<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 21, 1997
REGISTRATION NO. 333-25905
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
TCF FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 6021 41-1591444
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>
801 MARQUETTE AVENUE, SUITE 302,
MINNEAPOLIS, MINNESOTA 55402
TELEPHONE: (612) 661-6500
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
GREGORY J. PULLES, VICE CHAIRMAN, GENERAL COUNSEL AND SECRETARY
TCF FINANCIAL CORPORATION
801 MARQUETTE AVENUE, SUITE 302
MINNEAPOLIS, MINNESOTA 55402
TELEPHONE: (612) 661-6500
(Name, address, including zip code and telephone number, including
area code, of agent for service)
--------------------------
COPIES OF COMMUNICATIONS TO:
BRUCE J. PARKER, ESQ. THOMAS R. MAREK, ESQ.
KAPLAN, STRANGIS AND KAPLAN, P.A. OPPENHEIMER WOLFF & DONNELLY
5500 NORWEST CENTER 3400 PLAZA VII
90 SOUTH 7TH STREET 45 SOUTH 7TH STREET
MINNEAPOLIS, MINNESOTA 55402 MINNEAPOLIS, MINNESOTA 55402
TELEPHONE: (612) 375-1138 TELEPHONE: (612) 344-9309
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after this Registration Statement becomes effective and
all other conditions to the proposed merger (the "Merger") of a wholly-owned
subsidiary of the Registrant with and into Winthrop Resources Corporation
("Winthrop") pursuant to the Agreement and Plan of Reorganization dated as of
February 28, 1997 attached as Appendix A to the enclosed Joint Proxy
Statement/Prospectus have been satisfied or waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: /X/
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common stock, par value $.01 per share (2)
(1).................................... 7,050,000 Shares
9.50% Senior Notes due 2003.............. $28,750,000 principal 100% (3) $28,750,000 (3) $8,715 (3)
amount (3)
</TABLE>
(1) Each share of the registrant's common stock includes one preferred share
purchase right issued pursuant to that certain Stockholder Rights Agreement
dated May 23, 1989, as amended, between TCF Financial Corporation ("TCF")
and The First National Bank of Boston c/o Boston EquiServe L.P. ("Boston
Equiserve").
(2) Registration fee previously paid.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f). The amount to be registered is the principal
balance of the 9.50% Senior Notes due 2003 of Winthrop Resources Corporation
("Winthrop") for which TCF will become a co-obligor upon cunsummation of the
merger of Winthrop with a wholly-owed subsidiary of TCF and subject to
certain modifications to the indenture pursuant to which the notes were
issued.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TCF-Registration Trademark-
TCF FINANCIAL CORPORATION
801 MARQUETTE AVENUE, SUITE 302
MINNEAPOLIS, MN 55402
(612) 661-6500
May 23, 1997
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders (the
"Special Meeting") of TCF Financial Corporation ("TCF" or "TCF Financial") which
will be held at The Marquette Hotel, Seventh Street and Marquette Avenue,
Minneapolis, Minnesota, on Tuesday, June 24, 1997, at 11:00 a.m. local time.
At the Special Meeting, stockholders will be asked to approve the Agreement
and Plan of Reorganization, dated February 28, 1997, and the exhibits thereto
(the "Merger Agreement"), the merger of a newly-formed, wholly-owned subsidiary
of TCF Financial with and into Winthrop Resources Corporation, a Minnesota
corporation ("Winthrop") with Winthrop being the surviving corporation (the
"Merger"), and the issuance of shares of TCF common stock in connection
therewith. As a result of the Merger, Winthrop will become a wholly-owned
subsidiary of TCF. TCF Financial will issue shares of its common stock to
holders of common stock of Winthrop, and will assume the obligation to issue
shares of its common stock to holders of Winthrop stock options upon exercise of
such options. After the Merger, TCF Financial intends to contribute Winthrop,
the surviving corporation of the Merger, to TCF National Bank Minnesota, its
wholly-owned national bank subsidiary. Winthrop, a financial services company
based in Minnetonka, Minnesota, leases computers, telecommunications equipment,
point-of-sale systems and other business-essential equipment to companies
throughout the United States.
Approval by the requisite vote of TCF stockholders is a condition to the
consummation of the Merger. Based on the total number of shares of Winthrop
common stock outstanding at May 20, 1997, the record date for the Special
Meeting, and the application of the exchange ratio of 0.7766 specified in the
Merger Agreement (the "Exchange Ratio"), approximately 6,679,000 new shares of
TCF common stock would be issued to stockholders of Winthrop in connection with
the Merger, representing approximately 16.1% of the total number of shares of
TCF common stock outstanding at May 20, 1997, after giving effect to such
issuance. An additional 349,082 shares of TCF common stock would be reserved for
issuance to option holders of Winthrop common stock in connection with TCF's
assumption of Winthrop's 1992 Stock Incentive Plan. The terms of the Merger,
including the method for determining the number of shares of TCF common stock to
be issued, as well as other important information relating to TCF Financial,
Winthrop and the combined operations after the Merger, are explained in detail
in the accompanying Joint Proxy Statement/Prospectus and we urge you to read it
carefully.
Please give this document your prompt attention. A proposal is included to
authorize adjournment of the meeting, if necessary, to obtain sufficient votes
for approval of the Merger. In order to avoid the expense of adjournment, I urge
you to return your proxy card as soon as possible.
<PAGE>
THE BOARD OF DIRECTORS OF TCF FINANCIAL HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE MERGER AND THE ISSUANCE OF SHARES OF TCF COMMON STOCK PROVIDED
FOR THEREIN, AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" BOTH OF THE
PROPOSALS ON THE ENCLOSED PROXY CARD: APPROVAL OF THE MERGER AGREEMENT, THE
MERGER AND THE ISSUANCE OF TCF COMMON STOCK IN CONNECTION THEREWITH; AND
APPROVAL OF ADJOURNMENT OF THE SPECIAL MEETING IF NECESSARY TO SOLICIT
ADDITIONAL PROXIES.
Your vote is important, regardless of the number of shares you own. On
behalf of the Board of Directors, I urge you to sign, date and return the
enclosed proxy card as soon as possible, even if you plan to attend the Special
Meeting. If you receive more than one proxy card, because you have multiple
accounts with TCF Financial common stock, please sign, date and return each
proxy card so that all your shares will be voted. This will not prevent you from
voting in person, but will assure that your vote is counted if you are unable to
attend the Special Meeting.
Sincerely,
[SIGNATURE]
William A. Cooper
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
<PAGE>
TCF-Registration Trademark-
TCF FINANCIAL CORPORATION
801 MARQUETTE AVENUE, SUITE 302
MINNEAPOLIS, MN 55402
(612) 661-6500
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 24, 1997
------------------------
TO THE STOCKHOLDERS OF TCF FINANCIAL CORPORATION:
A Special Meeting of the Stockholders of TCF Financial Corporation ("TCF" or
"TCF Financial") (the "TCF Special Meeting") will be held at The Marquette
Hotel, Seventh Street and Marquette Avenue, Minneapolis, Minnesota on Tuesday,
June 24, 1997 commencing at 11:00 a.m. local time to consider and vote upon the
following proposals:
1. Approval and adoption of the Agreement and Plan of Reorganization, dated
February 28, 1997, and the exhibits thereto (the "Merger Agreement")
between TCF Financial and Winthrop Resources Corporation ("Winthrop"),
the merger of a newly-formed, wholly-owned subsidiary of TCF Financial
with and into Winthrop with Winthrop being the surviving corporation and
becoming a wholly-owned subsidiary of TCF pursuant to the Merger
Agreement (the "Merger"), and the issuance of up to 7,050,000 shares of
common stock of TCF Financial, par value $.01 per share (the "TCF Common
Stock"), and cash for fractional shares, to Winthrop stockholders and
holders of stock options in connection therewith. After the Merger, TCF
Financial intends to contribute Winthrop to TCF National Bank Minnesota,
one of its wholly-owned subsidiaries. Pursuant to the Merger Agreement,
each outstanding share of the common stock, par value $.01 per share, of
Winthrop ("Winthrop Common Stock") automatically would be converted into
and exchangeable for 0.7766 (the "Exchange Ratio") of a share of TCF
Common Stock, with cash paid in lieu of fractional shares. In addition,
as a result of the Merger, each outstanding option to purchase Winthrop
Common Stock would be assumed by TCF Financial at the effective time of
the Merger and would be converted into an option to acquire such number
of whole shares of TCF Common Stock as is equal to the product of the
Exchange Ratio and the number of shares of Winthrop Common Stock
remaining subject to the original option immediately prior to the
effective time of the Merger, at an exercise price per share equal to the
exercise price per share of Winthrop Common Stock under such option
immediately prior to the effective time of the Merger, divided by the
Exchange Ratio. The Merger Agreement is attached as Appendix A to the
accompanying Joint Proxy Statement/Prospectus and is incorporated by
reference herein;
2. To adjourn the TCF Special Meeting to solicit additional proxies, if
necessary; and
3. To transact such other business, if any, as may properly come before the
TCF Special Meeting or any adjournment or postponement thereof.
Only holders of record of TCF Common Stock at the close of business on May
20, 1997 are entitled to notice of and to vote at the TCF Special Meeting or any
adjournment or postponement thereof.
A list of TCF Financial stockholders entitled to vote at the TCF Special
Meeting will be available for examination, for any purpose germane to the TCF
Special Meeting, at TCF's executive offices located at 801 Marquette Avenue,
Suite 302, Minneapolis, Minnesota, during ordinary business hours for at least
ten days prior to the TCF Special Meeting and for the duration of the TCF
Special Meeting itself.
<PAGE>
Whether or not you plan to attend the TCF Special Meeting in person, please
fill in, sign and date the enclosed Proxy Card and mail it promptly. Should you
attend the TCF Special Meeting, you may revoke your proxy and vote in person. A
return envelope, which requires no postage if mailed in the United States, is
enclosed for your convenience.
Remember, if your shares are held in the name of a broker, only your broker
can vote your shares and only after receiving your instructions. Please contact
the person responsible for your account, with instructions to execute a proxy
card on your behalf.
THE BOARD OF DIRECTORS OF TCF FINANCIAL UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" BOTH PROPOSALS ON THE ENCLOSED PROXY CARD: APPROVAL OF THE MERGER
AGREEMENT, THE MERGER AND THE ISSUANCE OF TCF COMMON STOCK IN CONNECTION
THEREWITH; AND APPROVAL OF ADJOURNMENT OF THE SPECIAL MEETING IF NECESSARY TO
SOLICIT ADDITIONAL PROXIES.
If you have any questions or require assistance, please call Georgeson &
Co., which is assisting us in the solicitation of proxies, at (800) 223-2064.
By Order of the Board of Directors
[SIGNATURE]
William A. Cooper
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
WHETHER OR NOT YOU EXPECT TO ATTEND THE TCF SPECIAL MEETING, PLEASE SIGN THE
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. THE PROMPT RETURN OF PROXIES WILL
SAVE TCF FINANCIAL THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO
ASSURE A QUORUM. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
Minneapolis, Minnesota
May 23, 1997
<PAGE>
WINTHROP RESOURCES CORPORATION
1015 OPUS CENTER, 9900 BREN ROAD EAST
MINNETONKA, MN 55343
(612) 936-0226
May 23, 1997
Dear Winthrop Stockholder:
I am pleased to invite you to attend a Special Meeting of Stockholders of
Winthrop Resources Corporation ("Winthrop") (the "Winthrop Special Meeting")
which will begin at 10:00 a.m. Minneapolis time, on Tuesday June 24, 1997 at The
Marquette Hotel, Seventh Street and Marquette Avenue, Minneapolis, Minnesota.
At the Winthrop Special Meeting, you will be asked to approve the Agreement
and Plan of Reorganization dated February 28, 1997, and the exhibits thereto
(the "Merger Agreement") by and between Winthrop and TCF Financial Corporation
("TCF" or "TCF Financial") pursuant to which a newly-formed, wholly-owned
subsidiary of TCF will be merged with and into Winthrop, with Winthrop being the
surviving corporation and becoming a wholly-owned subsidiary of TCF (the
"Merger"). Upon completion of the Merger, TCF intends that Winthrop will become
a wholly-owned subsidiary of TCF National Bank Minnesota. If the proposed
Merger, described in the accompanying Joint Proxy Statement/Prospectus, becomes
effective, each outstanding share of Winthrop common stock automatically would
be converted into and exchangeable for 0.7766 (the "Exchange Ratio") of a share
of TCF common stock (with cash paid in lieu of fractional shares). Based on the
last reported sale price of TCF common stock on the New York Stock Exchange on
May 13, 1997, the Exchange Ratio would result in a per share purchase price for
Winthrop common stock of $33.394. If the Merger is completed, Winthrop
stockholders will no longer hold any interest in Winthrop other than through
their interest in shares of TCF common stock. Winthrop may terminate the Merger
Agreement and abandon the Merger if, among other things, the "Average TCF Stock
Price" is less than $42.30 per share. TCF may terminate the Merger Agreement and
abandon the Merger if, among other things, the "Average TCF Stock Price" is
greater than $51.70 per share. The "Average TCF Stock Price" is defined under
the Merger Agreement as the average of the daily closing sales prices of TCF
common stock for the 30 consecutive full trading days ending on the third
business day immediately prior to either the last date of either of the
stockholders meetings or the date on which the last regulatory approval has been
obtained and all required waiting periods have expired, whichever date is
closest to the effective time of the Merger. TCF common stock is traded on the
New York Stock Exchange under the symbol TCB.
The proposed Merger is subject, among other things, to approval by holders
of a majority of the outstanding shares of Winthrop common stock. The three
founding stockholders of Winthrop who are current directors and executive
officers of Winthrop and who collectively hold approximately 43.5% of the
outstanding shares of Winthrop common stock have already agreed to vote their
shares in favor of the Merger.
It is important that your shares are represented at the Winthrop Special
Meeting, whether or not you plan to attend. I urge you to cast your vote as soon
as possible. To cast a vote, simply complete, date, sign and return the proxy
card which is enclosed. A postage-paid envelope is enclosed for the return of
the proxy card. A proxy card which is signed but unmarked will be deemed as a
vote in favor of the Merger. An abstention or failure to vote will have the same
effect as a vote against the Merger. Although you may have voted by proxy, you
may attend the Winthrop Special Meeting and vote your shares in person. This
vote may be different from the way you voted in the proxy.
I encourage you to carefully read the Notice of Special Meeting and Joint
Proxy Statement/Prospectus which accompany this letter as they contain more
information about the Merger Agreement, the Merger, and the parties to the
Merger.
<PAGE>
Please hold onto your Winthrop stock certificates until you receive a letter
which explains how to exchange your shares of Winthrop common stock for shares
of TCF common stock. PLEASE DO NOT SEND IN YOUR WINTHROP STOCK CERTIFICATES AT
THIS TIME.
Winthrop's Board of Directors has received an opinion of Dain Bosworth
Incorporated, Winthrop's financial advisor, that as of February 26, 1997 and as
of the date of the accompanying Joint Proxy Statement/ Prospectus, the
consideration to be received in the Merger by the Winthrop common stockholders
is fair, from a financial point of view, to the stockholders of Winthrop. A copy
of this opinion is included as Appendix C to the Joint Proxy
Statement/Prospectus.
After careful consideration, the Winthrop Board of Directors, by unanimous
vote of all directors, has approved the terms of the Merger Agreement and the
Merger, and has concluded that the Merger Agreement and the Merger are in the
best interests of Winthrop and its stockholders.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT AND APPROVAL OF THE MERGER
On behalf of the Winthrop Board of Directors, I thank you for your continued
support and encourage you to vote "For" the Merger Agreement and the Merger.
Sincerely,
[SIGNATURE]
John L. Morgan
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
WINTHROP RESOURCES CORPORATION
1015 OPUS CENTER, 9900 BREN ROAD EAST
MINNETONKA, MINNESOTA 55343
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 24, 1997
------------------------
TO THE STOCKHOLDERS OF WINTHROP RESOURCES CORPORATION:
NOTICE IS HEREBY GIVEN that a Special Meeting (the "Winthrop Special
Meeting") of stockholders of the common stock, par value $.01 per share, of
Winthrop Resources Corporation ("Winthrop"), a Minnesota corporation, will be
held at 10:00 a.m., Minneapolis time, on Tuesday, June 24, 1997 at The Marquette
Hotel, Seventh Street and Marquette Avenue, Minneapolis, Minnesota for the
purpose of considering and voting upon:
1. The approval and adoption of the Agreement and Plan of Reorganization
dated February 28, 1997 (the "Merger Agreement"), by and between Winthrop
and TCF Financial Corporation ("TCF"), including the transactions
contemplated by the Merger Agreement. Pursuant to the Merger Agreement,
among other things, a newly-formed, wholly-owned subsidiary of TCF will
merge with and into Winthrop, with Winthrop being the surviving
corporation and becoming a wholly-owned subsidiary of TCF (the "Merger").
After the Merger, Winthrop will become a wholly-owned subsidiary of TCF
National Bank Minnesota. Pursuant to the Merger Agreement, each
outstanding share of Winthrop common stock, par value $.01 per share
("Winthrop Common Stock"), automatically will be converted into and
exchangeable for 0.7766 (the "Exchange Ratio") of a share of TCF common
stock, par value $.01 per share (with cash paid in lieu of fractional
shares). The Merger Agreement and the transactions contemplated by the
Merger Agreement are more fully described in the Joint Proxy
Statement/Prospectus which accompanies this Notice of Special Meeting of
Stockholders. The Merger Agreement is attached as Appendix A to such
Joint Proxy Statement/Prospectus, and is incorporated by reference
herein.
2. Such other matters as may properly come before this Winthrop Special
Meeting or any adjournment or postponement thereof, including a motion to
adjourn to a later date to permit further solicitation of proxies if
necessary.
All Winthrop stockholders are invited to attend the Winthrop Special Meeting
in person. Only holders of record of Winthrop Common Stock at the close of
business on May 21, 1997 are entitled to notice of, and to vote at, the Winthrop
Special Meeting. Whether or not you plan to attend the Winthrop Special Meeting
in person, please promptly complete, sign, date and return the enclosed proxy
card. A postage-paid envelope is enclosed for the return of the proxy card. The
proxy may be revoked at any time before it is voted. Although you may have voted
by proxy, you may attend the Winthrop Special Meeting and vote your shares in
person if you wish.
Under Minnesota law, stockholders of Winthrop Common Stock are eligible to
exercise dissenters' rights in connection with the proposed Merger, as described
in greater detail in the accompanying Joint Proxy Statement/Prospectus.
The accompanying Joint Proxy Statement/Prospectus and the exhibits thereto,
including the Merger Agreement, form a part of this Notice.
Remember, if your shares are held in the name of a broker, only your broker
can vote your shares and only after receiving your instructions. Please contact
the person responsible for your account with instructions to execute a proxy
card on your behalf.
<PAGE>
If the accompanying Proxy Card is properly executed and returned to Winthrop
in time to be voted at the Winthrop Special Meeting, and not revoked, the shares
represented thereby will be voted in accordance with the instructions marked
thereon. EXECUTED BUT UNMARKED PROXIES WILL BE VOTED FOR APPROVAL AND ADOPTION
OF THE MERGER AGREEMENT AND THE MERGER. The presence of a stockholder at the
Winthrop Special Meeting will not automatically revoke such stockholder's proxy.
A stockholder may, however, revoke a proxy at any time before the vote by filing
a written notice of revocation with, or by delivering a duly executed Proxy Card
bearing a later date to, Mr. Paul L. Gendler, General Counsel, Winthrop
Resources Corporation, 1015 Opus Center, 9900 Bren Road East, Minnetonka,
Minnesota 55343 or by attending the Winthrop Special Meeting and voting in
person.
By Order of the Board of Directors
[LOGO]
Mark L. Wilson
SECRETARY
Minnetonka, Minnesota
May 23, 1997
- --------------------------------------------------------------------------------
THE WINTHROP BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS VOTE "FOR" THE PROPOSAL TO APPROVE
AND ADOPT THE MERGER AGREEMENT AND TO APPROVE THE MERGER AND
"FOR" THE PROPOSAL TO ADJOURN THE MEETING, IF NECESSARY,
TO SOLICIT ADDITIONAL PROXIES.
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
<PAGE>
TCF FINANCIAL CORPORATION
WINTHROP RESOURCES CORPORATION
JOINT PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS OF TCF FINANCIAL CORPORATION
TO BE HELD ON
JUNE 24, 1997
AND
SPECIAL MEETING OF STOCKHOLDERS OF WINTHROP RESOURCES CORPORATION
TO BE HELD ON
JUNE 24, 1997
------------------------
TCF FINANCIAL CORPORATION
PROSPECTUS
FOR
UP TO 7,050,000 SHARES OF COMMON STOCK
OF TCF FINANCIAL CORPORATION
TO BE ISSUED PURSUANT TO THE
AGREEMENT AND PLAN OF REORGANIZATION DATED FEBRUARY 28, 1997
BETWEEN
TCF FINANCIAL CORPORATION
AND
WINTHROP RESOURCES CORPORATION
AND
UP TO $28,750,000 AGGREGATE PRINCIPAL AMOUNT OF 9.50% SENIOR NOTES DUE 2003
OF WINTHROP RESOURCES CORPORATION
FOR WHICH TCF FINANCIAL CORPORATION WILL BECOME A CO-OBLIGOR
UPON CONSUMMATION OF THE MERGER AND SUBJECT TO CERTAIN MODIFICATIONS TO
THE INDENTURE PURSUANT TO WHICH THE 9.50% SENIOR NOTES DUE 2003 WERE ISSUED
------------------------
THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS IS MAY 23, 1997.
This Joint Proxy Statement/Prospectus is being furnished in connection with
the solicitation of proxies by the Board of Directors of TCF Financial
Corporation, a Delaware corporation ("TCF" or "TCF Financial") to be used at a
special meeting of its stockholders to be held on Tuesday, June 24, 1997 (the
"TCF Special Meeting"), the solicitation of proxies by the Board of Directors of
Winthrop Resources Corporation, a Minnesota corporation ("Winthrop") to be used
at a special meeting of its stockholders to be held on Tuesday, June 24, 1997
(the "Winthrop Special Meeting"), and the solicitation of consents from the
holders of the Winthrop 9.50% Senior Notes due 2003 (the "Winthrop Senior
Notes") to certain modifications to the indenture dated as of July 1, 1996 (the
"Indenture") between Winthrop and Norwest Bank Minnesota, National Association,
as trustee. The TCF Special Meeting and the Winthrop Special
1
<PAGE>
Meeting are jointly referred to as the "Special Meetings." At the TCF Special
Meeting, TCF common stockholders will be asked to consider and act upon: a
proposal to approve the Agreement and Plan of Reorganization dated February 28,
1997 by and between TCF and Winthrop, and the exhibits thereto (the "Merger
Agreement"), pursuant to which a newly-formed, wholly-owned subsidiary of TCF
will be merged with and into Winthrop, with Winthrop being the surviving
corporation and becoming a wholly-owned subsidiary of TCF (the "Merger"), and
pursuant to which TCF will issue shares of its common stock, par value $.01 per
share, including the associated preferred share purchase rights described in
"Description of TCF Capital Stock--TCF Common Stock--Preferred Share Purchase
Rights" ("TCF Common Stock"). At the Winthrop Special Meeting, Winthrop common
stockholders will be asked to consider and act upon a proposal to approve and
adopt the Merger Agreement and the Merger. After the Merger, TCF intends to
contribute all outstanding capital stock of Winthrop to TCF National Bank
Minnesota ("TCF Minnesota"), one of its wholly-owned subsidiaries. The Boards of
Directors of TCF and Winthrop are also soliciting their respective stockholders
for authority to adjourn the respective Special Meetings to solicit additional
proxies, if necessary. A copy of the Merger Agreement is attached as Appendix A
to this Joint Proxy Statement/Prospectus and incorporated by reference herein.
In accordance with the terms of the Merger Agreement, upon approval of the
Merger Agreement by the stockholders of TCF and Winthrop, the receipt of all
requisite regulatory approvals, the expiration of the applicable waiting periods
and the satisfaction or waiver of all other conditions, the Merger will occur.
In connection with the Merger, each share of common stock of Winthrop, par value
$.01 per share ("Winthrop Common Stock"), outstanding immediately prior to
consummation of the Merger (other than dissenters' shares and shares held by TCF
or any subsidiary thereof except for shares held in a fiduciary capacity or in
satisfaction of a debt) shall be automatically converted into and exchangeable
for 0.7766 (the "Exchange Ratio") of a share of TCF Common Stock. No fractional
shares of TCF Common Stock will be issued and cash will be paid in lieu thereof.
Upon consummation of the Merger, TCF will also assume the obligation to issue
TCF Common Stock upon the exercise of outstanding employee and director options
(the "Options") under Winthrop's 1992 Stock Incentive Plan (the "Winthrop Stock
Option Plan"), and TCF will become a co-obligor of the outstanding Winthrop
Senior Notes, subject to approval by Winthrop Senior Note holders of certain
modifications to the indenture pursuant to which the Winthrop Senior Notes were
issued. See "The Merger--Interests of Certain Persons in the Merger." The
outstanding shares of TCF Common Stock are, and it is a condition to
consummation of the Merger that the shares of TCF Common Stock to be issued in
the Merger will be (subject to official notice of issuance), listed on the New
York Stock Exchange (the "NYSE") under the symbol "TCB". The last reported sale
price of TCF Common Stock on the NYSE composite tape on May 13, 1997 was $43.00
per share. Based on the last reported sale price, the Exchange Ratio would
result in a per share purchase price for the Winthrop Common Stock of $33.394.
BECAUSE THE EXCHANGE RATIO IS FIXED, A CHANGE IN THE MARKET PRICE OF TCF
COMMON STOCK BEFORE THE MERGER WILL AFFECT THE VALUE OF THE TCF COMMON STOCK TO
BE RECEIVED IN THE MERGER.
Consummation of the Merger is conditioned upon, among other things,
satisfaction of certain conditions precedent, including the receipt of all
required stockholder and regulatory approvals. Because of the uncertainty of the
timing of the satisfaction of the conditions precedent and receipt of regulatory
approvals, the Merger may not be consummated for a substantial period of time
after any receipt of approvals by the stockholders of TCF and Winthrop. See "The
Merger--Regulatory Approvals."
