SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No __)*
Illini Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
451773105
- --------------------------------------------------------------------------------
(CUSIP Number)
Samuel J. Witsman
Hart, Southworth & Witsman
One North Old State Capitol Plaza, Suite 501, Springfield, IL 62701-1323
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 19, 1999
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following page(s))
Page 1 of 6 Pages
<PAGE>
CUSIP NO. 451773105 13D Page 2 of 6 Pages
---------------- --------------------------
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Ernest H. Huls
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
123,333
SHARES -------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY -0-
-------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 123,333
-------------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH -0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
123,333
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.57%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 3 of 6 Pages
ITEM 1. SECURITY AND ISSUER
This Schedule 13D relates to the shares of Common Stock, $10.00 par
value per share (the "Shares"), of Illini Corporation, a Illinois corporation
("Illini"), whose principal executive offices are located at 3200 West Iles
Avenue, Springfield, Illinois 62707.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement on Schedule 13D is filed by Ernest H. Huls (the
"Reporting Person").
(b) The address for the Reporting Person is: #1 Huls Place
Box 579
Gifford, IL 61847
(c) The Reporting Person is retired, former chairman of Farmers
State Bank of Camp Point.
(d) The Reporting Person has not been convicted in any criminal
proceeding (excluding traffic violations or similar
misdemeanors) during the last five years.
(e) During the last five years, the Reporting Person has not been
a party to any civil proceeding of a judicial or
administrative body of competent jurisdiction which as a
result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or
State securities laws or finding any violation with respect to
such laws.
(f) The Reporting Person is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS.
The Shares covered by this Schedule 13D were acquired by the Reporting
Person in exchange for all of the issued and outstanding shares held by the
Reporting Person of common stock of Farmers State Bank of Camp Point ("Farmers
State Bank") pursuant to the terms of the Agreement and Plan of Reorganization,
dated as of March 2, 1999 (the "Reorganization Agreement"), between Illini and
Farmers State Bank. Pursuant to the Reorganization Agreement, Farmers State Bank
was merged with and into Farmers Interim Bank, a wholly-owned subsidiary of
Illini, (the "Merger") and each share of common stock of Farmers State Bank was
converted into cash and shares of common stock of Illini pursuant to the terms
of the Reorganization Agreement. The Reorganization Agreement is filed as
Exhibit 1 to this Schedule 13D.
<PAGE>
Page 4 of 6 Pages
ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Person has acquired the Shares described in this Schedule
13D in order to effect the Merger pursuant to the terms of the Reorganization
Agreement as described above.
The Reporting Person does not intend to make a tender offer or propose
a merger, reorganization, liquidation or similar transaction involving Illini;
or, to make any change in the Board of Directors, management, business,
corporate structure, capitalization, dividend policy, Articles of Incorporation,
Bylaws or listing or registration of securities of Illini; or to take any action
similar to any of those set forth above.
As a condition of the Merger, the Reporting Person on November 19, 1999
entered into a certain Non-compete, Standstill and Sale of Personal Goodwill
Agreement (the "Standstill Agreement") with Illini as more fully described in
Item 6 of this Schedule 13D. The Standstill Agreement may impede the acquisition
of control of Illini by another party. The Standstill Agreement is filed as
Exhibit 2 to this Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Reporting Person beneficially owns 123,333 Shares, equal
to approximately 21.57% of the outstanding Shares.
(b) The Reporting Person has the sole power to vote or to direct
the vote and sole power to dispose or to direct the
disposition of 123,333 of the Shares owned by him.
(c) The Reporting Person received the Shares in connection with
the consummation of the Merger, as described above, on
November 19, 1999.
Except as described above, to the best of his knowledge, the
Reporting Person does not own or have any right to acquire,
direct or indirectly, any Shares, or has not effected any
transactions in the Shares in the last 60 days.
(d) No other person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds
from the sale of the Shares.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
As a condition of the Merger, the Reporting Person on November 19, 1999
entered into a
<PAGE>
Page 5 of 6 Pages
certain Non-compete, Standstill and Sale of Personal Goodwill Agreement (the
"Standstill Agreement") with Illini pursuant to which the Reporting Person
agreed that for a period ending on the fifth anniversary of the closing date of
the Merger, in the election of directors of Illini and on all other matters
submitted to a vote of shareholders, the Reporting Person will vote (whether by
proxy or otherwise) all shares of Illini Common Stock then beneficially owned by
him in the manner recommended by Illini.
In addition, pursuant to the Standstill Agreement, the Reporting Person
agreed that for a period ending on the fifth anniversary of the Closing Date,
the Reporting Person and his affiliates will not, alone or in concert with
others, directly or indirectly, unless specifically requested in writing in
advance by Illini: (i) purchase or otherwise acquire, or agree to acquire,
ownership (including, but not limited to, beneficial ownership) of any Illini
Common Stock, or direct or indirect rights (including convertible securities) or
options to acquire such ownership other than as specifically contemplated by the
Merger Agreement and other than as may be acquired by virtue of any stock
dividend, stock split or similar distribution of Illini Common Stock; (ii) make
any public announcement with respect to, or submit any proposal for, the
acquisition of beneficial ownership of Illini Common Stock (or direct or
indirect rights, including convertible securities, or options to acquire such
beneficial ownership) or for or with respect to any merger, consolidation, sale
of substantial assets or business combination involving Illini or any of its
affiliates; (iii) initiate or propose any shareholder proposals for submission
to a vote of shareholders with respect to Illini or any of its affiliates or
propose any person for election to the Board of Directors of Illini or any of
its affiliates; or (iv) otherwise seek to control the management or policies of
Illini or any of its affiliates.
Pursuant to the Standstill Agreement, the Reporting Person further
agreed that the requirements contained in the Standstill Agreement are to be
binding on any transferee of the Reporting Person and that the Reporting
Person's stock will not be transferred to any person unless prior to the
transfer, the transferee agrees in writing to be bound by the applicable terms
of the Standstill Agreement.
Except as described above or otherwise disclosed herein, the Reporting
Person is not a party to any contract, arrangement, understanding or
relationship (legal or otherwise) with respect to any securities of Illini.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1. Agreement and Plan of Reorganization between Illini and
Farmers State Bank dated as of March 2, 1999.
Exhibit 2. Non-compete, Standstill and Sale of Personal Goodwill
Agreement between Illini and the Reporting Person dated as of November
19, 1999.
<PAGE>
Page 6 of 6 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Dated: November 23, 1999
------------------------
/s/ Ernest H. Huls
-----------------------------------------
Ernest H. Huls
Exhibit 1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
ILLINI CORPORATION
AND
FARMERS STATE BANK OF CAMP POINT
Dated as of March 2, 1999
Exhibit 1-1
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement") is made
and entered into as of the 2nd day of March, 1999, by and between ILLINI
CORPORATION, an Illinois corporation ("ILLINI") and FARMERS STATE BANK OF CAMP
POINT, an Illinois banking corporation ("FARMERS").
WHEREAS, the Boards of Directors of ILLINI and FARMERS deem it
advisable and in the best interests of the parties hereto and their respective
stockholders, to consummate the Merger (as defined in Section 1.1), upon the
terms and subject to the conditions of this Agreement; and
WHEREAS, ILLINI and FARMERS desire to make certain representations,
warranties, covenants and agreements in connection with the Merger.
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions herein
contained, the parties hereto covenant and agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement
and of the other agreements referred to in this Article I, in accordance with
the Illinois Banking Act (the "IBA") and a Merger Agreement to be entered into
by and between FARMERS INTERIM BANK, an Illinois banking corporation that will
be formed by ILLINI and will be a subsidiary of ILLINI ("INTERIM BANK") and
FARMERS (the "Merger Agreement"), substantially in the form of Exhibit A
attached hereto, at the Effective Time (as defined in the Merger Agreement),
FARMERS shall be merged with and into INTERIM BANK (the "Merger"). INTERIM BANK
shall be the resulting bank ("RESULTING BANK") in the Merger and shall be
considered the same business and corporate entity as each merging bank and shall
have the other properties, liabilities and attributes as provided by the IBA. As
set forth more fully in the Merger Agreement (which provisions shall control in
the event of any conflict with the terms of this Agreement), pursuant to the
Merger:
(a) the Charter of INTERIM BANK as in effect as of the
Effective Time, shall be the charter of the RESULTING BANK, except that it shall
be deemed to be amended so that, at the Effective Time, the name of the
RESULTING BANK shall be "Farmers State Bank of Camp Point" and the amount of
capital and the number of shares of capital stock shall be as provided in
Section D of the Recitals to the Merger Agreement;
(b) the Bylaws of INTERIM BANK as in effect immediately prior
to the Effective Time shall be, from and after the Effective Time, the Bylaws of
the RESULTING BANK;
(c) the directors of FARMERS immediately prior to the
Effective Time shall be, from and after the Effective Time, the directors of the
RESULTING BANK and except that there shall
Exhibit 1-2
<PAGE>
be two (2) additional persons designated by ILLINI to serve on the Board of
Directors of the RESULTING BANK;
(d) the officers of FARMERS immediately prior to the Effective
Time shall be, from and after the Effective Time, the officers of the RESULTING
BANK;
(e) at the Effective Time, all shares of common stock of the
RESULTING BANK shall be owned by ILLINI;
(f) each share of common stock, par value $100.00 per share,
of FARMERS other than shares held by Ernest H. Huls ("Non-Huls Share") issued
and outstanding immediately prior to the Effective Time shall be converted,
without any action by the holder thereof, into the right to receive $2,190.00
cash for each Non-Huls Share ($1,484,820.00 in the aggregate) and each share of
common stock, par value $100.00 per share, of FARMERS held by Ernest H. Huls
("Huls Share") issued and outstanding immediately prior to the Effective Time
shall be converted, without any action by the holder thereof, into a combination
of 71.622 shares of ILLINI Common Stock par value $10.00 per share (123,333
shares in the aggregate) and $1,028.71 cash ($1,771,440.00 in the aggregate);
provided, however, in the event that, after giving effect to any anti-dilution
adjustment contemplated by Section 1.4 hereof, it would be impracticable (by
reason of court order or otherwise) for ILLINI to issue in exchange for the Huls
Shares the aggregate number of shares of ILLINI Common Stock contemplated
hereby, then each Huls Share issued and outstanding immediately prior to the
Effective Time shall be converted, without any action by the holder thereof,
into the right to receive $3,208.35 cash ($5,524,778.00 in the aggregate) and no
shares of ILLINI Common Stock shall be issued in exchange therefore. The
determination concerning whether it shall have become impracticable for ILLINI
to issue the ILLINI Common Stock contemplated hereby shall be made by the
resolution of the Board of Directors of ILLINI in its sole discretion. In the
event that ILLINI'S Board of Directors takes the action described in the
preceding sentence, ILLINI will within five (5) business days of the date on
which such action is taken, notify FARMERS in writing that such action has been
taken and FARMERS shall thereupon be permitted to terminate this Agreement by
providing written notice thereof to ILLINI within five (5) business days after
receipt of the notification from ILLINI. In the event FARMERS shall not have
provided such notice within said time period, it shall be deemed to have waived
such termination right.
1.2 Exchange Agent. Prior to the Closing, ILLINI may designate an
exchange agent to deliver to the stockholders of FARMERS the cash and ILLINI
Common Stock which they are entitled to receive pursuant to the Merger.
1.3 The Closing. The closing of the transactions contemplated by this
Agreement and the Merger Agreement (the "Closing") shall take place at the
offices of FARMERS, 206 East Wood Street, Camp Point, Illinois, on a date and
time mutually agreeable to the parties hereto (hereinafter referred to sometimes
as the "Closing Date").
1.4 Changes in ILLINI Common Stock. FARMERS and ILLINI each acknowledge
that litigation is pending concerning whether obligations have arisen pursuant
to that certain Rights
Exhibit 1-3
<PAGE>
Agreement by and between ILLINI Corporation and Illinois Stock Transfer Company
dated as of June 20, 1997 (the "Rights Agreement") which could affect the number
of shares of ILLINI Common Stock issued and outstanding. Subject to the proviso
contained in Section 1.1(f), if by virtue of the Rights Agreement or otherwise,
between the date of this Agreement and the Effective Time, the number of shares
of ILLINI Common Stock issued and outstanding shall be changed into a different
number of shares by reason of any issuance, reclassification, recapitalization,
split-up, combination or exchange of shares, or if a stock dividend thereon
shall be declared with a record date within said period, the number of shares of
ILLINI Common Stock to be issued pursuant hereto shall be adjusted accordingly.
ARTICLE II
STATEMENTS OF ESSENTIAL FACTS
CONCERNING FARMERS
This Agreement is entered into by ILLINI upon the understanding, and
FARMERS represents and warrants, that the following statements of essential
facts ("FARMERS Statements of Essential Facts") are true and correct on the date
of this Agreement.
2.1 Organization and Existence of FARMERS. FARMERS is a state bank duly
chartered and organized, validly existing and currently authorized to transact
the business of banking under the laws of the State of Illinois and is duly
authorized and has full power to own its properties and carry on its business as
now being conducted. FARMERS does not own or control any voting stock or equity
securities of any other entity.
2.2 Organizational Documents; Minutes and Stock Records. FARMERS has
furnished ILLINI with copies of its Charter and bylaws, in each case as amended
to the date hereof, and with such other documents relating to the authority of
FARMERS to conduct its business as ILLINI has requested. All such documents are
complete and correct copies of the original documents. The stock register and
minute book of FARMERS are complete and correct in all material respects and
accurately reflect all meetings, consents and other actions of the organizers,
incorporators, shareholders, Board of Directors and committees of the Board of
Directors of FARMERS and all transactions in the capital stock of FARMERS
occurring since its initial organization.
