAGE>
(d) GOVERNMENT APPROVALS. To the knowledge of Purchaser, no fact
or condition exists which Purchaser has reason to believe will prevent it
(or, to the extent that approval with respect to the Subsidiary is required
under applicable law, statute or regulation, the Subsidiary) from obtaining
any of the Regulatory Approvals, assuming that Purchaser and Subsidiary will
obtain sufficient funds, sources of funds and requisite regulatory capital to
consummate the Merger.
(e) ABSENCE OF CLAIMS. There is no private or governmental suit,
claim, action or proceeding pending or threatened, or which reasonably should
be expected to be commenced, against Purchaser, its subsidiaries or against
any of their respective directors or officers that would impair the ability
of Purchaser or Subsidiary to perform its obligations hereunder.
(f) FUNDS TO CONSUMMATE MERGER; REQUISITE CAPITAL. Each of
Purchaser and Subsidiary agrees to use its reasonable best efforts to have
prior to the Closing the necessary capital required by the regulations of the
Federal Reserve and the Commissioner to consummate the transactions
contemplated by this Agreement and to have sufficient funds and capital
resources to carry out their respective obligations under this Agreement.
However, this undertaking does not guaranty that such funding and capital can
be obtained.
(g) PROXY INFORMATION. None of the information to be supplied by
Purchaser for inclusion or incorporation by reference in any proxy statement
of Seller with respect to the Merger as of the time of its mailing and as of
the time of the meeting of Seller's stockholders in connection therewith, and
as amended or supplemented by Purchaser, will contain any untrue statement of
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements contained therein not misleading.
(h) CAPITAL STOCK. The authorized, issued and outstanding capital
stock of Subsidiary is as follows: 100 shares of Common Stock, $1.00 par
value per share. All of the issued and outstanding shares of capital stock
are duly and validly authorized and issued, fully paid and nonassessable and
are owned by Purchaser.
(i) TRUTHFULNESS OF REPRESENTATIONS. The representations and
warranties made by Purchaser and Subsidiary in this Agreement do not contain
any untrue statement of a material fact or omit to state a material fact
which is necessary in order to make the statements contained herein not
misleading.
(j) REASONABLE BEST EFFORTS. Subject to the conditions set forth
in Paragraph 16 hereof, Purchaser will undertake or, to the extent such
action is not within the sole power of Purchaser, use its reasonable best
efforts to cause to be undertaken, each such action as may be necessary to
effectuate the Merger and to carry out the provisions of this Agreement and
the Certificate of Merger.
7
<PAGE>
(k) SURVIVAL OF INDEMNIFICATION; D&O INSURANCE. Purchaser agrees
that, for a period of three years from the Effective Date, all provisions for
indemnification now existing in favor of the directors, officers and
employees of Seller or Seller Subsidiaries (as defined below) in their
respective charters and by-laws shall survive the Merger and shall continue
in full force and effect with respect to acts or omissions occurring prior to
the Effective Date. Purchaser agrees to use its best efforts to maintain in
effect, provided the same may be maintained at a cost not to exceed $20,000,
for a period of three years from the Effective Date, the current policies for
directors' and officers' liability insurance maintained by Seller or policies
which provide substantially similar coverage. Purchaser shall have the right
to procure this coverage for the benefit of such persons. Nothing in this
Paragraph 7(k) shall be construed to require Purchaser to provide
indemnification to such directors or officers of Seller or any Seller
Subsidiary for claims of Purchaser arising out of the transactions
contemplated by this Agreement.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER. Seller
represents and warrants to, and covenants with, Purchaser that:
(a) DUE ORGANIZATION. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all necessary corporate power to own its properties and assets and to
carry on its business as now conducted. Seller is duly qualified to conduct
its business and is in good standing in each jurisdiction in which the nature
of the business transacted by Seller requires such qualification, except for
failures to be so qualified or in good standing which would not, individually
or in the aggregate, have a material adverse effect (as defined herein) on
Seller. A listing of all jurisdictions in which Seller is qualified to do
business has been furnished Purchaser in the Subsidiary List referred to in
subparagraph 8(e) hereof. For purposes of this Agreement, the term "material
adverse effect" shall mean, with respect to Seller, an effect which would
equate to a material adverse change as provided in Paragraph 8(j) below.
(b) CAPITAL STOCK. On the date hereof, Seller has authorized,
issued and outstanding capital stock as follows:
Class of Stock Authorized Issued Outstanding Treasury
-------------- ---------- ------ ----------- --------
Common 1,000,000 240,000 208,714 31,286
Preferred 1,000,000 -0- -0- -0-
All of the issued and outstanding shares of Seller Common are duly and
validly authorized and issued, fully paid and nonassessable. None of the
issued and outstanding shares of Seller Common have been issued in violation
of any preemptive rights. Other than as set forth above and as set forth in
a list (the "COMMITMENT LIST") which has been furnished to Purchaser, there
are no (nor will there be on the Effective Date) shares of any class of
capital stock or equity securities of Seller outstanding (other than Seller
Common) and there are no (nor will there be on the Effective Date)
outstanding or existing subscriptions, options, warrants, convertible secu-
8
<PAGE>
rities, preemptive rights or other agreements, commitments or obligations
relating to the issuance of additional shares of any class of capital stock
or other equity securities of Seller, other than the Stock Option.
(c) GOVERNMENT REGISTRATION. Seller is registered as a bank
holding company with the Federal Reserve pursuant to the applicable
provisions of the Federal Reserve Act, as amended, and the regulations
promulgated thereunder, and is also registered with the Commissioner as a
bank holding company under the laws of the State of Illinois.
(d) PROPER AUTHORIZATION. Subject only to approval by the
stockholders of Seller of the Merger to permit the transactions contemplated
hereby, the execution and delivery of this Agreement and the Certificate of
Merger by Seller and the consummation of the transactions contemplated by
this Agreement have been duly and validly authorized by all necessary
corporate action on the part of Seller and constitute the legal, valid and
binding obligations of Seller, enforceable against Seller in accordance with
their terms, except as limited by (x) bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting creditors' rights generally,
and (y) general principles of equity, regardless of whether asserted in a
proceeding in equity or at law. The execution of this Agreement and the
Certificate of Merger by Seller and the consummation of the transactions
contemplated by this Agreement and the Certificate of Merger have not and
will not violate the provisions of, or constitute a breach or default, or
give rise to any rights of termination, cancellation or acceleration under
(i) any of the certificate of incorporation, charter or by-laws of Seller or
any of Seller Subsidiaries, (ii) any Material Contract (as hereinafter
defined) of Seller or any Seller Subsidiary or (iii) any other material
license, law, order, injunction, decree, rule, regulation or judgment to
which Seller or any Seller Subsidiary is a party, is bound or by which any of
their respective properties or assets is subject.
(e) SUBSIDIARIES. Seller has furnished to Purchaser a list (the
"SUBSIDIARY LIST") as of the date hereof of all entities including, without
limitation, corporations, partnerships, joint ventures, limited liability
companies, and inactive corporations, in which Seller has a direct or
indirect equity or ownership interest, other than stock in the Federal
Reserve Bank of Chicago (each a "Seller Subsidiary" and collectively, the
"Seller Subsidiaries"). Except as set forth on the SUBSIDIARY LIST, Seller
represents that it is the sole owner of all Seller Subsidiaries. The
SUBSIDIARY LIST shows for each of Seller Subsidiaries: its date and
jurisdiction of incorporation or organization; each other jurisdiction in
which it is qualified or licensed to do business; its authorized, issued and
outstanding capital stock, other equity securities and other ownership
interests; and the record owners thereof and the percentages owned by each.
Each of Seller Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization and was properly established pursuant to the regulations and
procedures of either the Federal Reserve or the Commissioner and has all
necessary corporate power to own its properties and assets and to carry on
its business as now conducted. Each of Seller Subsidiaries is duly qualified
to conduct its business and is in good standing in each jurisdiction in which
the nature of the business transacted by it requires such qualification,
except for failures to be so qualified or in good standing which would not,
9
<PAGE>
individually or in the aggregate, have a material adverse effect on Seller.
Other than as set forth on the SUBSIDIARY LIST, all of the issued and
outstanding shares of capital stock, other equity securities and other
ownership interests of Seller Subsidiaries are duly and validly authorized
and issued, are fully paid and nonassessable, and, together with all
outstanding subscriptions, options, warrants, convertible securities,
preemptive rights and other agreements, commitments and obligations relating
to the issuance of additional shares of capital stock, other equity
securities or other ownership interests of any of Seller Subsidiaries, are
owned by Seller or another Seller Subsidiary, free and clear of all liens,
security interests, charges, claims and encumbrances. Other than as set
forth on the SUBSIDIARY LIST, there are no shares of any class of capital
stock, other equity securities or other ownership interests of any of Seller
Subsidiaries outstanding and there are no outstanding or existing
subscriptions, options, warrants, convertible securities, preemptive rights
or other agreements, commitments or obligations relating to the issuance of
additional shares of any class of capital stock, other equity securities or
other ownership interests of any of Seller Subsidiaries.
(f) FINANCIAL STATEMENTS. Seller has delivered to Purchaser
consolidated statements of condition of Seller and Seller Subsidiaries at
December 31, 1993, 1994 and 1995, and the related consolidated statements of
income, stockholders' equity and cash flows for the fiscal years 1993 through
1995. All such financial statements referred to above have been examined by
Crowe, Chizek & Company, LLP, independent certified public accounts, or KPMG
Peat Marwick, independent certified public accountants, whose reports thereon
are included with such financial statements with respect to fiscal years 1994
and 1995 and 1993 respectively. Seller has delivered to Purchaser the
unaudited consolidated statement of condition of Seller and Seller
Subsidiaries at March 31, 1996, as reported in Seller's Quarterly Report of
Condition to be filed with the Federal Reserve, the Federal Deposit Insurance
Corporation ("FDIC") and the Commissioner. All such financial statements
have been prepared in conformity with generally accepted accounting
principles, or regulatory principles in the case of the Quarterly Report of
Condition, applied on a consistent basis (except for changes, if any,
required by generally accepted accounting principles and disclosed therein),
and the statements of income present fairly the results of operations for the
respective periods covered and the statements of condition present fairly the
consolidated financial condition of Seller as of their respective dates
except for Seller's interim financial statements which are subject to normal
year-end adjustments. At the dates of such consolidated statements of
condition, there were no material liabilities of Seller or any of Seller
Subsidiaries (actual, contingent or accrued) which, in accordance with
generally accepted accounting principles applied on a consistent basis,
should have been shown or reflected in such statements of condition or the
notes thereto, but which are not so shown or reflected.
(g) TAXES.
(i) FILING OF TAX RETURNS; PAYMENTS; LIENS. Except as
provided in the TAX LIST (as hereinafter defined), Seller and each Seller
Subsidiary, including any predecessor or successor thereto (the "Group")
alone or as members of any other Affiliated Group (as that term is defined in
Section 1504(a) of the Internal Revenue Code of 1986, as amended (the
"Code")) have (i) duly and timely filed and will timely file (taking into
account any extensions
10
<PAGE>
received from a relevant governmental body) where required (directly or
indirectly), pursuant to the laws, regulations or administrative requirements
of each governmental body, all tax returns required to be filed for all
periods up to and including the Effective Date that are, were or shall be
required to be filed by or with respect to it, with respect to any taxes, and
(ii) paid or made specific provision for the payment of all taxes, whether or
not disputed, that have or may become due, including without limitation taxes
shown as due on such tax returns, that are attributable directly or
indirectly, by law or by contract, to (A) the operation of its business,
valuation studies or other documentation prepared by any member of the Group
or by third parties in connection with taxes, the acquisition of any member
of the Group or any investment of the Group or (B) any assessment or notice,
either formal or informal, received by any member of the Group, including as
members of predecessor Affiliated Groups, for any period up to and including
the Effective Date or (C) the transactions contemplated by this Agreement.