Piper Jaffray Inc. ("Piper Jaffray") has rendered its opinion dated the date
of this Joint Proxy Statement/Prospectus, updating its opinion dated February
25, 1997, to the Board of Directors of TCF that, as of such dates, the
consideration to be paid by TCF in the Merger is fair, from a financial point of
view, to the stockholders of TCF. See "The Merger--Opinion of TCF Financial
Advisor."
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Dain Bosworth Incorporated ("Dain Bosworth") has rendered its opinion dated
the date of this Joint Proxy Statement/Prospectus, updating its oral opinion
provided on February 26, 1997, to the Board of Directors of Winthrop that, as of
such dates, the consideration to be received by stockholders of Winthrop is
fair, from a financial point of view, to the stockholders of Winthrop. See "The
Merger--Opinion of Winthrop Financial Advisor."
THE BOARD OF DIRECTORS OF TCF UNANIMOUSLY RECOMMENDS THAT HOLDERS OF TCF
COMMON STOCK VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT, THE MERGER AND
ISSUANCE OF SHARES OF TCF COMMON STOCK IN CONNECTION THEREWITH. THE BOARD OF
DIRECTORS OF WINTHROP UNANIMOUSLY RECOMMENDS THAT HOLDERS OF WINTHROP COMMON
STOCK VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF
THE MERGER.
This Joint Proxy Statement/Prospectus is part of a Registration Statement on
Form S-4 pursuant to the Securities Act of 1933, as amended, to register shares
of TCF Common Stock to be issued in connection with the Merger and the
assumption of the Options upon consummation of the Merger. The Exchange Ratio,
and the determination of the maximum number of shares of TCF Common Stock to be
issued as a result of the Merger, are explained herein.
This Joint Proxy Statement/Prospectus serves as a proxy statement for each
of TCF and Winthrop in connection with their respective Special Meetings and as
the Prospectus of TCF with respect to the shares of TCF Common Stock to be
issued in connection with the Merger and the Options of Winthrop to be assumed
by TCF upon consummation of the Merger. All information in this Joint Proxy
Statement/ Prospectus regarding TCF and its affiliates has been furnished by
TCF, and all information herein regarding Winthrop and its affiliates has been
furnished by Winthrop.
Winthrop stock certificates should not be sent or returned until after
receipt of a letter of transmittal to be provided to Winthrop stockholders upon
consummation of the Merger.
------------------------
THE SECURITIES TO BE ISSUED IN THE MERGER HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR ANY OTHER GOVERNMENTAL AGENCY, NOR HAS THE COMMISSION, ANY STATE
SECURITIES COMMISSION OR OTHER AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE ABOVE MATTERS ARE DISCUSSED IN DETAIL IN THIS JOINT PROXY STATEMENT/
PROSPECTUS. THE PROPOSED MERGER IS A COMPLEX TRANSACTION. STOCKHOLDERS OF TCF
AND WINTHROP ARE STRONGLY URGED TO READ AND CONSIDER CAREFULLY THIS JOINT PROXY
STATEMENT/PROSPECTUS IN ITS ENTIRETY.
------------------------
This Joint Proxy Statement/Prospectus and the accompanying Notices and Proxy
Cards for the respective Special Meetings are first being mailed to stockholders
of TCF and Winthrop on or about May 27, 1997.
AVAILABLE INFORMATION
TCF has filed with the Securities and Exchange Commission (the "Commission")
a Registration Statement on Form S-4 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
shares of TCF Common Stock which may be issued in connection with the Merger
described herein, and the Options to be assumed by TCF in connection with the
Merger. As permitted by the rules and regulations of the Commission, this Joint
Proxy Statement/Prospectus omits certain information, exhibits and undertakings
contained in the Registration Statement. For further
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information, reference is made to the Registration Statement, including all
amendments to the Registration Statement, and all the exhibits and schedules
filed as part of the Registration Statement. Statements contained herein
concerning provisions of documents are necessarily summaries of the documents
and each statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission. The Registration Statement can be
inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Offices at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and 7 World Trade Center, New York, New York 10048. The
Registration Statement can be accessed over the Commission's web site located at
http:// www.sec.gov.
TCF and Winthrop are currently subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, file reports, proxy and information statements and other
information with the Commission. Copies of such TCF materials may be obtained at
prescribed rates from the Commission. The TCF Common Stock is listed for
quotation on the NYSE. The Winthrop Common Stock is quoted on the Nasdaq
National Market System. Consequently, reports, proxy and information statements
and other information concerning TCF can also be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005 and concerning Winthrop at the
offices of the Nasdaq National Market System, 1735 K Street N.W., Washington,
D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Joint Proxy Statement/Prospectus incorporates documents by reference
which are not presented herein or delivered herewith. The following documents
filed by TCF (File No. 0-16431) and by Winthrop (File No. 0-20123) with the
Commission pursuant to the Exchange Act and the rules and regulations of the
Commission are incorporated herein by reference:
(a) TCF's (i) Annual Report on Form 10-K for the year ended December 31,
1996; (ii) Quarterly Report on Form 10-Q for the quarter ended March 31,
1997; and (iii) Current Reports on Form 8-K dated January 27, 1997, February
19, 1997, March 5, 1997, March 21, 1997 and April 11, 1997; and
(b) Winthrop's (i) Annual Report on Form 10-K for the year ended
December 31, 1996; (ii) Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997; (iii) Current Reports on Form 8-K dated January 19, 1996 and
March 7, 1997; (iv) Current Report on Form 8-K/A dated March 29, 1996; (v)
Registration Statement on Form 8-A dated April 23, 1992; and (vi) any
amendment or report filed for the purpose of updating such description of
Winthrop Common Stock filed subsequent to the date of this Joint Proxy
Statement/Prospectus and prior to the termination of the offering described
herein; and
(c) All other documents filed by either TCF or Winthrop pursuant to
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to the
date of this Joint Proxy Statement/Prospectus and prior to the Special
Meetings.
In addition, TCF has also entered into an agreement and plan of
reorganization dated March 16, 1997 (the "Standard Merger Agreement") with
Standard Financial, Inc., a Delaware corporation ("Standard"), which owns all of
the outstanding capital stock of Standard Federal Bank for savings, a federal
savings bank ("Standard Bank"), pursuant to which TCF has agreed to acquire
Standard for approximately $419 million, subject to certain adjustments, in a
combination of stock and cash. Certain financial information of Standard is
incorporated by reference from exhibits to TCF's registration statement on file
with the Commission. See "Recent Developments--Standard." Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this Joint
Proxy Statement/Prospectus to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein
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modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Joint Proxy Statement/Prospectus.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. ALL OF SUCH DOCUMENTS WITH
RESPECT TO TCF ARE AVAILABLE UPON WRITTEN OR ORAL REQUEST FROM MR. GREGORY J.
PULLES, SECRETARY, TCF FINANCIAL CORPORATION, 801 MARQUETTE AVENUE, SUITE 302,
MINNEAPOLIS, MINNESOTA 55402; TELEPHONE NUMBER (612) 661-6500. ALL OF SUCH
DOCUMENTS WITH RESPECT TO WINTHROP ARE AVAILABLE UPON WRITTEN OR ORAL REQUEST
FROM MR. GARY W. ANDERSON, VICE PRESIDENT, WINTHROP RESOURCES CORPORATION, 1015
OPUS CENTER, 9900 BREN ROAD EAST, MINNETONKA, MINNESOTA, 55343; TELEPHONE NUMBER
(616) 936-0226. COPIES WILL BE FURNISHED (WITHOUT EXHIBITS UNLESS THE EXHIBITS
HAVE BEEN SPECIFICALLY INCORPORATED BY REFERENCE) FREE OF CHARGE. IN ORDER TO
ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS PRIOR TO THE SPECIAL MEETINGS, ANY
REQUEST SHOULD BE MADE BEFORE JUNE 13, 1997.
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TABLE OF CONTENTS
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<S> <C>
AVAILABLE INFORMATION...................................................................................... 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................................ 4
SUMMARY.................................................................................................... 8
COMPARATIVE MARKET PRICE DATA.............................................................................. 17
COMPARATIVE UNAUDITED PER-SHARE DATA....................................................................... 19
SELECTED HISTORICAL AND UNAUDITED PRO FORMA
COMBINED FINANCIAL DATA.............................................................................. 21
INFORMATION CONCERNING THE TCF SPECIAL MEETING............................................................. 27
INFORMATION CONCERNING THE WINTHROP SPECIAL MEETING........................................................ 28
EXPENSES................................................................................................... 31
THE MERGER................................................................................................. 32
General.................................................................................................. 32
Background of and Reasons for the Merger................................................................. 32
Opinion of TCF Financial Advisor......................................................................... 37
Opinion of Winthrop Financial Advisor.................................................................... 42
Effects of the Merger.................................................................................... 45
The Exchange Ratio....................................................................................... 46
Conditions to the Merger................................................................................. 48
Regulatory Approvals..................................................................................... 50
Certain Covenants........................................................................................ 51
Limitation on Negotiations............................................................................... 51
Termination and Amendment................................................................................ 52
Termination Fees......................................................................................... 52
Business Pending the Merger.............................................................................. 53
Interests of Certain Persons in the Merger............................................................... 56
Resale Considerations With Respect to the TCF Common Stock............................................... 57
Certain Federal Income Tax Consequences.................................................................. 57
Accounting Treatment of the Merger....................................................................... 58
Dissenters' Rights--Winthrop............................................................................. 59
Expenses of the Merger................................................................................... 61
Stockholder and Affiliate Letter Agreements.............................................................. 61
DESCRIPTION OF TCF CAPITAL STOCK........................................................................... 62
DESCRIPTION OF WINTHROP SECURITIES......................................................................... 65
COMPARISON OF THE RIGHTS OF STOCKHOLDERS................................................................... 69
RECENT DEVELOPMENTS........................................................................................ 78
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION......................................................... 79
ADJOURNMENT OF SPECIAL MEETINGS............................................................................ 89
LEGAL OPINIONS............................................................................................. 90
EXPERTS.................................................................................................... 90
OTHER MATTERS.............................................................................................. 90
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TABLE OF CONTENTS (CONTINUED)
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<S> <C> <C>
APPENDIX A: Agreement and Plan of Reorganization dated as of February 28, 1997, between TCF
Financial Corporation and Winthrop Resources Corporation, including the related Form
of Stockholder Agreement attached as Exhibit A thereto, the Articles of Merger
attached as Exhibit B thereto and the Forms of Affiliate Letters attached as Exhibits
C and D thereto...................................................................... A
APPENDIX B: Opinion of Piper Jaffray Inc........................................................... B
APPENDIX C: Opinion of Dain Bosworth Incorporated.................................................. C
APPENDIX D: Sections 302A.471 and .473 of MBCA (Dissenters' Rights applicable to Winthrop
Stockholders)........................................................................ D
</TABLE>
------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY TCF OR WINTHROP. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE
SECURITIES OFFERED BY THIS JOINT PROXY STATEMENT/PROSPECTUS, OR THE SOLICITATION
OF A PROXY, IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER,
SOLICITATION OF AN OFFER OR PROXY SOLICITATION. NEITHER THE DELIVERY OF THIS
JOINT PROXY STATEMENT/ PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES OFFERED
PURSUANT TO THIS JOINT PROXY STATEMENT/PROSPECTUS SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF TCF OR WINTHROP OR ANY OF
THEIR RESPECTIVE SUBSIDIARIES SINCE THE DATE OF THIS JOINT PROXY
STATEMENT/PROSPECTUS.
------------------------
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SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS JOINT PROXY STATEMENT/ PROSPECTUS AND IS NOT INTENDED TO BE A COMPLETE
STATEMENT OF THE MATTERS DESCRIBED HEREIN. REFERENCE IS MADE TO, AND THIS
SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION CONTAINED
ELSEWHERE IN THIS JOINT PROXY STATEMENT/PROSPECTUS AND IN THE APPENDICES
ATTACHED HERETO, INCLUDING THE MERGER AGREEMENT, A COPY OF WHICH IS ATTACHED
HERETO AS APPENDIX A. UNLESS OTHERWISE DEFINED, CAPITALIZED TERMS USED IN THIS
SUMMARY HAVE THE RESPECTIVE MEANINGS ASCRIBED TO THEM ELSEWHERE IN THIS JOINT
PROXY STATEMENT/PROSPECTUS.
ALL INFORMATION CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS RELATING
TO TCF HAS BEEN PROVIDED BY TCF, AND ALL INFORMATION CONTAINED HEREIN RELATING
TO WINTHROP HAS BEEN PROVIDED BY WINTHROP.
THE SPECIAL MEETINGS
TCF SPECIAL MEETING. The TCF Special Meeting will be held at The Marquette
Hotel, Seventh Street and Marquette Avenue, Minneapolis, Minnesota, on Tuesday,
June 24, 1997 at 11:00 a.m., local time. Only the holders of record of the
outstanding shares of TCF Common Stock at the close of business on May 20, 1997
(the "TCF Record Date") will be entitled to notice of and to vote at the TCF
Special Meeting. At the TCF Record Date, 34,721,954 shares of TCF Common Stock
were outstanding and entitled to vote.
At the TCF Special Meeting, TCF stockholders will be asked to consider and
vote upon: (i) a proposal to approve the Merger Agreement, the Merger and the
issuance of shares of TCF Common Stock in connection therewith; and (ii) a
proposal to adjourn the TCF Special Meeting if necessary to solicit additional
proxies. Because the number of shares of TCF Common Stock to be issued or
reserved for issuance in connection with the Merger will exceed 20% of the
number of shares of TCF Common Stock outstanding prior to the signing of the
Merger Agreement, approval by holders of TCF Common Stock of the issuance of TCF
Common Stock pursuant to the Merger Agreement is required under the rules of the
NYSE. Under NYSE rules, the proposed issuance of TCF Common Stock pursuant to
the Merger Agreement must be approved by a majority of the votes cast at the TCF
Special Meeting, provided that the total votes cast on the proposal represents
over 50% of the outstanding shares of TCF Common Stock. If holders of TCF Common
Stock do not vote to approve such issuance, the Merger will not be consummated.
TCF is not a constituent corporation to the Merger and, therefore, approval by
TCF's stockholders is not required under the Delaware General Corporation Law
(the "DGCL") or the TCF Restated Certificate of Incorporation (the "TCF
Certificate") or the TCF Bylaws, as amended (the "TCF Bylaws"). See "Information
Concerning the TCF Special Meeting".
As of March 31, 1997, the directors and executive officers of TCF and their
affiliates beneficially owned in the aggregate 5,417,539 shares, or 15.7%, of
the issued and outstanding TCF Common Stock, excluding shares subject to
options. Each of TCF's directors and executive officers has signed agreements
(the "Affiliate Letters" or the "Affiliate Letter Agreements") under which they
will not sell their shares of TCF Common Stock during the period starting 30
days before the Merger and expiring upon the publication by TCF of results from
30 days of post-merger combined operations of TCF and Winthrop. See "The
Merger--Stockholder and Affiliate Letter Agreements."
WINTHROP SPECIAL MEETING. The Winthrop Special Meeting will be held at The
Marquette Hotel, Seventh Street and Marquette Avenue, Minneapolis, Minnesota, on
Tuesday, June 24, 1997 at 10:00 a.m., local time. Only the stockholders of
record of the outstanding shares of Winthrop Common Stock at the close of
business on May 21, 1997 (the "Winthrop Record Date") will be entitled to notice
of and to vote at the Winthrop Special Meeting. At the Winthrop Record Date,
8,600,300 shares of Winthrop Common Stock were outstanding and entitled to vote.
At the Winthrop Special Meeting, Winthrop stockholders will be asked to
consider and vote upon: (i) a proposal to approve the Merger Agreement, the
Merger and the transactions contemplated thereby;
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and (ii) such other matters as may properly come before the Winthrop Special
Meeting or any adjournment or postponement thereof, including a motion to
adjourn to a later date to permit further solicitation of proxies if necessary.
The affirmative vote of a majority of the outstanding shares of Winthrop Common
Stock, voted in person or by proxy, is required to approve the Merger Agreement,
the Merger and the transactions contemplated thereby. Assuming a quorum is
present, the affirmative vote of the holders of a majority of the outstanding
shares of Winthrop Common Stock, voting in person or by proxy, is required to
approve the proposal to adjourn the Winthrop Special Meeting, if necessary. See
"Information Concerning the Winthrop Special Meeting."
As of the Winthrop Record Date, the directors and executive officers of
Winthrop and their affiliates beneficially owned in the aggregate 3,992,483
shares, or 46.4%, of the issued and outstanding Winthrop Common Stock, excluding
shares subject to options and shares that may be deemed beneficially owned
because a director or officer serves as a fiduciary. Each of the three largest
stockholders of Winthrop, John L. Morgan, Kirk A. MacKenzie and Jack A. Norqual
(who are also the President, Executive Vice President and Treasurer, and Senior
Vice President, respectively, of Winthrop, as well as members of its board of
directors) (collectively, the "Winthrop Founders") has entered into a separate
agreement with TCF which, subject to certain exceptions, requires, among other
things, that each of them will vote all shares of Winthrop Common Stock which
such Winthrop Founder has the right to vote in favor of the Merger Agreement and
the transactions contemplated thereby, and will refrain from transferring any of
their shares of Winthrop Common Stock until the earlier of the date of the
Winthrop Special Meeting or termination of the Merger Agreement. The Winthrop
Founders and certain other directors and executive officers of Winthrop have
signed letters (the "Affiliate Letters" or the "Affiliate Letter Agreements")
restricting their rights to sell: (i) shares of TCF Common Stock issued to such
person pursuant to the Merger except in compliance with Rule 145 under the
Securities Act, in a transaction that is otherwise exempt from the registration
requirements under the Securities Act or in an offering registered under the
Securities Act, and (ii) for the period starting 30 days before the effective
date of the Merger and until such time as financial results covering at least 30
days of post-Merger combined operations of TCF and Winthrop have been published
by TCF, shares of TCF Common Stock and Winthrop Common Stock held by such
person. See "The Merger--Stockholder and Affiliate Letter Agreements."
THE PARTIES TO THE MERGER
TCF. TCF is a Delaware corporation and a bank holding company under the
Bank Holding Company Act, as amended (the "BHCA"). TCF's direct and indirect
wholly-owned banking subsidiaries are TCF Minnesota, TCF National Bank Wisconsin
("TCF Wisconsin"), TCF National Bank Illinois ("TCF Illinois"), Great Lakes
National Bank Michigan ("Great Lakes Michigan"), Great Lakes National Bank Ohio
("Great Lakes Ohio") and TCF National Bank Colorado ("TCF Colorado"),
(collectively, TCF Minnesota, TCF Wisconsin, TCF Illinois, Great Lakes Michigan,
Great Lakes Ohio and TCF Colorado are called the "TCF Banks"). TCF Minnesota
currently conducts business through 75 branch offices in Minnesota. TCF
Wisconsin currently conducts business through 27 branch offices in Wisconsin.
TCF Illinois currently conducts business through 35 branch offices in Illinois.
Great Lakes Michigan currently conducts business through 56 branch offices in
Michigan. Great Lakes Ohio currently conducts business through 8 branches in
Ohio. TCF Colorado expects to conduct business through six branches in Colorado
starting on or about July 1, 1997. In addition, a consumer finance company
subsidiary of TCF Minnesota, TCF Financial Services, Inc., conducts business
through 61 offices in sixteen states. Other direct or indirect subsidiaries of
TCF sell insurance products, annuities and mutual funds, make mortgage loans and
engage in certain other activities. TCF Financial signed a definitive agreement
on March 16, 1997 to acquire Standard, and its wholly-owned subsidiary Standard
Bank, headquartered in Chicago, Illinois. Standard had total assets of $2.5
billion and Standard Bank had 14 full-service branches in Illinois at March 31,
1997. TCF agreed to acquire Standard for approximately $419 million, subject to
certain adjustments, in a combination of stock and cash. The Merger is not
contingent upon TCF's acquisition of Standard. See "Recent
Developments--Standard." The deposits of the TCF Banks are insured to the
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maximum extent provided by law, by the Savings Association Insurance Fund
("SAIF") or the Bank Insurance Fund ("BIF"), both of which are administered by
the Federal Deposit Insurance Corporation ("FDIC"). The principal business of
the TCF Banks consists of attracting deposits from the general public and
investing such deposits, together with other funds, in consumer loans,
residential real estate loans, commercial real estate loans, commercial business
loans and mortgage-backed and investment securities. TCF's executive offices are
located at 801 Marquette Avenue, Suite 302, Minneapolis, Minnesota 55402, and
its telephone number is (612) 661-6500. At March 31, 1997, TCF had total assets
of $7 billion, total liabilities of $6.4 billion and stockholders' equity of
$541.9 million. For further information concerning TCF, see the TCF documents
incorporated by reference herein as described under "Incorporation of Certain
Documents by Reference."
WINTHROP. Winthrop is engaged in leasing high-technology and
business-essential equipment to businesses throughout the United States.
Winthrop's operations are currently conducted through its principal office in
Minnetonka, Minnesota and six other offices in the United States.
Since its founding in 1982, Winthrop's focus has been primarily on leasing
high-technology equipment, including computers, telecommunications equipment,
point-of-sale systems and other technology-based equipment to large
organizations (generally, corporations with revenues of $50 million or more).
These lease transactions, which are retained in Winthrop's portfolio, range from
$250,000 to $20 million and generally have terms from two to five years. This is
Winthrop's "Value Added" Lease product.
Winthrop also offers Small Ticket Lease and Wholesale Lease products. Lease
transactions in the small ticket area typically are for less than $250,000 and
have lease terms of between two and five years. Small Ticket Leases are
primarily generated for Winthrop's lease portfolio by Winthrop sales
representatives. The Wholesale Lease is primarily associated with transactions
which are originated by unrelated lease brokers. The Wholesale Lease is
generally funded by outside sources and does not become part of Winthrop's lease
portfolio.
Winthrop also markets the Enterprise Lease, which combines the Value Added
Lease and Small Ticket Lease products. This product is designed to meet the
needs of large corporations that have influence over multiple business entities,
such as franchisor-franchisee relationships. The Enterprise Lease integrates the
Value Added Lease and the Small Ticket Lease for organizations in need of
enterprise-wide equipment and system solutions.
At March 31, 1997, Winthrop had total assets of $370 million and total
stockholders' equity of $84.8 million.
For additional information about Winthrop and its business, see the Winthrop
documents incorporated by reference herein as described under "Incorporation of
Certain Documents by Reference."
Winthrop is a Minnesota corporation and was founded in 1982. Winthrop's
corporate offices are located at 1015 Opus Center, 9900 Bren Road East,
Minnetonka, Minnesota 55343 and its telephone number is (612) 936-0226.
TERMS OF THE MERGER
In accordance with the terms of the Merger Agreement, a newly-formed,
wholly-owned subsidiary of TCF will be merged with and into Winthrop, with
Winthrop as the surviving corporation in the Merger (the "Surviving
Corporation"). As a result of the Merger, Winthrop will become a wholly-owned
subsidiary of TCF. The name of the Surviving Corporation will remain Winthrop
Resources Corporation. Following completion of the Merger, TCF intends to
contribute the Surviving Corporation to TCF Minnesota such that it will be
operated after the Merger as a direct, wholly-owned subsidiary of TCF Minnesota.
At the effective time of the Merger (the "Effective Time"), all of the
issued and outstanding shares of Winthrop Common Stock (other than dissenters'
shares and shares held by TCF or any subsidiary thereof,
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other than shares held in a fiduciary capacity or in satisfaction of debt) will
be automatically converted into and exchangeable for 0.7766 of a share of TCF
Common Stock (including the associated preferred share purchase rights described
in "Description of TCF Capital Stock--TCF Common Stock--Preferred Share Purchase
Rights"), plus cash in lieu of fractional shares.
Based on 8,600,300 shares of Winthrop Common Stock outstanding on May 20,
1997, TCF would have issued approximately 6,679,000 shares of TCF Common Stock
for all of the outstanding shares of Winthrop Common Stock then outstanding.
Under such circumstances, immediately after the Effective Time, former Winthrop
stockholders would hold approximately 16.1% of the outstanding shares of TCF
Common Stock. An additional 349,082 shares of TCF Common Stock would be reserved
for issuance to option holders of Winthrop Common Stock in connection with TCF's
assumption of Winthrop's 1992 Stock Incentive Plan.
No fractional shares of TCF Common Stock will be issued in the Merger to
holders of Winthrop Common Stock. Each stockholder of Winthrop Common Stock who
otherwise would have been entitled to a fraction of a share of TCF Common Stock
will receive in lieu thereof, at the time of surrender of the certificate or
certificates representing such holder's shares of Winthrop Common Stock, an
amount of cash (without interest) determined by multiplying the fractional share
interest to which such holder would otherwise be entitled by the closing sales
price of TCF Common Stock on the NYSE on the effective date of the Merger.
The Merger Agreement also provides that upon consummation of the Merger, the
Winthrop Stock Option Plan, and all Options thereunder which are outstanding at
such time (whether or not then exercisable), will be assumed by TCF in
accordance with the terms of the Winthrop Stock Option Plan. See "The
Merger--The Exchange Ratio--Treatment of Stock Options Outstanding Under the
Winthrop Stock Option Plan."
In addition to the shares to be issued by TCF Financial to Winthrop
stockholders and to holders of Options to purchase Winthrop Common Stock, the
Merger Agreement contemplates an additional offering by TCF of up to 800,000
shares of TCF Common Stock in order to qualify the Merger as a pooling of
interests. TCF has filed a separate registration statement on Form S-3 with
respect to these shares, the sale of which will close prior to the Effective
Time.
If the Average TCF Stock Price (as defined in the Merger Agreement) is less
that $42.30, then Winthrop has the right to terminate the Merger Agreement and
abandon the Merger. See "The Merger-- Termination and Amendment." In lieu of
terminating the Merger Agreement and abandoning the Merger, Winthrop could waive
such termination right and proceed with the Merger pursuant to the terms and
conditions of the Merger Agreement, or Winthrop could attempt to renegotiate the
terms and conditions of the Merger Agreement with TCF. Winthrop has not yet
determined its course of action in the event that the Average TCF Stock Price is
less than $42.30. Winthrop will make that determination when and if such
occasion arises based on the facts and circumstances existing at such time. By
approving the Merger Agreement and the Merger, Winthrop stockholders would be
permitting the Winthrop Board of Directors to determine, in the exercise of its
fiduciary duties, to proceed with the Merger even though the Average TCF Stock
Price is less than $42.30.