2.3 Authorization of Transactions. The execution, delivery and
performance of this Agreement have been, and the execution, delivery and
performance of the Merger Agreement will be, prior to the Closing Date, duly
authorized by the Board of Directors of FARMERS in accordance with governing
Illinois law. This Agreement constitutes, and the Merger Agreement will
constitute, the legal, valid, and binding obligations of FARMERS, enforceable
against FARMERS in accordance with their respective terms. Subject to such
approval by the stockholders of FARMERS as contemplated by Section 5.1(d) hereof
and as may be required by the laws of the State of Illinois. FARMERS has the
corporate power to execute, deliver and perform this Agreement and the Merger
Agreement and to consummate the transactions herein and therein contemplated,
and such execution, delivery and performance do not and will not violate any
provisions of the Charter or bylaws of FARMERS, or any agreement to or by which
FARMERS is
Exhibit 1-4
<PAGE>
a party or is otherwise bound. Except for the regulatory approvals referred to
in Section 5.1(c) hereof and the approval of stockholders referred to in Section
5.1(d) hereof, no consent of any regulatory authority or other person is
required to be obtained by FARMERS in order to permit consummation of the
Merger.
2.4 Capitalization. The authorized capital stock of FARMERS consists
solely of 2,400 shares of common stock, $100.00 par value per share, all of
which shares are issued and outstanding ("FARMERS Shares"). No FARMERS Shares
are held in treasury. The FARMERS Shares have been duly and validly authorized
and issued and are fully paid and nonassessable. None of the FARMERS Shares have
been issued in violation of any preemptive rights. Except for the rights of
ILLINI under this Agreement and the Merger Agreement, there are no outstanding
warrants, options, rights, calls, agreements, understandings, or other
commitments of any nature relating to the FARMERS Shares, or concerning the
authorization, issuance or sale of any other equity securities of FARMERS. The
number of shares set forth above is not subject to change before the Effective
Time. All of the FARMERS Shares will be entitled to vote on this Agreement.
2.5 Financial Statements.
(a) FARMERS has furnished ILLINI with true and complete copies
of the following financial statements (the "FARMERS Financial Statements"): the
Consolidated Reports of Condition and Consolidated Reports of Income of FARMERS
as of and for the periods ended December 31, 1998 as filed with the Federal
Deposit Insurance Corporation (the "FDIC"). Since December 31, 1998, and as of
the date of this Agreement, there have not been any changes in the financial
condition, assets, liabilities or business of FARMERS, other than changes in the
ordinary course of business, none of which have been materially adverse.
(b) FARMERS will furnish ILLINI with copies of its unaudited
Consolidated Reports of Condition and Consolidated Reports of Income for each
annual and quarterly period subsequent to December 31, 1998, until the Effective
Time ("FARMERS Subsequent Financial Statements").
(c) All of the aforesaid FARMERS Financial Statements have
been, and, with respect to the FARMERS Subsequent Financial Statements, will be,
prepared in accordance with generally accepted accounting principles, utilizing
accounting practices consistent with prior years except as otherwise disclosed.
None of the aforesaid FARMERS Financial Statements fail to disclose, and none of
the FARMERS Subsequent Financial Statements will fail to disclose, any items
that should be disclosed. All for the aforesaid FARMERS Financial Statements
present fairly, and all of the FARMERS Subsequent Financial Statements will
present fairly, the financial position of FARMERS and the results of its
operations and changes in its financial position at the respective dates and for
the respective periods to which they relate. The allowance for loan and lease
losses in such FARMERS Financial Statements is, and with respect to the FARMERS
Subsequent Financial Statements will be, adequate based on past loan and lease
loss experiences and potential losses in the current portfolio to cover all
known or anticipated loan and lease losses. There are and, with respect to the
FARMERS Subsequent Financial Statements, will be no agreements, contracts
Exhibit 1-5
<PAGE>
or other instruments to which FARMERS is a party or by which it or, to the
knowledge of the executive officers of FARMERS, any of the officers, directors,
employees or stockholders of FARMERS have rights which would have a materially
adverse effect on FARMERS and which are not reflected in the FARMERS Financial
Statements and the FARMERS Subsequent Financial Statements.
2.6 Undisclosed Liabilities. FARMERS has no liabilities, whether
accrued, absolute, contingent or otherwise, existing or arising out of any
transaction or state of facts existing on or prior to the date hereof, except:
(a) as and to the extent disclosed, reflected or reserved against in the FARMERS
Financial Statements, (b) as and to the extent arising under contracts,
commitments, transactions or circumstances identified in the schedules and
exhibits provided for herein, and (c) as and to the extent incurred in the
ordinary course of business since September 30, 1998, which in the aggregate are
not materially adverse.
2.7 Loan Portfolio. The loans contained in the loan portfolio of
FARMERS are evidenced by promissory notes or other evidences of indebtedness,
which, with all ancillary security documents, constitute valid and binding
obligations of FARMERS and each of the other parties thereto enforceable in
accordance with their terms, except as limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights and remedies generally from time to time in effect and by
applicable laws which may affect the availability of equitable remedies. None of
such loans is subject to any defense, set-off, or counterclaim of any party
liable thereon, and all of such loans that are secured, as evidenced by the
ancillary security documents, are so secured by valid and enforceable liens.
2.8 No Adverse Changes. Other than as specifically disclosed in this
Agreement, the FARMERS Financial Statements, the schedules delivered pursuant to
this Agreement or the documents referred to in this Agreement as having been
delivered to ILLINI there has not occurred (a) any material adverse change since
December 31, 1998 in the business, income, assets, liabilities, financial
condition or prospects of FARMERS, or (b) any condition (other than general
economic or competitive conditions), event, circumstance, fact or other
occurrence, whether occurring before or since December 31, 1998, that may
reasonably be expected to have or result in such a material adverse change.
2.9 Conduct of Business in Normal Course. Except as reflected in
Schedule 2.9, the business of FARMERS, since December 31, 1998, has been
conducted only in the ordinary and usual course consistent with past practice
and with the restrictions set forth in Section 4.1 hereof (as though such
restrictions had been in force and effect throughout such period).
Exhibit 1-6
<PAGE>
2.10 Properties and Assets.
(a) FARMERS has furnished ILLINI with Schedule 2.10(a),
Schedule of Real Property, which sets forth a complete and correct description
of all real property owned or leased by FARMERS, including all real property
carried by the FARMERS as Other Real Estate Owned or which is the subject of a
pending foreclosure proceeding by FARMERS. FARMERS owns, or has a valid right to
use or a valid leasehold interest in, all real property used by FARMERS in the
conduct of its business as such business has been or is now being conducted.
Except as otherwise disclosed on Schedule 2.10(a), FARMERS' ownership or
leasehold interest in such property is subject to no mortgage, pledge, lien,
option, conditional sale agreement, encumbrance, security interest, title
exceptions or restrictions or claim or charge of any kind ("Encumbrances"),
except for liens and taxes not yet due and payable. No improvement on the real
property upon which FARMERS' main banking premises, branch banking premises,
drive up facilities and parking lots are located (the "Bank Premises")
encroaches on any property owned by others or otherwise conflicts with the
rights of any other and there are no encroachments onto the Bank Premises from
adjoining properties. All certificates, licenses and permits required for the
lawful use and occupancy of any real property by FARMERS have been obtained and
are in full force and effect.
(b) FARMERS has furnished ILLINI with Schedule 2.10(b),
Schedule of Tangible Personal Property, which sets forth a complete and correct
description of all material personal property owned by FARMERS or used by
FARMERS in the conduct of its business. Except as otherwise disclosed in
Schedule 2.10(b), all of said assets are owned free and clear of any
Encumbrances and all of said assets are in good working condition, normal wear
and tear excepted. All of such property is insured against loss for customary
risks and in customary amounts. The assets reflected in the most recent of the
Financial Statements or identified in this Agreement or in the schedules
provided for herein include (i) all of the assets owned by FARMERS, except for
those subsequently disposed of by FARMERS for fair value in the ordinary course
of business, and (ii) all of the assets used or intended for use by FARMERS in
the conduct of its business.
2.11 Insurance. FARMERS has furnished ILLINI with Schedule 2.11,
Schedule of Insurance, which sets forth a complete and correct list and copies
of all policies of insurance in which FARMERS is named as an insured party,
which otherwise relate to or cover any assets, properties, premises, operations
or personnel of FARMERS or which is owned or carried by FARMERS. FARMERS has in
full force and effect the policies of insurance set forth in Schedule 2.11.
There has been no notice given by any party of interest in or to any such
policies claiming any breach or violation of any provisions thereof, disclaiming
or denying any coverage thereof or canceling or threatening cancellation of any
such insurance contracts.
2.12 Litigation and Compliance with Laws. FARMERS and its respective
institution affiliated parties (as defined in 12 U.S.C. ss. 181 3(u)) are in
compliance in all material respects with all applicable federal, state, county
and municipal laws and regulations (a) that regulate or are concerned in any way
with the ownership and operation of FARMERS or the business of banking,
including those laws and regulations relating to the investment of funds, the
taking of
Exhibit 1-7
<PAGE>
deposits, the lending of money, the collection of interest, the extension of
credit and the location and operation of banking facilities, or (b) that
otherwise relate to or affect the business or assets of FARMERS or the assets
owned, used, occupied or managed by FARMERS. There are no claims, actions,
suits, orders or proceedings pending or, to the best knowledge of FARMERS,
threatened or contemplated against or affecting FARMERS or the
institution-affiliated parties of FARMERS (in their capacities as such), at law
or in equity, or before any federal, state, municipal or other governmental
authority or any arbitrator or arbitration panel, whether by contract or
otherwise, and there is no decree, judgment, or order or supervisory agreement
of any kind in existence against or restraining FARMERS or any of its respective
institution-affiliated parties from taking any action of any kind in connection
with the business of FARMERS. FARMERS has not received from any regulatory
authority any notice or threat of enforcement actions, or any criticism,
recommendation or suggestion of a material nature, and FARMERS has no reasonable
basis for believing that any such notice or threat, criticism, recommendation or
suggestion not otherwise disclosed herein is contemplated concerning capital,
compliance with laws or regulations, safety or soundness, fiduciary duties or
other banking or business practice that has not been resolved to the reasonable
satisfaction of such authority.
2.13 Conflict of Interest Transactions. Except as reflected in Schedule
2.13, Schedule of Interested Transactions, no officer or director of FARMERS, or
holder of 10% or more of the FARMERS Shares or any member of the immediate
family of any such person: (i) has any direct or indirect interest in any entity
which does business with FARMERS, or any property or asset which is owned or
used by FARMERS in the conduct of its business; (ii) has any financial, business
or contractual relationship or arrangement with FARMERS, excluding any
agreements and commitments entered into in respect of FARMERS' acceptance of
deposits or investments; or (iii) since September 30, 1998, has been involved in
any transaction with FARMERS which involves an amount in excess of $10,000 or
has been involved in any other material transaction with FARMERS or has loans or
any commitment to loan outstanding from FARMERS involving an amount in excess of
$10,000.
2.14 Significant Contracts. FARMERS has furnished to ILLINI Schedule
2.14, Schedule of Significant Contracts, together with true and complete copies
of the documents referred to in Schedule 2.14, which completely and accurately
describes every contract, commitment, or arrangement (whether written or oral)
of a material nature (or that assumes materiality because of its continuing
nature) under which FARMERS is obligated on the date hereof, including the
following:
(a) All leases of real estate or personal property, other than
leases of personal property whereunder total future rentals are, in each
instance, less than $10,000;
(b) All contracts, commitments and agreements for the
acquisition, development or disposition of real or personal property other than
conditional sales contracts and security agreements for the acquisition of
personal property whereunder total future payments are, in each instance, less
than $10,000;
Exhibit 1-8
<PAGE>
(c) All employee benefit plans (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974 ("ERISA") under which
FARMERS or any of its affiliates has or may have any obligation ("ERISA Plans"),
all other employee compensation arrangements, all severance agreements and all
other bonus, deferred compensation, pension, retirement, profit sharing, stock
option, stock purchase, stock appreciation and other employee benefit plans,
formal or informal, under which FARMERS or any of their affiliates has or may
have any obligation ("Non-ERISA Plans" and, together with ERISA Plans, the
"Benefit Plans");
(d) All union and other labor contracts;
(e) All agreements, contracts, mortgages, loans, deeds of
trust, leases, commitments, indentures, notes, instruments and other
arrangements which are with officers or directors of FARMERS, any "affiliates"
of FARMERS within the meaning of Section 23A of the Federal Reserve Act, or any
record or beneficial owner of 5% or more of the FARMERS Shares, excepting any
ordinary and customary banking relationships that comply with applicable banking
regulations; and
(f) All other material contracts, made other than in the usual
or ordinary course of business of FARMERS, to which FARMERS is a party or under
which FARMERS is obligated.
2.15 No Defaults. FARMERS has fulfilled and taken all action reasonably
necessary to date to enable it to fulfill, when due, all of its material
obligations under all contracts, commitments and arrangements to which it is a
party. There are no defaults under any such contracts, commitments and
arrangements, and no events have occurred that, with the lapse of time or the
election of any other party, will become defaults by FARMERS. No breach or
default by any other party under such contracts, commitments or arrangements has
occurred or is threatened that will or could impair the ability of FARMERS to
enforce any of its rights thereunder in any material respect.