All tax returns filed or to be filed by any member of the Group, including as
members of predecessor Affiliated Groups, were when filed and continue to be,
or will be when filed, true, correct and complete in all material respects;
and further, such tax returns filed subsequent to the date hereof shall be
prepared in a manner that, to the extent consistent with both applicable law
(including reasonably based interpretations thereof) and the application of
such law on prior tax returns, minimizes the taxes payable by Seller and
Seller Subsidiaries and, subsequent to the Effective Date, by Purchaser and
its affiliates. There are no liens with respect to taxes (other than taxes
the payment of which is not yet due or which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
established) upon any of the properties or assets, real or personal, tangible
or intangible, of any member of the Group. Any accruals made and to be made
for taxes on or prior to the Effective Date are and will be sufficient for
the payment of all unpaid taxes payable by any member of the Group
attributable to all periods up to and including the Effective Date provided
however that with respect to accruals for core deposit intangibles and other
intangibles including goodwill, this representation and warranty is made to
the best of Seller's knowledge. All accruals in the other-assets, deferred
tax account accurately provide deferred tax debits and credits which, based
upon current applicable income tax law and reasonable interpreta-tions
thereof, will be realized on Purchaser's (or its affiliates) income tax
returns subsequent to the Effective Date or, if not, will be recorded on the
books and records of the Seller. No issues have been raised by any
governmental body in connection with any audit of any federal, state, local
or foreign tax returns, except as disclosed on the TAX LIST. Except as
disclosed on the TAX LIST, the tax returns of Seller and each member of the
Group have been audited by the Internal Revenue Service or relevant
governmental body or are closed by the applicable statute of limitations for
all taxable years through December 31, 1995. All tax deficiencies proposed
(plus interest and penalties assessed thereon, if any) as a result of any
such audits, if any, have been paid, reserved against, settled, or, as
described on the TAX LIST, are being contested in good faith by appropriate
proceedings. The TAX LIST describes all adjustments to the tax returns filed
by the Group or any predecessor Affiliated Group, if any, for all open
taxable years, and the resulting deficiencies proposed by any governmental
body. Except as set forth on the TAX LIST no member of the Group has given
or been given a waiver or extension (or is or would be subject to a waiver or
extension given to or by any other entity) of any statute of limitations
relating to the payment of taxes of any member of the Group, including any
predecessor Affiliate Group, if any, for which Purchaser
11
<PAGE>
or its affiliates or any member of the Group may be liable. There is no
ongoing proceeding by any governmental body for the assessment or collection
of any taxes. There exists no proposed assessment against any member of the
Group or notice, either formal or informal, of any tax deficiency or any
examination of any tax returns filed by any member of the Group or any notice
that any member of the Group has not filed any tax returns required to be
filed by any member of the Group except as disclosed in the consolidated
statements of condition of Seller or on the TAX LIST.
(ii) DELIVERY OF TAX RETURNS. For Purchaser's prior review,
Seller shall deliver or cause to be delivered to Purchaser at least 10 days
prior to the filing thereof a copy of each income tax return to be filed on
or before the Effective Date by Seller or any of Seller Subsidiaries.
(iii) PAYMENT OF TAXES. Each of Seller and each of Seller
Subsidiaries shall punctually pay and discharge all taxes lawfully imposed
upon it or any of its property, or upon the income and profits thereof;
provided however, that nothing herein contained shall prohibit Seller from
contesting in good faith and by appropriate proceedings the validity or
amount of any taxes as long as there shall have been established on the
appropriate books a reserve therefor deemed adequate by its Board of
Directors.
(iv) COMPROMISE OF CLAIMS. Seller and Seller Subsidiaries
shall not 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 Purchaser.
(v) PARACHUTE PAYMENTS. Neither Seller nor any Seller
Subsidiary has made any payments, is obligated to make any payments or is a
party to any agreement that could obligate any of them, Purchaser or
Subsidiary to make any payment that would constitute a "parachute payment"
under Section 280G of the Code.
(h) MATERIAL CONTRACTS. All material executory contracts,
indentures, com-mitments, and other material agreements in excess of $20,000,
and all such contracts, indentures and other material agreements where
payments when aggregated over the course of a twelve month period exceeds
$20,000 or which cannot be terminated without penalty, to which Seller and/or
any of Seller Subsidiaries is a party or to which Seller and/or any of Seller
Subsidiaries or any of their properties are subject (collectively, the
"Material Contracts" and each a "Material Contract") were entered into, and
are, in the ordinary course of business, and appear on a list which has been
furnished to Purchaser (the "CONTRACT LIST"). True copies of the agreements
appearing on the CONTRACT LIST, including all amendments and supplements
thereto, have been delivered to Purchaser. Except as disclosed on the
CONTRACT LIST and except as set forth in the LITIGATION LIST (as hereinafter
defined), all the Material Contracts are valid and subsisting, and Seller and
each of Seller Subsidiaries has duly performed in all material respects all
its obligations thereunder to the extent that such obligations to perform
have accrued, and no breach or default thereunder by Seller or any of Seller
Subsidiaries or, to the best of Seller's
12
<PAGE>
knowledge, any other party thereto has occurred which will impair the ability
of Seller or any of Seller Subsidiaries to enforce any material rights
thereunder.
(i) REAL AND PERSONAL PROPERTY. Seller or a Seller Subsidiary, as
the case may be, has good title to all of the assets which do not constitute
real property (other than those non-real property assets disposed in the
ordinary course of business of Seller or a Seller Subsidiary since December
31, 1995) reflected as owned by any of them in the December 31, 1995
consolidated financial statements of Seller, free and clear of any material
liens or other material encumbrances, except for: (i) statutory liens for
taxes not yet due; (ii) statutory liens of landlords, liens of carriers,
warehousemen, mechanics and materialmen incurred in the ordinary course of
business for sums not yet due; (iii) liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return of money bonds and
similar obligations; and (iv) minor irregularities of title which do not in
the aggregate materially detract from the value or use of such of Seller's
assets. Seller or a Seller Subsidiary, as the case may be, has fee simple
title to all of the real properties reflected as owned by any of them in the
December 31, 1995 consolidated financial statements of Seller, free and clear
of any material liens or other material encumbrances, except for any minor
imperfections of title and any exceptions (the "Permitted Exceptions") set
forth in the REAL ESTATE LIST (as herein defined) and except for those assets
disposed of in the ordinary course of business of Seller or a Seller
Subsidiary since that date. Seller has furnished to Purchaser a list (the
"REAL ESTATE LIST"), which lists (i) all real property owned or leased by
Seller or any Seller Subsidiary together with the addresses thereof and (ii)
each lease, sublease, installment purchase or similar arrangement (a "Lease")
for the use or occupancy of real property to which Seller or a Seller
Subsidiary is a party. Seller has furnished to Purchaser a copy of each
Lease, including all amendments thereto. Each Lease is valid and enforceable
in all material respects by Seller or the respective Seller Subsidiary in
accordance with its terms, except as limited by (i) bankruptcy, insolvency,
moratorium, reorganization and other similar laws affecting creditors' rights
generally, and (ii) general principles of equity, regardless of whether
asserted in a proceeding in equity or at law. As of the date hereof, to
Seller's knowledge, the real properties, structures, buildings, equipment,
and the tangible personal property owned, operated or leased by Seller or any
Seller Subsidiary, taken as a whole (that is, aggregating all of the types of
property referred to above, whether owned, operated or leased, and regardless
of by whom owned, operated or leased), in substantially good condition and
working order, except for depreciation and ordinary wear and tear. The real
properties, structures, and buildings owned, operated or leased by Seller or
any Seller Subsidiary are free from any material structural defect known to
the management of Seller.
(j) MATERIAL ADVERSE CHANGE. Since December 31, 1995, there has
been no mate-rial adverse change in the business, financial condition,
properties or other assets or capitalization of Seller and Seller
Subsidiaries, taken as a whole. The effect of any decrease in the carrying
value of Seller's investment in AMCORE Financial, Inc., a multi-bank holding
company, shall be disregarded for this purpose.
13
<PAGE>
(k) CATASTROPHIC LOSS. There has been no physical loss, damage or
destruction affecting any of the tangible properties of Seller or any of
Seller Subsidiaries since December 31, 1995 which (a) materially adversely
affects the business or financial condition of Seller and Seller Subsidiaries
(whether or not covered by insurance), taken as a whole, or (b) which may
involve an uninsured loss of more than $50,000.
(l) INVESTIGATIONS AND LITIGATION. There is no investigation by
any federal, state or local governmental agency of which Seller is aware, or
any action, suit, proceeding or claim pending or, to the best of Seller's
knowledge, threatened or which reasonably should be expected to be
threatened, against or adversely affecting Seller or any of Seller
Subsidiaries (including, without limitation, any investigation, action, or
proceeding with respect to taxes), or the assets or business of Seller or any
of Seller Subsidiaries, which would, if adversely determined, have a material
adverse effect on Seller or to the best of Seller's knowledge, which may
involve a payment by Seller or any Seller Subsidiary of more than $50,000 in
excess of applicable insurance coverage, except as set forth on a list (the
"LITIGATION LIST") which has been furnished to Purchaser. Except as set
forth on the LITIGATION LIST, (i) neither Seller nor any Seller Subsidiary
nor any director, officer, employee or agent of Seller or any Seller
Subsidiary in their respective capacities as directors, officers, employees
or agents, is a party to any, and there are no pending or, to the best of
Seller's knowledge threatened, legal, administrative, arbitral or other
proceedings, claims, suits, actions or governmental investigations of any
nature against Seller or any Seller Subsidiary, or any director, officer,
employee or agent of Seller or any Seller Subsidiary in their respective
capacities as directors, officers, employees or agents, or involving any
property or assets of Seller or any Seller Subsidiary and (ii) there is no
outstanding order, writ, injunction or decree of any court, government or
governmental agency against or, affecting Seller or any of Seller
Subsidiaries, or the assets or business of Seller or any of Seller
Subsidiaries, which in the case of either (i) or (ii) could reasonably be
expected to have a material adverse effect on Seller or which challenges the
validity or propriety of the transactions contemplated by this Agreement.
(m) ACCURACY OF MINUTE BOOKS. The minute books of Seller and each
of Seller Subsidiaries accurately reflect all material actions taken to this
date by the respective incorporators, stockholders, board of directors and
committees of such corporations and contain true and complete copies of their
respective certificates of incorporation or charters and by-laws and all
amendments thereto.
(n) SUFFICIENCY OF RECORDS. Seller and each of Seller
Subsidiaries have records which reflect, in all material respects, its
transactions sufficient to ensure that such transactions are recorded in
conformity with generally accepted accounting principles.
(o) INSURANCE. Seller and each Seller Subsidiary has in effect
insurance coverage with reputable insurers, which in respect to amounts,
types and risks insured, is reasonably adequate for the business in which
Seller and Seller Subsidiaries are engaged. A schedule of all insurance
policies in effect as to Seller and any Seller Subsidiary is set forth in the
INSURANCE LIST. All material policies of fire, product or other liability,
worker's
14
<PAGE>
compensation and other similar forms of insurance owned or held by Seller or
any Seller Subsidiary are in full force and effect, all premiums with respect
thereto covering all periods up to and including the date as of which this
representation is being made have been paid (other than retrospective
premiums which may be payable with respect to worker's compensation insurance
policies), and no notice of cancellation or termination has been received
with respect to any such policy. To the best of Seller's knowledge, such
policies are in force in accordance with their terms, and will not be
materially adversely affected, or terminate or lapse, solely by reason of,
the transactions contemplated by this Agreement. The insurance policies to
which Seller and each Seller Subsidiary is a party are sufficient for
compliance with all material requirements of law and of all material
agreements to which Seller and each Seller Subsidiary is a party and provide
adequate insurance coverage for the assets and operations of Seller and any
Seller Subsidiary. Except as set forth in the INSURANCE LIST, neither Seller
nor any Seller Subsidiary has been refused any insurance with respect to any
material assets or operations, during the last two years.