OPINION OF TCF FINANCIAL ADVISOR; OPINION OF WINTHROP FINANCIAL ADVISOR
TCF. The Board of Directors of TCF has received written opinions from Piper
Jaffray Inc. ("Piper Jaffray"), dated February 25, 1997 and as of the date of
this Joint Proxy Statement/Prospectus, to the effect that, as of the dates of
the opinions, based on and subject to the assumptions, factors and limitations
set forth therein, the consideration proposed to be paid by TCF in the Merger
pursuant to the Merger Agreement is fair to the stockholders of TCF from a
financial point of view. See "The Merger--Opinion of TCF Financial Advisor" for
a further description of the opinions of Piper Jaffray and of the fees payable
to Piper Jaffray by TCF. A copy of the fairness opinion of Piper Jaffray dated
as of the date of this Joint Proxy
11
<PAGE>
Statement/Prospectus is attached hereto as Appendix B and should be read in its
entirety with respect to the assumptions made and other matters considered and
limitations set forth therein.
WINTHROP. Dain Bosworth Incorporated ("Dain Bosworth"), Winthrop's
financial advisor, rendered an oral opinion to the Board of Directors of
Winthrop on February 26, 1997 and a written opinion to the Board dated as of the
date of this Joint Proxy Statement/Prospectus to the effect that, as of the
dates of the opinions, the consideration to be received in the Merger by the
holders of the Winthrop Common Stock is fair, from a financial point of view, to
the holders of Winthrop Common Stock. See "The Merger-- Opinion of Winthrop
Financial Advisor" for a further description of the opinions of Dain Bosworth
and of the fees payable to Dain Bosworth by Winthrop. A copy of the fairness
opinion of Dain Bosworth dated as of the date of this Joint Proxy
Statement/Prospectus is attached hereto as Appendix C and should be read in its
entirety with respect to the assumptions made and other matters considered and
limitations set forth therein.
DISSENTERS' RIGHTS
Stockholders of Winthrop have the right to receive, in lieu of the
consideration provided in the Merger, the fair market value of their shares of
Winthrop Common Stock as determined pursuant to the Minnesota Business
Corporations Act, Chapter 302A of the Minnesota Statutes (the "MBCA"). Any
Winthrop stockholders who wish to assert dissenters' rights must notify Winthrop
of their intent to do so before the vote on June 24, 1997, the scheduled date of
the Winthrop Special Meeting. Holders of shares of TCF Common Stock will not
have dissenters' rights. See "The Merger--Dissenters' Rights--Winthrop."
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS OF TCF AND WINTHROP
The Board of Directors of TCF has determined that the Merger is in the best
interests of the TCF stockholders and, accordingly, has unanimously approved the
Merger Agreement, the Merger and the issuance of shares of TCF Common Stock
provided for therein. THE BOARD OF DIRECTORS OF TCF UNANIMOUSLY RECOMMENDS THAT
TCF STOCKHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT, THE MERGER AND THE
ISSUANCE OF TCF COMMON STOCK IN CONNECTION THEREWITH. SEE "THE
MERGER--BACKGROUND OF AND REASONS FOR THE MERGER."
The Board of Directors of Winthrop has determined that the Merger is in the
best interests of the Winthrop stockholders and, accordingly, has unanimously
approved the Merger Agreement and the Merger. THE BOARD OF DIRECTORS OF WINTHROP
UNANIMOUSLY RECOMMENDS THAT WINTHROP STOCKHOLDERS VOTE "FOR" APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE MERGER. SEE "THE
MERGER--BACKGROUND OF AND REASONS FOR THE MERGER."
STOCKHOLDER AND AFFILIATE LETTER AGREEMENTS
In conjunction with the Merger Agreement, TCF has entered into a voting
agreement with each of the Winthrop Founders, who hold in the aggregate 43.5% of
the outstanding shares of Winthrop Common Stock as of the Winthrop Record Date,
the form of which is included as Exhibit A to the Merger Agreement attached
hereto as Appendix A (the "Stockholder Agreements"). Under the Stockholder
Agreements each Winthrop Founder agrees, among other things, to vote all of his
shares of Winthrop Common Stock at the Winthrop Special Meeting in favor of the
Merger Agreement and to not transfer those shares prior to the earlier of the
date of the Winthrop Special Meeting or termination of the Merger Agreement. The
Winthrop Founders and the other executive officers and directors of Winthrop
have also signed agreements under which they have agreed not to sell: (i) shares
of TCF Common Stock issued to such person pursuant to the Merger except in
compliance with Rule 145 under the Securities Act, in a transaction that is
otherwise exempt from the registration requirements under the Securities Act or
in an offering registered under the Securities Act; and (ii) for the period
starting 30 days before the effective
12
<PAGE>
date of the Merger and until such time as financial results covering at least 30
days of post-Merger combined operations of TCF and Winthrop have been published
by TCF, shares of TCF Common Stock and Winthrop Common Stock held by such
person.
The directors and executive officers of TCF have signed Affiliate Letters
dated February 28, 1997 (a form of which is attached as Exhibit D of Appendix A
to this Joint Proxy Statement/Prospectus) which provide, among other things,
that they will refrain from selling their shares of TCF Common Stock and shares
of Winthrop Common Stock for the period starting 30 days before the effective
date of the Merger until such time as financial results covering at least 30
days of post-Merger combined operations of TCF and Winthrop have been published
by TCF.
EFFECTIVE TIME AND EFFECTIVE DATE OF THE MERGER
The Merger shall become effective upon filing of the Articles of Merger with
the Secretary of State of Minnesota, which is the Effective Time of the Merger.
Such filing will occur only after the receipt of all requisite regulatory
approvals, approval by the requisite vote of TCF's and Winthrop's respective
stockholders and the satisfaction or waiver of all other conditions to the
Merger. The date of the filing of the Articles of Merger is the "Effective
Date." See "The Merger--The Exchange Ratio--Effective Time of the Merger."
CONDITIONS TO THE MERGER; WAIVER AND AMENDMENT
Consummation of the Merger is subject to various conditions, including,
without limitation, obtaining the requisite TCF stockholder approval of the
Merger Agreement, the Merger and the issuance of TCF Common Stock in connection
therewith, and requisite Winthrop stockholder approval and adoption of the
Merger Agreement and approval of the Merger; receipt of all necessary regulatory
approvals pertaining to the Merger, including approval of the Merger by the
Federal Reserve Board ("FRB") and notification to the Office of Comptroller of
the Currency ("OCC") concerning the contribution of Winthrop to TCF Minnesota,
completion of a supplemental offering by TCF of up to 800,000 shares of TCF
Common Stock, if necessary, in order to allow the Merger to be accounted for as
a pooling of interests; and certain other closing conditions. An application for
approval of the Merger has been filed by TCF with the FRB pursuant to Section 4
of the BHCA and Regulation Y and notification of the Merger and of the intended
contribution of Winthrop to TCF Minnesota has been provided to the OCC. There
can be no assurance that all requisite regulatory approvals will be obtained by
TCF promptly or at all. If the Merger is not consummated on or before August 1,
1997, either TCF or Winthrop may terminate the Merger Agreement but neither is
required to do so. See "The Merger--Conditions to the Merger" and "The Merger--
Regulatory Approvals."
Substantially all of the conditions to consummation of the Merger (except
for required stockholder and regulatory approvals) may be waived at any time by
the party for whose benefit they were created, and the Merger Agreement may be
amended at any time by written agreement of the parties. See "The
Merger--Termination and Amendment."
LIMITATION ON NEGOTIATIONS OF THIRD-PARTY ACQUISITION PROPOSALS
The Merger Agreement includes a "no solicitation" provision that prohibits
Winthrop from soliciting or encouraging submission of third-party acquisition
proposals, but permits Winthrop to negotiate with and furnish non-public
information to third parties if Winthrop's Board of Directors determines, after
consultation with Winthrop's legal counsel, that there is a reasonable
likelihood that it has a fiduciary duty to do so. See "The Merger--Limitation on
Negotiations."
TERMINATION
The Merger Agreement may be terminated, either before or after approval by
TCF's and Winthrop's stockholders, under certain circumstances, including: (i)
by either TCF or Winthrop if the conditions of
13
<PAGE>
such party's obligation to consummate the Merger are not satisfied; (ii) by
either TCF or Winthrop if the stockholders of each do not approve the Merger;
(iii) by Winthrop if the average of the daily closing sales prices of TCF Common
Stock as reported on the NYSE by the Wall Street Journal for a 30-day period of
consecutive full trading days (the "Average TCF Stock Price") ending on the
third business day before either (a) the scheduled date for the TCF and Winthrop
Special Meetings or (b) the last regulatory approval has been obtained and the
waiting period has expired, whichever is closest to the Effective Date (the
"Determination Date") is less than $42.30 per share; (iv) by TCF if the Average
TCF Stock Price on the Determination Date is more than $51.70 per share; (v) by
Winthrop if its Board of Directors exercises its "fiduciary out" to terminate
the Merger Agreement; (vi) by TCF if a person commences a bona fide tender offer
for 25% or more of the outstanding Winthrop Common Stock and the Winthrop Board
of Directors has withdrawn or materially adversely modified its recommendation
of the Merger; (vii) by either TCF or Winthrop if there is a willful breach of
the representations, warranties, covenants or other obligations under the Merger
Agreement by the other party; (viii) by either TCF or Winthrop if the Merger has
not occurred by August 1, 1997; (ix) by the mutual written agreement of the
parties; or (x) by either TCF or Winthrop if the other party amends or
supplements its warranties and representations under the Merger Agreement in a
manner that makes the representation or warranty materially inaccurate and,
after notice and an opportunity to cure, the information in the amendment or
supplement indicates that the party has suffered a "material adverse effect."
See "The Merger--Termination and Amendment." Under certain circumstances of
termination, a termination fee ranging from $1 million to $12.5 million may be
payable to TCF by Winthrop depending on the circumstances of such termination.
Under certain circumstances of termination, a termination fee of $1 million may
be payable by TCF to Winthrop. See "The Merger--Termination Fees."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to qualify as a tax-free reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"). Therefore,
no gain or loss will be recognized by TCF or Winthrop as a result of the Merger.
A Winthrop stockholder who receives TCF Common Stock in exchange for Winthrop
Common Stock will not recognize any gain or loss as a result of the Merger,
except that gain or loss will be recognized with respect to any cash received by
a holder of Winthrop Common Stock in lieu of any fractional share of TCF Common
Stock. The income tax basis of the TCF Common Stock received generally will
equal the income tax basis of the Winthrop Common Stock surrendered, and the
holding period of the TCF Common Stock received generally will include the
holding period of the Winthrop Common Stock surrendered. See "The
Merger--Certain Federal Income Tax Consequences." EACH WINTHROP STOCKHOLDER
SHOULD CONSULT THEIR OWN TAX ADVISOR CONCERNING THE FEDERAL AND ANY APPLICABLE
FOREIGN, STATE, OR LOCAL INCOME TAX CONSEQUENCES OF THE MERGER.
ACCOUNTING TREATMENT OF THE MERGER
It is a condition to consummation of the Merger that the Merger be accounted
for as a pooling-of-interests for accounting and financial reporting purposes.
See "The Merger--Accounting Treatment of the Merger" and "The Merger--Conditions
to the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Some members of Winthrop's Board of Directors and management may be deemed
to have certain interests in the Merger in addition to their interests as
stockholders of Winthrop generally. The Merger Agreement contains provisions
which require TCF to elect one member of the current Board of Directors of
Winthrop (currently it is intended that this will be John L. Morgan) as a
director of TCF. The Merger Agreement provides that Winthrop will amend existing
employment contracts with each of the Winthrop Founders to assure their
continuing services with Winthrop for a three year period commencing January 1,
1997, and that Winthrop will amend its existing employment contract with a
fourth executive, Robert P. Murphy, in certain respects. The Merger Agreement
provides for indemnification of Winthrop's directors,
14
<PAGE>
officers, employees and agents for claims against them arising out of or in
connection with activities prior to the Effective Time and requires the
Surviving Corporation to maintain in effect, for a period of three years after
the Effective Time, directors' and officers' liability insurance comparable to
that maintained by Winthrop as of the date of the Merger Agreement for acts or
omissions prior to the Merger. In addition, the Stockholder Agreements with each
of the Winthrop Founders provide certain indemnification rights to them. The
directors of the Surviving Corporation will include certain persons designated
by TCF who were directors of Winthrop immediately prior to the Effective Time.
See "The Merger--Effects of the Merger-- Effect on Employees of Winthrop."
REGULATORY APPROVALS
TCF must obtain approval for the acquisition of Winthrop from the FRB
pursuant to Section 4 of the BHCA and Regulation Y. TCF filed an application
with the FRB on May 1, 1997 and is awaiting its approval. TCF has also notified
the OCC in writing of the intended contribution of Winthrop to TCF Minnesota, as
a result of which Winthrop would become an "operating subsidiary" of TCF
Minnesota.
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Act"), certain acquisition transactions, including the Merger, may not be
consummated unless certain information has been furnished to the Federal Trade
Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice (the "Antitrust Division") and certain waiting period
requirements have been satisfied. TCF's information was furnished in connection
with its filing of an application for approval of the Merger with the FRB under
Section 4 of the BHCA and no filings are required by Winthrop. See "The
Merger--Regulatory Approvals" and "The Merger--Conditions to the Merger."
EXCHANGE OF WINTHROP STOCK CERTIFICATES
Promptly following the Merger, The First National Bank of Boston c/o Boston
EquiServe L.P. ("Boston Equiserve"), the exchange agent for the Merger (the
"Exchange Agent"), will send a notice and transmittal form, with instructions,
to each holder of record of Winthrop Common Stock at the Effective Time of the
Merger advising such holder of the effectiveness of the Merger and of the
procedure for surrendering to the Exchange Agent certificates formerly
evidencing Winthrop Common Stock in exchange for new certificates evidencing
newly issued TCF Common Stock. WINTHROP STOCKHOLDERS SHOULD NOT SEND IN THEIR
COMMON STOCK CERTIFICATES UNTIL THEY RECEIVE THE NOTICE AND TRANSMITTAL FORM
FROM THE EXCHANGE AGENT.
RESALE OF TCF COMMON STOCK
The shares of TCF Common Stock issuable to stockholders of Winthrop upon
consummation of the Merger may be traded freely by those stockholders who are
not "affiliates" of Winthrop or TCF. Winthrop has agreed to obtain signed
representations from each stockholder of Winthrop who may reasonably be deemed
an "affiliate" of Winthrop (as such term is used in Rule 145 under the
Securities Act) to the effect that such person will not transfer or dispose of:
(i) shares of TCF Common Stock issued to such person pursuant to the Merger,
except in compliance with Rule 145 under the Securities Act, in a transaction
that is otherwise exempt from the registration requirements under the Securities
Act or in an offering registered under the Securities Act; and (ii) for the
30-day period prior to the Effective Time of the Merger, the shares of Winthrop
Common Stock held by such person and, until such time as financial results
covering at least 30 days of post-Merger combined operations of TCF and Winthrop
have been published by TCF, the shares of TCF Common Stock issued to such person
pursuant to the Merger. See "The Merger--Resale Considerations With Respect to
the TCF Common Stock" and "The Merger-- Accounting Treatment of the Merger." In
addition, TCF has agreed to use its best efforts to obtain signed
representations from TCF affiliates to the effect that they will not dispose of
TCF Common Stock and rights to acquire such TCF Common Stock during the time
periods described in clause (ii) above.
15
<PAGE>
DIFFERENCES IN RIGHTS OF STOCKHOLDERS
Upon consummation of the Merger, holders of Winthrop Common Stock will
become holders of TCF Common Stock. As a result, their rights as stockholders,
which are now governed by Minnesota corporate law and Winthrop's Restated
Articles of Incorporation (the "Winthrop Articles") and Restated Bylaws (the
"Winthrop Bylaws"), will be governed by Delaware corporate law and TCF's
Certificate and Bylaws. Because of certain differences between Minnesota and
Delaware law, and because of differences in the provisions of Winthrop's
Articles and Bylaws and TCF's Certificate and Bylaws, the current rights of
Winthrop stockholders will change after the Merger. For a discussion of various
differences between the rights of stockholders of Winthrop and the rights of
stockholders of TCF, see "Comparison of the Rights of Stockholders."
16
<PAGE>
COMPARATIVE MARKET PRICE DATA
TCF Common Stock is listed on the NYSE under the symbol "TCB" and Winthrop
Common Stock is quoted on the Nasdaq National Market System under the symbol
"WINR." The following table sets forth the high and low prices per share of TCF
Common Stock as reported on the NYSE and of Winthrop Common Stock as reported by
the Nasdaq National Market System for the periods indicated:
<TABLE>
<CAPTION>
WINTHROP COMMON STOCK
TCF COMMON STOCK
---------------------- ----------------------
<S> <C> <C> <C> <C>
HIGH LOW HIGH LOW
---------- ---------- ---------- ----------
1997:
Second Quarter (through May 13, 1997).......................... $ 44.3750 $ 37.5000 $ 33.1250 $ 27.7500
First Quarter.................................................. 47.5000 39.0000 35.7500 26.7500
1996:
Fourth Quarter................................................. 45.3750 37.5000 31.5000 26.2500
Third Quarter.................................................. 38.6250 31.1250 27.2500 18.5000
Second Quarter................................................. 37.7500 32.0000 23.0000 18.2500
First Quarter.................................................. 38.0000 29.6250 18.5000 15.4688
1995:
Fourth Quarter................................................. 33.3750 28.5000 18.5000 16.0000
Third Quarter.................................................. 29.8750 23.5000 18.2500 13.2500
Second Quarter................................................. 24.0625 21.2500 14.5000 11.2500
First Quarter.................................................. 21.6250 18.5625 12.0000 10.2500
</TABLE>
The following table sets forth the closing market price per share of TCF
Common Stock, the last reported sale price per share of Winthrop Common Stock
and the equivalent per-share price of Winthrop Common Stock giving effect to the
Merger at February 13, 1997, the last day preceding the public announcement that
TCF and Winthrop had signed a non-binding letter of intent (the "Letter of
Intent"), February 27, 1997, the last day preceding the public announcement that
TCF and Winthrop had entered into the Merger Agreement, and at May 13, 1997. The
price of Winthrop Common Stock does not include adjustment for retail mark-ups,
mark-downs or commissions. The equivalent per-share price of Winthrop Common
Stock at February 13, 1997 represents the closing market price of a share of TCF
Common Stock on such date ($47.125) multiplied by 0.7766, the Exchange Ratio.
The equivalent per-share price of Winthrop Common Stock at February 27, 1997
represents the closing market price of a share of TCF Common Stock on such date
($45.50) multiplied by 0.7766, the Exchange Ratio. The equivalent per-share
price of Winthrop Common Stock at May 13, 1997 represents the closing market
price of a share of TCF Common Stock on such date ($43.00) multiplied by 0.7766,
the Exchange Ratio. See "The Merger--The Exchange Ratio."
<TABLE>
<CAPTION>
WINTHROP
TCF WINTHROP EQUIVALENT
COMMON COMMON PER-SHARE
STOCK STOCK PRICE
--------- ----------- -----------
<S> <C> <C> <C>
Market Value Per Share at:
February 13, 1997......................................... $ 47.125 $ 34.000 $ 36.597
February 27, 1997......................................... 45.500 33.125 35.335
May 13, 1997.............................................. 43.000 32.250 33.394
</TABLE>
Winthrop stockholders are advised to obtain current market quotations for
TCF Common Stock. No assurance can be given concerning the market price of TCF
Common Stock before or after the Effective Time. The market price for TCF Common
Stock may fluctuate between the date of this Joint Proxy
17
<PAGE>
Statement/Prospectus and the Effective Time. The Exchange Ratio is fixed at
0.7766. There can be no assurance that holders of Winthrop Common Stock will
receive $33.394 which is the Winthrop equivalent per-share price on May 13, 1997
(or any other specific amount) in market value of shares of TCF Common Stock
exchanged for the shares of Winthrop Common Stock which they own because the
market price of TCF Common Stock at the time of the Merger may be less than the
$43.00 per share for TCF Common Stock on May 13, 1997 and is subject to changes
thereafter. Because the Exchange Ratio is fixed, it will not compensate for
changes in the market value of TCF Common Stock.
BECAUSE THE EXCHANGE RATIO IS FIXED, A CHANGE IN THE MARKET PRICE OF TCF
COMMON STOCK BEFORE THE MERGER WILL AFFECT THE VALUE OF THE TCF COMMON STOCK TO
BE RECEIVED BY WINTHROP STOCKHOLDERS IN THE MERGER.
The Merger Agreement may be terminated by Winthrop if the Average TCF Stock
Price on the Determination Date is less than $42.30 per share and by TCF if the
Average TCF Stock Price on the Determination Date is more than $51.70 per share.
Market prices shown in the foregoing tables are as of the date indicated and do
not represent the Average TCF Stock Price which is used in determining the
parties' termination rights. See "The Merger--Termination and Amendment." Even
if either of these conditions occurs, there can be no assurance that TCF or
Winthrop will exercise its right to terminate the Merger Agreement and therefore
the Merger may still occur. Neither TCF nor Winthrop has made any determination
whether to terminate the Merger Agreement should these events occur. For a
discussion of the Exchange Ratio and the termination provisions, see "The
Merger--The Exchange Ratio" and "The Merger--Termination and Amendment."
If the Average TCF Stock Price is less than $42.30, then Winthrop has the
right to terminate the Merger Agreement and abandon the Merger. See "The
Merger--Termination and Amendment." In lieu of terminating the Merger Agreement
and abandoning the Merger, Winthrop could waive such termination right and
proceed with the Merger pursuant to the terms and conditions of the Merger
Agreement, or Winthrop could attempt to renegotiate the terms and conditions of
the Merger Agreement with TCF. Winthrop has not yet determined its course of
action in the event that the Average TCF Stock Price is less than $42.30.
Winthrop will make that determination when and if such occasion arises based on
the facts and circumstances existing at such time. By approving the Merger
Agreement and the Merger, Winthrop stockholders would be permitting the Winthrop
Board of Directors to determine, in the exercise of its fiduciary duties, to
proceed with the Merger even though the Average TCF Stock Price is less than
$42.30.
Upon consummation of the Merger, Winthrop Common Stock will be cancelled
and, as a result, will no longer be quoted on The Nasdaq National Market System
after the Effective Time.
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<PAGE>
COMPARATIVE UNAUDITED PER-SHARE DATA
The following table presents selected comparative unaudited per-share data
for TCF Common Stock on a historical and a pro forma combined basis and for
Winthrop Common Stock on a historical and a pro forma equivalent basis giving
effect to the Merger using the pooling-of-interests method of accounting. For a
description of the pooling-of-interests method of accounting with respect to the
Merger and the related effects on the historical financial statements of TCF,
see "The Merger--Accounting Treatment of the Merger." The information is derived
from the consolidated financial statements of each of TCF and Winthrop and the
Unaudited Pro Forma Combined Financial Information. The consolidated financial
statements of each of TCF and Winthrop are incorporated by reference into this
Joint Proxy Statement/ Prospectus. The Unaudited Pro Forma Combined Financial
Information appears elsewhere herein. This information should be read in
conjunction with such historical and pro forma financial statements and the
related notes thereto. See "Incorporation of Certain Documents by Reference" and
"Unaudited Pro Forma Combined Financial Information."
TCF's and Winthrop's fiscal years end December 31. The per-share data
included within is not necessarily indicative of the results of future
operations of the combined entity or the actual results that would have been
achieved had the Merger been consummated prior to the dates or periods
indicated.
<TABLE>
<CAPTION>
TCF WINTHROP
COMMON STOCK COMMON STOCK
------------------------- ------------------------
<S> <C> <C> <C> <C>
PRO FORMA PRO FORMA
HISTORICAL COMBINED HISTORICAL EQUIVALENT
------------ ----------- ----------- -----------
Book Value Per Common Share (1):
March 31, 1997................................................. $ 15.66 $ 15.18 $9.87 $ 11.79
March 31, 1996................................................. 15.10 14.26 7.25 11.07
December 31, 1996.............................................. 15.81 15.22 9.44 11.82
December 31, 1995.............................................. 14.82 13.96 6.94 10.84
December 31, 1994.............................................. 13.44 12.48 5.68 9.69
December 31, 1993.............................................. 12.10 11.14 4.65 8.65
December 31, 1992.............................................. 11.03 10.04 3.47 7.80
Cash Dividends Declared Per Common Share (2):
Three Months Ended:
March 31, 1997............................................... .18750 .18750 .05000 .14561
March 31, 1996............................................... .15625 .15625 .04000 .12134
Year Ended:
December 31, 1996............................................ .71875 .71875 .16000 .55818
December 31, 1995............................................ .59375 .59375 .12000 .46111
December 31, 1994............................................ .50000 .50000 .08000 .38830
December 31, 1993............................................ .34375 .34375 .06000 .26696
December 31, 1992............................................ .23750 .23750 .02000 .18444
Income Before Extraordinary Items and Cumulative Effect of Change
in Accounting Principle Per Common Share (3):
Three Months Ended:
March 31, 1997............................................... .83 .79 .46 .61
March 31, 1996............................................... .73 .70 .40 .54
Year Ended:
December 31, 1996............................................ 2.42 (4) 2.39 1.76 1.86
December 31, 1995............................................ 1.71 (5) 1.73 1.46 1.34
December 31, 1994............................................ 1.95 1.88 1.16 1.46
December 31, 1993............................................ 1.53 (6) 1.49 .98 1.16
December 31, 1992............................................ 1.51 1.42 .70 1.10
</TABLE>
19
<PAGE>
NOTES TO COMPARATIVE UNAUDITED PER-SHARE DATA
(1) The pro forma combined book values per share of TCF Common Stock represent
the historical combined common stockholders' equity for TCF and Winthrop
divided by total pro forma common shares of the combined entity, reflecting
the Exchange Ratio of 0.7766. The pro forma equivalent book values per share
of Winthrop Common Stock represent the pro forma combined book value per
share amounts multiplied by the Exchange Ratio of 0.7766. See "The
Merger--The Exchange Ratio."
(2) The pro forma combined cash dividends declared per common share assume no
changes in the historical cash dividends declared per share of TCF Common
Stock. The pro forma equivalent cash dividends declared per share of
Winthrop Common Stock represent the cash dividends declared on one share of
TCF Common Stock multiplied by the Exchange Ratio of 0.7766. See "The
Merger-- The Exchange Ratio."