2.16 Securities Schedules. FARMERS has furnished to ILLINI Schedule
2.16, Securities Schedule, setting forth all investment securities owned by
FARMERS as of December 31, 1998 and as of the month-end preceding the date of
this Agreement. Except for pledges to secure public deposits, none of the
investments identified on Schedule 2.16 and none of the investments made by
FARMERS since December 31, 1998 is subject to any restriction, whether
contractual or statutory, which materially impairs the ability of FARMERS freely
to dispose of such investment at any time. With respect to all repurchase
agreements to which FARMERS is a party, FARMERS has a valid, perfected first
lien or security interest in the government securities or other collateral
securing the 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. FARMERS has not sold or 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 FARMERS to
repurchase or otherwise reacquire any such assets.
Exhibit 1-9
<PAGE>
2.17 Oral Commitments. The records of FARMERS contain accurate copies
of all contracts, commitments or arrangements of a material nature, and FARMERS
has not entered into any contract, commitment or arrangement, not reduced to
writing, in which it has agreed (i) to loan money or extend credit, or to make
other financial accommodations, to or for the benefit of another party, (ii) to
waive, release, modify, extend or defer the obligations or the terms thereof of
any other party to repay indebtedness owing to FARMERS or to forbear in the
enforcement of any right or remedy of FARMERS with respect thereto, (iii) to
release, relinquish or discharge any guarantor, surety, or other party that is
or may be liable for repayment of indebtedness owing to FARMERS, (iv) to release
or surrender, in whole or in part, any collateral or rights therein, securing
the obligation of any party that is or may be liable for repayment of
indebtedness owing to FARMERS or (v) to purchase or sell, or repurchase or
resell, any asset or interest or participation therein from or to any party.
2.18 Taxes. All federal, state and local income, franchise, excise,
real and personal property, employment and other tax reports, returns,
declarations and information statements (collectively, the "Returns") required
to be filed by FARMERS have been timely filed. All Returns covering periods
through the fiscal year ended December 31, 1997, have been filed, and no
application for extension of time for filing any Return or consent to any
extension of the period of limitations applicable to the assessment or
collection of any tax is in effect with respect to FARMERS. FARMERS is not
delinquent in the payment of any taxes claimed to be due by any taxing
authority, and adequate provisions for taxes (including any penalties and
interest) have been made on the books of FARMERS and on the most recent of the
Financial Statements. None of the Returns filed with the Internal Revenue
Service covering the fiscal years commencing January 1, 1990 have been examined.
FARMERS has not received any notice of any proposed deficiency of FARMERS for
any duty, tax, assessment or governmental charge, and there are no pending
claims with respect thereto.
2.19 Employee Compensation and Benefit Plans.
(a) Schedule 2.14, Schedule of Significant Contracts, referred
to in Section 2.14, sets forth a complete and accurate list of all Benefit
Plans, including ERISA and Non-ERISA Plans, which FARMERS or any ERISA Affiliate
of FARMERS maintains or to which FARMERS or any ERISA Affiliate contributes or
has contributed, or to which FARMERS or any ERISA Affiliate of FARMERS is a
party or by which it is otherwise bound. The term "ERISA Affiliate" shall mean
with respect to any person, any trade or business (whether or not incorporated)
which, (i) together with such person, is under "common control" as described in
Section 414(c) of the Internal Revenue Code of 1986, as amended (the "Code") and
the Consolidated Omnibus Budget Reconciliation Act and regulations or
interpretations thereunder, or (ii) is a member of a "controlled group" as
defined in Section 414(b) of the Code, which includes such person.
(b) FARMERS has not entered into and does not maintain any
Benefit Plan which includes any change of control provisions which would cause
an increase or acceleration of benefits or benefit entitlements to employees or
former employees of FARMERS or any other
Exhibit 1-10
<PAGE>
increase in the liabilities of FARMERS under such Benefit Plan as a result of
the transactions contemplated by this Agreement.
(c) Neither FARMERS nor any ERISA Affiliate of FARMERS
maintains or participates in a multi-employer plan within the meaning of Section
3(37) of ERISA. Neither FARMERS nor any ERISA Affiliate of FARMERS nor any
director or employee of any of the foregoing, nor any fiduciary of any ERISA
Plan has engaged in any transaction in violation of Section 406 of ERISA or any
"prohibited transaction" (as defined in Section 4975(c)(1) of the Code) for
which no exemption exists under Section 408(b) of ERISA or Section 4975(d) of
the Code in connection with such ERISA Plan. Neither FARMERS nor any ERISA
Affiliate of FARMERS provides or has ever provided medical benefits to former
employees, except as required by Section 601 of ERISA.
(d) No liability to the Pension Benefit Guaranty Corporation
("PBGC") has been incurred, or is expected to be incurred, by FARMERS with
respect to any Title IV Plan (as defined below), other than premium payment
obligations. The PBGC has not instituted any proceedings, and there exists no
event or condition which would constitute grounds for institution of proceedings
by the PBGC, to terminate any Title IV Plan under Section 4024 of ERISA. The
term "Title IV Plan" shall mean any ERISA Plan that is a defined benefit plan
(as defined in Section 3(35) of ERISA) and is subject to Title IV of ERISA. No
reportable event (as defined in Section 4043 of ERISA) has occurred with respect
to any Title IV Plan.
(e) No Title IV Plan had an accumulated funding deficiency (as
such term is defined in Section 302 of ERISA) as of the last day of the most
recent plan year of such Title IV Plan. The value of the assets of each Title IV
Plan as of the last day of the most recent plan year of such Title IV Plan, as
determined by such plan's independent actuaries, exceeded the present value, as
of such date, of all benefits accrued under such Title IV Plan, as determined by
such actuaries. No events have occurred or, to the best knowledge of FARMERS,
are expected to occur with respect to any Title IV Plan that would cause a
material change in the value of the assets or benefits of such Title IV Plan for
purposes of the preceding sentence. There have been no changes in the actuarial
methods or assumptions used with respect to any Title IV Plan.
(f) Each ERISA Plan that is intended to qualify under Section
401 and related provisions of the Code is the subject of a determination letter
from the Internal Revenue Service to the effect that it is so qualified under
the Code and that its related funding instrument is tax-exempt under Section 501
of the Code.
(g) Except as provided in Schedule 2.19(g), Schedule of
Benefit Plan Exceptions, each Benefit Plan is, and since its inception has been,
administered in material compliance with its terms and with all applicable laws,
rules and regulations governing such Benefit Plan, including, without
limitation, the rules and regulations promulgated by the Department of Labor,
the PBGC and the Internal Revenue Service under ERISA, the Code or any other
applicable law. None of FARMERS or any fiduciary with respect to any Benefit
Plan has breached any of the responsibilities, obligations or duties imposed on
it by ERISA.
Exhibit 1-11
<PAGE>
(h) There is no litigation, claim or assessment pending or, to
the best knowledge of FARMERS, threatened by, on behalf of, or against any of
the Benefit Plans or against the administrators or trustees or other fiduciaries
of any Benefit Plan that alleges a violation of applicable state or federal law.
To the best knowledge of FARMERS, there is no basis for any such litigation,
claim or assessment.
(i) All accrued contributions and other payments to be made by
FARMERS to any Benefit Plan through the date hereof have been made or reserves
adequate for such purposes have been set aside therefor and are reflected in the
Financial Statements. FARMERS is not in default in performing any of its
respective contractual obligations under any Benefit Plan or any related trust
agreement or insurance contract. There are no outstanding liabilities with
respect to any Benefit Plan other than liabilities for benefits to be paid to
participants in such Benefit Plan and their beneficiaries in accordance with the
terms of such Benefit Plan.
(j) There are no employment or similar agreements by which
FARMERS is obligated or bound which is not terminable by FARMERS at will and
without further obligation on not more than thirty (30) days notice.
2.20 Environmental Suits and Proceedings. FARMERS has had and now has
all environmental approvals, consents, licenses, permits and orders required to
conduct the businesses in which it has been or is now engaged. FARMERS has been
and is in compliance in all material respects with all applicable federal,
state, county and municipal laws, regulations, authorizations, licenses,
approvals, permits and orders relating to air, water, soil, solid waste
management, hazardous or toxic substances, or the protection of health or the
environment (collectively, the "Environmental Laws"). There are no claims,
actions, suits or proceedings pending or, to the best knowledge of FARMERS,
threatened against, or involving, FARMERS or any assets of FARMERS under any of
the Environmental Laws (whether by reason of any failure to comply with any of
the Environmental Laws or otherwise). No decree, judgment or order of any kind
under any of the Environmental Laws has been entered against FARMERS. FARMERS is
not or was not a generator or transporter of hazardous waste, or the owner,
operator, lessor or sublessor of a treatment, storage, or disposal facility or
underground storage tank as those terms are defined under the Resource
Conservation and Recovery Act, as amended, or regulations promulgated pursuant
thereto. FARMERS (i) does not own, operate, lease or sublease or has not owned,
operated, leased or subleased any facility at which any Hazardous Substances (as
defined below) were treated, stored, recycled, disposed or are or were installed
or incorporated, (ii) arranged for the disposal or treatment, or arranged with a
transporter for transport for disposal or treatment of Hazardous Substances at
any facility from which there is a release or threat of release, or (iii) has
not and does not accept Hazardous Substances for transport for disposal or
treatment at any facility, as those terms are defined under the Comprehensive
Environmental Response, Compensation and Liability Act, as amended ("CERCLA").
FARMERS (i) is not or was not the owner, lessee or mortgagee with respect to any
real property on which there is or was located a treatment, storage or disposal
facility, underground storage tank or any facility at which any Hazardous
Substances are or were treated, stored, recycled or disposed, and (ii) is not
and has not been the holder of a security interest where the party giving the
security is or was the owner
Exhibit 1-12
<PAGE>
or operator of a treatment, storage or disposal facility, underground storage
tank or any facility at which any Hazardous Substances are or were treated,
stored, recycled or disposed and where FARMERS participates or participated in
management decisions concerning the facility's waste disposal activities. To the
best knowledge of FARMERS, there are no other facts, conditions or situations,
whether now or heretofore existing, that could form the basis for any claim
against, or result in any liability of FARMERS under any of the Environmental
Laws. For purposes of this Section 2.20, "Hazardous Substance" shall mean a
hazardous substance (as defined in CERCLA) and petroleum, including crude oil or
any fraction thereof, but excluding underground crude oil in its natural
unrefined state, prior to its initial extraction.
2.21 Regulatory Reports. FARMERS has filed all reports, registrations,
and statements, together with any amendments required to be made with respect
thereto, required to be filed with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), the FDIC and the Illinois Commissioner of
Banks and Real Estate (the "Commissioner") or other bank regulatory agency
(collectively, the "FARMERS Regulatory Reports"), and has paid all fees or
assessments due and payable in connection therewith. To the extent permissible
by law, FARMERS has furnished ILLINI with a copy of any report, correspondence
or statement by any Federal, state or local governmental agency, commission or
other entity relating to an examination of FARMERS within the past five years.
There is no unresolved violation, criticism or exception of a material nature
cited by the Federal Reserve Board, the FDIC, the Commissioner or other agency,
commission or entity with respect to any report or statement referred to in this
Section 2.21. As of their respective dates, the FARMERS Regulatory Reports
complied in all material respects with the statutes, rules and regulations
enforced or promulgated by the applicable regulatory authority 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 to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
2.22 Change in Business Relationships. FARMERS has no notice nor reason
to believe, whether on account of the transactions contemplated by this
Agreement or otherwise, that (i) any customer, agent, representative or supplier
of FARMERS intends to discontinue, diminish or change its relationship with
FARMERS, the effect of which would be material to the business of FARMERS, or
(ii) any executive officer of FARMERS intends to terminate or substantially
alter the terms of his or her employment.
2.23 No Omissions. None of the FARMERS Statements of Essential Facts
contained in this Article II and none of the representations, warranties and
covenants of FARMERS contained herein or in the schedules provided for herein or
in the Financial Statements or Subsequent Financial Statements is or will be
false or misleading in any material respect or omits or will omit to state a
fact herein or therein necessary to make such statements not misleading in any
material respect.
2.24 Brokers' and Finders' Fees. FARMERS has not incurred any liability
for brokerage commissions, finders' fees, or like compensation with respect to
the transactions contemplated hereunder.
Exhibit 1-13
<PAGE>
2.25 Advice of Changes. Between the date hereof and the Effective Time,
FARMERS shall promptly advise ILLINI in writing of any material fact which, if
existing or known at the date hereof, would have been required to be set forth
or disclosed in or pursuant to this Agreement or of any material fact which, if
existing or known at the date hereof, would have made any of the representations
contained herein untrue in any material respect.
ARTICLE III
STATEMENTS OF ESSENTIAL FACTS
CONCERNING ILLINI
This Agreement is entered into by FARMERS upon the understanding, and
ILLINI represents and warrants, that the following Statements of Essential Facts
("ILLINI Statements of Essential Facts") are true and correct on the date of
this Agreement.
3.1 Organization and Existence of ILLINI. ILLINI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois. ILLINI has the corporate power to own its properties and to carry on
its business as it is now being conducted, and is duly qualified and in good
standing as a foreign corporation in each jurisdiction where the location and
character of its properties and the business conducted by it require such
qualification.
3.2 Authorization of Transactions. The execution, delivery and
performance of this Agreement have been, and the execution, delivery and
performance of the Merger Agreement will be, prior to the Closing, duly
authorized by the Board of Directors of ILLINI in accordance with the Articles
of Incorporation and bylaws of ILLINI and governing Illinois law. This Agreement
constitutes, and the Merger Agreement will constitute, the legal, valid, and
binding obligations of ILLINI enforceable against ILLINI in accordance with
their respective terms. Subject to the approval of the Merger Agreement by
ILLINI as the shareholder of INTERIM BANK, each of ILLINI and INTERIM BANK has
the corporate power to execute, deliver, and perform this Agreement and the
Merger Agreement and to consummate the transactions herein and therein
contemplated, and such execution, delivery and performance do not violate any
provisions of the Articles of Incorporation or bylaws of ILLINI or any agreement
to which ILLINI is a party or by which ILLINI is otherwise bound. Except for the
regulatory approvals referred to in Section 5.1(c) hereof and the approval of
ILLINI as the shareholder of INTERIM BANK referred to in Section 5.2(c) hereof,
no consent of any regulatory authority or other person is required to be
obtained by ILLINI in order to permit consummation of the Merger.