(p) LICENSES. Except as set forth in the FRANCHISE LIST, neither
Seller nor any of Seller Subsidiaries holds any registrations, licenses,
permits or franchises which are of material significance with respect to the
operation of their respective businesses.
(q) COMPLIANCE WITH LAW AND REGULATORY REQUIREMENTS. Seller and
each of Seller Subsidiaries has conducted its business in accordance with all
applicable federal, state and local laws, regulations and orders and is in
material compliance with all agreements with and commitments to their
respective banking regulators; including, without limitation, disclosure,
usury, equal credit opportunity, equal employment, fair credit reporting,
antitrust and other laws, regulations and orders; the forms, procedures, and
practices used by Seller and each of Seller Subsidiaries are in compliance
with such laws, regulations and orders except as disclosed in the LAW AND
REGULATION LIST, and except for such violations or non-compliance as will not
have a material adverse effect on Seller. Seller and Seller's subsidiaries
meet or exceed all core capital, tangible capital, risk-based capital or
other minimum capital requirements, directives or guidelines applicable to
them as established by the Federal Reserve, the FDIC, the Commissioner or any
other Applicable Governmental Authority.
(r) ACCURACY OF STOCKHOLDER COMMUNICATIONS. Seller has previously
made available to Purchaser true and complete copies of its proxy statements
and annual reports relating to all meetings of stockholders (whether special
or annual) during the calendar years 1993, 1994, 1995 and 1996. As of their
respective dates, the proxy statements and annual reports were true and
complete in all material respects and did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(s) INVESTMENT BANKER/FINDER FEE. Except for the fairness opinion
fee of Alex Sheschunoff & Co. which fee shall not exceed $20,000, neither
Seller nor any of Seller Subsidiaries or any of their respective affiliates
has incurred or paid or will incur or pay any fee
15
<PAGE>
or remuneration to any finder, broker or investment banker in respect of
matters provided for in this Agreement.
(t) DIVIDENDS. There has been no dividend or other distribution
of assets to stockholders of Seller, whether consisting of money, other
personal property, real property or other things of value, declared, issued
or paid subsequent to December 31, 1995. All dividends or other distribution
of assets to stockholders of Seller or Seller Subsidiaries have been
declared, issued and paid in compliance with all applicable laws, rules and
regulations of the Federal Reserve, the FDIC and the Commissioner.
(u) EMPLOYEE BENEFITS.
(i) IDENTIFICATION OF PLANS. Seller has furnished to
Purchaser a list (the "EMPLOYEE BENEFIT PLAN LIST"), which identifies each
compensation, consulting, employment or collective bargaining agreement, and
each stock option, stock purchase, stock appreciation right, life, health,
accident or other insurance, bonus, deferred or incentive compensation,
severance or separation (including any payment or benefit resulting from a
change in control), vacation, disability, profit sharing, retirement, or
other employment or employee benefit plan, practice, policy or arrangement of
any kind, oral or written, covering directors, officers, employees or former
employees of Seller or any Seller Subsidiary or its respective beneficiaries,
including, but not limited to, any employee benefit plans within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which Seller or any Seller Subsidiary maintains, to which
Seller or any Seller Subsidiary contributes, or under which any present or
former director, officer or employee of Seller or any Seller Subsidiary is
covered or has benefit rights ("Benefit Plans"). THE EMPLOYEE BENEFIT PLAN
List also sets forth a complete list which identifies any change in control
provisions in the Benefit Plans which would cause an increase or acceleration
of benefits or benefit entitlements ("Change in Control Benefit") to present
or former directors, officers or employees of Seller or any Seller Subsidiary
or its respective beneficiaries or other event which would cause an increase
in liability with respect thereto as a result of the transactions
contemplated by this Agreement and with respect to which Seller has
liability. The term "Benefit Plans" does not constitute an acknowledgment
that a particular arrangement is an employee benefit plan within the meaning
of Section 3(3) of ERISA. Without limitation of the foregoing, except as
separately set forth on the Employee Benefit Plan List, (i) no Benefit Plan
is a multiemployer plan within the meaning of Section 3(37) of ERISA, (ii) no
Benefit Plan is an employee pension benefit plan as defined in Section 3(2)
of ERISA (regardless of the applicability of said Section to any such plan),
and (iii) at no time has Seller or any Seller Subsidiary maintained,
sponsored or had an obligation to contribute to any such multi-employer plan
or employee pension benefit plan. For the purposes of subparagraph 8(u)(i),
the terms "Seller" and "Seller Subsidiary" shall be deemed to include
predecessors thereof.
(ii) PAYMENT OF CONTRIBUTIONS. All accrued contributions and
other payments to be made by Seller or any Seller Subsidiary to any Benefit
Plan through December 31, 1995 have been made or reserves adequate for such
purposes as of December 31,
16
<PAGE>
1995 have been set aside therefor and reflected in the December 31, 1995
financial statements. The present value of all accrued benefits under each
Benefit Plan do not exceed the present current value of the assets of such
Plan allocable to such accrued benefits, based upon actual assumptions used
for such Plan. Neither Seller nor any Seller Subsidiary is in default in
performing any of its respective contractual obligations under any of the
Benefit Plans or any related trust agreement or insurance contract, excepting
such defaults as would not have a material adverse effect on the business,
operations, assets or financial condition of Seller and Seller Subsidiaries
taken as a whole, and there are no material outstanding liabilities of any
Benefit Plan other than liabilities for benefits to be paid to participants
in such plan and their beneficiaries in accordance with the terms of such
plan.
(iii) PENDING LITIGATION. There is no pending litigation or,
to the best of Seller's knowledge or any Seller Subsidiary, threatened
litigation or pending claim by or on behalf of or against any of the Benefit
Plans (or with respect to the administration of any of the Benefit Plans) now
or heretofore maintained by Seller or any Seller Subsidiary which allege
violations of applicable state or federal law which would have a material
adverse effect on Seller, nor to the knowledge of Seller, is there any basis
for such a claim.
(iv) FIDUCIARY COMPLIANCE. Seller and each Seller Subsidiary
and, to the best of Seller's knowledge and each Seller Subsidiary's, all
other persons having fiduciary or other responsibilities or duties with
respect to any Benefit Plan are and have since the inception of each such
Plan been in compliance in all material respects with, and each such Plan is
and has been oper-ated in all material respects in accordance with, its
provisions and in compliance with the applicable laws, rules and regulations
governing such Plan, including, without limitation, the rules and regulations
promulgated by the Department of Labor, the Pension Benefit Guaranty
Corporation ("PBGC") and the IRS under ERISA, the Internal Revenue Code of
1986, as amended (the "Code") or any other applicable law. No Benefit Plan
has engaged in or been a party to a "prohibited transaction" (as defined in
Section 406 of the ERISA or 4975(c) of the Code). All Benefit Plans which
are group health plans have been operated in compliance with the group health
plan continuation coverage requirements of Section 4980B of the Code and
Section 601 of ERISA.
(v) ERISA COMPLIANCE. No Benefit Plan is subject to the
provisions of Part 3 of Title I of ERISA, Section 412 of the Code or the
provisions of Title IV of ERISA. Neither Seller nor any Seller Subsidiary
has incurred, nor to the best of Seller's knowledge or any Seller Subsidiary
is there a basis for believing that either Seller or any Seller Subsidiary
may incur, any material liability under Title IV of ERISA in connection with
any plan subject to the provisions of Title IV of ERISA now or heretofore
maintained or contributed to by it or by any ERISA Affiliate (as that term is
defined in the next sentence) of Seller or any Seller Subsidiary. The term
"ERISA Affiliate" shall mean any person which is or was a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Code) as Seller or is or was under common control (within the meaning of
Section 414(c) of the Code) with Seller.
17
<PAGE>
(vi) CHANGE IN CONTROL BENEFITS. SCHEDULE 8(u)(vi) of the
EMPLOYEE BENEFIT PLAN LIST lists: (A) each officer and director of Seller or
any Seller Subsidiary who is eligible to receive a Change in Control Benefit,
(B) the amount of each such Change in Control Benefit and the calculation
thereof, estimated compensation for 1996 based on compensation received to
the date of this Agreement, (C) each such individual's rate of compensation
in effect as of the date of this Agreement, and (D) such individual's
compensation from Seller and any Seller Subsidiary for each of the calendar
years 1991 through 1995, as reported by Seller and any Seller Subsidiary on
Form W-2 or Form 1099. Neither Seller nor any Seller Subsidiary has made any
payments or provided any compensation or benefits nor is a party to any
agreement or any Benefit Plan that could obligate it or any successor thereto
to make any payments or provide any compensation or benefits, the
deductibility of which is limited by Section 280G of the Code.
(vii) CONSULTING AGREEMENT. Concurrently with the execution
of this Agreement, Seller has obtained and delivered to Purchaser from Thomas
R. Beverlin, a Letter of Understanding in the form attached hereto as EXHIBIT A.
(v) LABOR CONTRACTS. Except as set forth on a list furnished to
Purchaser (the "LABOR CONTRACT LIST"), neither Seller nor any of Seller
Subsidiaries is a party to or has in effect any organized labor contract or
collective bargaining agreement.
(w) REAL ESTATE OWNED. "Properties" as used in this subparagraph
8(w)(i)-(iii) inclusive, shall include all of the following: (x) all real
property owned and/or operated by Seller and each Seller Subsidiary, (y) all
Real Estate Owned ("REO") by Seller and each Seller Subsidiary and (z) all
real property which serves as collateral ("Collateral Property") for any loan
or other indebtedness held by Seller or any Seller Subsidiary, provided
however, that the representations and warranties of Seller with regard to any
Collateral Property shall be to Seller's actual knowledge.
(i) ENVIRONMENTAL PERMITS. Seller and each Seller Subsidiary
has obtained all material permits, licenses and other authorizations which
are required with respect to the operation of their respective businesses
and all Properties under any Environmental Laws (as hereinafter defined)
(such material permits, licenses and authorizations being hereinafter
referred to as "Environmental Permits"), including all federal, state and
local laws relating to pollution or protection of the environment such as
laws relating to emissions, discharges, releases or threatened releases of
hazardous, toxic or other pollutants, contaminants, chemicals or industrial
but not limited to ambient air, surface water, ground water, land survey or
subsurface strata, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling or
hazardous, toxic or other pollutants, contaminants, chemicals or industrial
materials, substances or wastes (which laws, together with all regulations,
rules, codes, plans, decrees, judgments, injunctions, notices and demand
letters issued, entered, promulgated or approved thereunder being herein
referred to as "Environmental Laws"). The ENVIRONMENTAL LIST contains a list
of all Environmental Permits which have been obtained by Seller and each
Seller Subsidiary, if any. Except as identified on the ENVIRONMENTAL
18
<PAGE>
LIST, Seller and each Seller Subsidiary is in material compliance with all
terms and conditions of all Environmental Permits required under the
Environmental Laws, and is also in material compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws.
The ENVIRONMENTAL LIST contains a complete list of any notices actually known
to Seller of whatever form received by any previous owner or operator of any
Properties or any business currently owned or operated by Seller or a Seller
Subsidiary within the five years preceding the date of this Agreement or
alleging noncompliance with any Environmental Law, and Seller has provided
Purchaser with complete copies of all such notices actually known to it.