(3) The pro forma combined income before extraordinary items and cumulative
effect of change in accounting principle per common share (based on the
weighted average number of common and common equivalent shares outstanding)
is based upon the combined historical income before extraordinary items and
cumulative effect of change in accounting principle for TCF and Winthrop
divided by the average pro forma common shares of the combined entity. The
pro forma equivalent income before extraordinary items and cumulative effect
of change in accounting principle per share of Winthrop Common Stock
represents the pro forma combined income before extraordinary items and
cumulative effect of change in accounting principle per share multiplied by
the Exchange Ratio of 0.7766. See "The Merger--The Exchange Ratio."
(4) Amount reflects an after-tax one-time special assessment of $21.7 million
from the FDIC to recapitalize the SAIF under federal legislation enacted on
September 30, 1996. Excluding the one-time special assessment, income before
extraordinary items and cumulative effect of change in accounting principle
per common share would have been $3.04 for the year ended December 31, 1996.
(5) Amount reflects after-tax merger-related charges of $32.8 million related to
TCF's 1995 acquisition of Great Lakes Bancorp, A Federal Savings Bank
("Great Lakes"). Excluding such charges, income before extraordinary items
and cumulative effect of change in accounting principle per common share
would have been $2.60 for the year ended December 31, 1995.
(6) Amount reflects after-tax merger-related charges of $7.9 million related to
TCF's 1993 acquisition of Republic Capital Group, Inc. ("RCG"). Excluding
such charges, income before extraordinary items and cumulative effect of
change in accounting principle per common share would have been $1.77 for
the year ended December 31, 1993.
20
<PAGE>
SELECTED HISTORICAL AND UNAUDITED PRO FORMA
COMBINED FINANCIAL DATA
The following tables set forth certain selected historical consolidated
financial information for each of TCF and Winthrop, and certain selected
unaudited pro forma combined financial information giving effect to the Merger
using the pooling-of-interests method of accounting. For a description of the
pooling-of-interests method of accounting with respect to the Merger and the
related effects on the historical financial statements of TCF, see "The Merger--
Accounting Treatment of the Merger."
TCF's and Winthrop's fiscal years end December 31. The financial data
included in the Selected Historical Financial Data as of or for the five years
ended December 31, 1996 for TCF and Winthrop is derived from the audited
consolidated financial statements of each of TCF and Winthrop, including the
related notes thereto. The financial data as of or for the three months ended
March 31, 1997 and 1996 for TCF and Winthrop is derived from the unaudited
consolidated financial statements of each of TCF and Winthrop and reflect, in
the respective opinions of management of each of TCF and Winthrop, all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of such data. Certain historical information of Winthrop has
been reclassified to conform to TCF's financial statement presentation. The
respective consolidated financial statements of TCF and Winthrop are
incorporated by reference into this Joint Proxy Statement/Prospectus. This
information should be read in conjunction with such financial statements and in
conjunction with the Unaudited Pro Forma Combined Financial Information,
including the notes thereto, appearing elsewhere in this Joint Proxy Statement/
Prospectus. See "Incorporation of Certain Documents by Reference" and "Unaudited
Pro Forma Combined Financial Information."
The Pro Forma Combined Consolidated Operating Data does not reflect the
direct transaction costs of (i) the Merger, (ii) obtaining approval of a
Supplemental Indenture from the holders of the Winthrop Senior Notes, or (iii)
the anticipated public offering of up to 800,000 shares of TCF Common Stock
expected to close prior to the Effective Date. The Pro Forma Combined
Consolidated Operating Data and Consolidated Financial Condition Data do not
reflect the effects of the anticipated additional offering of up to 800,000
shares of TCF Common Stock in order to qualify the Merger as a pooling of
interests and anticipated issuance of approximately 400,000 shares of TCF Common
Stock in connection with the conversion of Great Lakes Michigan's 7 1/4%
Convertible Subordinated Debentures due 2011. See "Summary--Terms of the
Merger."
The significant accounting and reporting policies of TCF and Winthrop differ
in minor respects and no effect has been given to such differences in this
Selected Historical and Unaudited Pro Forma Combined Financial Data. The
Selected Unaudited Pro Forma Combined Financial Data included herein is not
necessarily indicative of the results of future operations of the combined
entity or the actual results that would have been achieved had the Merger been
consummated prior to the periods indicated.
21
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
AT OR FOR THE
THREE MONTHS ENDED
MARCH 31, AT OR FOR THE YEAR ENDED DECEMBER 31,
---------------------- -------------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ------------- --------------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED OPERATING DATA:
Interest income............... $ 145,136 $ 148,893 $ 582,861 $ 607,690 $ 552,482 $ 558,645 $ 630,442
Interest expense.............. 59,118 64,439 242,721 288,492 273,330 297,449 383,170
---------- ---------- ------------- --------------- ---------- -------------- ----------
Net interest income......... 86,018 84,454 340,140 319,198 279,152 261,196 247,272
Provision for credit losses... 1,090 2,802 19,820 15,212(2) 10,802 35,118(6) 40,663
---------- ---------- ------------- --------------- ---------- -------------- ----------
Net interest income after
provision for credit
losses.................... 84,928 81,652 320,320 303,986 268,350 226,078 206,609
Non-interest income........... 40,381 35,829 157,797 112,776(3) 125,219 139,005 125,524
Non-interest expense.......... 77,928 75,806 341,070(1) 317,333(4) 276,984 272,958(7) 264,239
---------- ---------- ------------- --------------- ---------- -------------- ----------
Income before income tax
expense and extraordinary
items..................... 47,381 41,675 137,047 99,429 116,585 92,125 67,894
Income tax expense............ 18,450 15,388 51,384 37,778 46,402 36,797 15,906
---------- ---------- ------------- --------------- ---------- -------------- ----------
Income before extraordinary
items..................... 28,931 26,287 85,663 61,651 70,183 55,328 51,988
Extraordinary items, net...... -- -- -- (963)(5) -- (157) 339
---------- ---------- ------------- --------------- ---------- -------------- ----------
Net income.................. 28,931 26,287 85,663 60,688 70,183 55,171 52,327
Dividends on preferred
stock....................... -- -- -- 678 2,710 2,769 2,911
---------- ---------- ------------- --------------- ---------- -------------- ----------
Net income available to
common shareholders....... $ 28,931 $ 26,287 $ 85,663 $ 60,010 $ 67,473 $ 52,402 $ 49,416
---------- ---------- ------------- --------------- ---------- -------------- ----------
---------- ---------- ------------- --------------- ---------- -------------- ----------
Per Common Share(8):
Income before extraordinary
items..................... $ .83 $ .73 $ 2.42(9) $ 1.71(10) $ 1.95 $ 1.53(11) $ 1.51
Extraordinary items......... -- -- -- (.03)(10) -- -- .01
---------- ---------- ------------- --------------- ---------- -------------- ----------
Net income................ $ .83 $ .73 $ 2.42(9) $ 1.68(10) $ 1.95 $ 1.53(11) $ 1.52
---------- ---------- ------------- --------------- ---------- -------------- ----------
---------- ---------- ------------- --------------- ---------- -------------- ----------
Dividends declared.......... $ .1875 $ .15625 $ .71875 $ .59375 $ .50 $ .34375 $ .2375
---------- ---------- ------------- --------------- ---------- -------------- ----------
---------- ---------- ------------- --------------- ---------- -------------- ----------
Average common and common
equivalent shares
outstanding (000's)......... 34,797 35,986 35,342 35,686 34,527 34,150 32,571
---------- ---------- ------------- --------------- ---------- -------------- ----------
---------- ---------- ------------- --------------- ---------- -------------- ----------
CONSOLIDATED FINANCIAL
CONDITION DATA:
Total assets.................. $6,964,119 $7,039,282 $7,090,862 $7,239,911 $7,845,588 $7,630,654 $7,774,537
Investments (12).............. 56,521 59,202 442,103 64,345 283,104 299,432 356,918
Securities available for
sale........................ 1,242,457 1,117,439 999,554 1,201,490 138,430 10,003 399,006
Loans held for sale........... 199,154 249,498 203,869 242,413 201,511 444,780 308,651
Mortgage-backed securities
held to maturity............ -- -- -- -- 1,601,200 1,751,916 1,670,164
Loans......................... 5,028,741 5,174,923 4,995,962 5,277,101 5,118,381 4,665,567 4,516,982
Goodwill...................... 25,052 11,227 9,897 11,503 13,355 14,549 16,446
Deposits...................... 5,291,894 5,150,023 4,977,630 5,191,552 5,399,718 5,695,928 5,683,130
Federal Home Loan Bank
advances.................... 630,307 831,585 1,141,040 893,587 1,354,663 945,492 1,018,725
Other borrowings.............. 411,068 437,302 352,778 547,857 530,332 467,875 599,900
Stockholders' equity.......... 541,869 541,019 549,506 527,675 475,469 428,065 375,495
Tangible net worth............ 516,817 529,792 539,609 516,172 462,114 413,516 359,049
Book value per common share... 15.66 15.10 15.81 14.82 13.44 12.10 11.03
Tangible book value per common
share....................... 14.94 14.78 15.53 14.50 13.04 11.67 10.51
KEY RATIOS:
Net interest margin........... 5.31% 5.06% 5.26% 4.61% 3.96% 3.69% 3.43%
Return on average assets...... 1.67 1.48 1.24 .82 .93 .73 .68
Return on average realized
common equity............... 21.49 19.97 16.13 12.70 15.94 13.95 15.67
Average total equity to
average assets.............. 7.78 7.51 7.70 6.59 5.95 5.28 4.39
Common dividend payout
ratio....................... 22.59 21.40 29.70 35.34 25.64 22.47 15.63
Ratio of earnings to fixed
charges (13):
Including interest on
deposits.................. 1.79x 1.64x 1.55x 1.34x 1.42x 1.31x 1.18x
Excluding interest on
deposits.................. 3.62x 3.00x 2.81x 2.00x 2.25x 2.00x 1.62x
</TABLE>
22
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
WINTHROP RESOURCES CORPORATION
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
AT OR FOR THE
THREE MONTHS ENDED AT OR FOR THE
MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- ----------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED OPERATING DATA:
Interest income............................... $ 8,358 $ 6,879 $ 30,024 $ 23,508 $ 16,382 $ 13,555 $ 11,547
Interest expense.............................. 4,171 3,619 15,595 13,614 10,091 8,618 9,028
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income......................... 4,187 3,260 14,429 9,894 6,291 4,937 2,519
Provision for credit losses................... 408 100 1,426 842 109 2,381 388
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after provision for
credit losses............................. 3,779 3,160 13,003 9,052 6,182 2,556 2,131
Non-interest income........................... 6,374 5,399 23,815 19,777 18,096 21,595 18,876
Non-interest expense.......................... 3,326 3,246 12,457 9,569 8,676 11,385 13,065
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income tax expense and
cumulative effect......................... 6,827 5,313 24,361 19,260 15,602 12,766 7,942
Income tax expense............................ 2,731 2,178 9,647 7,704 6,241 5,106 3,177
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before cumulative effect............. 4,096 3,135 14,714 11,556 9,361 7,660 4,765
Cumulative effect of change in accounting
principle................................... -- -- -- -- -- -- 289
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income................................ $ 4,096 $ 3,135 $ 14,714 $ 11,556 $ 9,361 $ 7,660 $ 5,054
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Per Common Share:
Income before cumulative effect............. $ .46 $ .40 $ 1.76 $ 1.46 $ 1.16 $ .98 $ 70
Cumulative effect........................... -- -- -- -- -- -- .04
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income................................ $ .46 $ .40 $ 1.76 $ 1.46 $ 1.16 $ .98 $ .74
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Dividends declared.......................... $ .05 $ .04 $ .16 $ .12 $ .08 $ .06 $ .02
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Average common and common equivalent shares
outstanding (000's)......................... 8,901 7,872 8,369 7,912 8,047 7,808 6,822
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
CONSOLIDATED FINANCIAL CONDITION DATA:
Total assets.................................. $ 369,979 $ 277,287 $ 350,110 $ 267,945 $ 226,711 $ 178,991 $ 139,877
Investments (12).............................. 3,937 3,934 14,092 11,061 8,333 8,052 2,000
Securities available for sale................. -- 37 32 35 312 70 732
Lease financings.............................. 326,200 243,291 296,958 239,247 194,379 159,602 107,935
Goodwill...................................... 5,436 5,829 5,534 66 -- -- --
Discounted lease rentals (14)................. 203,286 185,008 185,604 178,457 153,793 119,837 91,262
Other borrowings.............................. 28,750 -- 28,750 -- -- -- --
Stockholders' equity.......................... 84,847 56,872 81,181 54,724 45,317 37,423 25,303
Tangible net worth............................ 79,411 51,043 75,647 54,658 45,317 37,423 25,303
Book value per common share................... 9.87 7.25 9.44 6.94 5.68 4.65 3.47
Tangible book value per common share.......... 9.23 6.50 8.80 6.93 5.68 4.65 3.47
KEY RATIOS:
Net interest margin........................... 5.33% 5.32% 5.39% 4.57% 3.63% 3.68% 2.35%
Return on average assets...................... 4.66 4.61 4.87 4.79 4.88 4.92 3.82
Return on average realized common equity...... 19.78 22.47 21.80 23.04 22.78 23.71 24.83
Average total equity to average assets........ 23.58 20.53 22.36 20.80 21.40 20.77 15.38
Common dividend payout ratio.................. 10.87 10.00 9.09 8.22 6.90 6.12 2.70
Ratio of earnings to fixed charges (15)....... 2.35x 2.45x 2.42x 2.40x 2.53x 2.42x 1.85x
</TABLE>
23
<PAGE>
NOTES TO SELECTED HISTORICAL FINANCIAL DATA
(1) Amount reflects a one-time special assessment of $34.8 million from the
FDIC to recapitalize the SAIF.
(2) Amount reflects $5 million in merger-related provisions associated with
TCF's acquisition of Great Lakes.
(3) Amount reflects a loss of $21.3 million on merger-related asset sales
associated with TCF's acquisition of Great Lakes.
(4) Amount reflects $21.7 million in merger-related expenses and $4.4 million
in cancellation costs on the early termination of interest-rate exchange
contracts associated with TCF's acquisition of Great Lakes.
(5) Represents the prepayment of Federal Home Loan Bank ("FHLB") advances at a
pretax loss of $1.5 million, net of a $578,000 tax benefit, associated with
TCF's acquisition of Great Lakes.
(6) Amount reflects $7 million in merger-related provisions associated with
TCF's acquisition of RCG.
(7) Amount reflects $700,000 in merger-related provisions for real estate
losses and $5.5 million in merger-related expenses associated with TCF's
acquisition of RCG.
(8) Amounts are after preferred stock dividends.
(9) Amounts reflect an after-tax one-time special assessment of $21.7 million
from the FDIC to recapitalize the SAIF. Excluding the one-time special
assessment, net income per common share would have been $3.04 for the year
ended December 31, 1996.
(10) Amounts reflect after-tax merger-related charges of $32.8 million
associated with TCF's acquisition of Great Lakes. Excluding such charges,
net income per common share would have been $2.60 for the year ended
December 31, 1995.
(11) Amounts reflect after-tax merger-related charges of $7.9 million associated
with TCF's acquisition of RCG. Excluding such charges, net income per common
share would have been $1.77 for the year ended December 31, 1993.
(12) Includes interest-bearing deposits with banks, federal funds sold, U.S.
Government and other marketable securities held to maturity, securities
purchased under resale agreements and FHLB stock.
(13) For purposes of computing the ratio of earnings to fixed charges, earnings
represent income before income tax expense and extraordinary items plus
fixed charges. Fixed charges represent interest expense and that portion of
rental expense which is deemed representative of the interest factor. No
interest was capitalized during any of the periods presented.
(14) Discounted lease rentals include $203 million, $184.2 million, $185.3
million, $177.2 million, $145.8 million, $111.3 million and $76.8 million of
non-recourse debt and $268,000, $787,000, $316,000, $1.3 million, $8
million, $8.5 million and $14.5 million of recourse debt at March 31, 1997
and 1996 and December 31, 1996, 1995, 1994, 1993 and 1992, respectively.
(15) For purposes of computing the ratio of earnings to fixed charges, earnings
represent income before income tax expense and cumulative effect of change
in accounting principle plus fixed charges. Fixed charges represent that
portion of rental expense which is deemed representative of the interest
factor. Interest expense of $487,000, $810,000, $162,000 and $115,000 was
capitalized during the three months ended March 31, 1997 and the years ended
December 31, 1996, 1993 and 1992, respectively.
24
<PAGE>
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED MARCH AT OR FOR THE
31, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED OPERATING DATA:
Interest income................................... $ 153,494 $ 155,772 $ 612,885 $ 631,198 $ 568,864 $ 572,200 $ 641,989
Interest expense.................................. 63,289 68,058 258,316 302,106 283,421 306,067 392,198
--------- --------- --------- --------- --------- --------- ---------
Net interest income............................. 90,205 87,714 354,569 329,092 285,443 266,133 249,791
Provision for credit losses....................... 1,498 2,902 21,246 16,054 10,911 37,499 41,051
--------- --------- --------- --------- --------- --------- ---------
Net interest income after provision for credit
losses........................................ 88,707 84,812 333,323 313,038 274,532 228,634 208,740
Non-interest income............................... 46,755 41,228 181,612 132,553 143,315 160,600 144,400
Non-interest expense.............................. 81,254 79,052 353,527 326,902 285,660 284,343 277,304
--------- --------- --------- --------- --------- --------- ---------
Income before income tax expense and
extraordinary items........................... 54,208 46,988 161,408 118,689 132,187 104,891 75,836
Income tax expense................................ 21,181 17,566 61,031 45,482 52,643 41,903 19,083
--------- --------- --------- --------- --------- --------- ---------
Income before extraordinary items............... $ 33,027 $ 29,422 $ 100,377 $ 73,207 $ 79,544 $ 62,988 $ 56,753
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Per Common Share(1):
Income before extraordinary items............... $ .79 $ .70 $ 2.39 $ 1.73 $ 1.88 $ 1.49 $ 1.42
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Dividends declared.............................. $ .1875 $ .15625 $ .71875 $ .59375 $ .50 $ .34375 $ .2375
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Average common and common equivalent shares
outstanding (000's)............................. 41,710 42,253 41,926 41,965 40,891 40,296 37,869
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
CONSOLIDATED FINANCIAL CONDITION DATA:
Total assets...................................... $7,334,098 $7,316,569 $7,440,972 $7,507,856 $8,072,299 $7,809,645 $7,914,414
Investments (2)................................... 60,458 63,136 456,195 75,406 291,437 307,484 358,918
Securities available for sale..................... 1,242,457 1,117,476 999,586 1,201,525 138,742 10,073 399,738
Loans held for sale............................... 199,154 249,498 203,869 242,413 201,511 444,780 308,651
Mortgage-backed securities held to maturity....... -- -- -- -- 1,601,200 1,751,916 1,670,164
Loans............................................. 5,028,741 5,174,923 4,995,962 5,277,101 5,118,381 4,665,567 4,516,982
Lease financings.................................. 326,200 243,291 296,958 239,247 194,379 159,602 107,935
Goodwill.......................................... 30,488 17,056 15,431 11,569 13,355 14,549 16,446
Deposits.......................................... 5,291,894 5,150,023 4,977,630 5,191,552 5,399,718 5,695,928 5,683,130
Federal Home Loan Bank advances................... 630,307 831,585 1,141,040 893,587 1,354,663 945,492 1,018,725
Discounted lease rentals.......................... 203,286 185,008 185,604 178,457 153,793 119,837 91,262
Other borrowings.................................. 439,818 437,302 381,528 547,857 530,332 467,875 599,900
Stockholders' equity.............................. 626,716 597,891 630,687 582,399 520,786 465,488 400,798
Tangible net worth................................ 596,228 580,835 615,256 570,830 507,431 450,939 384,352
Book value per common share....................... 15.18 14.26 15.22 13.96 12.48 11.14 10.04
Tangible book value per common share.............. 14.44 13.85 14.85 13.68 12.14 10.77 9.60
KEY RATIOS:
Net interest margin............................... 5.31% 5.07% 5.27% 4.61% 3.95% 3.69% 3.41%
Return on average assets.......................... 1.82 1.59 1.39 .95 1.03 .81 .72
Return on average realized common equity.......... 21.26 20.21 16.77 13.69 16.55 14.72 16.14
Average total equity to average assets............ 8.54 7.99 8.31 7.04 6.33 5.59 4.58
Common dividend payout ratio...................... 23.73 22.32 30.07 34.72 26.60 23.07 16.61
Ratio of earnings to fixed charges (3):
Including interest on deposits.................. 1.83x 1.68x 1.61x 1.39x 1.46x 1.34x 1.19x
Excluding interest on deposits.................. 3.36x 2.92x 2.74x 2.05x 2.28x 2.03x 1.64x
</TABLE>
25
<PAGE>
NOTES TO SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
(1) Amounts are after preferred stock dividends.
(2) Includes interest-bearing deposits with banks, federal funds sold, U.S.
Government and other marketable securities held to maturity, securities
purchased under resale agreements and FHLB stock.
(3) For purposes of computing the ratio of earnings to fixed charges, earnings
represent income before tax expense and extraordinary items plus fixed
charges. Fixed charges represent interest expense and that portion of rental
expense which is deemed representative of the interest factor. Interest
expense of $487,000, $810,000, $162,00 and $115,000 was capitalized during
the three months ended March 31, 1997 and the years ended December 31, 1996,
1993 and 1992, respectively.
26
<PAGE>
INFORMATION CONCERNING THE TCF SPECIAL MEETING
This Joint Proxy Statement/Prospectus is being furnished to TCF stockholders
in connection with the solicitation of proxies by the Board of Directors of TCF
for use at the TCF Special Meeting to be held on June 24, 1997, and at any
adjournments or postponements thereof.
The principal executive offices of TCF are located at 801 Marquette Avenue,
Suite 302, Minneapolis, Minnesota 55402 and its telephone number is (612)
661-6500.
SPECIAL MEETING OF TCF STOCKHOLDERS
The TCF Special Meeting will be held on Tuesday, June 24, 1997, commencing
at 11:00 a.m., local time, at The Marquette Hotel, Seventh Street and Marquette
Avenue, Minneapolis, Minnesota.
PURPOSE OF MEETING. The purpose of the TCF Special Meeting is to consider
and vote upon: (i) a proposal to approve the Merger Agreement, the Merger and
the issuance of shares of TCF Common Stock in connection therewith; (ii) a
proposal to adjourn the TCF Special Meeting to solicit additional proxies, if
necessary; and (iii) such other business as may properly come before the TCF
Special Meeting and any adjournments or postponements thereof.
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE. The close of business
on May 20, 1997 has been fixed by the Board of Directors of TCF as the TCF
Record Date for the determination of holders of TCF Common Stock entitled to
notice of and to vote at the TCF Special Meeting and any adjournments or
postponements thereof. At the close of business on the TCF Record Date, there
were 34,721,954 shares of TCF Common Stock outstanding and entitled to vote,
held by approximately 8,988 holders of record. Each share of TCF Common Stock
entitles the holder thereof to one vote on each matter to be submitted to TCF
stockholders at the TCF Special Meeting.
VOTE REQUIRED. A quorum, consisting of a majority of the voting power of
the issued and outstanding stock of TCF entitled to vote at the TCF Special
Meeting, must be present in person or by proxy before any action may be taken at
the TCF Special Meeting. Abstentions and broker non-votes (i.e., proxies from
brokers or nominees indicating that such persons have not received instructions
from the beneficial owners or other persons as to certain proposals on which
such beneficial owners or persons are entitled to vote their shares but with
respect to which the brokers or nominees have no discretionary power to vote
without such instructions) will be treated as shares present at the TCF Special
Meeting for purposes of determining the presence of a quorum. Because the number
of shares of TCF Common Stock to be issued or reserved for issuance in
connection with the Merger will exceed 20% of the number of shares of TCF Common
Stock outstanding prior to the signing of the Merger Agreement, approval by
holders of TCF Common Stock of the issuance of TCF Common Stock pursuant to the
Merger Agreement is required under the rules of the NYSE. Under NYSE rules, the
proposed issuance of TCF Common Stock pursuant to the Merger Agreement must be
approved by a majority of the votes cast at the TCF Special Meeting, provided
that the total votes cast on the proposal represents over 50% of the outstanding
shares of TCF Common Stock. If holders of TCF Common Stock do not vote to
approve such issuance, the Merger will not be consummated. TCF is not a
constituent corporation to the Merger and, therefore, approval by TCF's
stockholders is not required under DGCL, the TCF Certificate or the TCF Bylaws.
The votes may be made in person or by proxy. Abstentions and broker non-votes
will have the same effect as votes against approval of the Merger Agreement.
Assuming a quorum is present, the affirmative vote of a majority of the shares
of TCF Common Stock voting in person or by proxy is required to adopt the
proposal to adjourn the TCF Special Meeting to solicit additional proxies, if
necessary.
As of March 31, 1997, the directors and executive officers of TCF and their
affiliates in the aggregate beneficially owned and are entitled to vote
5,417,539 shares, or 15.7%, of the outstanding shares of TCF Common Stock
(exclusive of shares of TCF Common Stock which may be acquired upon the exercise
of outstanding stock options). The directors and executive officers of TCF have
signed an Affiliate Letter
27
<PAGE>
dated February 28, 1997 (a form of which is attached as Exhibit D of Appendix A
to this Joint Proxy Statement/Prospectus) which provides, among other things,
that they will refrain from selling their shares of TCF Common Stock and shares
of Winthrop Common Stock for the 30-day period prior to the Effective Time,
until such time as financial results covering at least 30 days of post-Merger
combined operations of TCF and Winthrop have been published by TCF.
As of the TCF Record Date, neither Winthrop nor any of the directors and
executive officers of Winthrop beneficially owned any outstanding shares of TCF
Common Stock or had sole or shared voting power over any shares of TCF Common
Stock.
VOTING; SOLICITATION AND REVOCATION OF PROXIES. A proxy card for use at the
TCF Special Meeting accompanies this Joint Proxy Statement/Prospectus and is
solicited by the Board of Directors of TCF. Any TCF stockholder executing a
proxy may revoke it at any time before it is voted by filing with the Secretary
of TCF, at the address of TCF set forth on the Notice of Special Meeting of
Stockholders, written notice of such revocation by executing a later-dated proxy
or by attending the TCF Special Meeting and giving notice of such revocation in
person. Attendance at the TCF Special Meeting will not, in and of itself,
constitute revocation of a proxy.