3.3 No Omissions. None of the ILLINI Statements of Essential Facts
contained in this Article III and none of the representations, warranties and
covenants of ILLINI contained herein is false or misleading in any material
respect or omits to state a fact herein necessary to make such statements not
misleading in any material respect.
3.4 Capitalization. The authorized capital stock of ILLINI consists
solely of 800,000 shares of common stock, $10.00 par value per share, of which
448,456 shares are issued and outstanding ("ILLINI Shares"). No ILLINI Shares
are held in treasury. The ILLINI Shares have been
Exhibit 1-14
<PAGE>
duly and validly authorized and issued and are fully paid and nonassessable.
None of the ILLINI Shares have been issued in violation of any preemptive
rights. Except for the rights of FARMERS under this Agreement and the Merger
Agreement and except for rights under the Rights Agreement and except for
certain rights granted to Todd L. Barlow, there are no outstanding warrants,
options, rights, calls, agreements, understandings, or other commitments of any
nature relating to the ILLINI Shares, or concerning the authorization, issuance
or sale of any other equity securities of ILLINI. The number of shares set forth
above is not subject to change before the Effective Time.
3.5 Financial Statements.
(a) ILLINI has furnished FARMERS with true and complete copies
of the following financial statements (the "ILLINI Financial Statements"): the
audited Consolidated Balance Sheet, the Consolidated Statement of Income, the
Consolidated Statement of Changes in Shareholders Equity and the Consolidated
Statement of Cash Flows of ILLINI as of and for the period ended December 31,
1997 and the unaudited Consolidated Balance Sheet and the Consolidated Statement
of Income as of and for the period ended September 30, 1998. Since September 30,
1998, and as of the date of this Agreement, there have not been any changes in
the financial condition, assets, liabilities or business of ILLINI, other than
changes in the ordinary course of business, none of which have been materially
adverse.
(b) ILLINI will furnish FARMERS with copies of its unaudited
Consolidated Reports of Condition and Consolidated Reports of Income for each
annual and quarterly period subsequent to September 30, 1998, until the
Effective Time ("ILLINI Subsequent Financial Statements").
(c) All of the aforesaid ILLINI Financial Statements have
been, and, with respect to the ILLINI Subsequent Financial Statements, will be,
prepared in accordance with generally accepted accounting principles, utilizing
accounting practices consistent with prior years except as otherwise disclosed.
None of the aforesaid ILLINI Financial Statements fail to disclose, and none of
the ILLINI Subsequent Financial Statements will fail to disclose, any items that
should be disclosed. All for the aforesaid ILLINI Financial Statements present
fairly, and all of the ILLINI Subsequent Financial Statements will present
fairly, the financial position of ILLINI and the results of its operations and
changes in its financial position at the respective dates and for the respective
periods to which they relate. The allowance for loan and lease losses in such
ILLINI Financial Statements is, and with respect to the ILLINI Subsequent
Financial Statements will be, adequate based on past loan and lease loss
experiences and potential losses in the current portfolio to cover all known or
anticipated loan and lease losses. There are and, with respect to the ILLINI
Subsequent Financial Statements, will be no agreements, contracts or other
instruments to which ILLINI is a party or by which it or, to the knowledge of
the executive officers of ILLINI, any of the officers, directors, employees or
stockholders of ILLINI have rights which would have a materially adverse effect
on ILLINI and which are not reflected in the ILLINI Financial Statements and the
ILLINI Subsequent Financial Statements.
Exhibit 1-15
<PAGE>
3.6 No Adverse Changes. Other than as specifically disclosed in this
Agreement, the Financial Statements, the schedules delivered pursuant to this
Agreement or the documents referred to in this Agreement as having been
delivered to FARMERS there has not occurred (a) any material adverse change
since September 30, 1998 in the business, income, assets, liabilities, financial
condition or prospects of ILLINI, or (b) any condition (other than general
economic or competitive conditions), event, circumstance, fact or other
occurrence, whether occurring before or since September 30, 1998, that may
reasonably be expected to have or result in such a material adverse change.
3.7 Litigation and Compliance with Laws. ILLINI and its respective
institution affiliated parties (as defined in 12 U.S.C. ss.181 3(u)) are in
compliance in all material respects with all applicable federal, state, county
and municipal laws and regulations that regulate or are concerned in any way
with the business of banking, including those laws and regulations relating to
the investment of funds, the taking of deposits, the lending of money, the
collection of interest, the extension of credit and the location and operation
of banking facilities. There is no decree, judgment, or order or supervisory
agreement of any kind in existence against or restraining ILLINI or any of its
respective institution-affiliated parties from taking any action of any kind in
connection with the business of ILLINI. ILLINI has not received from any
regulatory authority any notice or threat of enforcement actions, or any
criticism, recommendation or suggestion of a material nature, and ILLINI has no
reasonable basis for believing that any such notice or threat, criticism,
recommendation or suggestion not otherwise disclosed herein is contemplated
concerning capital, compliance with laws or regulations, safety or soundness,
fiduciary duties or other banking or business practice that has not been
resolved to the reasonable satisfaction of such authority.
3.8 Regulatory Reports. ILLINI has filed all reports, registrations,
and statements, together with any amendments required to be made with respect
thereto, required to be filed with the Federal Reserve Board, the FDIC and the
Commissioner or other bank regulatory agency (collectively, the "ILLINI
Regulatory Reports"), and has paid all fees or assessments due and payable in
connection therewith. To the extent permissible by law, ILLINI has furnished
FARMERS with a copy of any report, correspondence or statement by any Federal,
state or local governmental agency, commission or other entity relating to an
examination of ILLINI within the past five years. There is no unresolved
violation, criticism or exception of a material nature cited by the Federal
Reserve Board, the FDIC, the Commissioner or other agency, commission or entity
with respect to any report or statement referred to in this Section 3.8. As of
their respective dates, the ILLINI Regulatory Reports complied in all material
respects with the statutes, rules and regulations enforced or promulgated by the
applicable regulatory authority 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 to make the statements therein, in
light of the circumstances under which they were made, not misleading.
3.9 Brokers' and Finders' Fees. Except in connection with fees which
may be payable to Legacy Securities Corp. and to Todd L. Barlow relating hereto,
ILLINI has not incurred any
Exhibit 1-16
<PAGE>
liability for brokerage commissions, finders' fees, or like compensation with
respect to the transactions contemplated hereunder.
3.10 Advice of Changes. Between the date hereof and the Effective Time,
ILLINI shall promptly advise FARMERS in writing of any material fact which, if
existing or known at the date hereof, would have been required to be set forth
or disclosed in or pursuant to this Agreement or of any material fact which, if
existing or known at the date hereof, would have made any of the representations
contained herein untrue in any material respect.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Conduct of Business.
(a) Between the date hereof and the Closing Date, FARMERS
shall conduct its business in the usual and ordinary course consistent in all
material respects with prudent banking practices. Without limiting the
foregoing, without the prior written consent of ILLINI:
(i) FARMERS shall make no changes in its charter or
bylaws or in its issued and outstanding shares;
(ii) FARMERS shall not increase the compensation of
its directors, officers or employees and it shall not award or pay bonuses to
any of the foregoing, except that it may make bonus payments in amounts
consistent with past practices but in all events in an aggregate annualized
amount not to exceed $25,000.00;
(iii) FARMERS shall make no loan, or renewal or
restructuring of a loan for $400,000 or more (including aggregation of loans to
any one customer or related entities) except for loans currently committed to be
made pursuant to written commitment letters, and FARMERS shall make no other
loans, or renewals or restructuring of loans except in the ordinary course of
business and consistent in all material respects with prudent banking practices
and policies and applicable rules and regulations of regulatory authorities with
respect to amount, terms, security and quality of the borrower's credit;
(iv) FARMERS shall, not declare or pay any stock
dividend, cash dividend or other distribution, except that, prior to the Closing
Date, it may declare and pay dividends at such times and in such amounts as are
consistent with its past practices at a quarterly rate not to exceed $35,500 in
the aggregate; provided, however, FARMERS shall not be permitted to make any
dividend payment during the calendar quarter in which the Closing Date shall
occur;
(v) FARMERS shall use its best efforts to maintain
its present insurance coverage in respect of its properties and businesses;
Exhibit 1-17
<PAGE>
(vi) FARMERS shall make no significant changes in the
general nature of the business conducted by FARMERS, including but not limited
to the investment or use of its assets, the liabilities it incurs, or the
facilities it operates;
(vii) FARMERS shall not enter into any employment,
consulting or other similar agreements which are not terminable on 30 days'
notice or less without penalty or obligation (beyond the notice period of 30
days or less);
(viii) FARMERS shall not take any action which would
result in a termination, partial termination, curtailment, discontinuance or
merger into another plan or trust of any Benefit Plan;
(ix) FARMERS shall timely file all required tax
returns with all applicable taxing authorities;
(x) FARMERS shall not make any expenditure for fixed
assets in excess of $10,000 for any single item, or $25,000 in the aggregate, or
enter into any lease of fixed assets having an annual rental in excess of
$10,000, or $25,000 in the aggregate;
(xi) FARMERS shall not incur any liabilities or
obligations, make any commitments or disbursements, acquire or dispose of any
property or asset, make any contract or agreement, or engage in any transaction,
except in the ordinary course consistent in all material respects with prudent
banking practices;
(xii) FARMERS shall not engage in or agree to engage
in any "covered transaction" within the meaning of Sections 23A or 23B of the
Federal Reserve Act (without regard to applicability of any exemptions contained
in said Section 23A);
(xiii) FARMERS shall only purchase or invest in
obligations of the government of the United States or agencies of the United
States or state or local governments having maturities of not more than five
years, and which municipal obligations have been assigned a rating of "A" or
better by Moody's Investors Service or a comparable rating assigned by Standard
& Poor's;
(xiv) FARMERS shall make no changes of a material
nature in its accounting procedures, methods, policies or practices or the
manner in which it conducts its business and maintains its records; and
(xv) FARMERS shall not accept or renew any brokered
deposits.
b. Between the date hereof and the Closing Date, ILLINI shall
conduct its business in the usual and ordinary course consistent in all material
respect with prudent banking practices. Without limiting the foregoing, without
the prior written consent of FARMERS:
Exhibit 1-18
<PAGE>
(i) ILLINI shall make no significant changes in the
general nature of the business conducted by ILLINI;
(ii) ILLINI shall not incur any liabilities or
obligations, make any commitments or disbursements, acquire or dispose of any
property or asset, make any contract or agreement, or engage in any transaction,
except in the ordinary course consistent in all material respects with prudent
banking practices (provided, nothing contained herein shall prevent ILLINI from
agreeing to engage in additional business combination transactions); and
(iii) ILLINI shall make no changes of a material
nature in its accounting procedures, methods, policies or practices.
4.2 Access to Information. To the extent permissible under law, FARMERS
shall (i) give ILLINI and its representatives full access to its internal
information (including, but not limited to, records, files, correspondence, tax
work papers and audit work papers); (ii) supply to ILLINI and its
representatives, as soon as they become available, all reports on loans and
investments, month-end balance sheets and profit and loss statements, its
internal and external audit reports and such other reports that ILLINI may
reasonably request. ILLINI will use such information solely for the purpose of
conducting business, legal and financial reviews of FARMERS and for such other
purposes as may be related to this Agreement, and ILLINI will, and will direct
all of its agents, employees and advisors to, maintain the confidentiality of
all such information. Pending the Closing, representatives of ILLINI shall,
during normal business hours and on reasonable advance notice to FARMERS, be
given full access to FARMERS' records and business activities and afforded the
opportunity to observe its business activities and consult with its directors
and officers regarding the same on an ongoing basis; provided, that the
foregoing actions do not interfere with the business operations of FARMERS.
4.3 Meeting of Stockholders of FARMERS. As soon as practicable after
the date of this Agreement, FARMERS shall call and hold a meeting of its
stockholders for the purpose of voting upon this Agreement, the Merger Agreement
and the transactions herein and therein contemplated in accordance with FARMERS'
Charter, its bylaws and the IBA. The Board of Directors of FARMERS shall
unanimously recommend to its stockholders, consistent with its fiduciary duties,
approval of the Merger Agreement and the Merger.
4.4 FARMERS Proxy Materials.
(a) As soon as practicable following the execution and
delivery of this Agreement by the parties hereto, FARMERS will prepare and mail
to the holders of the FARMERS Shares appropriate proxy materials (the "Proxy
Materials"), including a notice of the meeting contemplated in Section 4.3
hereof, a proxy statement and a form of proxy that comply with applicable laws
and regulations. ILLINI will furnish to FARMERS all information concerning
ILLINI 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, FARMERS shall present this
Exhibit 1-19
<PAGE>
Agreement, the Merger Agreement and the transactions contemplated hereby and
thereby for approval by the holders of the FARMERS Shares at the meeting of
stockholders. Prior to submitting the Proxy Materials and any amendment,
supplement or revision thereof to the stockholders of FARMERS, FARMERS shall
submit such materials to ILLINI and its counsel and provide ILLINI and its
counsel with a reasonable opportunity to review and comment upon such materials.
FARMERS covenants to ILLINI that the Proxy Materials (i) will comply in all
material respects with the provisions of applicable laws and regulations and
(ii) will not contain any statement which, at the time and in the tight 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 no event, however, shall FARMERS
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, information furnished by ILLINI specifically for use in the Proxy
Materials.