(ii) ENVIRONMENTAL CLAIMS. There is no civil, criminal or
administrative action, demand, claim, investigation or proceeding pending or,
to Seller's actual knowledge, threatened against Seller or any Seller
Subsidiary with regard to any Properties, under or relating in any way to the
Environmental Laws, except as identified on the ENVIRONMENTAL LIST.
(iii) ENVIRONMENTAL COMPLIANCE. To Seller's actual knowledge,
except as set forth on the ENVIRONMENTAL LIST, no release, emission or
discharge into the environment of any hazardous substance (as that term is
currently defined in the Environmental Laws) or petroleum or petroleum-based
substances (as those terms are defined in the Federal Storage Tank
Regulations, 40 C.F.R. Part 280) which would give rise to liability under any
Environmental Laws has occurred, is currently occurring or, to the extent
known or reasonably anticipated, is probable of occurring in the future in
connection with the ownership or operation of any Properties by Seller or any
Seller Subsidiary and there is no spill, deposit, or discharge of any such
hazardous substance or petroleum or petroleum-based substance, at, on, into,
under or having originated from any of the Properties. To Seller's actual
knowledge, except as set forth on the ENVIRONMENTAL LIST, none of the
Properties or any other assets of Seller and each Seller Subsidiary, include
any equipment, machinery, device, or other apparatus that contains
polychlorinated biphenyls (the "PCB Equipment") that is now or ever has been
leaking; any asbestos that is or reasonably may be anticipated to become in
friable condition within the next five years; or any underground storage
tank. To Seller's actual knowledge, the ENVIRONMENTAL LIST contains a list
of all (i) PCB Equipment, whether leaking or not, and indicating which, if
any, is now or ever has been leaking, and (ii) asbestos, whether in friable
condition or not, that are included within the assets of Seller and each
Seller Subsidiary.
(x) SELLER FACILITIES. To the best knowledge of Seller, all
"alterations" (as such term is defined in the Americans with Disabilities Act
and the regulations issued thereunder (collectively, "ADA")) to the
respective business of Seller and each Seller Subsidiary including, without
limitation, automatic teller machines (collectively, the Seller Facilities")
undertaken after January 26, 1992 comply with ADA and the ATBCB Accessibility
Guidelines for Buildings and Facilities ("ADAAG"). Seller warrants that
there are no material investigations, proceedings, or complaints, formal or
informal, pending or overtly threatened against Seller or any Seller
Subsidiary in connection with Seller Facilities under ADA, ADAAG, or any
other local, state or federal law concerning accessibility for individuals
with disabilities.
19
<PAGE>
(y) LOANS. Except as specifically set forth on the LOAN LIST, as
of the date of this Agreement (i) Seller is not a party to any written or
oral loan agreement, note or borrowing arrangement under the terms of which
the obligor is more than 30 days delinquent in payment of principal or
interest or, to the best of Seller's knowledge, in default of any other
provision as of the dates shown thereon other than loans the unpaid balance
of which do not exceed $10,000 per obligor; (ii) Seller is not a party to any
written or oral loan agreement, note or borrowing arrangement which has been
classified as "substandard," "doubtful," "loss," "other loans especially
mentioned" or any comparable classifications by Seller, one of Seller
Subsidiaries or any Applicable Governmental Authority; (iii) Seller is not a
party to any written or oral loan agreement, note, or borrowing arrangement,
including any loan guaranty, with any director or executive officer of
Seller, or any person, corporation or enterprise controlling, controlled by
or under common control with any of the foregoing; or (iv) to the best of
Seller's knowledge, neither Seller nor any Seller Subsidiary is a party to
any written or oral loan agreement, note or borrowing arrangement in
violation of any law, regulation or rule of any Applicable Governmental
Authority and which violation could have a material adverse effect on Seller.
To the best of Seller's knowledge, all loans of the Seller and Seller
Subsidiaries are legal and enforceable in accordance with the terms thereof
except as may be limited by bankruptcy, insolvency, moratorium or other laws
affecting creditors rights generally or by the exercise of judicial
discretion.
(z) INVESTMENT SECURITIES.
(i) THE LIST OF INVESTMENT SECURITIES (THE "INVESTMENT
SECURITIES LIST") supplied by Seller to Purchaser contains a complete and
accurate list of (i) the book and estimated market values as of March 31,
1996 of the investment securities, mortgage-backed securities and securities
held for sale of Seller and Seller Subsidiaries and (ii) an investment
securities report as of such date which includes security descriptions, pool
face values, book values and coupon rates.
(ii) Except as set forth in the INVESTMENT SECURITIES LIST and
except for pledges to secure public and trust deposits, none of the
investments reflected in the consolidated financial statements of Seller and
Seller Subsidiaries as of December 31, 1995 under the heading "Investment
Securities," and none of the investments made by Seller since December 31,
1995, are subject to any restriction, whether contractual or statutory, which
materially impairs the ability of Seller freely to dispose of any of such
investments at any time. With respect to all repurchase agreements to which
Seller is a party, Seller has a valid, perfected first lien or security
interest in the government securities or other collateral securing each such
repurchase agreement, and the value of the collateral securing each such
repurchase agreement equals or exceeds the amount of the debt secured by such
collateral under such agreement. Except as set forth in the INVESTMENT
SECURITIES LIST and except for transactions aggregating less than $25,000,
Seller has neither sold nor otherwise disposed of any assets in a transaction
in which the acquiror of such assets or other person has the right, either
conditionally or absolutely, to require Seller to repurchase or otherwise
reacquire any such assets.
20
<PAGE>
(iii) All United States Treasury securities, obligations of
other United States Government agencies and corporations, obligations of
states of the United States and their political subdivisions, and other
investment securities classified as "held to maturity" and "available for
sale" held by Seller, as reflected in the Financial Statements, were
classified and accounted for in accordance with F.A.S.B. 115 and the
intentions of management.
(iv) To the best of Seller's knowledge, all investment
securities owned and so categorized by the Seller or any Seller Subsidiary
constitute lawful and permissible investments and are enforceable in
accordance with the terms thereof except as may be limited by bankruptcy,
insolvency, moratorium or other laws affecting creditors' rights generally or
by the exercise of judicial discretion.
(aa) INTELLECTUAL PROPERTY. Except as set forth in the list
prepared by Seller (the "INTELLECTUAL PROPERTY RIGHTS LIST"), Seller and
Seller Subsidiaries have the appropriate right to use all material
intellectual property currently being used in their operations and business.
(ab) GOVERNMENTAL REPORTS. Since January 1, 1993 Seller and all of
Seller Subsidiaries have filed all reports, registrations and statements,
together with any amendments required to be made with respect thereto, that
were required to be filed with (i) the Federal Reserve, (ii) the Securities
and Exchange Commission (the "SEC") and (iii) the FDIC. All such reports,
registrations and statements are collectively referred to as the "Seller
Reports." As of their respective dates, such Seller Reports complied in all
material respects with all the statutes, rules and regulations enforced or
promulgated by the Applicable Regulatory Authorities with which they were
filed and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading, provided that information as of a later date shall
be deemed to have superseded information as of an earlier date.
(ac) RESERVE FOR POSSIBLE LOAN AND LEASE LOSSES. The reserve for
possible loan and lease losses shown on Seller's consolidated balance sheet
as of December 31, 1995 and as of the date hereof is adequate in all respects
based on past loan loss experience and potential loss experiences to provide
for all losses, net of recoveries relating to loans previously charged off,
on loans outstanding as of the date of such statement, and, to the best of
Seller's knowledge, the loan portfolios of Seller Subsidiaries at such dates
in excess of such reserves are all fully collectible in accordance with their
terms.
(ad) DERIVATIVES. Seller and Seller Subsidiaries do not own any
securities commonly known as derivatives except as set forth on the list of
derivative securities ("DERIVATIVES LIST"). Seller and Seller Subsidiaries
do not maintain for their own account or for the account of any of their
customers any account where derivative securities are held or where margin is
maintained, except as set forth on the DERIVATIVES LIST.
21
<PAGE>
(ae) TRUST AND FIDUCIARY ACCOUNTS. Seller and Seller Subsidiaries
do not act in a trust capacity, do not accept or maintain any trust or
fiduciary accounts, nor, to the best of Seller's knowledge, have Seller or
any Seller Subsidiary been appointed as trustee or other fiduciary with
respect to any person or other beneficiary, except as set forth on a list
(the "FIDUCIARY LIST") which has been supplied to Purchaser and except for
normal escrow accounts established in connection with loans (including with
respect to real estate taxes, insurance premiums and like matters).
(af) AFFILIATE TRANSACTIONS. Except as set forth on a list
supplied by Seller (the "AFFILIATE TRANSACTION LIST"), there are no material
contracts or other transactions between Seller or any of the Seller
Subsidiaries, on the one hand, and any (i) officer or director of Seller or
any Seller Subsidiary, (ii) record or beneficial owner of five percent or
more of the voting securities of Seller or (iii) affiliate (as such term is
defined in Regulation 12b-2 promulgated under the Securities Exchange Act) of
any such officer, director or beneficial owner, on the other hand.
(ag) SECTION 203 OF DELAWARE LAW. Seller represents that Section
203 of the Delaware Law is inapplicable to Seller based upon Section
203(b)(4) thereof.
(ah) GOVERNMENT APPROVALS. To the best of Seller's knowledge, no
fact or condition exists with respect to Seller or any of the Seller
Subsidiaries which Seller has reason to believe will prevent Purchaser from
obtaining approval of the Merger and other transactions contemplated by this
Agreement by the Federal Reserve or the Commissioner.
(ai) LEGAL FEES. Seller has retained Schwartz, Cooper, Greenberger
& Krauss, Chartered ("Schwartz Cooper") to provide legal advice in connection
with this Agreement. Seller represents that in all cases such fees shall be
reasonable in amount.
(aj) ACCURACY OF ALL REPRESENTATIONS. No representation or
warranty made by Seller or any Seller Subsidiary contained in this Agreement
and no statement contained in any certificate, list, exhibit or other
instrument specified in this Agreement, whether heretofore furnished to
Purchaser or hereinafter required to be furnished to Purchaser, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained therein not
misleading.
(ak) REASONABLE BEST EFFORTS. Seller will undertake or, to the
extent such action is not within the sole power of Seller, use its best
efforts to cause to be undertaken, each such action as may be necessary to
effectuate the Merger and to carry out the provisions of this Agreement.
9. AGREEMENTS WITH RESPECT TO CONDUCT OF SELLER AND SELLER SUBSIDIARIES
AFTER THE DATE HEREOF. Seller covenants and agrees with Purchaser and
Subsidiary that Seller and each of Seller Subsidiaries will, from and after
the date of this Agreement and until the Effective Date, act as follows:
22
<PAGE>
(a) MAINTENANCE OF BUSINESS. Seller and each of Seller
Subsidiaries, together with the officers and directors thereof, will do the
following, except as otherwise agreed to in writing by Purchaser:
(i) carry on its business only in the ordinary course and
consistent with the respective policies, procedures and practices of Seller
and each Seller Subsidiary in substantially the same manner as heretofore
conducted; and
(ii) except as they may terminate in accordance with their
terms, keep in full force and effect, and not default in any material respect
any of its obligations under, any Material Contracts; and
(iii) 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; and
(iv) use its reasonable 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 so that it will be available to Purchaser on and after the
Effective Date, and to maintain its existing, or substantially equivalent,
credit arrangements with banks and other financial institutions and to use
its best efforts to maintain the continuance of its general customer
relationships; and
(v) take such action as may be necessary to maintain,
preserve, renew and keep in full force and effect its corporate existence and
material rights and franchises; and duly comply in all material respects with
all laws applicable to it and to the conduct of its business.