The trustee of the TCF Employees Stock Ownership Plan--401(k), currently
First Trust N.A., votes the shares of TCF Common Stock held by the plan in
accordance with its fiduciary duties and the procedures set forth in the plan.
The plan provides that participants have the right to direct the trustee how to
vote shares of TCF Common Stock allocated to their accounts. The plan also
provides that a committee consisting of the members of the Personnel/Affirmative
Action Committee of the Board of Directors of TCF Financial directs the trustee
with respect to voting of any shares for which participants do not furnish
directions and of shares that are not allocated on or before the TCF Record Date
for the meeting.
Each properly executed proxy returned to TCF (and not revoked) will be voted
in accordance with the instructions indicated thereon. IF NO INSTRUCTIONS ARE
INDICATED, EACH EXECUTED PROXY WILL BE VOTED "FOR" APPROVAL OF THE MERGER
AGREEMENT AND THE MERGER AND THE ISSUANCE OF TCF COMMON STOCK PROVIDED FOR IN
CONNECTION THEREWITH, AND "FOR" ADJOURNMENT OF THE TCF SPECIAL MEETING TO
SOLICIT ADDITIONAL PROXIES, IF NECESSARY. While the Board of Directors of TCF
knows of no other matters to be presented at the TCF Special Meeting, if any
other matter properly comes before the meeting or any adjournment thereof, all
properly executed proxies returned to TCF will be voted on any such matter in
accordance with the best judgment of the proxy holders.
BENEFICIAL OWNERSHIP OF TCF COMMON STOCK. This information is incorporated
by reference from TCF's Annual Report on Form 10-K for the year ended December
31, 1996. See "Incorporation of Certain Documents by Reference."
INFORMATION CONCERNING THE WINTHROP SPECIAL MEETING
This Joint Proxy Statement/Prospectus is being furnished to Winthrop
stockholders in connection with the solicitation of proxies by the Board of
Directors of Winthrop for use at the Winthrop Special Meeting to be held on June
24, 1997, and at any adjournments or postponements thereof. The principal
executive offices of Winthrop are located at 1015 Opus Center, 9900 Bren Road
East, Minnetonka, Minnesota 55343 and its telephone number is (612) 936-0226.
WINTHROP STOCKHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR
PROXY CARDS.
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SPECIAL MEETING OF WINTHROP STOCKHOLDERS
The Winthrop Special Meeting will be held on Tuesday, June 24, 1997,
commencing at 10:00 a.m. local time, at The Marquette Hotel, Seventh Street and
Marquette Avenue, Minneapolis, Minnesota.
PURPOSE OF MEETING. The purpose of the Winthrop Special Meeting is to
consider and vote upon: (i) a proposal to approve and adopt the Merger Agreement
and to approve the Merger; and (ii) such other matters as may properly come
before the Winthrop Special Meeting or any adjournment or postponement thereof,
including a motion to adjourn to a later date to permit further solicitation of
proxies if necessary .
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE. The close of business
on May 21, 1997 has been fixed by the Board of Directors of Winthrop as the
Winthrop Record Date for the determination of stockholders of Winthrop Common
Stock entitled to notice of and to vote at the Winthrop Special Meeting and any
adjournments or postponements thereof. At the close of business on the Winthrop
Record Date, there were 8,600,300 shares of Winthrop Common Stock outstanding
and entitled to vote, held by approximately 90 holders of record. Each share of
Winthrop Common Stock entitles the stockholder thereof to one vote on each
matter to be submitted to Winthrop stockholders at the Winthrop Special Meeting.
VOTE REQUIRED. The affirmative vote of a majority of the outstanding shares
of Winthrop Common Stock is required to approve the Merger Agreement and the
transactions contemplated thereby. Assuming a quorum is present, the affirmative
vote of a majority of the Winthrop Common Stock voting in person or by proxy is
required to adopt the proposal to adjourn the Winthrop Special Meeting to
solicit additional proxies, if necessary. A majority of the outstanding shares
of Winthrop Common Stock entitled to vote, represented in person or by proxy,
will constitute a quorum at the Winthrop Special Meeting. Proxies marked as
abstaining will be treated as present for purposes of determining a quorum at
the Winthrop Special Meeting, but will not be counted as voting on any matter as
to which abstention is indicated. Proxies returned by brokers as "non-votes" on
behalf of shares held in street name will not be treated as present for purposes
of determining a quorum for the Winthrop Special Meeting unless they are voted
by the broker on at least one matter. Such non-voted shares will not be counted
as voting on any matter as to which a non-vote is indicated on the broker's
proxy. Abstentions and broker non-votes will have the same effect as votes
against approval of the Merger Agreement. Abstentions and broker non-votes will
have no effect on the adjournment proposal.
As of the Winthrop Record Date, the directors and executive officers of
Winthrop in the aggregate beneficially owned and are entitled to vote 3,992,483
shares or 46.4% of the outstanding Winthrop Common Stock (exclusive of shares of
Winthrop Common Stock that may be acquired upon the exercise of Options and
shares of Winthrop Common Stock that may be deemed beneficially owned because a
director or officer serves as a fiduciary). Each of the Winthrop Founders has
signed a Stockholder Agreement pursuant to which each has agreed, among other
things, to vote his shares of Winthrop Common Stock in favor of the Merger and
the Merger Agreement and to not transfer his shares of Winthrop Common Stock
until the earlier of the date of the Winthrop Special Meeting or termination of
the Merger Agreement. The Winthrop Founders and the other directors and
executive officers of Winthrop have signed an Affiliate Letter Agreement dated
February 28, 1997 (a form of which is attached as Exhibit C of Appendix A to
this Joint Proxy Statement/Prospectus), which provides that they have agreed not
to sell: (i) shares of TCF Common Stock issued to such person pursuant to the
Merger except in compliance with Rule 145 under the Securities Act, in a
transaction that is otherwise exempt from the registration requirements under
the Securities Act or in an offering registered under the Securities Act, and
(ii) for the period starting 30 days before the Effective Date and until such
time as financial results covering at least 30 days of post-Merger combined
operations of TCF and Winthrop have been published by TCF, shares of TCF Common
Stock and Winthrop Common Stock held by such person.
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As of the Winthrop Record Date, neither TCF and its subsidiaries, nor any of
the directors and executive officers of TCF and their affiliates, beneficially
owned any outstanding shares of Winthrop Common Stock. As of that date, TCF and
its subsidiaries, acting as fiduciaries, custodians or agents, did not have sole
or shared voting power over any shares of Winthrop Common Stock.
VOTING; SOLICITATION AND REVOCATION OF PROXIES. A proxy card for use at the
Winthrop Special Meeting accompanies this Joint Proxy Statement/Prospectus and
is solicited by the Board of Directors of Winthrop. Any Winthrop stockholder
executing a proxy may revoke it at any time before it is voted by filing with
the General Counsel of Winthrop, at the address of Winthrop set forth on the
Notice of Winthrop Special Meeting, written notice of such revocation, by
executing a later-dated proxy, or by attending the Winthrop Special Meeting and
giving notice of such revocation in person. Attendance at the Winthrop Special
Meeting will not, in and of itself, constitute revocation of a proxy. Each
properly executed proxy returned to Winthrop (and not revoked) will be voted in
accordance with the instructions thereon. IF NO INSTRUCTIONS ARE INDICATED, EACH
PROPERLY EXECUTED PROXY WILL BE VOTED "FOR" APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT AND APPROVAL OF THE MERGER, AND "FOR" ADJOURNMENT OF THE WINTHROP
SPECIAL MEETING TO SOLICIT ADDITIONAL PROXIES, IF NECESSARY. While the Board of
Directors of Winthrop knows of no other matters to be presented to the Winthrop
Special Meeting, if any other matter properly comes before the meeting or any
adjournment or postponement thereof, all properly executed proxies returned to
Winthrop will be voted on any such matter in accordance with the best judgment
of the proxy holders.
BENEFICIAL OWNERSHIP OF WINTHROP COMMON STOCK. This information is
incorporated by reference from Winthrop's Annual Report on Form 10-K for the
year ended December 31, 1996. See "Incorporation of Certain Documents by
Reference."
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EXPENSES
The Merger Agreement provides that each party will bear the costs incurred
by that party, but that TCF and Winthrop will each pay one-half of the filing
fees incurred in connection with the HSR Act filings, if any, related to the
Merger and TCF will bear the expense of preparing a supplement to the Indenture
(the "Supplemental Indenture") governing the Winthrop Senior Notes to effect the
modifications to the Indenture described under "Description of Winthrop
Securities--Winthrop Senior Notes" and obtaining approval of the noteholders
thereto. TCF has retained Georgeson & Company Inc. ("Georgeson") to assist in
the solicitation of the consents to the Supplemental Indenture from the holders
of the Winthrop Senior Notes. Georgeson will receive fees of approximately
$5,000, plus reimbursement for reasonable expenses. In addition to solicitation
of noteholder consents by mail, officers, directors and employees of TCF and
Winthrop, who will not be specifically compensated for such services, may
solicit consents from the holders of the Winthrop Senior Notes to the
Supplemental Indenture, personally or by telephone, telegram or other forms of
communication. TCF will also pay the standard charges and expenses of brokerage
houses, voting trustees, banks, associations and other custodians, nominees and
fiduciaries, who are record holders of Winthrop Senior Notes, not beneficially
owned by them, for forwarding such materials to and obtaining consents from the
beneficial owners of Winthrop Senior Notes to the Supplemental Indenture.
TCF and Winthrop will bear the expenses of printing and mailing this Joint
Proxy Statement/ Prospectus, the accompanying proxies and all other expenses
incurred in connection with the solicitation of proxies from TCF and Winthrop
stockholders on behalf of the TCF Board of Directors and the Winthrop Board of
Directors, respectively. TCF has retained Georgeson & Co. to assist in the
solicitation of proxies for the TCF Special Meeting. Georgeson will receive fees
of approximately $6,000, plus reimbursement for reasonable expenses. In addition
to solicitation by mail, directors, officers and employees of TCF and Winthrop,
who will not be specifically compensated for such services, may solicit proxies
from the stockholders of TCF and the stockholders of Winthrop, respectively,
personally or by telephone, telegram or other forms of communication. TCF will
also pay the standard charges and expenses of brokerage houses, voting trustees,
banks, associations and other custodians, nominees and fiduciaries, who are
record holders of TCF Common Stock, not beneficially owned by them, for
forwarding such materials to and obtaining proxies from the beneficial owners of
TCF Common Stock entitled to vote at the TCF Special Meeting. Winthrop will also
pay the standard charges and expenses of brokerage houses, voting trustees,
banks, associations and other custodians, nominees and fiduciaries, who are
record holders of Winthrop Common Stock, not beneficially owned by them, for
forwarding such materials to and obtaining proxies from the beneficial owners of
Winthrop Common Stock entitled to vote at the Winthrop Special Meeting.
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THE MERGER
The following description of the material terms of the Merger does not
purport to be complete and is qualified in its entirety by reference to the
Merger Agreement and the Stockholder Agreements, copies of which are attached to
this Joint Proxy Statement/Prospectus as Appendix A and Exhibit A thereto,
respectively. All stockholders of TCF and stockholders of Winthrop are urged to
read such documents and the other Appendices hereto carefully.
GENERAL
Each of the Boards of Directors of TCF and Winthrop has determined that the
combination of TCF and Winthrop is desirable and in the best interests of TCF's
and Winthrop's respective stockholders and have unanimously approved the Merger
Agreement and the Merger. The Merger will be accomplished through the merger of
a newly-formed and wholly-owned subsidiary of TCF with and into Winthrop, with
Winthrop to be the Surviving Corporation. After the Merger, TCF intends to
contribute to TCF Minnesota all the outstanding capital stock of Winthrop, such
that after the Merger, Winthrop will be operated as a wholly-owned subsidiary of
TCF Minnesota. THE BOARD OF DIRECTORS OF TCF UNANIMOUSLY RECOMMENDS THAT TCF
STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE MERGER AGREEMENT, THE MERGER AND THE
ISSUANCE OF TCF COMMON STOCK IN CONNECTION THEREWITH. THE BOARD OF DIRECTORS OF
WINTHROP UNANIMOUSLY RECOMMENDS THAT WINTHROP STOCKHOLDERS VOTE "FOR" APPROVAL
AND ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE MERGER.
Upon consummation of the Merger, each share of Winthrop Common Stock
outstanding at the Effective Time will be automatically converted into and
exchangeable for 0.7766 of a share of TCF Common Stock, see "The Merger--The
Exchange Ratio." Upon consummation of the Merger, each Option will entitle the
holder, upon exercise, to receive that number of shares of TCF Common Stock
equal to the number of shares of Winthrop Common Stock to which the Option
applied before the Merger, multiplied by the Exchange Ratio. The Options will be
exercisable in full and will have an exercise price equal to the original
exercise price of the Option, divided by the Exchange Ratio. See "The Merger--
Interests of Certain Persons in the Merger."
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND FOR TCF. Completion of a public offering of common stock and
capital notes in early 1992 enabled TCF to make a significant capital
contribution to its primary subsidiary, TCF Minnesota, which in turn enabled TCF
Minnesota (and the other TCF Banks) to qualify as "well-capitalized" under
regulations of the Office of Thrift Supervision (the "OTS"). Following the
achievement of this level of capitalization, which facilitates certain
regulatory approval requirements for acquisitions, TCF formed a committee of
senior executives to determine the location, size, asset quality requirements
and other characteristics of institutions that might be suitable acquisition
opportunities for TCF. Effective April 21, 1993 TCF acquired Republic Capital
Group, Inc. ("RCG") whose principal assets consisted of all of the capital stock
of Republic Capital Bank, F.S.B. (now TCF Wisconsin) and Peerless Federal
Savings Bank (now TCF Illinois), both federally chartered savings institutions,
which had 24 branch offices located in central and eastern Wisconsin and six
branch offices located in northeastern Illinois, respectively. In August 1993,
TCF entered the Michigan market with the acquisition of $220.8 million in
deposits and 15 branch offices of First Federal Savings and Loan Association,
Pontiac, Michigan from the Resolution Trust Corporation. Both acquisitions
represented strategic geographic expansions of TCF's business. Effective
February 8, 1995, TCF acquired Great Lakes with $1.6 billion in deposits and
$2.8 billion in assets. Effective January 16, 1997, TCF acquired the stock of
BOC Financial Corporation, an indirect holding company for Bank of Chicago,
s.b., an Illinois state-chartered savings bank with three primary retail
branches in the Chicago area and $168 million in deposits.
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In December 1996, William A. Cooper, Chairman of TCF Financial, attended a
general investor informational presentation on Winthrop (this presentation
included only publicly-available information about Winthrop available to
investors generally) and developed an interest in exploring the possibility of a
combination of Winthrop with TCF. At his request, Gregory J. Pulles, Vice
Chairman of TCF in charge of mergers and acquisitions, initiated contact with
Winthrop and there followed a series of discussions, meetings and exchanges of
information between Winthrop and TCF during the months of January and February
1997. The TCF Stockholder Relations Committee reviewed the Winthrop transaction
at a special meeting on January 20, 1997 and in a telephone conference call on
February 3, 1997. TCF conducted an on-site and off-site due diligence review of
Winthrop's operations in the second and third weeks of February. On February 13,
1997, the parties commenced negotiation of the terms for a transaction and on
February 14, 1997 the parties reached agreement on an exchange ratio of 0.7766.
The Letter of Intent was signed on February 14, 1997; it included the 0.7766
Exchange Ratio and was subject to certain conditions, including negotiation and
execution of a definitive merger agreement, approval by both boards of directors
and necessary stockholder approvals. The parties issued a press release
announcing the signing of the Letter of Intent on February 14, 1997. Winthrop
conducted a due diligence review of TCF from February 19 through February 28,
1997. The TCF Stockholder Relations Committee reviewed the transaction and its
terms in more detail at a special meeting on February 24, 1997. At the
conclusion of the February 24 meeting, the Committee unanimously approved
proceeding with the transaction. The Board of Directors of TCF reviewed the
transaction and unanimously approved the Merger Agreement, the Merger and the
issuance of shares (subject to stockholder approval) pursuant to the Merger
Agreement, as well as related matters, at a special board meeting held on
February 25, 1997. Winthrop's Board of Directors approved the Merger Agreement
at a special meeting held on February 26, 1997 and the Merger Agreement was
signed on February 28, 1997. See "--Reasons of TCF for the Merger;
Recommendation of TCF Board of Directors."
BACKGROUND FOR WINTHROP. The past several years have been a period of
significant consolidation in the financial services and leasing industry. On
December 31, 1996, Gregory J. Pulles, the General Counsel, Vice Chairman and
Secretary of TCF, contacted John L. Morgan, the President and Chief Executive
Officer of Winthrop, to discuss whether there was potential common interest in
exploring a business combination. Mr. Morgan indicated an interest in pursuing
preliminary discussions with TCF and on January 6, 1997, members of Winthrop's
senior executive management met with members of TCF's senior executive
management. Mr. Morgan and William A. Cooper, Chairman of the TCF Board of
Directors, attended and participated in this meeting. During the week of January
6, 1997, members of TCF and Winthrop's senior executive management, including
Mr. Cooper and Mr. Morgan, decided to have a second meeting, and on January 14,
1997, they met at TCF's offices to further discuss mutual business interests. At
this meeting, the executives discussed the economic aspects of Winthrop's
business and various other business, financial and legal issues surrounding a
possible business combination, including operations and information technology
issues, retention of management and employees, and benefit plans. Following this
meeting, Mr. Morgan advised members of Winthrop's Board of Directors to keep the
directors informed about the discussions with TCF.
A special meeting of the Board of Directors of Winthrop was held on January
17, 1997 to consider the question of whether to remain independent and implement
its own business plan or to proceed with the discussions surrounding a potential
merger with TCF. At this meeting, members of Winthrop's senior executive
management, together with its legal advisors, reviewed with the Winthrop Board
of Directors, among other things, the background of a possible transaction with
TCF, and the strategic advantages and disadvantages that could result from a
combination with TCF. The Winthrop Board of Directors authorized senior
management to proceed with further discussions with TCF as to the possibility of
a transaction.
During the ten-day period beginning January 20, 1997 and ending January 30,
1997, Mr. Morgan and other members of TCF senior executive management had a
number of telephone conversations and on
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January 30, 1997, TCF senior executive management, including Mr. Cooper, met
with senior executive management of Winthrop at the offices of Winthrop. This
meeting focused on the Winthrop organization and its business. Mr. Morgan and
the Executive Vice President/Chief Financial Officer of Winthrop, Kirk A.
MacKenzie, gave a presentation on the organizational and business aspects of
Winthrop, and answered numerous questions related to the same. On the following
day, January 31, 1997, Mr. Morgan received a telephone call from Mr. Pulles who
indicated that TCF would like to proceed further with a possible acquisition or
merger and with its due diligence investigation. On February 4, 1997, TCF signed
a confidentiality agreement with Winthrop.
On February 6, 1997, Messrs. Morgan and Cooper, along with their respective
legal counsel, and Mr. MacKenzie, met at the offices of TCF to discuss the
proposed business combination, and the strategic benefits to both companies and
their stockholders if an acquisition could be consummated. At this meeting, Mr.
Cooper indicated that TCF might be willing to undertake a stock-for-stock merger
with Winthrop. It was also agreed at this meeting that TCF would commence its
due diligence review of Winthrop on February 10, 1997. From February 10, 1997
through February 24, 1997, TCF conducted a due diligence review of Winthrop.
On February 12, 1997, Mr. Cooper presented to the Winthrop Board of
Directors, members of Winthrop senior executive management and legal advisors
for Winthrop, the TCF investor presentation (publicly-available information
about TCF generally presented to investors). Following Mr. Cooper's
presentation, he departed and the Winthrop Board of Directors then held a
special meeting. At this meeting, the Winthrop Board and members of Winthrop's
senior management, together with its legal advisors, discussed TCF's interest
and the desirability of retaining a financial advisor. Additionally, the Board
of Directors and its legal advisors reviewed the duties and responsibilities of
Winthrop's directors under relevant corporate law and regulatory requirements.
After the discussions, the Winthrop Board authorized senior management of
Winthrop to proceed with discussions with TCF and to engage a financial advisor
to assist the Winthrop Board of Directors and management with the proposed TCF/
Winthrop business combination. Later that same day, Mr. Morgan contacted a
representative of Dain Bosworth to discuss the possible business combination and
possible engagement of Dain Bosworth as Winthrop's financial advisor.
On February 13, 1997, Winthrop and TCF, with their respective legal,
financial, tax and accounting advisors, commenced their negotiations of a
definitive merger agreement. Additionally, that morning, Mr. Morgan and Mr.
Cooper met and had detailed discussions about the structure and pricing of a
potential business combination. Following the meeting with Mr. Cooper, Mr.
Morgan had telephone conversations with the other Winthrop directors whom he
advised and consulted with respect to the discussions with Mr. Cooper and
whether a letter of intent should be pursued. The general consensus of the
Winthrop directors was that it was in the best interests of the Winthrop
stockholders to enter into a non-binding letter of intent with TCF.
On the morning of February 14, 1997, Winthrop's senior executive management
and legal advisors met with representatives of Dain Bosworth. At this meeting,
Dain Bosworth and Winthrop discussed the structure of a potential business
combination, various pricing mechanisms, and other possible terms for a
combination. Winthrop then retained Dain Bosworth as its financial advisor in
connection with the proposed transaction. Dain Bosworth was requested to analyze
the transaction and advise the Winthrop Board of Directors concerning the
fairness of the proposed transaction at a special meeting of the Board to take
place on February 26, 1997. Following the meeting with Dain Bosworth, based on
the advice of Winthrop's legal and financial advisors at the meeting, Mr. Morgan
telephoned Mr. Cooper to finalize discussions regarding pricing of the proposed
business combination. Contingent on the results of due diligence by each of the
parties, negotiation of a mutually acceptable definitive agreement, approval by
their respective Boards of Directors, stockholder approval and regulatory
approval, on behalf of their respective companies, Mr. Morgan and Mr. Cooper
agreed to a stock-for-stock merger using a fixed exchange ratio of 0.7766 of a
share of TCF Common Stock for each share of Winthrop Common Stock.
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The Letter of Intent was executed shortly after 10:00 a.m. on February 14, 1997
and a joint press release was issued. The Letter of Intent stated that the
contemplated transaction was subject to approval by the Boards of Directors of
TCF and Winthrop, as well as regulatory approvals. Subsequently, from February
19, 1997 through February 28, 1997, Winthrop, through certain of its executive
officers and counsel, and with the assistance from representatives of Dain
Bosworth, conducted its due diligence review of TCF.
On February 26, 1997, the Winthrop Board of Directors held a special meeting
to consider the Merger Agreement and the Merger, and the transactions and
agreements contemplated thereby. All members of Winthrop's Board of Directors
were present at the meeting as well as members of Winthrop's senior executive
management and its legal and financial advisors. Together, this group reviewed
with the Winthrop Board of Directors, among other things, the negotiations with
TCF, the background of the proposed transaction, the potential benefits of the
transaction, including the strategic rationale for the transactions, the status
of Winthrop's due diligence investigation of TCF and of TCF's due diligence
investigation of Winthrop, a summary of Dain Bosworth's financial and valuation
analyses of the transaction, the potential impact of a merger on Winthrop's
business, finances and stockholders and the terms of the definitive Merger
Agreement and Stockholder Agreements. At the conclusion of the meeting, Dain
Bosworth delivered its oral opinion that, as of that date, the consideration to
be received by holders of Winthrop Common Stock would be fair to such
stockholders from a financial point of view. After these presentations, the
Winthrop Board of Directors, by unanimous vote, approved the Merger Agreement,
the Merger and the transactions contemplated thereby.
In the afternoon of February 28, 1997, representatives of TCF and Winthrop
signed the Merger Agreement.
REASONS OF TCF FOR THE MERGER; RECOMMENDATION OF TCF BOARD OF DIRECTORS
The terms of the Merger Agreement, including the consideration to be paid to
Winthrop's stockholders, were the result of arm's-length negotiations between
the representatives of TCF and Winthrop. Among the factors considered by the
Board of Directors of TCF in deciding to approve and recommend the terms of the
Merger were:
(i) The consideration to be paid to Winthrop's stockholders in relation
to the market value, book value, earnings per share and dividend rates of
the TCF Common Stock and the Winthrop Common Stock.
(ii) Information concerning the financial condition, results of
operations, capital levels, asset quality and prospects of TCF and Winthrop.
(iii) The short-term and long-term impact the Merger will have on TCF's
anticipated consolidated results of operations, including anticipated
reduced cost of funds available to Winthrop as a result of being funded, at
least in part, by TCF Minnesota.
(iv) The general structure of the transaction and the compatibility of
management and business philosophy.
(v) The improvement of the franchise value of TCF to its stockholders
through the enhanced network and products and services.
(vi) The likelihood of receiving the requisite regulatory approvals in a
timely manner.
(vii) The general tax-free nature of the Merger to the stockholders of
Winthrop.
(viii) The ability of the combined enterprise to compete in relevant
banking and non-banking markets.
(ix) Industry and economic conditions, including trends in the
consolidation of the financial services industry.
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(x) The impact of the Merger on the depositors, employees, customers of
and communities served by TCF and Winthrop through expanded products and
services.
(xi) The opinion of TCF's financial advisor as to the fairness, from a
financial point of view, of the consideration to be paid to Winthrop's
stockholders. See "--Opinion of TCF Financial Advisor."
The Board of TCF also considered the termination fee provisions of the
Merger Agreement, which was a necessary inducement to TCF to enter into the
Merger Agreement. See "The Merger--Termination Fees." In making its
determination to approve the Merger Agreement, the Board of Directors of TCF did
not ascribe relative weights to the factors which it considered. However, after
consideration of the foregoing factors the Board concluded that the Merger
offers TCF access to high yielding assets (Winthrop's lease portfolio), a means
to diversify its high yielding products, and a synergy through access by
Winthrop to TCF Minnesota's lower cost of funds.