(b) The Proxy Materials shall not be mailed to the holders of
FARMERS Shares until FARMERS shall have given at least five (5) days' notice to
ILLINI of the mailing date.
4.5 Reasonable Efforts. The parties to this Agreement agree to
continuously and expeditiously use their reasonable efforts in good faith to
satisfy the various conditions to Closing and to consummate the Merger as soon
as reasonably practicable. None of the parties hereto will intentionally take or
intentionally permit to be taken any action that would be in breach of the terms
or provisions of this Agreement or that would cause any of the representations
contained herein to be or become untrue.
4.6 Regulatory Approvals. As soon as is reasonably practical, ILLINI
will take all appropriate actions necessary to obtain the regulatory approvals
referred to in Section 5.1(c) hereof, and FARMERS will cooperate fully in the
process of obtaining all such approvals. As soon as practicable after the date
of this Agreement, ILLINI will make all appropriate initial filings necessary to
obtain the regulatory approvals referred to in Section 5.1 (c) hereof. ILLINI
shall provide FARMERS with copies of all applications when filed and all
approvals when received. All expenses attendant with the approvals provided in
this Section 4.6 shall be paid by ILLINI.
4.7 Business Relations and Publicity. FARMERS and ILLINI will each use
reasonable efforts to preserve their reputations and relationships with
suppliers, clients, depositors, customers, employees and others having business
relations with it. Press releases or other communications in connection with or
relating to this Agreement or the transactions contemplated hereby (other than
communications with appropriate regulatory authorities) shall be issued or made
only as mutually agreed upon; provided that each party after consultation with
the other, may make such disclosures concerning the transactions provided for
herein as such party believes are required by law.
4.8 Review by ILLINI. Between the date hereof and the Closing Date,
ILLINI shall have the right, at its cost, to cause a review of the books and
records of FARMERS performed by ILLINI'S regular accountants or such other
independent certified accountants that are acceptable to ILLINI.
Exhibit 1-20
<PAGE>
In addition, prior to the Closing Date, ILLINI and its accountants shall be
permitted to conduct, at ILLINI'S expense, such reviews as it desires to update
financial information regarding FARMERS.
4.9 Review by FARMERS. Between the date hereof and the Closing Date,
FARMERS shall have the right, at its costs, to cause a review of the books and
records of ILLINI performed by FARMERS' regular accountants or such other
independent certified accountants that are acceptable to FARMERS. In addition,
prior to the Closing Date, FARMERS and its accountants shall be permitted to
conduct, at FARMERS' expense, such reviews as it desires to update financial
information regarding ILLINI.
4.10 Loan Review. FARMERS shall, prior to the Closing Date, write off
and reclassify all loans of FARMERS which are required by regulatory policies or
practices to be written off or reclassified or that in conformity with past
practices and policies of FARMERS should be written off as loan losses or
reclassified. In addition, each party and its representatives shall be entitled
to periodically review the loan portfolio of each party and shall be furnished
with full information regarding the status of each loan contained therein.
4.11 Interim Bank. ILLINI shall cause the formation of INTERIM BANK
under the IBA prior to the Closing. ILLINI as the entity that will be the owner
of all of the outstanding shares of capital stock of the INTERIM BANK, shall
cause the Merger Agreement to be approved in accordance with the IBA.
4.12 No Conduct Inconsistent with this Agreement. FARMERS agrees that
it will not, during the term of this Agreement, (i) offer or sell, or negotiate
with or entertain any proposals from any other person for any such offer or sale
of, any securities of FARMERS or (ii) offer or sell, or negotiate with or
entertain any proposals from any other person for any other transaction wherein
the business or substantially all of the properties of FARMERS would be
acquired, directly or indirectly, by any party other than as contemplated in
this Agreement. FARMERS shall immediately inform ILLINI of any inquiry, proposal
or request for information (including the terms thereof and the person or entity
making such inquiry) which it may receive in respect of such a transaction.
4.13 Board of Directors' Notices. Minutes. Etc. So far as permitted by
law, FARMERS shall allow a representative of ILLINI to attend as an observer all
meetings of the Board of Directors and Board committees of FARMERS. FARMERS
shall give reasonable notice to ILLINI of any such meeting, and, if known, the
agenda for or business to be discussed at such meeting. FARMERS shall permit
ILLINI and its representatives to read copies of all notices, minutes, consents
and other materials that FARMERS provides to its directors to the extent
permissible under law; provided, however, ILLINI agrees to hold in confidence
and trust and to act in a fiduciary manner with respect to all information so
provided.
4.14 Untrue Representations and Warranties. During the term of this
Agreement, if a party hereto becomes aware of any facts or of the occurrence or
impending occurrence of any event which would cause one or more of such party's
representations and warranties contained
Exhibit 1-21
<PAGE>
in this Agreement to become untrue, or would have caused one or more of such
representations and warranties (except in the case of representations and
warranties expressly made only as of the execution of this Agreement) to be
untrue had such facts been known or had such event occurred prior to the
execution of this Agreement, then:
(a) such party shall immediately give detailed written notice
thereof to the other parties hereto; and
(b) such party shall use reasonable efforts to cause such
representations and warranties to become true, unless the same shall have been
waived in writing by the other party hereto.
4.15 Confidential Information. FARMERS and ILLINI each covenants that,
in the event the transactions contemplated in this Agreement are not
consummated, each party will keep in strict confidence and return all documents
containing any information concerning the properties, business and assets of
each other party that may have been obtained in the course of negotiations or
examination of the affairs of each other party either prior or subsequent to the
execution of this Agreement (other than such information as shall be in the
public domain or otherwise ascertainable from public or outside sources).
4.16 Environmental Audits. Between the date hereof and the Closing
Date, ILLINI shall be permitted to obtain a Phase I environmental assessment,
conducted by an independent environmental consultant reasonably acceptable to
FARMERS for the Bank Premises. A copy of the written report prepared by such
consultant shall be delivered to FARMERS upon receipt of the same by ILLINI. The
expense of the Phase I environmental assessment shall be paid by ILLINI.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions Precedent to Obligations of ILLINI. Unless the
conditions are waived by ILLINI, all obligations of ILLINI under this Agreement
are subject to the fulfillment, prior to or at the Closing, of each of the
following conditions:
(a) Statements of Essential Facts; Performance of Agreements.
The FARMERS Statements of Essential Facts contained in Article II of this
Agreement and any other representations or warranties of FARMERS contained
herein, or in the Financial Statements, the Subsequent Financial Statements or
in any documents, certificates, schedules or exhibits delivered by it or on its
behalf to ILLINI pursuant to this Agreement shall have been true and correct in
all material respects as of this date and shall be true and correct in all
material respects at the Closing as though made on and as of the Closing Date,
in each case to the reasonable satisfaction of ILLINI, and FARMERS shall have
performed all agreements herein required to be performed by it on or prior to
the Closing.
(b) Closing Certificate. ILLINI shall have received a
certificate signed by the Chairman of the Board of FARMERS, dated as of the
Closing Date, certifying in such detail as ILLINI may reasonably request as to
the fulfillment of the conditions to the obligations of ILLINI as set forth in
this Agreement.
Exhibit 1-22
<PAGE>
(c) Regulatory and Other Approvals. ILLINI shall have obtained
the approval of all appropriate regulatory entities (including, without
limitation, the approval of the Federal Reserve Board, the FDIC and the
Commissioner) of the transactions contemplated by this Agreement and the Merger
Agreement, upon such terms and conditions, if any, as are satisfactory to ILLINI
in its reasonable judgment; all required regulatory waiting periods shall have
expired, and there shall have been no motion for rehearing or appeal from such
approval or commencement of any suit or action seeking to enjoin the transaction
provided for herein or to obtain substantial damages in respect thereto.
(d) Approval of Merger and Delivery of Merger Agreement. The
Merger Agreement and the transactions contemplated therein shall have been
approved by the Board of Directors and the stockholders of FARMERS in accordance
with applicable law and the Charter and bylaws of FARMERS, and the proper
officers of FARMERS shall have executed and delivered to ILLINI copies of the
Merger Agreement and articles of merger, in form suitable for filing with the
FDIC and the Commissioner, and shall have executed and delivered all such other
certificates, statements or other instruments as may be necessary or appropriate
to effect such filings.
(e) No Litigation with Respect to Transactions. No suit or
other action shall have been instituted or threatened seeking to enjoin the
consummation of the transactions contemplated hereby or by the Merger Agreement,
or to obtain other relief in connection with this Agreement or the Merger
Agreement or the transactions contemplated hereby or thereby.
(f) Opinion of Counsel. ILLINI shall have received an opinion
of Hart, Southworth & Witsman, counsel for FARMERS, dated as of the Closing
Date, in form and substance satisfactory to ILLINI and its counsel, to the
effect that:
(i) FARMERS is a banking corporation validly existing
and in good standing under the laws of the State of Illinois and FARMERS is duly
authorized and has full corporate power to own its properties and carry on its
business as now being conducted and FARMERS has no subsidiaries.
(ii) The authorized capital stock of FARMERS consists
solely of 2,400 shares of Common Stock, $100.00 par value, all of which are
issued and outstanding. The FARMERS Shares have been duly and validly authorized
and issued, are fully paid and nonassessable. Except for rights of ILLINI under
this Agreement, there are no options, agreements, contracts, or other rights in
existence to purchase or acquire from FARMERS any FARMERS Shares or any other
equity security of FARMERS, whether now or hereafter authorized or issued.
(iii) The execution, delivery, and performance of
this Agreement and the Merger Agreement, and the transactions contemplated
herein and therein, have been duly authorized by the Board of Directors of
FARMERS and by the stockholders of FARMERS, these being the only corporate
authorizations required under FARMERS' Charter and bylaws and the laws of the
State of Illinois. This Agreement and the Merger Agreement constitute the legal,
valid, and binding obligations of FARMERS enforceable against FARMERS in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting creditors
generally and to general principles of equity.
Exhibit 1-23
<PAGE>
(iv) The execution, delivery, and performance of this
Agreement and the Merger Agreement do not violate any provisions of the Charter
or bylaws of FARMERS, any provision of applicable law or the regulations
thereunder or, to the knowledge of such counsel after reasonable investigation,
any contract or agreement to which FARMERS is a party or by which FARMERS is
otherwise bound that would prohibit consummation of the transactions
contemplated by this Agreement and the Merger Agreement in the manner herein and
therein contemplated.
(v) Except as disclosed in such opinion, there are no
claims, actions, suits, or proceedings pending or, to the knowledge of such
counsel after reasonable investigation, threatened against FARMERS, at law or in
equity, or before any Federal, state, municipal, or other governmental
authority, or before any arbitrator or arbitration panel, whether by contract or
otherwise, or any decrees, judgments, or orders of any kind in existence
enjoining or restraining FARMERS or any of its directors, officers, or employees
from taking action of any kind in connection with the business of FARMERS or
which would be likely to have a material adverse effect on FARMERS.
(vi) Except as disclosed in such opinion, there are
no actions, suits, or proceedings, pending or, to the knowledge of such counsel
after reasonable investigation, threatened against FARMERS to enjoin
consummation of the Merger or to obtain other relief in connection with this
Agreement and the Merger Agreement or the transactions contemplated hereby and
thereby.
(vii) No facts have come to the attention of such
counsel that lead it to believe that the Proxy Materials, at the time of mailing
to the shareholders of FARMERS or at the date of the stockholders meeting
referred to in Section 4.3 hereof, contained any untrue statement of a material
fact regarding FARMERS or omitted to state any material fact regarding FARMERS
required to be stated therein or necessary to make the statements therein not
misleading.
(viii) No consent, approval or authorization of or
designation, declaration or filing with any governmental agency or authority or
other public persons or entities on the part of FARMERS, which has not been
obtained or made, is required for the validity of the execution and delivery by
FARMERS of this Agreement and the Merger Agreement or the consummation of the
transactions contemplated hereby or thereby by FARMERS.
In rendering its opinion, such counsel may rely as to matters of fact
upon such certificates of the officers of FARMERS or governmental officials as
such counsel deems appropriate.
(g) No Adverse Changes. Between December 31, 1998 and the
Closing Date, the business of FARMERS shall have been conducted in the ordinary
course consistent with in all respects prudent banking practices, and there
shall not have occurred any material adverse change or any condition, event,
circumstance, fact or occurrence that may reasonably be expected to result in a
material adverse change in FARMERS' business, properties, financial condition,
loan portfolio, operations or prospects. FARMERS shall not have any contingent
liabilities outside the ordinary course of business.
Exhibit 1-24
<PAGE>
(h) Financial Requirements. As of the Closing Date, (i)
FARMERS' stockholders' equity, determined in conformity with generally accepted
accounting principles applied on a basis consistent with the preparation of the
FARMERS Financial Statements, shall be not less than $4,362,000.00 and (ii)
FARMERS' reserve for loan and lease losses, determined as described in Section
2.5(c), shall be adequate and, in any event, not less than the greater of 1.05%
of FARMERS' total loans and leases or $151,000.00.
(i) Resignations. ILLINI shall have received at the Closing
the resignations of all of the directors and officers of FARMERS identified by
ILLINI in writing at least thirty (30) days prior to the Closing.
(j) Due Diligence. ILLINI shall be satisfied, in its sole
discretion, with the results of its due diligence investigation which shall be
completed within sixty (60) days after the date hereof. ILLINI shall notify
FARMERS within such sixty (60) day period if the results of such investigation
are unsatisfactory.