(b) PROMPT NOTIFICATION. Seller will promptly notify Purchaser of
any event of which Seller obtains knowledge which has, or is reasonably
probable to have, a material adverse effect on the financial condition,
operations, business or assets of Seller and Seller Subsidiaries or in the
event that Seller determines that it is unable to fulfill the conditions to
the performance of Purchaser and Subsidiary set forth in Paragraph 14 hereof.
(c) RESTRICTIONS; REQUIRED CONSENT. From and after the date of
execution hereof, neither Seller nor any of Seller Subsidiaries will do any
of the following, except upon prior written notice to and consent of
Purchaser (the failure on the part of Purchaser to respond to Seller within
three business days of written notice will be deemed a denial of Purchaser's
consent), or as otherwise required or permitted by this Agreement:
(i) 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 (provided, however, that such
acquisition pursuant to foreclosure or loan collection proceedings shall be
permitted); sell or otherwise
23
<PAGE>
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 Seller or any Seller Subsidiary (provided,
however, that the disposition or sale of property pursuant to foreclosure or
loan collection proceedings shall be permitted); make or originate any loans
to any affiliate, executive officer, director, principal shareholder of
Seller or a Seller Subsidiary, or a "related interest" of any such persons
(as defined in regulations issued by the Federal Reserve) (provided, however,
that the renewal of existing loans to such persons on substantially the same
terms as in effect at the date hereof shall be permitted); or enter into any
contract, agreement, commitment or arrangement with respect to any of the
foregoing actions described in this subparagraph; or
(ii) grant any general or uniform increase in the rate of pay
of employees or employee benefits, or grant any material increase in salary
or employee benefits of any officer, employee or agent whose salary exceeds
forty thousand dollars ($40,000), except for general salary increases given
to all employees or class of employees as part of any traditional annual
salary adjustment and only in amounts consistent with past pay practices of
the Seller; or
(iii) issue, sell, redeem or acquire for value, or agree to
do so, any debt securities or any shares of the capital stock or other
equity securities or other ownership interests of Seller or of any of Seller
Subsidiaries, 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 stockholders other than (A) cash dividends
payable by any Seller Subsidiary which is wholly owned by Seller to Seller or
another Seller Subsidiary which is wholly owned by Seller; (B) a single $0.40
per share of Seller Common cash dividend, payable prior to December 31, 1996;
(C) the payment of any debt security upon the maturity thereof; and (D)
obligations or liabilities permitted to be incurred pursuant to Paragraph
9(c)(i) hereof; provided further, however, that if the Closing does not occur
by December 31, 1996, Seller shall be entitled to declare and pay a single
additional $.40 per share of Seller Common cash dividend prior to the Closing
and after December 31, 1996; or
(iv) (A) sell or pledge or otherwise encumber any stock owned
by it in any Seller Subsidiary; (B) except as set forth on a list (the
"Amendment List") which has been supplied to Purchaser, amend its, or permit
the amendment of any Seller Subsidiary's, certificate of incorporation,
charter or by-laws or any other constitutive, organic or governing document
of any Seller 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
(v) enter into any transactions other than in the ordinary
course of business; or
(vi) open any new office or close any current office of
Seller or any of Seller Subsidiaries at which business is conducted, except
as permitted under Paragraph 10(i).
24
<PAGE>
(d) RESTRICTIONS; CONSULTATION REQUIRED. From and after the date
of execution hereof, Seller and Purchaser shall consult when Seller, or any
Seller Subsidiary, does any of the following:
(i) incurs or agrees to incur any material 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; purchases any
investment security or sells or otherwise disposes of any of its investment
securities except in the ordinary course of business and consistent with past
practices; enters into any amendment, renewal or modification of any lease
agreement with respect to any facility or premise used in its business;
enhances, expands, modifies, replaces or alters any computer or data
processing system owned, leased or licensed by Seller or any Seller
Subsidiary (including any software associated with any such computer or
system); 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,
in an aggregate amount in excess of $250,000 to any person; or
(ii) compromises or otherwise settles or adjusts 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.
(e) NO SOLICITATION. Neither the Seller nor any Seller Subsidiary
nor any officer, director or any representative thereof shall, directly or
indirectly, solicit, authorize, initiate or encourage submission of, any
proposal, offer, tender offer or exchange offer from any person relating to
any acquisition proposal (hereinafter an "Acquisition Proposal"), or
participate in any negotiations in connection with or in furtherance of any
Acquisition Proposal or permit any person other than Purchaser and its
representatives to have any access to the facilities of, or furnish to any
person other than Purchaser and its representatives any non-public
information with respect to Seller or any Seller Subsidiary in connection
with or in furtherance of any of the foregoing; PROVIDED, HOWEVER, that
nothing in the immediately preceding sentence shall obligate Seller to take
any action or refrain from taking any action if Seller's Board of Directors
is advised in a written opinion of Schwartz Cooper that the fiduciary duties
of Seller's Board of Directors to the Stockholders imposed by law requires
such action or inaction. Seller shall immediately provide to Purchaser
telephone notice of any such proposal or offer and shall promptly provide
Purchaser with the name of the party seeking to engage in such discussions or
negotiations, or requesting such information, and, after receipt of a written
offer or proposal from such party, a copy of any written offers, proposals,
agreements or other documents with respect to such offer or proposal.
(f) NO INTERFERENCE. Seller will take no action, and will use its
reasonable best efforts to prevent any action from being taken, which would
result in the imposition of special (i.e., non-statutory) stockholder, Board
of Directors or other approval requirements with respect to the Merger or
other transaction contemplated hereby or which would frustrate or interfere
with the Merger or any such transaction.
25
<PAGE>
(g) PAYMENT OF LIABILITIES. Seller and Seller Subsidiaries shall
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.
(h) PROHIBITION AGAINST CREATION OF GOODWILL. Neither Seller nor
any Seller Subsidiary shall enter into any transaction which will create
goodwill on its books and records under generally accepted accounting
principles.
(i) COMPLIANCE WITH LAW. Neither Seller nor any Seller Subsidiary
will take any action which in any material respect 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.
(j) MAINTENANCE OF OPERATING EXPENSE LEVELS. Except for fees and
expenses incurred in connection with the transactions contemplated hereby,
neither Seller nor any Seller Subsidiary shall increase the level of its
operating expenses in any material respect.
(k) MAINTENANCE OF BOOKS AND RECORDS. Seller and each Seller
Subsidiary will maintain its books, accounts and records in accordance with
generally accepted accounting principles. Neither Seller nor any Seller
Subsidiary shall 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. Neither Seller nor any Seller
Subsidiary shall change any practice or policy with respect to the charging
off of loans or the maintenance of its reserve for possible loan losses,
except as required by law, regulation or generally accepted accounting
principles.
(l) INSIDER LOANS. Seller, and a representative of Purchaser
shall, prior to the Effective Date, review each loan outstanding to any
executive officer, director, principal shareholder or the related interests
of such persons of Seller or any Seller Subsidiary and no later than the
Effective Date take such steps to bring current and fully collateralize any
such loan which is past due.
10. ADDITIONAL AGREEMENTS. Seller hereby covenants and agrees, and
agrees to cause each Seller Subsidiary to covenant and agree, with Purchaser
and Subsidiary that Seller and each of Seller Subsidiaries will or, to the
extent not within its sole control, will use its reasonable best efforts to,
act as follows:
(a) CONTINUING ACCESS TO INFORMATION. Seller will afford to
Purchaser and to its accountants, counsel and other representatives
reasonable access, in a manner not unduly disruptive to the business of
Seller and Seller Subsidiaries, during normal business hours throughout the
period prior to the Effective Date and will make such documentation related
to Seller and the Seller Subsidiaries available as provided in a separate
agreement between Purchaser and Seller of even date herewith on the terms and
conditions described therein.
26
<PAGE>
(b) SHARING OF FILINGS. Seller promptly shall furnish Purchaser
with any information relating to Seller or Seller Subsidiaries which is
required under any applicable law or regulation for inclusion in any filing
that Purchaser is required to make with any regulatory or supervisory
authority in order to consummate the transactions contemplated by this
Agreement. Seller represents, warrants and covenants to Purchaser that all
information so furnished 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.
(c) NOTIFICATION. Prchaser will promptly notify Seller in the
event that Purchaser determines that it is unable to fulfill the conditions
to the performance of Seller and Seller Subsidiaries set forth in Paragraph
17 hereof.
(d) EVIDENCE OF TITLE. Immediately prior to Closing, and if
requested by Purchaser, Seller shall procure and deliver to Purchaser, at
Seller's expense and in a form satisfactory to Purchaser, (i) evidence of
marketable title for any real estate owned by Seller or Seller Subsidiaries
("Real Estate") and (ii) a survey of any parcel of Real Estate identified by
Purchaser. On or prior to the Effective Date, Seller shall provide Purchaser
with an owner's title insurance policy in a form acceptable to Purchaser for
any parcel of Real Estate identified by Purchaser.
(e) SELLER ACCRUALS AND RESERVES. Upon closing of the Merger and
contingent upon such closing, Seller shall, consistent with generally
accepted accounting principles and the accounting rules, regulations and
interpretations of the SEC and its staff, as well as any applicable federal
taxation rules, modify and change its loan, accrual and reserve policies and
practices (including loan classifications, levels of reserves and accruals
and assets disposition strategies to (i) reflect Purchaser's plans with
respect to the conduct of Seller's business following the Merger and (ii)
make adequate provisions for the cost and expenses relating thereto) so as to
be applied consistently on a mutually satisfactory basis with those of
Purchaser; PROVIDED, HOWEVER, that Seller shall not be obligated to take in
any respect any such action pursuant to this subparagraph unless and until
Purchaser acknowledges that all conditions to its obligation to consummate
the Merger have been satisfied or waived and Seller acknowledges that all
conditions to its obligations to consummate the Merger have been satisfied or
waived.
(f) RESALE OF SELLER. If, within 90 days after consummation of
the Merger on the Effective Date, Purchaser shall enter into an agreement for
the sale of Seller to a third party, by merger, tender offer, sale of
substantially all of the assets, or otherwise, and such sale transaction
eventually is consummated, Purchaser shall owe the Stockholders of the Seller
an additional amount equal to 50% of the positive difference, if any, between
price received by the Purchaser and the Merger Consideration. Such amount
shall be paid as promptly as practicable to the Stockholders of Seller
following the closing of any such sale, without interest. If any sale
proceeds are received in a form other than cash, the consideration shall be
distributed in kind. Payments received over time shall be distributed, to
the extent feasible, at the same time as received by Purchaser. For purposes
hereof, no Stockholder of Seller who exercises dissenter's rights under
Delaware law shall have any right to such additional amounts, if any.
27
<PAGE>
(g) TREATMENT OF SELLER EMPLOYEE BENEFIT PLANS. Seller, each
Seller Subsidiary and Purchaser shall cooperate in effecting the following
treatment of the Seller Employee Benefit Plans, except as mutually agreed
upon by Purchaser and Seller prior to the Effective Date:
(i) Except as otherwise provided herein, Purchaser shall
cause each Seller Benefit Plan sponsored by Seller or any Seller Subsidiary
to be continued in effect after the Effective Time without a termination or
discontinuance thereof as a result of the Merger, subject to the power
reserved under each such plan to subsequently amend or terminate the plan,
which amendments or terminations shall comply with applicable law. Seller,
each Seller Subsidiary, and Purchaser will use all reasonable efforts to
amend such plans to the extent necessary to provide for substitutions and
assumptions and such other actions contemplated under this Agreement.