FOR THE REASONS SET FORTH ABOVE, THE BOARD OF DIRECTORS OF TCF UNANIMOUSLY
RECOMMENDS THAT TCF STOCKHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT,
THE MERGER AND THE ISSUANCE OF TCF COMMON STOCK IN CONNECTION THEREWITH.
REASONS OF WINTHROP FOR THE MERGER; RECOMMENDATION OF WINTHROP BOARD OF
DIRECTORS
The Winthrop Board of Directors has unanimously determined that the Merger
and the Merger Agreement, including the Exchange Ratio, are fair to, and in the
best interest of, Winthrop and its stockholders. In the course of reaching its
determination, the Winthrop Board of Directors consulted with senior management
and Winthrop's legal counsel with respect to the legal duties of the Board,
regulatory matters, the Merger and the Merger Agreement and issues related
thereto, and with its financial advisor with respect to the financial aspects
and fairness, from a financial point of view, of the transaction and the
fairness of the consideration to be received by Winthrop stockholders. Prior to
approving the Merger, the Winthrop Board of Directors received information
regarding the Merger, and it analyzed and considered, without assigning any
relative or specific weight to any one factor, the following:
(i) Winthrop's positive future business, operations and financial
position and prospects as a part of TCF, compared with Winthrop's business,
results of operations, financial position and prospects were it to remain
independent. The Board of Directors concluded that merging with TCF would
provide Winthrop with a significantly greater capital base at lower cost.
(ii) Compatibility of Winthrop and TCF management philosophies and
style. The Board of Directors considered the management teams of both TCF
and Winthrop and their compatibility. The Board of Directors concluded that
TCF's and Winthrop's management philosophies and style are quite compatible;
(iii) Compatibility of Winthrop's and TCF's respective plans for growth
and expansion. The Winthrop Board of Directors also considered TCF's
strategic focus, and concluded that TCF's business and operating strategies,
and its desire to expand both its banking and non-banking businesses, were
compatible with Winthrop's business and operating strategies.
(iv) The complementary nature of Winthrop's and TCF's product lines. The
Winthrop Board of Directors considered the product lines of Winthrop and TCF
and concluded that the complementary nature of such products may enhance
Winthrop's competitive position.
(v) Dain Bosworth's opinion as to the fairness to Winthrop's
stockholders from a financial point of view (See "--Opinion of Winthrop
Financial Advisor").
(vi) The opportunity for Winthrop's stockholders to participate, as
holders of TCF Common Stock, in the anticipated growth of a combined
enterprise.
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(vii) The tax structure of the transaction. The Winthrop Board of
Directors concluded that the tax structure of the transaction is favorable
to the stockholders of Winthrop, allowing them to become stockholders in the
combined enterprise on a tax-free basis.
(viii) The terms and conditions of the Merger Agreement. The Winthrop
Board of Directors also considered the structure of the Merger and concluded
that the terms and conditions of the Merger Agreement, including Winthrop's
right to entertain other bona fide offers, are reasonable and fair to
Winthrop's stockholders. See "--Limitation on Negotiations" and
"--Termination Fees."
(ix) The impact of the Merger on its employees, customers and
communities. The Winthrop Board of Directors concluded that the Merger was
in the best interest of these constituents.
(x) The Winthrop Board of Directors also considered the level of TCF's
interest in consummating the Merger, and that the benefits of the proposed
Merger with TCF, coupled with the ability of Winthrop's Board to exercise
its fiduciary duties if a credible superior offer were to be made,
outweighed the potential benefits to Winthrop of foregoing the opportunity
with TCF in order either to seek other partners or remain independent.
FOR THE REASONS SET FORTH ABOVE, THE BOARD OF DIRECTORS OF WINTHROP
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF WINTHROP COMMON STOCK VOTE "FOR" THE
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE MERGER.
CERTAIN FORWARD-LOOKING STATEMENTS
Certain statements under "Reasons of TCF for the Merger; Recommendation of
TCF Board of Directors" and "Reasons of Winthrop for the Merger; Recommendation
of Winthrop Board of Directors," including statements concerning plans,
objectives and future events or performance, constitute "forward-looking
statements" within the meaning of the Securities Act and the Exchange Act and
are intended to be subject to the safe harbors created thereby. Actual results
of the combined entities may differ materially from those contemplated by such
forward-looking statements.
OPINION OF TCF FINANCIAL ADVISOR
Piper Jaffray was retained by TCF pursuant to an engagement letter dated
February 18, 1997 to render its opinion to the TCF Board regarding the fairness,
from a financial point of view, to TCF stockholders of the consideration
proposed to be paid by TCF to Winthrop stockholders in the Merger and to assist
TCF's management and Board of Directors in analyzing the proposed Merger and the
proposed Exchange Ratio.
Piper Jaffray is an investment banking firm engaged, among other things, in
the valuation of businesses and their securities in connection with mergers and
acquisitions, underwriting and secondary distributions of securities, private
placements and valuations for estate, corporation and other purposes. Piper
Jaffray was selected to prepare a fairness opinion based on its experience and
expertise in transactions similar to the Merger and its reputation in the
financial services and investment banking industries in general and the
midwestern thrift industry in particular. Except as set forth above and with
respect to rendering advice to TCF concerning certain aspects of the Winthrop
Senior Notes, Piper Jaffray has not otherwise acted as financial advisor to TCF
or the TCF Board in connection with the Merger and did not participate in the
discussions or negotiations with respect to the Merger. Piper Jaffray has acted
as a manager or co-manager of underwritings of TCF and Winthrop securities and
provided other investment banking services for TCF in the past and may continue
to do so for TCF in the future. In the ordinary course of its business, Piper
Jaffray actively trades TCF Common Stock and Winthrop Common Stock and Winthrop
Senior Notes for its own account and for the accounts of its customers, and,
therefore, may from time to time hold a long or short position in such
securities. Piper Jaffray also provides research coverage
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for TCF and Winthrop. Luella G. Goldberg, a director of TCF, is also a director
of several closed-end investment companies currently managed by Piper Capital
Management Incorporated, an affiliate of Piper Jaffray.
Piper Jaffray delivered to the TCF Board of Directors on February 25, 1997,
its oral opinion (subsequently confirmed by a written opinion dated as of the
same date) to the effect that, as of the date of the opinion and based on and
subject to the assumptions, factors and limitations as set forth in the opinion
and as described below, the consideration proposed to be paid by TCF pursuant to
the Merger Agreement was fair, from a financial point of view, to the
stockholders of TCF. Such opinion was subsequently reaffirmed by issuance to the
TCF Board of a Piper Jaffray opinion dated the date of this Joint Proxy
Statement/Prospectus. Those opinions are herein collectively referred to as the
"Piper Opinion." A copy of the Piper opinion letter dated the date of this Joint
Proxy Statement/Prospectus is attached to this Joint Proxy Statement/Prospectus
as Appendix B and is incorporated herein by reference. The February 25, 1997
opinion is substantially identical to the Piper opinion attached hereto.
While Piper Jaffray rendered its opinion and provided certain analyses to
the TCF Board, Piper Jaffray was not requested to and did not make any
recommendation to the TCF Board as to the form or amount of the consideration to
be exchanged by TCF in the Merger, which was determined through negotiations
between Winthrop and TCF. The Piper Opinion, which was delivered for use and
considered by the TCF Board, is directed only to the fairness to TCF
stockholders, from a financial point of view, of the proposed consideration to
be paid by TCF in connection with the Merger, does not address the value of a
share of TCF Common Stock, does not address TCF's underlying business decision
to participate in the Merger and does not constitute a recommendation to any TCF
stockholder as to how such stockholder should vote with respect to the Merger.
Piper Jaffray does not admit that it is an expert within the meaning of the term
"expert" as used in the Securities Act and the rules and regulations promulgated
thereunder, or that its opinions constitute a report or valuation within the
meaning of Section 11 of the Securities Act and the rules and regulations
promulgated thereunder. However, Piper Jaffray has consented to the use of its
name in this Joint Proxy Statement/Prospectus and the inclusion of the Piper
Opinion as Appendix B.
Piper Jaffray was not advised by TCF, Winthrop or their respective legal
counsel concerning the probable outcome of, or estimated damages which might
arise from, any pending or threatened litigation, possible unasserted claims or
other contingent liabilities, to which TCF or Winthrop or their affiliates was a
party or may be subject and undertook no analysis independent thereof.
Accordingly, the Piper Opinion made no assumption concerning, and therefore did
not consider, the possible assertion of claims, outcomes or damages arising out
of any such matters.
THE SUMMARY OF THE PIPER OPINION SET FORTH BELOW IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE PIPER OPINION. TCF STOCKHOLDERS
ARE URGED TO READ THE PIPER OPINION IN ITS ENTIRETY FOR A COMPLETE DESCRIPTION
OF THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS OF THE REVIEW UNDERTAKEN.
THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS OF THE REVIEW UNDERTAKEN
CONTAINED IN THE PIPER OPINION LETTER DATED THE DATE OF THIS JOINT PROXY
STATEMENT/PROSPECTUS ARE SUBSTANTIALLY THE SAME AS THOSE CONTAINED IN THE
OPINION LETTER DATED FEBRUARY 25, 1997.
In arriving at the Piper Opinion, Piper Jaffray reviewed, analyzed and
relied upon material bearing upon the financial and operating condition and
prospects of TCF and Winthrop and material prepared in connection with the
Merger, and considered such financial and other factors as it deemed appropriate
under the circumstances, including, among other things, the following: (i) the
Merger Agreement; (ii) information relative to the business, financial condition
and operations of TCF and Winthrop furnished by management of TCF and Winthrop,
respectively; (iii) certain internal financial planning information of Winthrop
furnished by management of Winthrop and certain pro forma internal financial
planning information for Winthrop and TCF furnished by management of TCF; (iv)
certain financial and securities data of TCF; (v) to the extent publicly
available, the financial terms of certain merger and acquisition transactions
deemed relevant; (vi) publicly available information relative to TCF and
Winthrop; and
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<PAGE>
(vii) certain financial and securities data of Winthrop and companies deemed
similar to Winthrop or representative of the business sector in which Winthrop
operates. In addition, Piper Jaffray engaged in discussions with members of
management of Winthrop and TCF concerning the respective financial condition,
current operating results and business outlook of Winthrop and TCF, including
the prospects for the combined companies and any potential operating
efficiencies and synergies which may arise from the Merger.
For purposes of the Piper Opinion, Piper Jaffray relied upon and assumed the
accuracy, completeness and fairness of the financial and other information made
available to it and did not attempt to independently verify such information.
Piper Jaffray relied upon the assurances of TCF and Winthrop management that the
information provided by TCF and Winthrop had a reasonable basis and, with
respect to financial planning data and other business outlook information,
reflected the best available estimates, and that they were not aware of any
information or fact that would make the information provided to Piper Jaffray
incomplete or misleading. Piper Jaffray relied, without independent
verification, on the assessments by management of TCF of the amount and timing
of potential cost savings, nonrecurring acquisition costs and other synergies
realizable as a result of the Merger and assumed that the Merger would be
accounted for as a pooling of interests under generally accepted accounting
principles. In arriving at the Piper Opinion, Piper Jaffray did not perform, nor
was it furnished, any appraisal or valuation of specific assets or liabilities
of TCF or Winthrop and expressed no opinion regarding the liquidation value of
any entity. No limitations were imposed by TCF on the scope of Piper Jaffray's
investigation or the procedures to be followed in rendering its opinion. Piper
Jaffray expressed no opinion as to the price at which shares of TCF Common Stock
or Winthrop Common Stock may trade at any future time. The Piper Opinion is
based upon information available to Piper Jaffray, and the facts and
circumstances as they existed and were subject to evaluation on the respective
dates of the Piper Opinion. Events occurring after such dates could materially
affect the assumptions used in preparing the Piper Opinion.
Piper Jaffray performed certain financial and comparative analyses,
including those summarized below, which it discussed with the TCF Board on
February 25, 1997. In delivering the Piper Opinion to the TCF Board on February
25, 1997, Piper Jaffray prepared and delivered to the TCF Board certain written
materials containing various analyses and other information relevant to the
Piper Opinion. Piper Jaffray confirmed the appropriateness of its reliance on
the described analyses in connection with its opinion dated the date of this
Joint Proxy Statement/Prospectus by performing procedures to update certain of
such analyses and reviewing the assumptions on which such analyses were based
and the factors considered in connection therewith. The analyses referred to
below were made in connection with rendering the Piper Opinion.
SELECTED MARKET INFORMATION. Piper Jaffray reviewed certain stock trading
characteristics of TCF Common Stock and Winthrop Common Stock, including stock
price and volume comparisons for periods ending February 21, 1997. Piper Jaffray
also analyzed the per share purchase price and aggregate transaction value based
on the Exchange Ratio and other terms set forth in the Merger Agreement.
PRO FORMA ANALYSIS. Piper Jaffray analyzed the hypothetical pro forma
effects of the Merger on TCF's earnings per share for the years ending December
31, 1997, 1998 and 1999. In this analysis, TCF's internal projected pre-Merger
earnings per share were compared to the internal projected post-Merger earnings
per share reflecting the addition of Winthrop's earnings and projected synergies
as well as certain other pro forma changes. This analysis was based on internal
projections for Winthrop provided by Winthrop's management and reviewed by TCF's
management. The projected earnings per share for the combined entities were then
compared to TCF's projected earnings over the same periods on a stand alone
basis. Based on an Exchange Ratio of 0.7766 of a share of TCF Common Stock for
each share of Winthrop Common Stock, this analysis indicated that the Merger
could be modestly dilutive to TCF projected earnings per share in 1997 and 1998
and would have a negligible effect on TCF projected earnings per share in 1999.
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<PAGE>
CONTRIBUTION ANALYSIS. Piper Jaffray analyzed the hypothetical pro forma
contribution of each of TCF and Winthrop to the combined company for the year
ended December 31, 1996 and the years ending December 31, 1997 through 2000. For
these periods, Piper Jaffray analyzed Winthrop's expected contribution, with and
without expected synergies from the Merger, to the pro forma net income, total
assets and book value of the combined entity and the post-Merger equity interest
to be held by Winthrop's stockholders. This analysis shows that Winthrop would
have contributed 14.7%, 4.7% and 12.9% to combined net income, total assets and
book value, respectively, in fiscal 1996. In fiscal 2000, taking into account
the expected synergies in connection with the Merger, the Winthrop contribution
increases to 19.1%, 9.8% and 14.9% of combined net income, total assets and book
value, respectively. Without such expected synergies, the Winthrop contribution
would be 16.2%, 9.8% and 14.9% of combined net income, total assets and book
value, respectively, in fiscal 2000. Assuming an Exchange Ratio of 0.7766 of a
share of TCF Common Stock for each share of Winthrop Common Stock, Winthrop
stockholders will account for approximately 16.2% of the combined companies'
equity on a fully diluted basis.
DISCOUNTED IMPLIED DIVIDEND ANALYSIS. Using a discounted implied dividend
analysis, Piper Jaffray calculated a range of theoretical per share values for
Winthrop based on the net present value of: (i) Winthrop's implied annual
dividend income, subject to a constraint of maintaining a minimum ratio of
equity to assets of 6%; and (ii) a terminal value for Winthrop in 2001
calculated based upon a multiple of net income. The projected financial data for
Winthrop for 1997 through 2001 utilized by Piper Jaffray in this analysis was
prepared by Winthrop management and reviewed by TCF management. Piper Jaffray
calculated the range of net present values per share for Winthrop based on a
range of discount rates of 14% to 18% and a range of terminal value multiples of
forecasted 2001 earnings of 10.0x to 14.0x. This analysis yielded a range of
estimated present values per share for Winthrop of approximately $36.05 to
$52.75 taking into account the expected synergies relating to the Merger and
approximately $30.71 to $44.55 without such synergies.
COMPARABLE MERGER AND ACQUISITION ANALYSIS. Piper Jaffray reviewed selected
transactions involving acquired companies deemed comparable to Winthrop that
have been completed from January 1, 1994 to the present and whereby the target
was 100% acquired. This analysis was based on publicly available information
obtained from Commission filings, public company disclosures, press releases,
industry and popular press reports, data bases and other sources. This search
yielded eight comparable transactions. Based on its analysis of the comparable
transactions, Piper Jaffray derived the mean, median and ranges of various
operating and valuation ratios for the comparable transaction group and compared
such ratios to Winthrop's comparable ratios. The comparable transaction group's
mean and median net margin ratios of 17.2% and 18.2%, and range of 3.1% to
28.4%, were compared with Winthrop's ratio of 19.2%; the mean and median return
on ending equity of 14.6% and 16.1%, and range of 7.7% to 21.0%, were compared
with Winthrop's return of 18.1%; the mean and median three-year net income
growth rate of 26.4% and 18.7%, and range of 2.0% to 70.3%, were compared with
Winthrop's growth rate of 24.3%; the mean and median total debt to capital
ratios of 70.1% and 70.0%, and range of 24.4% to 93.4%, were compared with
Winthrop's ratio of 72.5%; the mean and median equity value to latest twelve
month net income multiples of 17.8x and 16.0x, and range of 9.5x to 33.6x, were
compared with Winthrop's multiple of 21.8x; the mean and median equity value
multiple to growth rate of 67.3% and 64.3%, and range of 21.3% to 119.1%, were
compared with Winthrop's ratio of 89.8%; the mean and median multiples of
company value to revenues of 6.0x and 6.2x, and range of 2.3x to 9.9x, were
compared with Winthrop's multiple of 7.0x; and the mean and median equity value
to book value multiples of 3.2x and 2.8x, and range of 1.3x to 6.4x, were
compared with Winthrop's multiple of 4.0x.
PREMIUM ANALYSIS. Piper Jaffray reviewed publicly available information for
selected completed transactions from January 1, 1994 to present involving
publicly traded specialty finance companies. Piper Jaffray selected eight
transactions which were deemed comparable. Based on its review of the comparable
transactions, Piper Jaffray derived the mean, median and range of premiums paid
in the comparable transactions and compared them to the premium to be paid to
Winthrop's stockholders. The comparable
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transaction group's mean and median premiums of 31.3% and 34.3% above the
trading price on the day prior to announcement, and range of 4.5% to 72.5%, were
compared to a 5.9% premium to be paid to Winthrop's stockholders; the mean and
median premiums of 37.8% and 30.0% above the trading price one week prior to the
announcement, and range of 6.6% to 82.3%, were compared to an 18.1% premium to
be paid to Winthrop's stockholders; and the mean and median premiums of 43.6%
and 45.7% above the trading price four weeks prior to the announcement, and
range of 12.5% to 69.4%, were compared to the 21.1% premium to be paid to
Winthrop's stockholders.
COMPARABLE PUBLIC COMPANY ANALYSIS. Piper Jaffray reviewed information
relating to six publicly traded companies involved in commercial finance. Share
pricing for the publicly traded companies in the public market reflects the
value of a minority interest and does not reflect a control premium. Based on
its review, Piper Jaffray derived mean and median net margins of 11.8% and
11.2%, and a range of 4.8% to 22.8% (compared to a 19.2% net margin for
Winthrop); mean and median historical net income growth percentages of 28.7% and
33.7%, and a range of 2.8% to 46.9% (compared to 24.3% growth percentage for
Winthrop); mean and median projected earnings per share growth of 15.9% and
15.7%, and a range of 10.0% to 23.3% (compared to projected earnings per share
growth of 21.8% for Winthrop); mean and median total debt to capital ratios of
80.6% and 81.9%, and a range of 72.1% to 87.6% (compared to a debt to capital
ratio of 72.5% for Winthrop) and mean and median return on ending equity ratios
of 12.2% and 12.2%, and a range of 9.6% to 14.3% (compared to an 18.1% ratio for
Winthrop). Piper Jaffray also derived mean and median price to calendar 1996
earnings multiples of 17.1x and 15.7x, and a range of 15.4x to 21.6x (compared
to a multiple of 21.8x for Winthrop); mean and median price to estimated
calendar 1997 earnings multiples of 13.9x and 13.4x, and a range of 11.7x to
16.1x (compared to a multiple of 16.9x for Winthrop); mean and median price
earnings multiples to historical net income growth ratios of 70.4% and 50.5%,
and a range of 33.5% to 163.8% (compared to a ratio of 89.8% for Winthrop); mean
and median price earnings multiples to forward net income growth ratios of
112.7% and 109.2%, and a range of 85.3% to 154.1% (compared to a ratio of 100.2%
for Winthrop); mean and median company value to latest twelve month revenue
multiples of 6.4x and 5.9x, and a range of 2.4x to 11.2x (compared to a 7.0x
multiple for Winthrop); and mean and median equity value to book value multiples
of 2.1x and 1.9x, and a range of 1.4x to 3.2x (compared to a 4.0x multiple for
Winthrop).
In reaching its conclusions as to the fairness to the TCF stockholders of
the consideration to be paid by TCF in the Merger and in its presentation to the
TCF Board of Directors, Piper Jaffray did not rely on any single analysis or
factor described above, assign relative weights to the analyses or factors
considered by it, or make any conclusions as to how the results of any given
analysis, taken alone, supported its fairness opinion. The preparation of a
fairness opinion is a complex process and not necessarily susceptible to partial
analyses or summary description. Piper Jaffray believes that its analyses must
be considered as a whole and that selecting portions of its analyses and of the
factors considered by it, without considering all factors and analyses, would
create a misleading view of the process underlying the Piper Opinion. The
analyses of Piper Jaffray are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by such analyses. Analyses relating to the value of companies do not purport to
be appraisals or valuations or necessarily reflect the price at which companies
may actually be sold. No company or transaction used in any comparable analysis
as a comparison is identical to TCF, Winthrop or the Merger. Accordingly, an
analysis of the results is not mathematical; rather it involves complex
considerations and judgments concerning, among other things, differences in
financial and operating characteristics of the comparable companies and other
factors that could affect the public trading value of such companies.
For acting as financial advisor to TCF in connection with the Merger, TCF
has agreed to pay Piper Jaffray fees aggregating $300,000, $200,000 of which has
been paid and $100,000 of which is due because of Piper Jaffray's issuance of an
updated opinion as of the date of this Joint Proxy Statement/Prospectus. TCF has
also agreed to pay the reasonable out-of-pocket expenses of Piper Jaffray, not
to exceed $25,000 without TCF's approval, and to indemnify Piper Jaffray against
certain liabilities incurred (including
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liabilities under the federal securities laws) in connection with the engagement
of Piper Jaffray by TCF. The fees payable to Piper Jaffray are not contingent
upon consummation of the Merger.
OPINION OF WINTHROP FINANCIAL ADVISOR
The Merger Agreement provides that a newly-formed subsidiary of TCF will be
merged into and with Winthrop, with Winthrop as the Surviving Corporation, after
which TCF will contribute all of the outstanding capital stock of Winthrop to
TCF Minnesota. Stockholders of Winthrop Common Stock will be entitled to receive
0.7766 of a share of TCF Common Stock for each share of Winthrop Common Stock
they own, and receive cash in lieu of fractional shares they would otherwise
receive.
Winthrop retained Dain Bosworth on February 14, 1997 to act as its financial
advisor in connection with a possible merger of Winthrop and TCF Financial, and
to provide an opinion to the Board of Directors of Winthrop as to the fairness,
from a financial point of view, of the consideration to be received by
stockholders of Winthrop in connection with the Merger. While Dain Bosworth
acted as Winthrop's financial advisor and provided certain analyses to
Winthrop's Board, Dain Bosworth was not requested to and did not make any
recommendation to the Winthrop Board of Directors as to the form or amount of
consideration in connection with the Merger. See "--Background of and Reasons
for the Merger." However, Dain Bosworth has consented to the use of its name in
this Joint Proxy Statement/Prospectus and the inclusion of the Dain Bosworth
opinion as Appendix C.
Dain Bosworth has delivered to the Winthrop Board its written opinion, dated
the date of this Joint Proxy Statement/Prospectus, to the effect that, as of the
date of its opinion, the consideration to be received in the Merger by the
holders of Winthrop Common Stock is fair to such stockholders from a financial
point of view. This opinion confirmed an opinion that had been delivered orally
to the Winthrop Board on February 26, 1997. A copy of the written opinion of
Dain Bosworth is attached as Appendix C to this Joint Proxy Statement/Prospectus
and is incorporated herein by reference. The summary of the opinion of Dain
Bosworth set forth in this Joint Proxy Statement/Prospectus is qualified in its
entirety by reference to the full text of such opinion.
No limitations were imposed on Dain Bosworth with respect to the scope of
investigation, except that Dain Bosworth was not asked to solicit, and did not
solicit, proposals from other parties regarding a merger or acquisition of
Winthrop. Dain Bosworth's opinion does not address Winthrop's underlying
business decision to proceed with the Merger. As set forth in its opinion, Dain
Bosworth relied on, and did not independently verify, the accuracy and
completeness of the financial and other information furnished to it by Winthrop.
Dain Bosworth did not make an independent evaluation or appraisal of the assets
and liabilities of Winthrop or TCF, and does not express any opinion regarding
the liquidation value of either entity or the regulatory compliance of TCF.
Winthrop stockholders are urged to read Dain Bosworth's opinion in its entirety
for a summary description of the procedures followed, the factors considered and
the assumptions made by Dain Bosworth in rendering its opinion.
In connection with its opinion, Dain Bosworth, among other things: (i)
reviewed certain publicly available information regarding Winthrop and TCF; (ii)
reviewed certain business and financial information about Winthrop, including
financial forecasts that had been prepared and provided by the management of
Winthrop; (iii) made further inquiries regarding the financial forecasts for
Winthrop on a stand-alone basis; (iv) reviewed certain publicly available
documents filed by Winthrop and TCF with the Commission pursuant to the Exchange
Act; (v) reviewed certain confidential financial, operating and other
information supplied to it by Winthrop and TCF; (vi) visited the corporate
offices of Winthrop and TCF and made inquiries of management regarding the past
and current business operations, financial condition, and future prospects of
each company; (vii) reviewed the Merger Agreement and selected other documents
related to the Merger; (viii) held discussions with the senior management of
both companies to understand their respective reasons for completing the Merger;
(ix) analyzed the historical reported market prices and trading activity of the
common stock of both companies; (x) compared financial and
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stock market information on Winthrop and TCF to similar information for certain
publicly traded companies in the financial services industry; (xi) to the extent
publicly available, reviewed the financial terms of selected relevant mergers
and acquisitions; (xii) analyzed the general economic outlook for companies in
the financial services industry; and (xiii) performed other studies and analyses
considered appropriate by Dain Bosworth.