(k) Environmental Audits. The Phase I environmental assessment
obtained pursuant to Section 4.16 hereof shall not have identified any violation
of the Environmental Laws or a condition relating to the environment, human
health or safety which could reasonably be expected to have a material adverse
effect on the business, income, operations, assets, liabilities, financial
condition or prospects of FARMERS.
(l) Consents. FARMERS shall have obtained all such written
consents, permissions and approvals as required under any agreements, contracts,
appointments, indentures, plans, trusts or other arrangements with third parties
required to effect the transactions contemplated by this Agreement and the
Merger Agreement.
(m) Other Documents. ILLINI shall have received at the Closing
all such other documents, certificates or instruments as it may have reasonably
requested evidencing compliance by FARMERS with the terms of this Agreement and
the Merger Agreement.
(n) Absence of Registration. ILLINI and its counsel shall be
satisfied that the issuance of the ILLINI Common Stock in exchange for the Huls
Shares as contemplated by this Agreement and the Merger Agreement shall be
exempt from registration under the securities laws of the United States, the
State of Illinois and any other state which may have jurisdiction with respect
thereto.
(o) Employee Related Matters. On or before the Closing Date,
(i) ILLINI and Ernest H. Huls shall have entered into a Non-Compete, Standstill
and Sale of Personal Goodwill Agreement, which shall provide for the payment of
$50,000.00 to Huls at Closing and for the payment of three (3) annual
installments of $50,000.00 each to Huls on the anniversary date of the Closing
for the three (3) years following Closing ($200,000.00 in the aggregate) and
which shall contain such other terms and conditions as are satisfactory to
ILLINI; and (ii) ILLINI shall have entered into an employment agreement with
Gregg Roegge which shall have a term of not less
Exhibit 1-25
<PAGE>
than two (2) years and which shall provide that, unless such agreement is
terminated for cause, such agreement shall not be terminated by ILLINI on less
than 120 days notice and which shall contain such other terms and conditions as
are acceptable to ILLINI.
5.2 Conditions Precedent to Obligations of FARMERS. Unless the
conditions are waived by FARMERS, all obligations of FARMERS under this
Agreement and the Merger Agreement are subject to the fulfillment, prior to or
at Closing, of each of the following conditions:
(a) Statements of Essential Facts; Performance of Agreements.
The ILLINI Statements of Essential Facts contained in Article III of this
Agreement and any other representations or warranties of ILLINI contained herein
or in any documents, certificates, schedules or exhibits delivered by it or on
its behalf to FARMERS pursuant to this Agreement shall have been true and
correct in all material respects as of this date and shall be true and correct
in all material respects at the Closing as though made on and as of the Closing
Date, in each case to the reasonable satisfaction of FARMERS, and ILLINI shall
have performed all agreements herein required to be performed by it on or prior
to the Closing.
(b) Closing Certificate. FARMERS shall have received a
certificate signed by the President and Chief Executive Officer of ILLINI dated
as of the Closing Date, certifying in such detail as FARMERS may reasonably
request, as to the fulfillment of the conditions to the obligations of FARMERS
as set forth in this Agreement.
(c) Approval of Merger and Delivery of Merger Agreement. The
Merger Agreement and the transactions contemplated therein shall have been
approved by the Board of Directors and sole shareholder of INTERIM BANK in
accordance with its Charter, bylaws and the proper officers of INTERIM BANK
shall have executed and delivered to FARMERS copies of the Merger Agreement and
articles of merger, in form suitable for filing with the FDIC and the
Commissioner, and shall have executed and delivered all such other certificates,
statements or other instruments as may be necessary or appropriate to effect
such filings.
(d) No Litigation. No suit or other action shall have been
instituted or threatened seeking to enjoin consummation of the transactions
contemplated hereby or by the Merger Agreement.
(e) Opinion of Counsel. FARMERS shall have received the
opinion of Howard & Howard Attorneys, P.C., counsel for ILLINI dated as of the
Closing Date, in form satisfactory to FARMERS and its counsel to the effect
that:
(i) ILLINI is a corporation in good standing under
the laws of the State of Illinois and ILLINI has full corporate power and
authority to own its properties and to conduct its businesses.
(ii) The authorized capital stock of ILLINI consists
solely of 800,000 shares of Common Stock, $10.00 par value, of which 448,456
shares are issued and outstanding.
Exhibit 1-26
<PAGE>
The ILLINI Shares have been duly and validly authorized and issued, are fully
paid and nonassessable. Except for rights of FARMERS under this Agreement, and
except for the rights under the Rights Agreement and except for certain rights
granted to Todd L. Barlow, there are no options, agreements, contracts, or other
rights in existence to purchase or acquire from ILLINI any ILLINI Shares or any
other equity security of ILLINI, whether now or hereafter authorized or issued.
(iii) The execution, delivery and performance of this
Agreement have been duly authorized by the Board of Directors of ILLINI and the
execution, delivery and performance of the Merger Agreement have been duly
authorized by the Board of Directors and sole shareholder of INTERIM BANK. This
Agreement and the Merger Agreement constitute the valid and legally binding
obligations of ILLINI and INTERIM BANK enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors generally and to general principles of
equity.
(iv) No facts have come to the attention of such
counsel that lead it to believe that the Proxy Materials, at the time of mailing
to the shareholders of FARMERS or at the date of the stockholders meeting
referred to in Section 4.3 hereof, contained any untrue statement of a material
fact regarding ILLINI or omitted to state any material fact regarding ILLINI
required to be stated therein or necessary to make the statements therein not
misleading.
(v) The execution, delivery and performance of this
Agreement and the Merger Agreement do not violate any provisions of the Articles
of Incorporation, charter or bylaws of ILLINI and INTERIM BANK or, to the
knowledge of such counsel, of any contract or agreement by which ILLINI or
INTERIM BANK is bound which would prohibit consummation of the transactions
contemplated by this Agreement and the Merger Agreement in the manner herein and
therein contemplated.
(vi) No consent, approval or authorization of or
designation, declaration or filing with any governmental agency or authority or
other public persons or entities on the part of ILLINI, which has not been
obtained or made, is required for the validity of the execution and delivery by
ILLINI of this Agreement and the Merger Agreement or the consummation of the
transactions contemplated hereby or thereby by ILLINI.
(vii) Except as disclosed in such opinion, there are
no claims, actions, suits, or proceedings pending or, to the knowledge of such
counsel after reasonable investigation, threatened against ILLINI, at law or in
equity, or before any Federal, state, municipal, or other governmental
authority, or before any arbitrator or arbitration panel, whether by contract or
otherwise, or any decrees, judgments, or orders of any kind in existence
enjoining or restraining ILLINI or any of its directors, officers, or employees
from taking action of any kind in connection with the business of ILLINI or
which would be likely to have a material adverse effect on ILLINI.
(viii) Except as disclosed in such opinion, there are
no actions, suits, or proceedings, pending or, to the knowledge of such counsel
after reasonable investigation, threatened against ILLINI to enjoin consummation
of the Merger or to obtain other relief in connection with this Agreement and
the Merger Agreement or the transactions contemplated hereby and thereby.
Exhibit 1-27
<PAGE>
In rendering its opinion, such counsel may rely as to matters of fact
upon such certificates of the officers of ILLINI or governmental officials as
such counsel deems appropriate.
(f) No Adverse Changes. Between September 30, 1998 and the
Closing Date, the business of ILLINI shall have been conducted in the ordinary
course consistent with in all respects prudent banking practices, and there
shall not have occurred any material adverse change or any condition, event,
circumstance, fact or occurrence that may reasonably be expected to result in a
material adverse change in ILLINI'S business, properties, financial condition,
loan portfolio, operations or prospects. ILLINI shall not have any contingent
liabilities outside the ordinary course of business.
(g) Other Documents. FARMERS shall have received at the
Closing all such other documents, certificates or instruments as it may have
reasonably requested evidencing compliance by ILLINI with the terms of this
Agreement.
(h) Financial Requirement. As of the Closing Date, ILLINI'S
stockholders' equity, determined in conformity with generally accepted
accounting principles applied on a basis consistent with the preparation of the
ILLINI Financial Statements, shall not be less than $15,106,132.
ARTICLE VI
GENERAL PROVISIONS
6.1 Survival of Representations. Notwithstanding any other provision in
this Agreement, the agreements with respect to confidentiality contained in
Section 4.14, further assurances contained in Section 6.2, and payment of
expenses contained in Section 6.3, shall survive the termination of this
Agreement pursuant to Section 6.6 hereof.
6.2 Further Assurances. Each of the parties hereto agrees that at any
time and from time to time after the Closing it will cause to be executed and
delivered to any other party such further instruments or documents as such other
party may reasonably require to give effect to the transactions contemplated
hereby.
6.3 Expenses. Each of the parties to this Agreement shall bear their
respective costs and expenses incurred in connection with the negotiation and
preparation of this Agreement and the Merger Agreement and the consummation of
the transactions contemplated hereby and thereby; provided, however, that
FARMERS' attorneys fees shall be paid by FARMERS immediately prior to the
closing of this transaction and shall be payable out of earnings accrued after
December 31, 1998. The FARMERS' attorneys fees payable are those attorneys fees
incurred in connection with the negotiation and preparation of this Agreement
and the Merger Agreement and the consummation of the transactions contemplated
hereby and thereby but only in the event that the transactions contemplated
hereby and thereby are consummated.
6.4 Post Merger Adjustment to ILLINI Common Stock. In the event that
subsequent to the Effective Time, the Board of Directors of ILLINI determines
that it is obligated under the Rights Agreement to issue shares of ILLINI Common
Stock or other consideration to ILLINI stockholders with respect to event
occurring prior to the Effective Time, and if the holders of
Exhibit 1-28
<PAGE>
ILLINI Common Stock issued pursuant hereto will not be entitled to receive such
shares or other consideration issued pursuant thereto, ILLINI shall issue such
number of additional shares of ILLINI Common Stock or other consideration to the
holders of ILLINI Common Stock issued pursuant hereto so as to make such
stockholders as whole as is reasonably practicable and as the Board of Directors
of ILLINI shall in its sole discretion reasonably determine.
6.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective successors of the parties hereto;
provided, however, that no party may assign this Agreement without the written
consent of the other parties.
6.6 Termination. This Agreement may be terminated: (i) at any time,
whether before or after any stockholder action, by agreement of ILLINI and
FARMERS; (ii) by either ILLINI or FARMERS if the Closing has not occurred by
June 30, 2000; (iii) by FARMERS, either before or after approval of the Merger
Agreement by its stockholders, if the conditions precedent to its obligations
under this Agreement as specified in Article V have not been satisfied (or the
satisfaction thereof will not occur) prior to the Effective Time, or if ILLINI
has failed to perform the covenants and agreements contained herein which it is
obligated to perform prior thereto; (iv) by ILLINI either before or after its
approval of the Merger Agreement as INTERIM BANK's stockholder, if the
conditions precedent to its obligations under this Agreement as specified in
Article V have not been satisfied (or the satisfaction thereof will not occur)
prior to the Effective Time, or if FARMERS has failed to perform the covenants
and agreements contained herein which it is obligated to perform prior thereto;
(v) by FARMERS pursuant to Section 1.1(f) hereto; (vi) by ILLINI if the results
of the due diligence investigation contemplated by Section 5.1(j) are
unsatisfactory to ILLINI in its sole discretion; or (vii) by ILLINI in the event
the results of the environmental investigation contemplated by Sections 4.16 and
5.1(k) hereof shall be unsatisfactory to ILLINI in its sole discretion. In the
event of termination of this Agreement as provided in the first sentence of this
Section 6.6 and except as provided in the following sentence of this Section
6.6, there shall be no liability hereunder on the part of FARMERS or ILLINI or
their respective officers and directors and each party shall pay their own
expenses incurred in connection herewith. Termination of this Agreement shall
not relieve any party of responsibility or obligation, if any, for any breaches
of this Agreement occurring prior to such termination. The termination of this
Agreement shall cause the automatic termination of the Merger Agreement.
6.7 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given (i) when delivered personally; (ii) on the
second business day after being deposited in the United States mail registered
or certified (return receipt requested) postage prepaid; (iii) on the first
business day after being deposited with Federal Express or any other recognized
national overnight courier service for overnight delivery; or (iv) on the
business day on which it is sent and received by facsimile, in each case to the
parties at the following address or facsimile number (or at such other address
or facsimile number for a party as shall be specified by like notice):
Exhibit 1-29
<PAGE>
If to ILLINI addressed to:
Illini Corporation
120 South Chatham Road
P.O. Box 13257
Springfield, Illinois 62704
Attention: Burnard K. McHone, President and Chief Executive Officer
Facsimile: (217) 547-9659
with a copy to:
Theodore L. Eissfeldt
Howard & Howard Attorneys, P.C.
The Creve Coeur Building
321 Liberty Street, Suite 200
Peoria, Illinois 61602-1403
Facsimile: (309) 672-1568
If to FARMERS, addressed to:
Farmers State Bank of Camp Point
206 East Wood Street
Camp Point, Illinois 62320-0049
Attention: Ernest H. Huls, Chairman of the Board
Facsimile: (217) 593-7341
with a copy to:
Samuel J. Witsman, Esq.
Hart, Southworth & Witsman
One North Old State Capitol Plaza
Suite 501
Springfield, Illinois 62701-1323
Facsimile: (217) 753-1056
6.8 Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the internal laws of the State of Illinois,
without giving effect to the conflict of laws principles thereof.
6.9 Counterparts. This Agreement may be executed in any number of
counterparts, and each such executed counterpart will be an original instrument.