(ii) Immediately prior to the Effective Date, Seller and
Seller Subsidiary shall terminate and cause to be of no further force and
effect the provisions of any Benefit Plan which provide severance or
separation pay to officers or employees, other than the employment or other
agreements amended in connection with the execution of this Agreement as
described in Paragraph 8(u)(vii) hereof.
(iii) Immediately prior to the Effective Date, Seller and
Seller Subsidiary shall terminate and cause to be of no further force and
effect the provisions of any Directors' Deferred Compensation Agreement then
in effect and pay or cause to be paid the benefits required under such
agreement to each participant as determined on the basis that the service of
the eligible director as director of Seller is deemed to be terminated on the
Effective Date.
(iv) Seller may continue to accrue during 1996 at the present
annual rate (not to exceed $40,000) for its year-end holiday cash bonus
program which is subject to distribution within the sole discretion of
Seller's Board of Directors. If the Effective Date occurs during 1996 prior
to the normal distribution from said bonus program, Seller may declare and
pay a pro-rata portion of such bonus accrual as Seller may determine, based
on the number of calendar months that have expired during 1996 and before the
Effective Date.
(v) Nothing in this Agreement shall confer upon any employee
of Seller or any Seller Subsidiary any rights or remedies hereunder and this
Agreement shall not constitute a contract of employment or create any right
to be retained in the employment of Purchaser, Seller or any Seller
Subsidiary.
(h) ESCROW AGREEMENT. Purchaser and Subsidiary shall, within five
(5) business days of the execution hereof, place $200,000 in escrow pursuant
to the terms of the escrow agreement ("Escrow Agreement") in the form of
EXHIBIT B hereto, securing the good faith performance of Purchaser and
Subsidiary hereof.
(i) SELLER'S NEW MAIN BANKING FACILITY. Notwithstanding any
representation, warranty or covenant of Seller or any Seller Subsidiary to
the contrary herein, it is understood
28
<PAGE>
that Seller has recently purchased and is in the process of refurbishing its
proposed new main banking facility at 190 East Delaware Street, Chicago,
Illinois (the "New Main Office"), and the closing of the existing office at
196 East Pearson, Chicago, Illinois. Seller agrees to fully inform Purchaser
concerning and to cooperate, to the extent reasonably feasible, with
Purchaser in the refurbishing of the New Main Office, subject always to
Seller's ultimate control. Seller and Purchaser agree that joint approval
should be obtained with respect to the purchase of all FF and E (single items
where the cost exceeds $100,000). Seller and Purchaser further agree that
joint approval will be obtained for all hard costs (excluding the costs for
FF and E, the security system, the telephone system, the vault and the vault
doors) related to the refurbishing of the New Main Office to the extent such
costs exceed $2.2 million. All representations, warranties, and covenants of
Seller herein as they relate to the New Main Office are conditional upon
contracts, agreements and work plans being subject to Seller reserving the
right to make future alterations and modifications as Seller deems necessary
and advisable; PROVIDED, HOWEVER, that Seller has complied with the
obligations under this subparagraph in informing and consulting with
Purchaser.
11. ENVIRONMENTAL MATTERS. During the period prior to the Effective
Time, should Seller or any Seller Subsidiary propose to acquire ownership or
possession of any real property other than residential real properties,
through foreclosure or repossession or otherwise, then Seller shall cause to
be conducted a Phase I environmental assessment of such real property and any
further environmental investigation, sampling or analysis reasonably required
to ensure that either Seller or any Seller Subsidiary shall not acquire
ownership or possession of real property that is likely to cause Seller or
Seller Subsidiary to be subject to or incur any liabilities, damages,
penalties or removal, remediation or other costs as a result of its ownership
or control of the property that will exceed the value of such property.
12. CONFIDENTIALITY. In the event that the transactions contemplated
by this Agreement are not consummated, Purchaser will return to Seller all
information and data relating to Seller and Seller Subsidiaries delivered to
Purchaser by any such entity and any and all copies thereof, and in such
event, Purchaser agrees to take normal and reasonable precautions so that
none of its agents, employees, accountants, attorneys or other
representatives shall divulge any confidential information relating to the
business of Seller and Seller Subsidiaries to a third party or use the same
in any manner for the profit or to the benefit of Purchaser or any such
employee, agent or a third party. The obligation of Purchaser to keep
information confidential shall not apply to (i) any information which (w) was
already in its possession prior to the disclosure thereof by Seller; (x) was
then generally known to the public; (y) became known to the public through no
fault of Purchaser or any of its agents or representatives; or (z) was
disclosed to Purchaser by a third party who was not bound by an obligation of
confidentiality to Seller or any Seller Subsidiary or (ii) disclosures
required to be made in accordance with any law, regulation or order of a
court or regulatory agency of competent jurisdiction or authority or
information included in filings pursuant to Paragraph 14.
13. STOCKHOLDERS' APPROVAL. Seller will take all steps necessary to
submit this Agreement to its Stockholders at a special meeting thereof for
the purpose of acting on this
29
<PAGE>
Agreement (the "Meeting"), which Seller shall hold as soon as practicable but
in any event by August 12, 1996 unless such submittal to the Stockholders is
delayed due to the review and clearance of the Proxy Materials (as defined
below) by the SEC. In such instance, Seller will hold the meeting within
thirty (30) days after clearance of the Proxy Materials by the SEC; PROVIDED,
HOWEVER, that Seller need not mail the Proxy Materials to the Stockholders
for the Meeting prior to the date on which the Federal Reserve Bank of
Chicago accepts Purchaser's application in connection with the Merger as
informationally sufficient for processing (the "FRB Date"), unless Purchaser
complies with Paragraph 19(e) below. Seller and Purchaser will cooperate and
consult with each other generally with respect to the foregoing matters.
Subject to the fiduciary obligations of the Board of Directors of Seller,
Seller will use its reasonable best efforts to obtain the necessary approvals
of this Agreement and the transactions contemplated hereby by the
Stockholders of Seller.
14. REGULATORY APPROVALS. As promptly as practicable, Purchaser and
Seller 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 and the Commissioner. Seller and
Purchaser shall cooperate with each other and shall assist the other in the
preparation and filing of all such applications.
15. SELLER PROXY MATERIALS.
(a) PREPARATION OF PROXY MATERIAL. Subject to Paragraphs 13 and
19(e), as soon as practicable following the execution and delivery of this
Agreement by each of the parties hereto, Seller will prepare and, subject to
the conditions described in subparagraph (b) below, will mail to the holders
of Seller Common appropriate proxy materials (the "Proxy Materials"),
including a notice of the Meeting, proxy statement and form of proxy that
comply with the applicable laws. Each of Purchaser and Subsidiary will
furnish to Seller all information concerning Purchaser or Subsidiary, as the
case may be, required for inclusion in the Proxy Materials and all such
information will 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. In the Proxy Materials, Seller shall present
this Agreement and the transactions contemplated hereby for approval by the
holders of Seller Common at the Meeting. Subject to the fiduciary
obligations of the Board of Directors of Seller, Seller shall include in the
Proxy Materials a recommendation of its Board of Directors to the holders of
Seller Common that they unanimously approve this Agreement. Prior to
submitting the Proxy Materials and any amendment, supplement or revision
thereof to the stockholders of Seller, Seller shall submit such materials to
Purchaser and its counsel and provide Purchaser and its counsel with a
reasonable opportunity to review and comment upon such materials. Prior to
responding to any comments of any regulatory or supervisory authority
relating to the Proxy Materials, Seller shall review any proposed responses
with Purchaser and its counsel. Seller covenants to Purchaser and Subsidiary
that the Proxy Materials (i) will comply in all material respects with
applicable law, and (ii) will not contain any statement which, at the time
and in the light of the circumstances under which it is made, is false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not false or
misleading; in
30
<PAGE>
no event, however, shall Seller be liable for any untrue statement of a
material fact or omission to state a material fact in the Proxy Materials
made in reliance upon, and in conformity with, written information concerning
Purchaser or Subsidiary furnished by it specifically for use in the Proxy
Materials.
(b) CONDITIONS TO MAILING OF PROXY MATERIALS. The Proxy Materials
shall not be mailed to the holders of Seller Common until all of the
following additional conditions have been satisfied, except as both Seller
and Purchaser may waive such conditions in writing:
(i) FAIRNESS OPINION. Alex Sheschunoff & Co. or another
investment banking firm of national reputation shall have delivered to the
Board of Directors of Seller for inclusion in the Proxy Materials a letter,
dated the Mailing Date, substantially in the format customarily followed in
the industry confirming the fairness of the Merger from a financial point of
view to the Stockholders of Seller as of the Mailing Date.
(ii) OFFICER'S CERTIFICATE. Purchaser shall have delivered
to Seller, and Seller shall have delivered to Purchaser, five days prior to
the Mailing Date a certificate dated the date of its delivery, each
certificate with respect to the party delivering the certificate, signed by
an executive officer, to the effect that, to the best knowledge of the person
signing the certificate, all representations and warranties contained in this
Agreement of the party delivering the certificate to the party to whom the
certificate is delivered are true in all material respects at and as of the
date of such certificate and will be true and correct in all material
respects at and as of the Mailing Date as if such representations and
warranties were made at and as of the Mailing Date, except as specified in
such certificate.
(iii) MAILING DATE. Seller shall have given not less than
five days' notice to Purchaser of the Mailing Date.
16. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AND SUBSIDIARY.
The obligations of Purchaser and Subsidiary to effect the Merger shall be
subject to the fulfillment at the Effective Date of each of the following
conditions (any one or more of which may be waived by Purchaser and
Subsidiary, but only in writing):
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained in this Agreement shall
have been true in all material respects on the date of this Agreement and
shall continue to be true in all material respects as though made at and as
of the Effective Date (after giving effect to action taken or omitted in
accordance with Paragraph 9 hereof) or, if a representation and warranty is
limited to a state of facts existing as of any time prior to the Effective
Date, then at and as of such time.
(b) PERFORMANCE BY SELLER. Seller shall have performed and
satisfied in all material respects or otherwise complied in all material
respects with, or caused such performance and satisfaction of and compliance
with, all covenants, terms and conditions required by
31
<PAGE>
this Agreement to be performed and satisfied or otherwise complied with by
Seller or any Seller Subsidiary on or prior to the Effective Date.
(c) NO ADVERSE MATERIAL CHANGE; ADVERSE TRENDS IN PROBLEM LOANS.
During the period from December 31, 1995 to the Effective Date, there shall
not have occurred any material adverse change with respect to Seller as
provided in Paragraph 8(j) hereof and nothing shall come to Purchaser's
attention to lead it to reasonably believe that there is, or could be a
material increase, in the loans set forth in LOAN LIST.
(d) SELLER'S OPERATING BUDGET. As of the most recent month end
preceding the Effective Date, the cumulative reported earnings by Seller
shall be greater than or equal to:
(i) the amount calculated by taking the Seller's subsidiary
bank's 1996 annual budgeted after-tax net earnings of $423,000 divided by
12 months or $35,250, times the number of months in 1996 which would
represent the month end preceding the Effective Date, further multiplied
by 80 percent; plus
(ii) 80 percent of the after-tax net earnings of Seller
attributable to the stock dividend income received from AMCORE
Financial, Inc., a multi-bank holding company.