In conducting the review and in performing the analyses described below,
Dain Bosworth did not attribute any particular weight to any information or
analysis considered by it, but rather made qualitative judgments as to the
significance and relevance of each factor and analysis. Accordingly, Dain
Bosworth believes that the information reviewed and the analyses conducted must
be considered as a whole and that considering any portion of such information or
analyses, without considering all of such information and analyses, could create
a misleading or incomplete view of the process underlying its opinion.
In delivering its oral opinion to Winthrop's Board on February 26, 1997,
Dain Bosworth prepared and delivered to Winthrop's Board and its legal counsel
certain written materials containing a summary of various analyses and
information that Dain Bosworth considered to be material to its opinion. The
following is a summary of certain of these materials:
ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES. Dain Bosworth compared
Winthrop's financial information and recent prices of Winthrop Common Stock to
similar information for selected publicly traded leasing companies including:
Amplicon, Inc., Comdisco Inc., DVI Inc., Financial Federal Corporation, The
Finova Group Inc., Leasing Solutions Inc., ElectroRent Corporation, Rockford
Industries Inc., and TransLeasing International (the "Comparable Companies").
Dain Bosworth calculated valuation ratios based on published stock prices
for each of the Comparable Companies. The valuation ratios were based upon
several variables, including earnings for the latest twelve months ("LTM"),
earnings per share ("EPS") estimated for the current and next calendar years,
book value, and investment in leases. The estimates of EPS for the Comparable
Companies and Winthrop were based upon consensus earnings estimates obtained
from an independent reporting system that monitors estimates prepared by
research analysts from various investment firms.
Dain Bosworth compared the historical performance and expectations for the
Comparable Companies with the performance and management's expectations for
future profitability of Winthrop. Given Winthrop's historical financial
performance, Dain Bosworth concluded that Winthrop's valuation ratios should be
in the upper end of the range of valuation ratios for the Comparable Companies;
accordingly, Dain Bosworth computed the same valuation ratios for Winthrop
Common Stock based on (i) the closing sale price for Winthrop Common Stock on
February 7, 1997, five trading days prior to the announcement of the non-binding
Letter of Intent, and (ii) the consideration to be provided in the Merger based
on the closing price for TCF Common Stock on February 25, 1997, and compared
such ratios to the valuation ratios for the Comparable Companies. The following
table summarizes the results of this analysis:
<TABLE>
<CAPTION>
MULTIPLE FOR WINTHROP
COMMON STOCK BASED UPON:
--------------------------------
<S> <C> <C> <C>
MEDIAN FOR CLOSING PRICE
COMPARABLE FEBRUARY 7, MERGER
COMPANIES 1997 CONSIDERATION
--------------- --------------- ---------------
Valuation Variable:
Price / LTM EPS...................................................... 15.2x 17.3x 20.6x
Price / Calendar 1997 EPS estimate................................... 13.8 14.5 17.2
Price / Calendar 1998 EPS estimate................................... 12.0 12.2 14.5
Price / Book value................................................... 2.20 3.23 3.84
Enterprise value / Investment in leases.............................. 1.31 1.42 1.57
</TABLE>
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ANALYSIS OF SELECTED MERGER AND ACQUISITION TRANSACTIONS. Dain Bosworth
reviewed and summarized the terms of selected merger and acquisition
transactions it deemed to be relevant, including nine acquisitions of leasing
companies. Dain Bosworth concentrated on transactions that were announced after
January 1, 1996, and those for which relevant financial data was available.
For purposes of evaluating the Merger, valuation multiples were calculated
for each of the acquisitions based upon several variables, including net income,
book value, and investment in leases. These valuation multiples were then
compared to the valuation multiples implied in the Merger. The following table
summarizes the results of Dain Bosworth's analysis of selected merger and
acquisition transactions:
<TABLE>
<CAPTION>
VALUATION RATIO
-------------------------------------------
ENT. VALUE TO
PRICE TO PRICE TO INVESTMENT
NET INCOME BOOK VALUE IN LEASES
------------- ------------- -------------
<S> <C> <C> <C>
Selected acquisitions (median)............. 19.7x 1.78x 1.06x
Implied in the Merger...................... 20.6 3.84 1.57
</TABLE>
In addition to the valuation analyses described above, Dain Bosworth
performed an analysis of the premiums paid to prevailing market prices in the
comparable acquisitions. These premiums were then compared to the premiums
implied in the Merger. The following table summarizes the results of Dain
Bosworth's analysis of premiums paid:
<TABLE>
<CAPTION>
PREMIUM PAID TO PRICE
-------------------------------------
1 MONTH 1 WEEK 1 DAY
PRIOR TO PRIOR TO PRIOR TO
ANNC. ANNC. ANNC.
----------- ----------- -----------
<S> <C> <C> <C>
Selected acquisitions (median)..................... 42.3% 23.5% 31.2%
Implied in the Merger.............................. 21.7% 18.7% 5.0%
</TABLE>
DISCOUNTED CASH FLOW ANALYSIS. Dain Bosworth performed a discounted cash
flow analysis using financial projections through the year 2001 that was
prepared and provided by management of Winthrop. Dain Bosworth calculated ranges
of present values for Winthrop Common Stock using discount rates ranging from
13.0% to 19.0%. These discount rates were applied to projected dividends and
terminal values over various assumed holding periods. The terminal values were
estimated by using multiples ranging from 10.0 to 20.0 times estimated earnings
for each year. This range of multiples for estimated earnings was based upon
Winthrop's range of historical price/earnings multiples. Based on this analysis,
the computed range for the present value of Winthrop Common Stock was $19 to $50
per share.
PRO FORMA DILUTION ANALYSIS. Dain Bosworth analyzed certain projected
income statement data for Winthrop and TCF for calendar years 1997 and 1998 on a
pro forma combined basis. The pro forma combined projections were based upon the
stand-alone projections for both Winthrop and TCF, as well as certain synergy
and expense reduction assumptions. Winthrop's projections were supplied by
Winthrop management. Projections for TCF were based on published research
estimates and were discussed with TCF management. Based upon this analysis, Dain
Bosworth estimated that the Merger would result in dilution to earnings per
share of TCF Common Stock in 1997 and 1998 of approximately 3.7% and 1.1%,
respectively.
Dain Bosworth did not assign any particular weight to the individual
analyses described above, which represent a summary of the material analyses
performed by Dain Bosworth. Dain Bosworth's determination regarding the fairness
of the Merger is not based on a mathematical model but rather upon the entire
body of information obtained from such analyses and qualitative factors. In
connection with its opinion dated as of the date of this Joint Proxy
Statement/Prospectus, Dain Bosworth performed procedures to update certain of
its analyses conducted in connection with the February 26, 1997 opinion and
reviewed the assumptions on which such analyses were based and the factors
considered in connection therewith.
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For its services as financial advisor and for rendering its opinion to the
Winthrop Board of Directors in connection with the transaction contemplated by
the Merger Agreement, Winthrop has paid Dain Bosworth $300,000 and has also
agreed to pay Dain Bosworth an estimated $100,000 upon consummation of the
Merger for its role as financial advisor. In addition, Winthrop has agreed to
reimburse Dain Bosworth for its reasonable out-of-pocket expenses and to
indemnify Dain Bosworth against certain expenses and liabilities arising in
connection with its engagement, including liabilities under the Securities Act
and the Exchange Act.
Dain Bosworth was selected by Winthrop on the basis of its experience in
valuing securities in connection with mergers and acquisitions, knowledge of
Winthrop, and expertise in transactions in the financial services industry. Dain
Bosworth is a nationally recognized investment banking firm and is regularly
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. In the past, Dain Bosworth has provided investment
banking services to Winthrop and TCF and has received customary fees for the
rendering of such services. Dain Bosworth has from time to time issued research
reports and recommendations on Winthrop Common Stock and TCF Common Stock. In
the course of its trading activities, Dain Bosworth may, from time to time, have
a long or short position in, and buy and sell securities of, Winthrop and TCF.
EFFECTS OF THE MERGER
EFFECT ON HOLDERS OF WINTHROP'S COMMON STOCK AND OPTIONS. Upon consummation
of the Merger, (i) holders of Winthrop Common Stock shall be entitled to receive
a number of shares of TCF Common Stock in consideration for their shares of
Winthrop Common Stock based upon the Exchange Ratio and thereupon shall cease to
be stockholders of Winthrop, (ii) TCF shall assume the Winthrop Stock Option
Plan and all outstanding Options thereunder and, as a result, in accordance with
the terms of the Winthrop Stock Option Plan, holders of such Options shall be
entitled, upon exercise, to the number of shares of TCF Common Stock which such
Option holder would have been entitled to receive in the Merger if the Option
was exercised immediately prior to the Effective Time with the option exercise
price adjusted to reflect the Exchange Ratio. See "The Exchange Ratio--Treatment
of Stock Options Outstanding under the Winthrop Stock Option Plan."
EFFECT ON WINTHROP. Upon consummation of the Merger, the separate existence
and corporate organization of Winthrop will continue and it will retain its
name. As the Surviving Corporation of the Merger, Winthrop will retain all the
rights and property of Winthrop and will succeed to all of the rights and
property, if any, of the TCF subsidiary which will be merged into it. In
connection with the intended contribution of Winthrop to TCF Minnesota, Winthrop
may be required to dividend certain "low quality" assets, as defined pursuant to
Section 23A of the Federal Reserve Act, to TCF Financial and/or Winthrop may
elect to dividend certain additional assets to TCF Financial. The shares of
Winthrop will become 100% owned by TCF as a result of the Merger. Subject to
regulatory approval, TCF will contribute all of the stock of Winthrop to TCF
Minnesota after the Merger, such that Winthrop will be operated after the Merger
as a direct, wholly-owned subsidiary of TCF Minnesota. The members of the Board
of Directors of the Surviving Corporation at the Effective Time will be the
following individuals: John L. Morgan, Kirk A. MacKenzie, Jack A. Norqual,
William A. Cooper, Thomas A. Cusick, Lynn A. Nagorske, Ronald J. Palmer, and
Gregory J. Pulles. All other members of the current Board of Directors of
Winthrop will resign as of the Effective Time.
EFFECT ON EMPLOYEES OF WINTHROP. The officers of Winthrop will be unchanged
by the Merger, although their continuing service with Winthrop after the Merger
will be subject to the discretion and judgment of the new Board of Directors of
Winthrop. Upon consummation of the Merger, all employees of Winthrop will remain
employees of Winthrop, the Surviving Corporation. Following consummation of the
Merger, the Board of Winthrop may retain such of the employees of the Surviving
Corporation and its
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subsidiaries as it may decide in its sole discretion. Each employee of Winthrop
who remains an employee of the Surviving Corporation or its subsidiaries after
the Merger will be entitled to continue to participate in all employee plans
maintained by their employer prior to the Merger unless and until such plans are
merged, amended or discontinued. The Merger Agreement reflects the parties'
intention that Winthrop will retain its employee plans in effect for the benefit
of employees of Winthrop. Winthrop and TCF each reserves full authority to
amend, terminate, discontinue or otherwise revise their employee plans and/or to
adopt new plans from time to time subject solely to the discretion of their
respective Boards of Directors.
EFFECT ON WINTHROP SENIOR NOTE HOLDERS. The Senior Notes of Winthrop shall
continue to be an obligation of Winthrop as the Surviving Corporation after the
Merger. The Merger Agreement provides that TCF and/or Winthrop may solicit, at
TCF's expense, the consent of the Winthrop Senior Note holders to amend or
eliminate certain covenants contained in the Indenture relating to the Winthrop
Senior Notes, and that TCF will become a co-obligor of the Winthrop Senior
Notes, subject to approval by the Winthrop Senior Note holders of certain
modifications to the Indenture under which the Winthrop Senior Notes were
issued. TCF will solicit the consent of holders of the Winthrop Senior Notes to
a Supplemental Indenture which eliminates covenants from the Indenture, modifies
the Indenture in several significant respects, and provides that TCF will assume
and agree to be obligated to perform, jointly and severally with Winthrop, all
of Winthrop's obligations under the Indenture (as modified) and the Winthrop
Senior Notes upon consummation of the Merger. For a detailed discussion of these
proposed amendments to the Indenture, see discussion under "Description of
Winthrop Securities--Winthrop Senior Notes."
THE EXCHANGE RATIO
GENERAL. The Merger Agreement provides that at the Effective Time, all of
the issued and outstanding shares of Winthrop Common Stock (other than
dissenters' shares or shares held by TCF or any subsidiary thereof other than
shares held in a fiduciary capacity or in satisfaction of a debt) will be
cancelled and converted into the number of shares of TCF Common Stock (including
the associated preferred share purchase rights described in "Description of TCF
Capital Stock--TCF Common Stock-- Preferred Share Purchase Rights") determined
by multiplying the number of shares of such Winthrop Common Stock by the
Exchange Ratio, plus cash in lieu of any fractional shares of TCF Common Stock.
There can be no assurance that stockholders of Winthrop Common Stock will
receive a stated value in shares of TCF Common Stock for their shares of
Winthrop Common Stock because the market price of TCF Common Stock at the time
of the Merger may be less than it is currently and is subject to changes
thereafter. Winthrop's stockholders are urged to obtain current quotations for
shares of TCF Common Stock. See "Comparative Market Price Data." In the event
the Average TCF Stock Price is less than $42.30 per share on the Determination
Date, Winthrop may terminate the Merger Agreement. TCF may terminate the Merger
Agreement if the Average TCF Stock Price on the Determination Date is more than
$51.70 per share. Even if one of these conditions occurs, there can be no
assurance that TCF or Winthrop will exercise their right to terminate the Merger
Agreement; accordingly, even if one of these conditions occurs, the Merger may
still be consummated. Neither TCF nor Winthrop has made any determination
whether to terminate the Merger Agreement should these events occur.
If the Average TCF Stock Price is less than $42.30, then Winthrop has the
right to terminate the Merger Agreement and abandon the Merger. See "The
Merger--Termination and Amendment." In lieu of terminating the Merger Agreement
and abandoning the Merger, Winthrop could waive such termination right and
proceed with the Merger pursuant to the terms and conditions of the Merger
Agreement, or Winthrop could attempt to renegotiate the terms and conditions of
the Merger Agreement with TCF. Winthrop has not yet determined its course of
action in the event that the Average TCF Stock Price is less than $42.30.
Winthrop will make that determination when and if such occasion arises based on
the facts and circumstances existing at such time. By approving the Merger
Agreement and the Merger, Winthrop stockholders would be permitting the Winthrop
Board of Directors to determine, in the exercise of its fiduciary duties, to
proceed with the Merger even though the Average TCF Stock Price is less than
$42.30.
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Based on 8,600,300 shares of Winthrop Common Stock outstanding on May 20,
1997, TCF would have issued approximately 6,679,000 shares of TCF Common Stock
for all of the outstanding shares of Winthrop Common Stock at the Effective Time
of the Merger. Under such circumstances, immediately after the Effective Time
former Winthrop stockholders would hold approximately 16.1% of the outstanding
shares of TCF Common Stock as of May 20, 1997. The Merger Agreement also
provides that upon consummation of the Merger, the Winthrop Stock Option Plan,
and all Options thereunder which are outstanding at such time (whether or not
then exercisable), will be assumed by TCF in accordance with the terms of the
Winthrop Stock Option Plan. The Merger Agreement further provides that upon
exercise of an Option, holders will be entitled to receive the number of shares
of TCF Common Stock they would have received pursuant to the Merger if the
Option had been exercised immediately prior to the Merger at an exercise price
per share equal to the aggregate amount that would have been paid upon exercise
divided by the number of shares of TCF Common Stock that would have been
purchased. Based upon Options to purchase 449,500 shares outstanding on May 20,
1997, if the Merger had occurred on May 20, 1997 and all Option holders
exercised their Options, TCF would have issued 349,082 additional shares of TCF
Common Stock upon the exercise of those Options.
EFFECTIVE TIME OF THE MERGER. The Merger will be effective upon the filing
of the Articles of Merger with the Secretary of State of Minnesota. This filing
will occur only after the receipt of all requisite regulatory approvals, the
approval of the Merger Agreement and the Merger by the requisite vote of
Winthrop's stockholders, the approval of the Merger Agreement and Merger and the
issuance of TCF Common Stock pursuant thereto by the requisite vote of TCF
stockholders, and the satisfaction or waiver of all other conditions to the
Merger.
NO FRACTIONAL SHARES OF TCF COMMON STOCK TO BE ISSUED. No fractional shares
of TCF Common Stock will be issued in the Merger to Winthrop stockholders. Each
holder of Winthrop Common Stock who otherwise would have been entitled to a
fraction of a share of TCF Common Stock shall receive in lieu thereof, at the
time of surrender of the certificate or certificates representing such holder's
shares of Winthrop Common Stock, an amount of cash (without interest) determined
by multiplying the fractional share interest to which such holder would
otherwise be entitled by the closing price of TCF Common Stock on the Effective
Date.
MANNER OF EXCHANGING WINTHROP COMMON STOCK CERTIFICATES. As soon as
practicable after the Effective Time, each record holder of Winthrop Common
Stock immediately prior to the Effective Time will be advised of the
consummation of the Merger by letter accompanied by a letter of transmittal and
instructions advising such holders of the terms of the exchange and the
procedure for surrendering the certificate or certificates representing shares
of Winthrop Common Stock to an exchange agent duly appointed by TCF (the
"Exchange Agent"). CERTIFICATES FOR SHARES OF WINTHROP COMMON STOCK SHOULD NOT
BE FORWARDED TO THE EXCHANGE AGENT UNTIL AFTER RECEIPT OF THE LETTER OF
TRANSMITTAL FORM AND INSTRUCTIONS FROM THE EXCHANGE AGENT.
Until such surrender for shares of TCF Common Stock, the certificates for
shares of Winthrop Common Stock will represent ownership of the number of shares
of TCF Common Stock into which such shares were converted in the Merger, and the
holders will be entitled to all rights and privileges of holders of TCF Common
Stock, except that holders of certificates for Winthrop Common Stock will not be
entitled to receive dividends or any other distributions declared by TCF until
such certificates are so surrendered. Following surrender of the certificates
for Winthrop Common Stock and in accordance with the terms of the Merger
Agreement, the holders of newly-issued TCF Common Stock and certificates will be
paid, without interest, any dividends or other distributions with respect to
such shares of TCF Common Stock for any dividend record date which is after the
Effective Time (less any taxes that may have been imposed thereon).
After the Effective Time, holders of unsurrendered Winthrop Common Stock
certificates shall be entitled to vote at any meeting of TCF stockholders at
which holders of TCF Common Stock are eligible to
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vote, regardless of whether such holders have exchanged their certificates. Any
certificate representing shares of TCF Common Stock to be issued in a name other
than that in which the certificate surrendered is registered must be properly
endorsed and otherwise in proper form for transfer, and the holder requesting
such exchange must pay to the Exchange Agent in advance any transfer or other
taxes in connection therewith, if applicable.
After the Effective Time, there will be no further transfers on the records
of Winthrop of the certificates and, if such certificates are presented to TCF
for transfer, they will be cancelled against delivery of certificates for shares
of TCF Common Stock.
LOST CERTIFICATES. Any Winthrop stockholder who has lost, misplaced or
destroyed a certificate for any of his or her shares of Winthrop Common Stock
should immediately call Paul L. Gendler, General Counsel of Winthrop at (612)
912-5382 for information regarding the procedures to be followed for replacing
the lost certificate. Until a replacement certificate is obtained, the Winthrop
stockholder will be unable to properly submit the letter of transmittal.
TREATMENT OF STOCK OPTIONS OUTSTANDING UNDER THE WINTHROP STOCK OPTION
PLAN. Upon consummation of the Merger, TCF will assume the Winthrop Stock
Option Plan and all outstanding Options to purchase Winthrop Common Stock
granted pursuant to the Winthrop Stock Option Plan. Pursuant to the terms of
such plan, holders of such Options will be entitled, upon exercise, to receive
the number of shares of TCF Common Stock which such Option holder would have
been entitled to receive in the Merger if the Option was exercised immediately
prior to the Effective Time. The exercise price per share of TCF Common Stock
will be equal to the exercise price of the Option divided by the Exchange Ratio.
Thus, an Option for 5,000 shares of Winthrop Common Stock at an exercise price
of $9.75 per share would be converted into a right to receive 3,883 shares of
TCF Common Stock (5,000 shares multiplied by the Exchange Ratio) at an exercise
price of $12.555 per share of TCF Common Stock ($9.75 divided by the Exchange
Ratio). Under the Merger Agreement, Winthrop has agreed that the committee which
administers the Winthrop Stock Option Plan will not exercise its discretion to
permit holders of Winthrop Stock Options to receive a cash payment, in lieu of
stock, under that Plan.
CONDITIONS TO THE MERGER
Approval and adoption of the Merger Agreement and approval of the Merger by
the requisite vote of stockholders of Winthrop and of the Merger Agreement, the
Merger and the issuance of the shares of TCF Common Stock pursuant thereto by
the requisite vote of stockholders of TCF is a condition to consummation of the
Merger. Additional conditions to consummation of the Merger are set forth in the
Merger Agreement, a copy of which is attached to this Joint Proxy
Statement/Prospectus as Appendix A. Stockholders of Winthrop and stockholders of
TCF are encouraged to read the Merger Agreement in its entirety.
The Merger Agreement provides that consummation of the transactions
contemplated by the Merger Agreement is subject to the satisfaction of certain
conditions, or the waiver of such conditions by the party entitled to do so, at
or before the Effective Time. Each of the parties' obligations under the Merger
Agreement is subject to the following conditions: (i) all necessary regulatory
approvals of any governmental authority required to consummate the transactions
(including TCF's contribution of Winthrop to TCF Minnesota) contemplated by the
Merger Agreement shall have been received and all notice periods and waiting
periods with respect thereto shall have expired without any objections by any
applicable governmental authorities; (ii) no injunction or other order entered
by a state or federal court of competent jurisdiction shall have been issued and
remain in effect which would prohibit or make illegal the consummation of the
transactions contemplated by the Merger Agreement; (iii) there shall have been
no law, statute, rule or regulation, domestic or foreign, enacted or promulgated
which would prohibit or make illegal the consummation of the transactions
contemplated by the Merger Agreement; (iv) the Registration Statement (and the
Form S-3 registration statement for the registration by TCF of a supplemental
offering
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required to permit the Merger to be accounted for as a pooling of interests)
shall have been declared effective and shall not be subject to a stop order of
the Commission; if the offer and sale of TCF Common Stock in the Merger pursuant
to the Merger Agreement is required to be registered under the securities laws
of any state, the Registration Statement shall not be subject to a stop order of
the securities commission in such state; and TCF will have completed the sale of
shares of TCF Common Stock, if any, required to be sold under the Form S-3
registration statement in order for the Merger to be accounted for as a pooling
of interests; (v) TCF and Winthrop shall have received an opinion of KPMG Peat
Marwick LLP covering certain tax matters (see "--Certain Federal Income Tax
Consequences"); and (vi) TCF Common Stock to be issued to holders of Winthrop
Common Stock or issuable upon the exercise of the Options shall have been
approved for listing on the NYSE subject to official notice of issuance.
In addition to the foregoing conditions, TCF's obligations under the Merger
Agreement are conditioned upon (i) the accuracy in all material respects as of
both the date of the Merger Agreement and as of the Effective Time of the
representations and warranties of Winthrop set forth in the Merger Agreement,
except as to any representation or warranty which specifically relates to an
earlier date and except as otherwise contemplated by the Merger Agreement; (ii)
the performance by Winthrop in all material respects of each obligation and
agreement and compliance by Winthrop with each covenant to be performed or
complied with or by it under the Merger Agreement at or prior to the Effective
Time; (iii) the receipt of certain certificates from specified officers of
Winthrop with respect to compliance with certain of the conditions set forth in
the Merger Agreement; (iv) the receipt of certain legal opinions from Winthrop's
legal counsel; (v) the approval of the Merger Agreement, the Merger and the
issuance of TCF Common Stock in connection therewith, by the affirmative vote of
holders of the percentage of TCF Common Stock required for such approval under
the TCF Certificate and the TCF Bylaws, the DGCL and/or the rules of the NYSE;
(vi) the receipt by TCF of the letters relating to the sale of Winthrop or TCF
Common Stock, during certain periods before and after the Effective Time from
all executive officers and directors of Winthrop and all stockholders who are
affiliates of Winthrop (the "Affiliate Letters"); (vii) no event having occurred
which, in the reasonable opinion of TCF and concurred with by KPMG Peat Marwick
LLP, would prevent the Merger from being accounted for as a
pooling-of-interests, and the receipt by TCF from KPMG Peat Marwick LLP of an
opinion that the Merger will qualify as a pooling-of-interests for accounting
purposes; (viii) no action or proceeding before any court or governmental
authority or agency, domestic or foreign, being threatened, instituted or
pending (A) challenging or seeking to make illegal, or to delay or otherwise
directly or indirectly to restrain or prohibit, the consummation of the
transactions contemplated by the Merger Agreement or seeking to obtain material
damages in connection with the transactions contemplated thereby, (B) seeking to
prohibit direct or indirect ownership or operation by TCF of all or a material
portion of the business or assets of Winthrop or any of its subsidiaries or of
TCF or any of its subsidiaries, or to compel TCF or any of its subsidiaries or
Winthrop to dispose of all or a material portion of the business or assets of
TCF or any of its subsidiaries or of Winthrop or any of its subsidiaries, as a
result of the transactions contemplated by the Merger Agreement, or (C) seeking
to require direct or indirect divestiture by TCF of any material portion of its
business or assets or of Winthrop's business or assets; (ix) no action being
taken, or any statute, rule, regulation, judgment, order or injunction being
proposed, enacted, entered, enforced, promulgated, issued or deemed applicable
to the transactions contemplated by the Merger Agreement by any federal, state
or other court, government or governmental authority or agency, which could
reasonably be expected to result, directly or indirectly, in any of the
consequences referred to in clause (viii) of this paragraph; (x) since February
28, 1997, Winthrop not suffering or experiencing a material adverse effect (as
defined in the Merger Agreement); (xi) the receipt by TCF, within five days
prior to mailing the Joint Proxy Statement/Prospectus to the stockholders of
TCF, of an opinion from Piper Jaffray (or another investment banking firm
reasonably acceptable to TCF) to the effect that the Merger is fair from a
financial point of view to the holders of TCF Common Stock; (xii) the receipt by
TCF of signed Stockholder Agreements from and execution and delivery to TCF by
the Winthrop Founders and Mr. Murphy of the employment contract amendments
provided for pursuant to the Merger Agreement; and (xiii) dissenters' shares in
the
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merger not exceeding 10% of the outstanding shares of Winthrop Common Stock on
the Effective Date. Any of the foregoing conditions may be waived by TCF.