6.10 Severability. In the event that any provisions of this Agreement
or any portion thereof shall be finally determined to be unlawful or
unenforceable, such provision or portion
Exhibit 1-30
<PAGE>
thereof shall be deemed to be severed from this Agreement, and every other
provision, and any portion of a provision, that is not invalidated by such
determination, shall remain in full force and effect. To the extent that a
provision is deemed unenforceable by virtue of its scope but may be made
enforceable by limitation thereof, such provision shall be enforceable to the
fullest extent permitted under the laws and public policies of the State whose
laws are deemed to cover enforceability. It is declared to be the intention of
the parties that they would have executed the remaining provisions without
including any that may be declared unenforceable.
6.11 Headings. Descriptive headings appearing in this Agreement are for
convenience only and will not be deemed to explain, limit or amplify any of the
provisions hereof.
6.12 Entire Agreement. This Agreement, with its exhibits and the
schedules delivered pursuant to it, sets forth the entire understanding of the
parties and supersedes all prior agreements, arrangements and communications,
whether oral or written. This Agreement may only be modified or amended by an
agreement in writing by the parties hereto.
6.13 Disclosure Schedules. This Agreement references various Disclosure
Schedules as having been delivered by FARMERS on or before the date hereof. The
parties hereto acknowledge that to the extent such Schedules have not been
delivered on or before the date hereof, FARMERS shall be permitted to complete
and deliver such Disclosure Schedules to ILLINI within ten (10) days of the
execution and delivery of this Agreement.
IN WITNESS WHEREOF, ILLINI and FARMERS have executed this Agreement as
of the day and year hereinabove first written.
ILLINI CORPORATION
By:/s/ Burnard K. McHone
----------------------------------------
Burnard K. McHone
Its: President and Chief Executive Officer
FARMERS STATE BANK OF CAMP POINT
By:/s/ Ernest H. Huls
----------------------------------------
Ernest H. Huls
Its: Chairman of the Board
Exhibit 1-31
<PAGE>
AGREEMENT OF ERNEST H. HULS
Ernest H. Huls ("HULS"), being the principal shareholder and the
Chairman of the Board of Directors of FARMERS STATE BANK OF CAMP POINT
("FARMERS") does hereby join in the Agreement and Plan of Reorganization by and
between ILLINI CORPORATION ("ILLINI") and FARMERS dated as of March 2, 1999
("Reorganization Agreement") for the purposes set forth herein and in
consideration of the benefits to be derived from affiliation by HULS, does
hereby agree with each of the corporate parties as follows:
1. HULS agrees to vote all shares of stock in FARMERS now or hereafter
beneficially owned by him, in person or by proxy, at any meeting of stockholders
of FARMERS or adjournments thereof, in favor of approval of the Reorganization
Agreement and the Merger Agreement (as that term is defined in the
Reorganization Agreement).
2. HULS further agrees to enter into the Non-Compete and Standstill
Agreement contemplated by Section 5.1(o) of the Reorganization Agreement.
3. HULS further agrees to indemnify, defend, and hold harmless ILLINI,
the RESULTING BANK (as that term is defined in the Reorganization Agreement) and
the directors, officers, stockholders, employees and agents of each against any
and all losses, costs, and expenses (including reasonable cost of investigation,
court costs and legal fees) and other damages resulting from any breach by
FARMERS of any of its covenants, obligations, representations or warranties
contained in the Reorganization Agreement or any Schedules, certificate or
document of FARMERS delivered pursuant to the Reorganization Agreement or any
breach by the undersigned of any of his covenants or obligations contained
herein.
4. This Agreement shall be binding upon each of the parties hereto and
their respective successors and assigns.
IN WITNESS WHEREOF, HULS, ILLINI and FARMERS have each executed this
Agreement as of the 2nd day of March, 1999.
/s/ Ernest H. Huls
-------------------------------------------
ERNEST H. HULS
ILLINI CORPORATION
By:/s/ Burnard K. McHone
----------------------------------------
Burnard K. McHone
Its: President and Chief Executive Officer
FARMERS STATE BANK OF CAMP POINT
By:/s/ Ernest H. Huls
----------------------------------------
Ernest H. Huls
Its: Chairman of the Board
Exhibit 1-32
<PAGE>
Exhibit A
MERGER AGREEMENT
BETWEEN
FARMERS INTERIM BANK AND FARMERS STATE BANK OF CAMP POINT
UNDER THE CHARTER OF
FARMERS INTERIM BANK
This Merger Agreement (this "Agreement") is made and entered into this
3rd day of November, 1999, by and between FARMERS INTERIM BANK (hereinafter
called "INTERIM BANK" or, where appropriate, the "RESULTING BANK") and FARMERS
STATE BANK OF CAMP POINT (hereinafter called "FARMERS") (hereinafter Farmers and
Interim Bank are sometimes referred to as the "Merging Banks").
RECITALS
A. INTERIM BANK is an Illinois banking corporation in formation with
its main banking premises located at 206 East Wood Street, Camp Point, County of
Adams, Illinois. The sole incorporator of INTERIM BANK is Illini Corporation
(the "Incorporator").
B. FARMERS is an Illinois banking corporation with its main banking
premises located at 206 East Wood Street, Camp Point, County of Adams, Illinois.
As of March 31, 1999, FARMERS had capital stock outstanding of $240,000,
consisting of 2,400 shares of common stock with a par value of $100 per share,
surplus of $1,760,000, and undivided profits and capital reserves of $2,363,000
and a Market Value Adjustment of Available for Sale Securities of $27,000.
C. Attached hereto as Schedule I, and made a part hereof, is a list of
the stockholders of FARMERS, as of the date of this Agreement.
D. The RESULTING BANK will have capital stock outstanding of $240,000,
consisting of 2,400 shares of issued and outstanding common stock, $100 par
value per share, surplus of $1,760,000, and the undivided profits and reserves
of the RESULTING BANK shall equal the sum of the capital accounts of FARMERS
immediately prior to the Effective Time less the sum of the capital and surplus
of the FARMERS as of the Effective Time (subject to adjustment, if necessary for
compliance with the purchase method of accounting). Attached as Schedule II and
made a part hereof is a detailed pro forma financial statement, based upon March
31, 1999, reports of condition and income of FARMERS, showing the assets and
liabilities of the RESULTING BANK after the proposed merger.
E. The board of director of FARMERS and the Incorporator deem it
advisable to merge the Merging Banks under the charter of INTERIM BANK and the
name of "Farmers State Bank of Camp Point," subject to the terms and conditions
set forth in this Agreement and in accordance
A-1
<PAGE>
with applicable laws of the United States and the State of Illinois. A majority
of the board of directors of FARMERS and the Incorporator have approved such
merger (the "Merger") and authorized the execution of this Agreement.
NOW THEREFORE, in consideration of the premises and of the agreements,
covenants and conditions hereinafter contained, the Merging Banks agree as
follows:
ARTICLE I
THE MERGER
1.1 RESULTING BANK. Subject to the terms and conditions set forth
herein, FARMERS shall be merged into, and under the charter of, INTERIM BANK
pursuant to the provisions of, and with the effect provided in, the Illinois
Banking Act, as amended, and INTERIM BANK shall be the bank resulting from such
merger (the "RESULTING BANK"). The name of the RESULTING BANK shall be "Farmers
State Bank of Camp Point," and the present main banking premises of each of
INTERIM BANK and FARMERS at 206 East Wood Street, Camp Point, Illinois shall be
the main banking premises of the RESULTING BANK.
1.2 Effective Time. As soon as is reasonably practicable after the date
hereof, this Agreement shall be submitted to the Illinois Commissioner of Banks
and Real Estate (the "Commissioner") for approval pursuant to Section 22 of the
Illinois Banking Act. This Agreement also shall be submitted to the Incorporator
and to the stockholders of FARMERS for approval and adoption as provided for by
Section 23 of the Illinois Banking Act. Subject to and upon satisfaction of all
requirements of law and other conditions specified in this Agreement, this
Agreement, together with a certified copy of resolutions of the stockholders of
FARMERS approving this Agreement and a certification of approval of the
Incorporator, shall be filed with the Commissioner pursuant to and in the manner
provided by the Illinois Banking Act as soon as reasonably practicable after the
receipt of all required approvals and the expiration of any statutory waiting
periods. The Merger shall become effective on the date on which the Commissioner
issues a certificate of merger to the RESULTING BANK pursuant to Section 24 of
the Illinois Banking Act (the "Effective Time").
1.3 Charter. The charter of INTERIM BANK, as in effect as of the
Effective Time, shall be the charter of the RESULTING BANK, except that it shall
be deemed to be and hereby is amended so that, at the Effective Time, its name
shall be "Farmers State Bank of Camp Point" and the amount of capital and the
number of shares of capital stock shall be as provided in Section D of the
Recitals to the Agreement.
1.4 Bylaws. The bylaws of INTERIM BANK, as in effect as of the
Effective Time, shall be the bylaws of the RESULTING BANK until the same shall
be thereafter altered, amended or repealed in accordance with said bylaws, the
charter of the RESULTING BANK, and applicable law.
1.5 Directors and Officers. As of the Effective Time, the directors of
the RESULTING BANK shall consist of the directors of FARMERS immediately before
the Effective Time, except that there shall be two (2) persons designated by
ILLINI to serve on the Board of Directors of the RESULTING BANK. As of the
Effective Time, the officers of the RESULTING BANK shall consist of the officers
of FARMERS immediately before the Effective Time.
A-2
<PAGE>
1.6 Regulatory and Stockholder Approvals. This Agreement is subject to
the approval of the Commissioner, the Federal Deposit Insurance Corporation, the
stockholders of FARMERS, and the Incorporator. The Merging Banks will pay the
Commissioner's expenses of examination whether the Agreement is approved or
disapproved.
ARTICLE II
EFFECT OF MERGER
2.1 Corporate Existence. As of the Effective Time, the corporate
existences of each of the Merging Banks shall, with the full effect provided for
in the Illinois Banking Act, be merged into and continued in the RESULTING BANK
under the charter of INTERIM BANK. The RESULTING BANK shall be considered the
same business and corporate entity as each of the Merging Banks, with all the
property, rights, powers, duties and obligations of each of the Merging Banks
except as affected by the laws of the State of Illinois and by the charter and
bylaws of the RESULTING BANK. The separate existence of FARMERS shall cease
except to the extent provided by applicable law.
2.2 Rights and Liabilities of the RESULTING BANK. The RESULTING BANK
shall be liable for all liabilities of each of the Merging Banks, and all
rights, franchises and interests of each of the Merging Banks in and to every
species of property, real, personal and mixed, and choses in action "hereunto
belonging, shall be deemed to be transferred to and vested in the RESULTING BANK
without any deed or other transfer, and the RESULTING BANK, without any order or
other action on the part of any court or otherwise, shall hold and enjoy the
same and all rights of property, franchises, and interests, including
appointments, designations and nominations and all other rights and interests as
trustee, executor, administrator, registrar or transfer agent of stocks and
bonds, guardian, assignee, receiver, and in every other fiduciary capacity, in
the same manner and to the same extent as such rights of property, franchises
and interests were held and enjoyed by each of the Merging Banks. Any reference
to any of the Merging Banks in any writing, whether executed or taking effect
before or after the Merger, shall be deemed a reference to the RESULTING BANK if
not inconsistent with the other provisions of such writing.
2.3 Books of the RESULTING BANK. The assets, liabilities, reserves and
accounts of each of the Merging Banks shall be recorded on the books of the
RESULTING BANK at the amounts at which each shall have been carried on the books
of the Merging Banks at the Effective Time.
2.4 Effectiveness of Prior Corporate Acts and Authorizations. All
corporate acts, plans, policies, contracts, approvals and authorizations of each
of the Merging Banks, their respective stockholders, boards of directors,
committees elected or appointed by their boards of directors, officers and
agents, which were valid and effective immediately prior to the Effective Time,
shall be taken for all purposes as the acts, plans, policies, contracts,
approvals and authorizations of the RESULTING BANK and shall be as effective and
binding thereon as the same were with respect to any of the Merging Banks. The
employees of the Merging Banks shall become the employees of the RESULTING BANK
and shall continue to be entitled to the same rights and benefits which they
enjoyed as employees of the Merging Banks.
A-3
<PAGE>
ARTICLE III
TREATMENT OF STOCK
3.1 Treatment of Shares of FARMERS. At the Effective Time, by virtue of
the Merger and without any action on the part of the holders of such shares of
stock,each share of common stock, par value $100.00 per share of FARMERS
("FARMERS Shares") other than shares held by Ernest H. Huls (a "Non-Huls Share")
issued and outstanding immediately prior to the Effective Time shall be
converted, without any action by the holder thereof, into the right to receive
$2,190.00 cash for each Non-Huls Share ($1,484,820.00 in the aggregate) and each
share of FARMERS Stock held by Ernest H. Huls (a "Huls Share") issued and
outstanding immediately prior to the Effective Time shall be converted, without
any action by the holder thereof, into combination of 71.622 shares of ILLINI
Common Stock par value $10.00 per share (123,333 shares in the aggregate) and
$1,028.71 cash ($1,771,440.00 in the aggregate); provided, however, in the event
that, after giving effect to any adjustment contemplated by Section 1.4 of the
Agreement and Plan of Reorganization by and between ILLINI and FARMERS dated as
of February ______, 1999, it would be impracticable (by reason of court order or
otherwise) for ILLINI to issue in exchange for the Huls Shares the aggregate
number of shares of ILLINI Common Stock contemplated hereby, then each Huls
Share issued and outstanding immediately prior to the Effective Time shall be
converted, without any action by the holder thereof, into the right to receive
$3,208.35 cash ($5,524,778.00 in the aggregate) and no shares of ILLINI Common
Stock shall be issued in exchange thereof.