As used in this subparagraph "reported" means reported, on Seller's financial
statements as reported to the SEC on Form 10-Q or based on Seller's 1996
unaudited monthly financial statements prepared in accordance with generally
accepted accounting principles applied on a basis consistent with Seller's
financial statements for the years ended December 31, 1994 and 1995, as
included in Seller's reports to the SEC on Form 10-K subject to any
subsequent adjustments required to be reported to the SEC whether or not such
adjustments have, as yet, been reported with the following adjustments, if
any, net of related tax savings and costs which were reflected in net income
for the relevant period(s) added back into or deducted from net income for
the applicable period: (A) investment banking expenses, outside legal and
accounting fees, or other costs associated with the Merger, (B) gains or
losses on sales of assets outside of the ordinary course of business, (C) the
moving expenses related to the new main banking facility, the restoration
expenses related to the existing main banking facility to the extent they
exceed the 11 monthly accruals of $12,000 or $132,000 in aggregate as
provided for in the 1996 budget, (D) the refurbishment expenses relating to
the new main banking facility, (E) any other expenses upon which Seller and
Purchaser shall mutually agree in writing and (F) the accrual of the amount
of the increase or decrease between what the Seller or Seller Subsidiary is
accruing for payment of real estate taxes on the New Main Banking Office and
actual real estate taxes assessed.
(e) CERTIFICATION BY SELLER. There shall be delivered to
Purchaser a certificate (dated the Effective Date and signed by the President
of Seller) stating that to the best of their knowledge the conditions set
forth in clauses (a) through (d) above have been satisfied.
32
<PAGE>
(f) APPROVAL BY STOCKHOLDERS; DISSENTERS. The Merger shall have
been approved by the holders of Seller Common according to the Delaware Law
and any other applicable requirements. Not more than 10% of Seller Common
shall have been designated as Dissenting Shares under Paragraph 5.
(g) CERTIFICATION BY BOARD OF DIRECTORS. All action required to
be taken by or on the part of Seller 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 Board of
Directors and stockholders of Seller, and Purchaser shall have received
certified copies of the resolutions evidencing such authorizations.
(h) RECEIPT OF REQUISITE APPROVALS. All consents, approvals,
waivers, exemptions, amendments and authorizations required to be obtained by
Seller prior to the Effective Date for the consummation of the Merger shall
have been obtained at or prior to the Effective Date, and all filings,
registrations, applications, designations and declarations required on the
part of Seller prior to the Effective Date in connection with the
consummation of the Merger and such transactions shall have been made or
effected at or prior to the Effective Date.
(i) LEGAL OPINION. Purchaser shall have received an opinion,
dated the Effective Date, of Schwartz Cooper, counsel for Seller,
substantially in the form of EXHIBIT C.
(j) GOVERNMENTAL APPROVAL. The transactions contemplated by this
Agreement and the Certificate of Merger shall have been approved by all
Applicable Governmental Authorities and such approval shall not contain any
material conditions which are not customarily imposed in transactions of the
type contemplated hereby and which in the reasonable opinion of Purchaser
would materially adversely affect the benefits to it of the Merger. Such
approvals, and the trans-actions contemplated hereby, shall not have been
contested by any federal or state governmental authority.
(k) NO ADVERSE DECISION. No decision of any federal, state or
foreign court awarding substantial damages or penalty against any of the
parties or affiliates thereof in connection with the Merger shall have been
rendered, and no action or proceeding before any such court seeking such
damages or penalty or a preliminary or permanent injunction or other order to
prevent the consummation of the Merger shall be pending.
(l) PROCEEDINGS. All proceedings required to be taken by Seller
in connection with the transactions contemplated in this Agreement shall have
been taken, and all documents incidental thereto, shall be satisfactory in
form and substance to Purchaser, and Purchaser shall have received copies of
all documents which Purchaser may reasonably request in connection with said
transactions and copies of the records of all corporate proceedings in
connection therewith in form and substance satisfactory to Purchaser.
(m) ACCOUNTANT'S LETTER. Purchaser shall have received on or
prior to the Effective Date a comfort letter from Crowe, Chizek & Company,
LLP dated the date of
33
<PAGE>
delivery, in the form currently delivered by certified public accounting
firms in similar transactions.
(n) RECEIPT OF RESIGNATIONS. Seller shall have procured and
delivered to Purchaser the resignations of all directors of Seller and Seller
Subsidiaries, with a release of claim in form and substance acceptable to
Purchaser and Seller.
(o) NO LEGAL PROHIBITION. No statute, rule or regulation shall
have been enacted in the United States by any governmental or regulatory
agency of competent jurisdiction which prevents or restricts the Merger.
(p) EMPLOYEE MATTERS. Purchaser shall have received on or prior
to the Effective Date amendments or other evidence of action taken by Seller,
the Seller Subsidiaries, directors and officers thereof described in
Paragraphs 8(u) and 10(g) hereof, in each case in form and substance
satisfactory to Purchaser.
(q) NON-COMPETITION MATTERS; CONSULTING MATTERS. Each member of
Seller's Board of Directors shall have executed the non-competition
agreements restricting competitive activity with Seller in its "CRA Service
Area" existing at the date hereof for a period of one year following the
closing, the form of agreement to be acceptable to Purchaser and Seller, and
the Consulting Agreement referred to in EXHIBIT A hereto shall be in full
force and effect.
(r) FUNDS AVAILABLE FOR CONSUMMATION. Purchaser and Subsidiary
shall have secured the necessary funds and/or financial resources on such
terms as they may reasonably established to permit them to consummate the
Merger.
17. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligations of
Seller to effect the Merger shall be subject to the fulfillment at the
Effective Date of each of the following conditions (any one or more of which
may be waived by Seller, but only in writing):
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Purchaser and Subsidiary contained in this
Agreement shall be true in all material respects at and as of the Effective
Date, as though such representations and warranties were made at and as of
the Effective Date, and Purchaser and Subsidiary shall have performed and
satisfied all covenants, conditions and agreements required by this Agreement
to be performed and satisfied by either of them on or Prior to the Effective
Date, and at the Effective Date there shall be delivered to Seller
certificates (dated the Effective Date and signed by the Chairman of the
Board and the Secre-tary of Purchaser and by the President and the Secretary
of Subsidiary, and stated to be to the best knowledge of the signers thereof)
to the foregoing effect.
(b) STOCKHOLDER APPROVAL. The Merger shall have been approved by
the holders of Seller Common according to the Delaware Law and any other
applicable requirements.
34
<PAGE>
(c) LEGAL OPINION. Seller shall have received an opinion, dated
the Effective Date, of Vedder, Price, Kaufman & Kammholz, in substantially
the form of EXHIBIT D.
(d) PERFORMANCE BY PURCHASER. All action required to be taken by
or on the part of Purchaser and Subsidiary 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 Board of Directors and stockholder of Purchaser and Subsidiary, and
Seller shall have received certified copies of the resolutions evidencing
such authorizations.
(e) RECEIPT OF REQUISITE APPROVALS. All consents, approvals,
waivers, exemptions, amendments and authorizations required to be obtained by
Purchaser and Subsidiary prior to the Effective Date for the consummation of
the Merger shall have been obtained at or prior to the Effective Date, and
all filings, registrations, applications, designations and declarations
required on the part of Purchaser and Subsidiary prior to the Effective Date
in connection with the consummation of the Merger and such transactions shall
have been made or effected at or prior to the Effective Date.
(f) PROCEEDINGS. All proceedings required to be taken by
Purchaser and Subsidiary in connection with the transactions contemplated in
this Agreement shall have been taken, and all documents incidental thereto
shall be satisfactory in form and substance to Seller, and Seller shall have
received copies of all documents which Seller may reasonably request in
connection with said transactions and copies of the records of all corporate
proceedings in connection therewith in form and substance satisfactory to
Seller.
18. FURTHER ASSURANCES. 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 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 obtainment 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
in the lists, 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 Effective
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 Purchaser, Subsidiary or Seller will take
all such necessary action.
19. PAYMENT OF EXPENSES. Each party shall pay its own expenses
incurred in connection with the transactions contemplated by this Agreement,
and the parties agree that the proper allocation of the fees and
out-of-pocket expenses listed below is as indicated:
35
<PAGE>
(a) all fees and disbursements of their counsel, investment
bankers, consultants and accountants shall be paid by Purchaser and
Subsidiary;
(b) all fees and disbursements of its counsel, investment bankers,
consultants and accountants shall be paid by Seller; and
(c) subject to subparagraph (e) below, fees and out-of-pocket
expenses in connection with obtaining approval of the transaction by
stockholders of Seller, including any proxy solicitation costs, shall be paid
by Seller;
(d) filing fees and out-of-pocket expenses in connection with
securing approval of the transactions contemplated in this Agreement by all
the Applicable Governmental Authorities and any other banking or other
regulatory authority shall be paid by Purchaser; and
(e) printing and mailing costs with respect to the Meeting and the
Proxy Materials (not to exceed $5,000) and the legal fees of Seller's counsel
directly attributable to the preparation of the Proxy Materials (not to
exceed $10,000) shall be paid by Purchaser if Purchaser directs Seller to
mail the Proxy Materials prior to the FRB Date.
20. PUBLICITY AND REPORTS. Purchaser (for itself and for Subsidiary)
and Seller shall coordinate all publicity relating to the transactions
contemplated by this Agreement and, except as otherwise required by law,
neither party shall issue any press release, publicity statement or other
public notice relating to this Agreement or any of the transactions
contemplated hereby without prior consultation with the other. Seller shall
consult with Purchaser as to the content of any communication to its
stockholders and each party shall consult with the other party(ies) as 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.
21. BINDING EFFECT. Neither this Agreement nor any rights, duties or
obligations hereunder shall be assignable by Seller, in whole or in part, and
any attempted assignment in violation of this prohibition shall be null and
void. This Agreement shall, however, be assignable by Purchaser to an
affiliate of Purchaser without the consent of Seller; provided, however, that
Purchaser shall remain liable hereunder. 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.
22. LAW GOVERNING. This Agreement is made and shall be governed by and
construed in accordance with the laws of the State of Delaware without regard
to the application of that state's conflict of laws provisions.
23. 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.
36
<PAGE>
24. 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 approval of this Agreement by the stockholders of Seller
and Subsidiary, to the extent authorized by applicable law, by a writing
signed by Seller, Purchaser and Subsidiary; provided, however, that following
approval by the Stockholders of the Seller of the Merger no such amendment or
modification shall be made without the further approval of such Stockholders
if such amendment or modification would violate Section 251 of the Delaware
Law.
25. TERMINATION OF AGREEMENT.
(a) METHODS OF TERMINATION. This Agreement may be terminated at
any time prior to the Effective Date, whether before or after approval of
this Agreement by the stockholders of Seller:
(i) by mutual consent in writing of Purchaser and Seller; or
(ii) by Purchaser or Seller, by giving written notice of such
termination to the other party or parties if, upon the taking of the vote of
the Stockholders of Seller, the required approval of such stockholders shall
not be obtained; or
(iii) by Purchaser by giving written notice of such
termination to Seller, (A) if there has been (I) a material breach of any
agreement herein on the part of Seller which has not been cured or adequate
assurance of cure given, in either case within 10 business days following
notice of such breach from Purchaser, or (II) a breach of a representation or
warranty of Seller herein which (individually or, together with other such
breaches, in the aggregate) would reasonably be expected to have a material
adverse effect on Seller as provided in Paragraph 8(j) above and which, in
the opinion of Purchaser, by its nature cannot be cured prior to March 31,
1997, (B) if any Acquisition Proposal other than as contemplated by this
Agreement, shall have been proposed by any third party (and such proposal is
not opposed in writing by Seller within ten business days after Seller or any
of Seller Subsidiaries shall have first received or become aware of such
proposal, or Seller or its Board of Directors at any time shall cease to
oppose such proposal or shall take, or permit any Seller Subsidiaries to
take, any action which is not consistent with opposition to such proposal) or
shall have been agreed to or consummated, (C) if there shall have occurred or
been proposed, after the date of this Agreement, any change in any law, rule
or regulation, or after the date of this Agreement there shall have been any
decision or action by any court, government or governmental agency
(including, without limitation, any bank regulatory authority) that could
reasonably be expected to prevent or delay consummation of the Merger beyond
March 31, 1997 or that would have a material adverse effect on Seller; or
(iv) by Seller (with the approval of its Board of Directors),
by giving written notice of such termination to Purchaser, (A) if there has
been (I) a material breach of any agreement herein on the part of Purchaser
which has not been cured or adequate assurance of cure given, in either case
within five business days following notice of such breach from the
37
<PAGE>
Company, or (II) a breach of a representation or warranty of Purchaser herein
which (individually or, together with other such breaches, in the aggregate)
would reasonably be expected to materially impair the ability of Purchaser to
perform its obligations under this Agreement and which, in the opinion of
Seller, by its nature cannot be cured prior to the date specified in
Paragraph 25(a)(v) hereof, (B) if prior to the approval of the Merger by
Seller's stockholders, the Company receives an Acquisition Proposal on terms
which the Board of Directors determines, after consultation with its
financial advisor and based upon the written opinion of Schwartz Cooper, its
outside counsel, (y) that to proceed with the Merger, notwithstanding the
receipt of such proposal, would violate the fiduciary duties of the Board of
Directors to Seller's stockholders and (z) to accept such proposal; provided,
however, that Seller shall not be permitted to terminate this Agreement
pursuant to this clause (B) unless it has provided Purchaser with five
business days prior written notice of its intent to so terminate this
Agreement (together with a summary of the terms of such Acquisition
Proposal); or
(v) by Purchaser or by Seller, by giving written notice of
such termination to the other party or parties, if the Merger shall not have
been consummated on or before March 31, 1997, unless the failure of the
Closing to occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein.
(b) FURTHER LIABILITY. If this Agreement is terminated for any
reason, no party to this Agreement shall have any further liability hereunder
of any nature whatsoever to the other parties hereto; PROVIDED, HOWEVER,
that, notwithstanding the foregoing, (i) termination of this Agreement shall
not terminate or affect the agreements of the parties contained in Paragraph
12 hereof (with respect to confidentiality), in Paragraph 26 (with respect to
a termination payment), or in Paragraph 19 hereof (with respect to the
payment of certain expenses), the provisions of all of which Paragraphs shall
survive any termination of this Agreement and (ii) the $100,000 payment by
Purchaser to Seller under the circumstances provided for in the Escrow
Agreement between the parties.
26. TERMINATION FEES. If this Agreement is terminated by Seller
pursuant to Paragraph 25(a)(iv)(B) or if any of the events described in (a),
(b) or (c) below occur, Seller shall pay to Purchaser such amounts as
hereafter described by wire transfer of immediately available funds to such
accounts as Purchaser shall designate. Immediately prior to any termination
described in Paragraph 25(a)(iv)(B), Seller shall pay to Purchaser $800,000
by causing the other party to the Acquisition Proposal to pay such amount to
Purchaser at the execution of said Acquisition Proposal. With respect to the
events described in (a), (b) or (c) below, Purchaser shall be entitled to its
out-of-pocket expenses, of every kind and description, not to exceed
$200,000, payable immediately upon such occurrence. If thereafter any
merger, tender offer, sale of assets or other change of control of Seller
occurs, and the closing thereof occurs within two (2) years after the
termination hereof, Purchaser shall be entitled to an amount, when added to
any expense reimbursement received, equaling $800,000. Such additional
amount shall be due to the closing of such transaction.
38
<PAGE>
(a) The commencement by any person or group of persons, other than
Purchaser or any of its affiliates, of a tender or exchange offer for 80% or
more of any class of securities of Seller or the commencement by any person
or group of persons, other than Purchaser or any of its affiliates, of a
proxy contest with respect to Seller or the solicitation by any person or
group of persons, other than Purchaser or any of its affiliates, of proxies
with respect to securities of Seller prior to the Closing of the Merger and
the Merger is not approved by the holders of Seller Common under Delaware
Law; or
(b) Seller shall have withdrawn, or not included in the Proxy
Materials, the recommendation of its Board of Directors with respect to the
Merger as provided in Paragraph 15 hereof, or shall not have held the Meeting
on, or by, the date as provided in Paragraph 13 hereof, or shall not close
the Merger notwithstanding the fulfillment of all of the conditions of
Paragraph 17 hereof; or
(c) Prior to the closing, there is a filing of an application or
notice, other than by Purchaser or any of its affiliates, under the Bank
Holding Company Act of 1956, as amended (the "BHCA"), the Change in Bank
Control Act, as amended, or the state law counterparts of any of the
foregoing, with respect to the acquisition or proposed acquisition of Seller
or any Seller Subsidiaries or any securities of Seller or any Seller
Subsidiaries, or substantially all of the assets of any such entity, and the
holders of Seller Common do not approve the Merger under Delaware Law.
27. SURVIVAL. Except to the extent required by Paragraphs 3, 4, 5, 6
and 7(f) hereof, the respective representations, warranties, covenants and
agreements of the parties hereto shall not survive the Effective Date but
shall terminate as of such date.
28. NOTICES. Any notice of communication required or permitted
hereunder shall be sufficiently given if in writing and (a) delivered in
person and (b) is also mailed by certified or registered mail, postage
prepaid), as follows:
If to Purchaser or Subsidiary, addressed to:
TDI Financial Corporation
161 East Chicago Avenue, Apt. 31B
Chicago, Illinois 60611
Attention: James W. Aldrich
With a copy addressed to:
Vedder, Price, Kaufman & Kammholz
222 N. LaSalle Street, Suite 2600
Chicago, Illinois 60601-1003
Attention: Robert J. Stucker, Esq.
or Daniel O'Rourke, Esq.
39
<PAGE>
If to Seller, addressed to:
Security Chicago Corp.
196 East Pearson
Chicago, Illinois 60611
Attention: James D. Polivka
With a copy addressed to:
Schwartz, Cooper, Greenberger & Krauss, Chartered
180 North LaSalle Street
Chicago, Illinois 60601
Attention: Robert Dunn Glick, Esq.
29. ENTIRE AGREEMENT. All exhibits and lists referred to in this
Agreement are integral parts hereof, and this Agreement, together with 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.
30. REMEDIES. Subject to the terms hereof, in the event of any willful
breach of this Agreement in any material respect by any of the parties
hereto, any other party hereto damaged shall have all the rights, remedies
and causes of action available at law or in equity.
[Signature Page Follows]
40
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
TDI FINANCIAL CORPORATION
ATTEST: By /s/ James W. Aldrich
---------------------------------
/s/ Randolph F. Williams President
- ---------------------------------
Secretary
SECURITY CHICAGO CORP.
ATTEST: By /s/ James D. Polivka
---------------------------------
/s/ Ronald A. Landsman Chairman
- ---------------------------------
Assistant Secretary
ALPHA ACQUISITION CORP.
ATTEST: By /s/ James W. Aldrich
---------------------------------
/s/ Randolph F. Willams President and Chief Executive Officer
- ---------------------------------
Secretary
<PAGE>
EXHIBITS
FOR
AND LISTS PURSUANT TO
AGREEMENT AND PLAN OF MERGER
by and among
TDI FINANCIAL CORPORATION
ALPHA ACQUISITION CORP.
and
SECURITY CHICAGO CORP.
May 28, 1996
<PAGE>
EXHIBIT LIST
EXHIBIT A - Form of Letter of Understanding re Employment/Consulting Matters
EXHIBIT B - Form of Purchaser's Escrow Agreement
EXHIBIT C - Form of Schwartz Cooper Opinion
EXHIBIT D - Form of Vedder, Price, Kaufman & Kammholz Opinion
<PAGE>
LIST INDEX
Document Paragraph Number Page Number
- -------- ---------------- -----------
Commitment List 8(b) 8
Subsidiary List 8(e) 9
Tax List 8(g)(i) 10
Contract List 8(h) 12
Real Estate List 8(i) 13
Litigation List 8(l) 14
Insurance List 8(o) 14
Franchise List 8(p) 15
Law and Regulation List 8(q) 15
Employee Benefit Plan List 8(u)(i) 16
Labor Contract List 8(v) 18
Environmental List 8(w)(i) 19
Loan List 8(y) 20
Investment Securities List 8(z) 20
Intellectual Property Rights List 8(aa) 21
Derivatives List 8(ad) 21
Fiduciary List 8(ae) 22
Affiliate Transaction List 8(af) 22
Amendment List 9(c)(iv) 24
<PAGE>
EXHIBIT B
SECURITY CHICAGO CORP.
(letterhead)
May 28, 1996
TO: The Shareholders of
Security Chicago Corp.
Dear Fellow Shareholders:
As the Chairman of your company, I am delighted to announce to you, on behalf
of myself and all of the other directors, that the company has, subject to
your approval and the approval of various regulatory authorities, entered
into an Agreement with TDI Financial Corporation, a company owned and
controlled by James W. Aldrich, the former Chairman and Chief Executive
Officer of Lake Shore National Bank, to acquire your stock at $60.00 per
share, in cash.
The Board of Directors considers TDI's offer to be quite sound, and, in
consultation with the company's counsel and other advisors, has determined
that the offer is fair to the shareholders. Accordingly, the directors will
call a special meeting of the shareholders, to be held later this year as
this transaction is working its way through the regulatory process, and will
recommend to the shareholders that at such meeting they approve the
Agreement. It is anticipated that, subject to approval by you and the
regulators, that this transaction can be consummated prior to year end. Full
disclosure of all of the important terms of this transaction will be
contained in the proxy materials that will be sent to you in connection with
the solicitation of your vote.
Once again, let me say that the directors of the company are very excited
about this event and we hope that you will be, too.
Sincerely yours,
/s/ JAMES D. POLIVKA
James D. Polivka
Chairman
Enclosure
196 EAST PEARSON - CHICAGO, ILLINOIS 60611 - 312/280-0360
<PAGE>
EXHIBIT C
FOR IMMEDIATE RELEASE
May 29, 1996
TDI FINANCIAL TO ACQUIRE SECURITY CHICAGO CORPORATION
CHICAGO (May 29) - James W. Aldrich, principal shareholder and chairman
of TDI Financial Corp. and James D. Polivka, chairman of Security Chicago
Corp., today jointly announced a definitive agreement under which TDI
Financial Corp. will purchase Security Chicago Corp. for $60 per share.
Aldrich is a long-time Chicago community banker. TDI is a Chicago-based
corporation established by Aldrich for the purpose of facilitating this
transaction.
Security Chicago Corp. had assets of over $70 million as of March 31,
1996. Security Chicago Corp. is a one bank holding company that owns First
Security Bank of Chicago located at 196 East Pearson Street. First Security
Bank also has a branch office at 446 East Ontario Street and a convenience
facility located in Water Tower Place.
"This action is in the best interest of our stockholders, customers, and
the community," said Polivka. "With his distinguished career in the financial
services industry and extensive knowledge of this market, Jim Aldrich brings
the resources and dedication to effectively position First Security for the
future. Jim also shares our community banking philosophy of offering quality
products and services without sacrificing the personal attention First
Security customers have come to expect."
Aldrich is the former chairman and chief executive officer of Lake
Shore National Bank, a long time fixture on Michigan Avenue. In 1993, Lake
Shore was acquired by First Chicago Corp. Prior to joining Lake Shore,
Aldrich was chairman and chief executive officer of LaSalle Northwest
National Bank, located on the northwest side of the City.
"First Security is a quality banking institution with a rich history of
serving the Magnificent Mile, Gold Coast and Streeterville neighborhoods. My
intention is to build upon future financial needs. I also intend to build on
First Security's tradition of being an active participant in this
neighborhood," said Aldrich.
The transaction, which is expected to close during the fourth quarter of
this year, is subject to the approval by the stockholders of Security Chicago
Corp. and appropriate regulatory agencies.