3.2 Manner of Exchange of FARMERS Shares.
(a) Upon proper presentation to the RESULTING BANK, or its
designee, of certificates representing FARMERS Shares, the holder of such
FARMERS Shares shall be issued cash or ILLINI Common Stock, as applicable, to
which such holder is entitled pursuant to Section 3.1 hereof. Until so properly
presented, each certificate representing FARMERS Shares shall be deemed, for all
corporate purposes, to evidence only the right to receive cash or shares of
ILLINI Common Stock, as applicable, that the holder thereof would be entitled to
receive upon its surrender and the RESULTING BANK may withhold distribution of
such cash or shares of ILLINI Common Stock until the certificates representing
the FARMERS Shares shall be surrendered, at which time, the cash or shares of
ILLINI Common Stock so withheld with respect to such FARMERS Shares shall be
delivered. No interest shall be payable with respect to any cash received in
exchange for the FARMERS Shares.
(b) ILLINI dividends otherwise payable subsequent to the
Effective Time on any whole shares of ILLINI Common Stock for which a
certificate or certificates for FARMERS Shares have not been surrendered for
exchange pursuant to this Agreement shall be withheld until such outstanding
certificate or certificates shall be surrendered for exchange. Upon such
surrender, there shall be paid to the record holder of the new certificate or
certificates of ILLINI Common Stock the amount of all dividends, without
interest thereon, withheld with respect to such shares as above provided.
(c) If a certificate representing a FARMERS Share is lost,
stolen or destroyed, the registered owner thereof shall be entitled to receive
the applicable cash or the applicable number of whole shares of ILLINI Common
Stock, if any, to which he or she would be otherwise
A-4
<PAGE>
entitled on surrender of such certificate of a FARMERS Share by notifying ILLINI
in writing of such lost, stolen or destroyed certificate and giving ILLINI
evidence of loss and a bond adequate in the opinion of ILLINI to indemnify it
and the exchange agent against any claim that may be made against it on account
of the alleged lost, stolen or destroyed certificate and the issuance of the
applicable cash or number of whole shares of ILLINI Common Stock.
3.3 Dissenters' Rights. Any stockholder of FARMERS who (i) files
written objection to the Merger prior to or at the meeting of stockholders of
FARMERS at which this Agreement is submitted to a vote, (ii) does not vote in
favor of the Merger at such meeting, and (iii) makes written demand on the
RESULTING BANK within twenty (20) days after receiving written notice of the
Effective Time of the Merger, shall be entitled to receive from the RESULTING
BANK the fair value of the shares held by such stockholder, subject to and in
accordance with the provisions of the Illinois Banking Act, provided such
stockholder shall have complied with all applicable provisions of law.
3.4 Shares of RESULTING BANK. All of the shares of common stock of the
RESULTING BANK shall be issued to Illini.
3.5 Conditions Precedent. Effectuation of the Merger herein provided
for is conditioned upon:
(a) approval of this Agreement by vote of the stockholders of
FARMERS as required by law;
(b) approval of this Agreement by the Incorporator;
(c) approval of this Agreement and the Merger by the Federal
Deposit Insurance Corporation and the Commissioner; and
(d) procurement of all other consents and approvals, and
satisfaction of all other requirements prescribed by law, which are necessary
for consummation of the Merger.
ARTICLE IV
GENERAL PROVISIONS
4.1 Post-Merger Agreements. Each of the Merging Banks hereby appoints
the RESULTING BANK to be its true and lawful attorney for the purpose of taking,
in its name, place and stead, any and all actions that the RESULTING BANK deems
necessary or advisable to vest in the RESULTING BANK title to all property or
rights of each of the Merging Banks or otherwise to effect the purposes of this
Agreement, and each of the Merging Banks hereby grants to said attorney full
power and authority to take all actions necessary to effect those purposes,
including the power to execute, in its name, place and stead, such further
assignments or assurances in law necessary or advisable to vest in the RESULTING
BANK title to all property and rights of each of the Merging Banks.
A-5
<PAGE>
4.2 Termination. This Agreement shall automatically terminate upon the
termination of that certain Agreement and Plan of Reorganization dated as of
February ___, 1999, by and between ILLINI and FARMERS.
4.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the Merging Banks; provided,
however that after this Agreement has been approved by the stockholders of the
Merging Banks, no such amendment shall affect the rights of such stockholders in
a manner which is materially adverse to the interests of such stockholders.
4.4 Captions. The captions in this Agreement have been inserted for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement.
4.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall constitute an original, but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of FARMERS and the Incorporator has caused
this Agreement to be executed by its duly authorized officers and its corporate
seal to be affixed hereto as of the date first above written.
Attest: FARMERS INTERIM BANK
by Illini Corporation, its Sole Incorporator
By: By:
----------------------- ----------------------------------------------
Burnard K. McHone
Its: President
Attest: FARMERS STATE BANK OF CAMP POINT
By: By:
----------------------- ----------------------------------------------
Gregg Roegge
Its: President
A-6
<PAGE>
SCHEDULE I
STOCKHOLDERS OF FARMERS STATE BANK OF CAMP POINT
STOCKHOLDERS SHARES
------------ ------
A-7
<PAGE>
SCHEDULE II
PRO FORMA COMBINED BALANCE SHEET
This schedule is designed to reflect the pro forma combined balance sheet of the
FARMERS INTERIM BANK and FARMERS State Bank of Camp Point after adjustments.
<TABLE>
<CAPTION>
AS OF ________, 199__ FARMERS INTERIM BANK(1) ADJUSTMENTS PRO FORMA
(IN THOUSANDS) RESULTING
BANK
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ $ $ $
Investment securities
Federal funds sold Loans
Net of unearned discount
Less:
Allowance for loan
losses
Bank premises and equipment
Other assets
_________ _________ __________ _________
TOTAL ASSETS $ $________ $_________ $________
LIABILITIES AND
CAPITAL ACCOUNTS
Non-interest bearing
deposits $ $ $ $
Interest bearing deposits
TOTAL DEPOSITS $________ $________ $_________ $________
Other liabilities $ $ $ $
TOTAL LIABILITIES $________ $________ $_________ $________
Capital accounts:
Common stock $ $ $ $
Surplus
Undivided profits $________ $ $________
TOTAL CAPITAL $_____ $________ $ $________
ACCOUNTS
TOTAL LIABILITIES AND $ $ $_____ $
CAPITAL ACCOUNTS
</TABLE>
(1) Prior to the Effective Time of the Merger, Interim Bank will not have any
assets or liabilities.
A-8
Exhibit 2
NON-COMPETE, STANDSTILL AND
SALE OF PERSONAL GOODWILL AGREEMENT
THIS NON-COMPETE, STANDSTILL AND SALE OF PERSONAL GOODWILL AGREEMENT
("Agreement") is made by and between ILLINI CORPORATION ("Illini"), an Illinois
corporation, and ERNEST H. HULS ("Huls") as of the 19th day of November, 1999.
WHEREAS, Illini and Farmers State Bank of Camp Point have entered into
an Agreement and Plan of Reorganization (the "Merger Agreement") dated as of
March 2, 1999, whereby Illini will acquire Farmers State Bank of Camp Point and
whereby Huls will become a shareholder of Illini; and
WHEREAS, Section 5.1(o) of the Merger Agreement requires that Illini
and Huls enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows:
ARTICLE I
REPRESENTATIONS
1.1 Representations of Illini. Illini represents that it has full legal
right, power and authority to enter into and perform this Agreement.
1.2 Representations of Huls. Huls represents that (i) he has full legal
right, power and authority to enter into and perform this Agreement, (ii) upon
consummation of the transactions contemplated by the Merger Agreement (the
"Closing Date"), Huls will be the beneficial owner (within the meaning of Rule
13(d)-3 (as such rules are currently in effect) under the Securities and
Exchange Act of 1934, as amended) of 123,333 shares of Illini Common Stock (the
"Huls Illini Stock"), and (iii) Huls does not have any agreements, arrangements
or understanding with any other persons regarding the Huls Illini Stock.
ARTICLE II
SALE OF PERSONAL GOODWILL
2.1 Personal Goodwill. Huls acknowledges that he has been actively
involved with the Farmers State Bank of Camp Point since 1969 and that during
this period he has developed close relationships with customers, employees,
correspondent bankers and vendors of Farmers State Bank of Camp Point. These
relationships are attributable to Huls' own personal goodwill and are being sold
separate and apart from Farmers State Bank of Camp Point.
ARTICLE III
STANDSTILL AND VOTING
Exhibit 2-1
<PAGE>
3.1 Standstill Provisions. For a period ending on the fifth anniversary
of the Closing Date, Huls and his affiliates will not, alone or in concert with
others, directly or indirectly, unless specifically requested in writing in
advance by Illini: (i) purchase or otherwise acquire, or agree to acquire,
ownership (including, but not limited to, beneficial ownership) of any Illini
Common Stock, or direct or indirect rights (including convertible securities) or
options to acquire such ownership other than as specifically contemplated by the
Merger Agreement and other than as may be acquired by virtue of any stock
dividend, stock split or similar distribution of Illini Common Stock; (ii) make
any public announcement with respect to, or submit any proposal for, the
acquisition of beneficial ownership of Illini Common Stock (or direct or
indirect rights, including convertible securities, or options to acquire such
beneficial ownership) or for or with respect to any merger, consolidation, sale
of substantial assets or business combination involving Illini or any of its
affiliates; (iii) initiate or propose any shareholder proposals for submission
to a vote of shareholders with respect to Illini or any of its affiliates or
propose any person for election to the Board of Directors of Illini or any of
its affiliates; or (iv) otherwise seek to control the management or policies of
Illini or any of its affiliates.
3.2 Voting. For a period ending on the fifth anniversary of the Closing
Date, Huls will vote (whether by proxy or otherwise) all shares of Illini Common
Stock then beneficially owned by Huls in the manner recommended by Illini in the
election of directors of Illini and on all other matters submitted to a vote of
shareholders.
3.3 Binding Nature of Restrictions. Huls hereby agrees that the
requirements contained in this Article III shall be binding on any transferee of
the Huls Illini Stock and that the Huls Illini Stock will not be transferred to
any person unless prior to the transfer, the transferee agrees in writing to be
bound by the terms of this Article III. Huls further agrees that a restrictive
legend will be placed on the certificate(s) representing Huls Illini Stock which
will set forth the requirements of this Article III.
ARTICLE IV
NON-COMPETE
4.1 Non-Compete Agreement. For a period ending on the third anniversary
date of the Closing Date, Huls will not engage in the business of banking or in
any other manner compete with the business of Illini and its affiliates in Adams
County, Illinois or any county in Illinois contiguous to Adams County (the
"Non-Compete Area") or own stock in any bank or bank holding company (other than
Illini) or any savings association or savings association holding company which
has an office in the Non-Compete Area, except that Huls may own not more than
five percent (5%) of the stock of a bank or bank holding company or a savings
association or savings association holding company whose stock is listed on a
national securities exchange.
ARTICLE V
CONSIDERATION
5.1 Consideration. In consideration of the foregoing, Illini shall pay
Huls the sum of Fifty Thousand and 00/100 ($50,000.00) Dollars on the Closing
Date and shall pay Huls three (3) successive annual installments of Fifty
Thousand and 00/100 ($50,000.00) Dollars each on
Exhibit 2-2
<PAGE>
each anniversary date of the Closing Date ($200,000.00 in the aggregate).
5.2 Allocation. The parties hereby agree that the Consideration shall
be allocated for tax purposes as follows: One Hundred Ninety Thousand and 00/100
($190,000.00) Dollars to the Sale of Personal Goodwill and Ten Thousand and
00/100 ($10,000.00) Dollars to the Non- Compete Agreement. Each party further
agrees that they will file all tax returns in a manner which is consistent with
such allocation.
ARTICLE VI
GENERAL PROVISIONS
6.1 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective successors, heirs, devisees and the like
of the parties hereto.
6.2 Termination. This Agreement will terminate in the event that the
Merger Agreement is terminated.
6.3 Notices. All notices and other communications hereunder shall be
delivered in writing and shall be deemed given (i) when delivered personally;
(ii) on the second business day after being deposited in the United States mail,
registered or certified (return receipt requested) postage prepaid; (iii) on the
first business day after being deposited with Federal Express or any other
recognized national overnight courier service for overnight deliver; or (iv) on
the business day on which it is sent and received by facsimile, in each case to
the parties at the following address or facsimile number (or at such other
address or facsimile number for a party as shall be specified by like notice):
If addressed to Illini:
Illini Corporation
120 South Chatham Road
P.O. Box 13257
Springfield, Illinois 62704
Attention: Burnard K. McHone, President and Chief Executive Officer
Facsimile: (217) 547-9659
with a copy to:
Theodore L. Eissfeldt
Howard & Howard Attorneys, P.C.
One Technology Plaza
211 Fulton Street, Suite 600
Peoria, Illinois 61602-1350
Facsimile: (309) 672-1568
Exhibit 2-3
<PAGE>
If to Huls:
Ernest H. Huls
7850 East Via Costa
Scottsdale, Arizona 85258
Facsimile: (602) 607-0039
with a copy to:
Samuel J. Witsman, Esq.
Hart, Southworth & Witsman
One North Old State Capitol Plaza
Suite 501
Springfield, Illinois 62701-1323
Facsimile: (217) 753-1056
6.4 Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the internal laws of the State of Illinois,
without giving affect to the conflict of laws principles thereof.
6.5 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart will be an original instrument.
IN WITNESS WHEREOF, Illini and Huls have executed this Agreement as of
the day and year first above written.
ILLINI CORPORATION
By:/s/ Burnard K. McHone
-----------------------------------------
Burnard K. McHone
Its: President and Chief Executive Officer
/s/ Ernest H. Huls
--------------------------------------------
Ernest H. Huls
Exhibit 2-4