In addition to the conditions set forth above, Winthrop's obligation to
consummate the Merger is subject to satisfaction of the following conditions,
among others: (i) the accuracy in all material respects as of both the date of
the Merger Agreement and as of the Effective Time of the representations and
warranties of TCF set forth in the Merger Agreement, except as to any
representation or warranty which specifically relates to an earlier date and
except as otherwise contemplated by the Merger Agreement; (ii) the performance
by TCF in all material respects of each obligation and agreement and compliance
by TCF with each covenant to be performed or complied with or by it under the
Merger Agreement at or prior to the Effective Time; (iii) the receipt of certain
certificates from specified officers of TCF with respect to compliance with
certain of the conditions set forth in the Merger Agreement; (iv) the receipt of
certain legal opinions from Gregory J. Pulles, TCF's General Counsel; (v) the
approval of the Merger Agreement and the transactions contemplated thereby by
the affirmative vote of the holders of the percentage of Winthrop Common Stock
required for such approval under the provisions of the Winthrop Articles and
Bylaws and the MBCA; (vi) since February 28, 1997, TCF not suffering or
experiencing a material adverse effect (as defined in the Merger Agreement);
(vii) the receipt by Winthrop, within five days prior to mailing this Joint
Proxy Statement/Prospectus to the stockholders of Winthrop, of a written opinion
in a form reasonably acceptable to Winthrop from Dain Bosworth (or another
investment banking firm reasonably acceptable to Winthrop) to the effect that
the consideration to be delivered in the Merger is fair from a financial point
of view to the holders of Winthrop Common Stock; and (viii) the receipt by
Winthrop of the letters relating to the sale of Winthrop or TCF Common Stock,
during certain periods before and after the Effective Time, from all executive
officers and directors of TCF and all holders of TCF Common Stock who are
affiliates of TCF. Any of the foregoing conditions may be waived by Winthrop.
REGULATORY APPROVALS
Under the Merger Agreement, the obligations of both TCF and Winthrop to
consummate the Merger are conditioned upon the receipt of all required
regulatory approvals and the lapse of all required regulatory waiting periods.
There can be no assurance that any applicable regulatory authority will approve
or take other required action with respect to the Merger or as to the date of
such regulatory approval or other action. TCF and Winthrop are not aware of any
governmental approvals or actions that are required in order to consummate the
Merger except as described below. Should such other approval or action be
required, it is presently contemplated that TCF and Winthrop would seek such
approval or action. There can be no assurance as to whether or when any such
other approval or action, if required, could be obtained, or that such approval
or action, if obtained, would not delay the consummation of the Merger and would
not be conditioned in a manner that would cause TCF to abandon the Merger. In
the event the Merger is not consummated on or before August 1, 1997, the Merger
Agreement may be terminated by either TCF or Winthrop. See "--Termination and
Amendment."
In order to consummate the Merger, TCF must provide notice to and obtain
prior approval from the FRB under the BHCA and pursuant to the terms of
Regulation Y for the acquisition of a non-banking subsidiary and related
matters. TCF has provided such notice to the FRB on May 1, 1997. TCF must also
provide notice to the OCC concerning the ownership by TCF Minnesota of Winthrop
as an operating subsidiary. TCF provided the requisite notice to the OCC on
March 31, 1997. There can be no assurance that the FRB and the OCC will approve
the Merger or the contribution of Winthrop to TCF Minnesota or of the timing of
such approvals. Other applications that may be required under state securities
laws have been filed with the appropriate regulatory authorities. The Merger
will not be consummated unless and until all requisite regulatory approvals are
obtained. In addition, the Merger cannot be consummated prior to the expiration
of a fifteen-day waiting period following the date on which the FRB approves the
Merger.
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In approving the Merger and the contribution of Winthrop to TCF Minnesota
under the BHCA, the FRB will consider the effect of the Merger on the regulatory
capital of TCF and TCF Minnesota, the effect on operations, and how
closely-related the business activities of Winthrop are to those authorized for
banks and bank holding companies. In accepting notice of Winthrop as an
operating subsidiary of TCF Minnesota and related actions, the OCC may consider
the effect of the Merger (and the subsequent contribution of Winthrop to TCF
Minnesota) on the safety and soundness of TCF Minnesota, the planned operating
relationships between Winthrop and TCF Minnesota and the transfer of Winthrop by
TCF to TCF Minnesota.
HSR ACT. Under the HSR Act, certain acquisition transactions, including the
Merger, may not be consummated unless certain information has been furnished to
the FTC and the Antitrust Division, and certain waiting period requirements have
been satisfied. TCF has furnished such information in connection with its filing
of a notification with the FRB under Section 4 of the BHCA for acquisition of a
non-banking entity which would occur as a result of the Merger. The FRB has
advised TCF that there will be no waiting period under the HSR Act once FRB
approval of TCF's notification is given. No filings under the HSR Act by
Winthrop are required.
CERTAIN COVENANTS
Pursuant to the Merger Agreement, TCF and Winthrop have each agreed to take
certain actions between the date of the Merger Agreement and the Effective Time,
including the "--Limitation on Negotiations" set forth below. Stockholders of
TCF and Winthrop should consult the Merger Agreement, attached as Appendix A
hereto, to review these covenants in full.
TCF's covenants include, but are not limited to, the obligation to obtain
signed copies of all Affiliate Letters provided for under the Merger Agreement,
to register and complete a public offering of shares of TCF Common Stock in
order to allow the Merger to qualify as a pooling-of-interests and to obtain
issuance of a letter from KPMG Peat Marwick LLP that the Merger qualifies for
pooling-of-interests accounting treatment.
Winthrop's covenants include, but are not limited to, the obligation to
obtain signed copies of all Affiliate Letters and employment contract amendments
provided for under the Merger Agreement, and to obtain issuance of a letter from
KPMG Peat Marwick LLP, if required, that the Merger qualifies for
pooling-of-interests accounting treatment.
LIMITATION ON NEGOTIATIONS
The Merger Agreement provides that Winthrop will not, and will use its best
efforts to cause its officers, directors, employees, agents and affiliates not
to, directly or indirectly, solicit, authorize, initiate or encourage submission
of, any proposal, offer, tender offer or exchange offer from any person or
entity (including any of its or their officers or employees) relating to any
liquidation, dissolution, recapitalization, merger, consolidation or acquisition
or purchase of all or a material portion of the assets or deposits of, or any
equity interest in Winthrop or other similar transaction or business combination
involving Winthrop (the "Acquisition Proposal"). Unless the Board of Directors
of Winthrop shall have determined, after consultation with its legal counsel,
that there is a reasonable likelihood that the Board of Directors has a
fiduciary duty to do so, the Merger Agreement provides that Winthrop will not
(i) participate in any negotiations in connection with or in furtherance of any
of the foregoing or (ii) permit any person other than TCF and its
representatives to have any access to the facilities of, or furnish to any
person other than TCF and its representatives any non-public information with
respect to, Winthrop in connection with or in furtherance of any of the
foregoing. Winthrop is also required to notify TCF if any such proposal or
offer, or any inquiry from or contact with any person with respect thereto, is
made, and to provide TCF with such information regarding such proposal, offer,
inquiry or contact as TCF may request.
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TERMINATION AND AMENDMENT
The Merger Agreement may be terminated at any time on or prior to the
Effective Time by: (i) mutual consent of TCF and Winthrop approved by a vote of
a majority of the members of their respective entire Boards of Directors; (ii)
either TCF or Winthrop, if any of the conditions to such party's obligation to
consummate the transactions contemplated in the Merger Agreement have become
impossible to satisfy; (iii) either TCF or Winthrop, if the Merger Agreement is
not duly approved by the stockholders of each of TCF or Winthrop: (iv) either
TCF or Winthrop if the Effective Time is not on or before August 1, 1997 (unless
the failure to consummate the Merger by such date shall be due to the action or
failure to act of the party seeking to terminate the Merger Agreement in breach
of such party's obligations thereunder); (v) Winthrop if the Average TCF Stock
Price on the Determination Date is less than $42.30 per share; (vi) TCF if the
Average TCF Stock Price on the Determination Date is greater than $51.70 per
share; (vii) Winthrop if any person (other than TCF or any affiliate of TCF)
shall have commenced a bona fide tender offer for all outstanding shares of
Winthrop Common Stock or any person shall have made a bona fide written offer
involving a merger or consolidation of Winthrop or the acquisition of all or
substantially all of its assets or capital stock, and Winthrop's Board of
Directors determines, in its good faith judgement, after consultation with
Winthrop's independent financial advisors, that such offer is more favorable to
Winthrop's stockholders when compared to the Merger and that such Board's
failure to recommend such offer or accept such proposal would likely result in a
breach of the directors' fiduciary or legal duties subject to the expiration of
five business days after written notice of any such offer or proposal has been
delivered to TCF (the "Fiduciary Termination"); (viii) TCF if, after February
28, 1997, any person shall have commenced a bona fide tender offer or exchange
offer to acquire at least 25% of the then outstanding shares of Winthrop Common
Stock, and thereafter the Board of Directors of Winthrop shall have withdrawn,
or materially adversely modified or changed its recommendation of the Merger
Agreement or the Merger (the "Tender Offer Termination"); (ix) either TCF or
Winthrop, if the other party commits a willful breach which is not cured within
ten days after receipt by the breaching party of written demand for cure by the
non-breaching party (a "Willful Breach Termination"); or (x) TCF or Winthrop,
within 20 days after receipt of a supplement or amendment to the disclosure
schedules included with the Merger Agreement, if such supplement or amendment,
together with any other supplements or amendments to the disclosure schedules
previously provided to the non-disclosing party, indicate that the disclosing
party has suffered or is reasonably likely to suffer a material adverse effect
which either has not or cannot be cured within 30 days after disclosure to the
receiving party. Any party desiring to terminate the Merger Agreement is
required to give written notice of such termination and the reasons therefor to
the other party.
To the extent permitted under applicable law, the Merger Agreement may be
amended or supplemented at any time by written agreement of the parties whether
before or after the Special Meetings. Such amendment or supplement may be made
without further approval of TCF's and Winthrop's respective stockholders.
TERMINATION FEES
The Merger Agreement provides that either Winthrop or TCF shall pay the
other a termination fee if the Merger Agreement is terminated in certain events.
Winthrop shall pay TCF the sum of $12.5 million if the Merger Agreement is
terminated by Winthrop pursuant to the Fiduciary Termination. See "--Limitations
on Negotiations." Winthrop shall pay TCF the sum of $1 million in the event
termination results from any of the following: (i) termination is by Winthrop as
a result of failure to obtain approval for the Merger by its own stockholders or
failure to obtain the required fairness opinion; (ii) termination is by TCF as a
result of failure of Winthrop's officers to certify, to their best knowledge,
that Winthrop's representations are true and correct, except where the failure
to be true and correct would not have, or would not reasonably be expected to
have, a material adverse effect on Winthrop, that all covenants of Winthrop
under the Merger Agreement have been materially complied with, and that the
resolutions of the
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Winthrop Board approving the Merger have not been modified or rescinded; or
(iii) termination is by TCF if there is a Tender Offer Termination or a Willful
Breach Termination. If the Merger Agreement is terminated for any of the reasons
set forth in the preceding sentence, an additional payment of $11.5 million will
be made from Winthrop to TCF if (i) Winthrop receives an Acquisition Proposal
during the period after February 28, 1997 and before the Merger Agreement is
terminated and (ii) Winthrop enters into a definitive merger acquisition
agreement with that third party (or its affiliate) within twelve months after
the Merger Agreement is terminated.
Under the Merger Agreement, TCF has agreed to pay Winthrop a termination fee
of $1.0 million if the Merger Agreement is terminated: (i) by Winthrop due to
the failure of TCF's officers to certify, to their best knowledge, that TCF's
representations are true and correct except where a failure to be true and
correct would not have, or would not reasonably be expected to have a material
adverse effect on TCF, that all covenants of TCF under the Merger Agreement have
been materially complied with, and that the resolutions of the TCF Board
approving the Merger and issuance of shares have not been modified or rescinded;
(ii) by TCF due to the failure of TCF to obtain a fairness opinion; (iii) by TCF
if the Merger Agreement is not approved by stockholders of TCF or Winthrop; (iv)
by Winthrop if there is a Willful Breach Termination; or (v) by Winthrop if the
Board of Directors of TCF fails to recommend approval of the Merger Agreement,
or withdraws or adversely modifies its recommendation of the Merger Agreement.
The termination payments provided for in the Merger Agreement, if accepted
by the party to whom they are payable, are in lieu of any other damages or
remedies the party may otherwise have. If the party entitled to a termination
payment does not accept it, the Merger Agreement provides for injunctive relief
and for specific enforcement of the terms of the Merger Agreement and for the
payment of consequential and incidental damages, in the case of a willful
breach.
BUSINESS PENDING THE MERGER
The Merger Agreement provides that from the date of the Merger Agreement to
the Effective Time of the Merger, except as otherwise permitted by the Merger
Agreement or agreed to by TCF, the business of Winthrop will be conducted only
in the ordinary course, on an arms'-length basis and in accordance in all
material respects with past practices and applicable laws, rules and regulations
and with prudent leasing practices. In addition, the Merger Agreement provides
that during such period, except as otherwise permitted by the Merger Agreement
or agreed to by TCF, Winthrop shall not, directly or indirectly:
(i) (A) amend or propose to amend its Articles or Bylaws; (B) issue or sell
any of its equity securities, securities convertible into or exchangeable for
its equity securities, warrants, options or other rights to acquire its equity
securities, or any bonds or other securities, except pursuant to the exercise of
Options outstanding as of February 28, 1997; (C) redeem, purchase, acquire or
offer to acquire, directly or indirectly, any shares of Winthrop capital stock
or other securities of Winthrop, except pursuant to the agreements, arrangements
or commitments disclosed in the Merger Agreement; (D) split, combine or
reclassify any outstanding shares of Winthrop capital stock or declare, set
aside or pay any dividend or other distribution payable in cash, stock, property
or otherwise with respect to shares of capital stock of Winthrop except the
regular quarterly cash dividends on Winthrop Common Stock not to exceed $.05 per
share subject to declaration by the Winthrop Board of Directors payable on or
about July 1, 1997 to stockholders of record as of June 15, 1997; (E) borrow any
amount or incur or become subject to any material liability, except borrowings
and liabilities incurred in the ordinary course of business; (F) discharge or
satisfy any material lien or encumbrance on the properties or assets of Winthrop
or pay any material liability, except in the ordinary course of business; (G)
sell, assign, transfer, mortgage, pledge or subject to any lien or other
encumbrance any of its assets with an aggregate market value in excess of
$100,000, except (1) in the ordinary course of business; (2) liens and
encumbrances for current property taxes not yet due and payable; and (3) liens
and encumbrances which do not materially affect the value of, or interfere with
the current use or ability to convey, the property subject thereto or affected
thereby; (H) cancel any material lease, debt or claims or waive any rights of
material value, except in the ordinary
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course of business or upon payment in full; (I) acquire (by merger, exchange,
consolidation, acquisition of stock or assets or otherwise) any corporation,
partnership, joint venture or other business organization or division or
material assets thereof, or assets or deposits that are material to Winthrop,
except in exchange for debt previously contracted; (J) other than as disclosed
on a Schedule to the Merger Agreement, make any single or group of related
capital expenditures or commitments therefor in excess of $100,000 (other than
pursuant to binding commitments existing on February 28, 1997 and other than
expenditures necessary to maintain assets in good repair) or enter into any
lease or group of leases as lessee with the same party which involves aggregate
lease payments payable of more than $100,000 for any individual lease or
involves more than $100,000 for any group of leases with the same party in the
aggregate; (K) other than as disclosed on a Schedule to the Merger Agreement,
commit to enter into any lease or contemporaneously enter into a group of lease
schedules with the same party which involves aggregate monthly lease charges (as
defined in such lease or lease schedules) payable during the term of the lease
of more than $10 million without the prior consultation with TCF's Chief
Financial Officer; (L) enter into or propose to enter into, or modify or propose
to modify, any agreement, arrangement, or understanding with respect to any of
the matters set forth in this clause (i) except in the ordinary course of
business; (M) without prior consultation with TCF, purchase or otherwise acquire
any investments, direct or indirect, in any derivative securities other than
occasional overnight investments of excess cash; or (N) without prior
consultation with TCF, enter into any interest rate swap, floor and option
agreements or other similar interest rate management agreements;
(ii) enter into, modify or terminate any employment, severance or similar
agreements or arrangements with, or grant any bonuses, wage, salary or
compensation increases, or severance or termination pay to, or promote, any
director, officer, employee, group of employees or consultant or hire any
employee with an annual salary over $100,000, other than (A) in the ordinary
course of business and in a manner consistent with past practices or (B) as
contemplated in the Merger Agreement, and promptly notify TCF of any termination
or resignation of any officer or key employee of Winthrop;
(iii) adopt or amend any profit sharing, stock option, pension, retirement,
deferred compensation, or other employee benefit plan, trust, fund, contract or
arrangement for the benefit or welfare of any employees, except as required by
law or grant any stock option except as described on a Schedule to the Merger
Agreement;
(iv) fail to use reasonable efforts to cause its current insurance policies
not to be canceled or terminated or any of the coverage thereunder to lapse,
unless simultaneously with such termination, cancellation or lapse, replacement
policies providing coverage substantially equal to the coverage under the
canceled, terminated or lapsed policies are in full force and effect;
(v) enter into any settlement or similar agreement with respect to, or take
any other significant action with respect to the conduct of, any action, suit,
proceeding, order or investigation which is required to be disclosed in a
Schedule to the Merger Agreement or to which Winthrop becomes a party after
February 28, 1997 which is required to be disclosed in a Schedule to the Merger
Agreement, without prior consultation with TCF's General Counsel;
(vi) fail to use commercially reasonable efforts to preserve intact in all
material respects the business organization and the goodwill of Winthrop and to
keep available the services of its officers and employees as a group and
preserve intact material agreements, or to establish a committee of senior
management personnel which will confer on a regular and frequent basis with a
committee of senior management personnel of TCF, as reasonably requested by TCF,
to report on operational matters and the general status of ongoing operations
and to plan for the operations of the Surviving Corporation upon consummation of
the Merger;
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(vii) take any significant action with respect to any of the leases
inconsistent with Winthrop's past practices or then current prudent practices,
materially alter its leasing portfolio or, without prior consultation with TCF,
voluntarily take any action that will have or can reasonably be expected to have
a material adverse effect on the leases or licenses of Winthrop;
(viii) with respect to real properties leased by Winthrop and any material
personal property leased or licensed by Winthrop for its use, renew, exercise an
option to extend, cancel or surrender any such lease or license or allow it to
lapse, without prior consultation with TCF; or
(ix) agree to any action prohibited by the foregoing.
Notwithstanding the forgoing, Winthrop can take any otherwise prohibited
action if it is expressly required to do so by law and Winthrop promptly informs
TCF of the action.
In addition, under the terms of the Merger Agreement, TCF has also agreed
not to take certain actions without the prior written consent of Winthrop,
including, among other things, the following: (i) issue or sell any equity
securities, securities convertible into or exchangeable for its equity
securities, warrants, options or other rights to acquire its equity securities,
or any bonds or other securities except (A) pursuant to the exercise of options
or warrants or the conversion of convertible securities set forth on a Schedule
to the Merger Agreement and pursuant to the exercise of options granted pursuant
to clause (C) below; (B) issuances of TCF Common Stock to satisfy the employer
matching obligation under TCF's 401(k) Plan for the participants in such plan
who elect to invest in TCF Common Stock; (C) grants of options and restricted
stock under the TCF Financial 1995 Incentive Stock Program in the ordinary
course of business; (D) pursuant to TCF's dividend reinvestment plan; or (E)
issuance of shares of TCF Common Stock to satisfy the "tainted shares"
requirement to have the Merger treated as a pooling of interests for accounting
purposes; (ii) redeem, purchase, acquire or offer to acquire, directly or
indirectly, any shares of capital stock of TCF or other securities of TCF,
except pursuant to an agreement arrangement or commitment identified on a
Schedule to the Merger Agreement and except with respect to the redemption of
redeemable debt, including but not limited to, outstanding convertible
debentures; (iii) split, combine or reclassify any outstanding shares of capital
stock of TCF or declare, set aside, make or pay any dividend or distribution
(whether in cash, stock, or property or otherwise) with respect to shares of TCF
capital stock other than regular quarterly cash dividends which are not in
excess of $.32 per share; (iv) borrow any amount or incur or become subject to
any material liability, except borrowings and liabilities incurred in the
ordinary course of business or borrowing to redeem outstanding debentures; (v)
amend the TCF Certificate or Bylaws (or those of a TCF subsidiary) in a manner
which would adversely affect in any manner the terms of the TCF Common Stock or
the ability of TCF to consummate the transactions contemplated by the Merger
Agreement in a timely manner; (vi) make any acquisition (including acquisitions
of branch offices and related deposit liabilities), or cause a TCF subsidiary
to, or take any other action that individually or in the aggregate would
adversely affect the ability of TCF or its wholly-owned subsidiaries to
consummate the transactions contemplated by the Merger Agreement in a timely
manner; or (vii) agree to do any of the foregoing things.
TCF has entered into a definitive agreement to acquire Standard. TCF and
Winthrop have agreed that the foregoing restrictions on actions by TCF do not
apply to TCF's acquisition of Standard pursuant to the terms of the Standard
Merger Agreement as currently in effect. See "Recent Developments-- Standard."
Furthermore, TCF and Winthrop have agreed to provide the other party and its
representatives with such financial data and other information with respect to
its business and properties as such party shall from time to time reasonably
request. Each party will cause all non-public financial and business information
obtained by it from the other to be treated confidentially. If the Merger is not
consummated, each party will return to the other all non-public financial
statements, documents and other materials previously furnished by such party.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the Winthrop Board of Directors and management may be
deemed to have certain interests in the Merger in addition to their interests as
stockholders of Winthrop generally. The Merger Agreement provides that, as of
the Effective Time, TCF will elect one member of the current Board of Directors
of Winthrop, currently expected to be John L. Morgan, who is the President of
Winthrop, as a director of TCF. Mr. Morgan, or any current Winthrop director who
serves on the Board of TCF, will not receive any fees for services rendered as a
TCF director at any time that he or such person is also employed by Winthrop or
any TCF affiliate. The directors of Winthrop as the Surviving Corporation will
include the Winthrop Founders. These members of the Board of Directors of the
Surviving Corporation will not receive any fees for services rendered as
directors during any time that they are also employees of Winthrop or any TCF
affiliate.
Winthrop has existing employment agreements (the "Employment Agreements")
with four senior officers of Winthrop: the three Winthrop Founders and Mr.
Robert P. Murphy. The Employment Agreements are for terms of two years each and
renew automatically for additional two-year terms at the end of the initial
two-year term unless either party elects not to renew. The Employment Agreements
are terminable at will by either party on 75-days' advance notice and provide
for one year of severance compensation in the event of a termination of
employment without cause or a termination by the executive for "good reason."
"Good reason" is defined to include forced diminution of status or
responsibilities or forced relocation of office by more than 20 miles, unless it
is part of a general office relocation. In the event of termination of
employment without cause of these executives after the Merger by TCF (or in the
event of their departure for "good reason"), the executives would be paid their
base salary of their usual rate, plus any applicable bonuses, for a one year
period following the date of termination. The Employment Agreements contain
certain non-competition covenants which are in effect for a period of two years
after a termination of employment, except in the case of Mr. Murphy, whose
non-competition covenant is in effect for a period of one year following
termination of employment.
In connection with the Merger Agreement, each of the Winthrop Founders has
agreed to execute amendments to the Employment Agreements to be effective upon
the Effective Date and pursuant to which the following changes would be made:
(i) the terms of the Employment Agreements would be extended to three years each
starting January 1, 1997; (ii) at the end of the three-year term, on January 1,
2000, the employment term would automatically be extended by one year each year
unless either the executive or Winthrop provided notice that the Employment
Agreement would not be renewed no later than June 1 of the year preceding the
expiration of the term; (iii) the executive agrees for three years after
termination of employment not to solicit any employees or former employees of
Winthrop; (iv) the executive shall no longer have the right to terminate the
Employment Agreement in the absence of a "good reason," and "good reason" is
redefined to include only the failure by Winthrop to pay amounts due under the
Employment Agreement as amended; (v) Winthrop shall retain the authority to
terminate the employment of the executive without cause; and (vi) in the event
of termination of the executive's employment without cause or for "good reason,"
the executive will receive his base salary and bonus due under the Employment
Agreement to the end of its term (subject to reduction by the "Committee" under
the Agreement in the event the executive is determined in good faith by the
Committee to be in violation of his non-competition, non-solicitation,
confidentiality or other ongoing obligations under the Employment Agreement). In
addition, Mr. Murphy has agreed to execute an amendment to his Employment
Agreement which provides that any increases in base salary and bonus under his
Agreement after December 31, 1998 will be the subject of good faith negotiation
and will be consistent with prior practices between Mr. Murphy and Winthrop and
that negotiations concerning such increases will commence no later than
September 1, 1998 and conclude no later than October 15, 1998. Amendments to the
Employment Agreements providing as described above will be executed by the
Winthrop Founders and Mr. Murphy and delivered to TCF prior to the Effective
Time. Promptly after the Effective Time the
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Employment Agreements will be signed by Winthrop and executed copies will be
delivered to the Winthrop Founders and Mr. Murphy.
The Merger Agreement also provides that from and after the Effective Time,
TCF will indemnify Winthrop's directors, officers, employees and agents from and
against any and all claims arising out of or in connection with activities in
such capacity prior to the Effective Time to the fullest extent permitted under
the TCF Certificate and Bylaws and applicable Delaware law. In addition, TCF has
agreed to cause the Surviving Corporation to maintain in effect, for a period of
three years after the Effective Time, directors' and officers' liability
insurance comparable to that maintained by Winthrop as of the date of the Merger
Agreement for acts or omissions prior to the Merger. Certain of Winthrop
employee benefit plans provide for indemnification and/or liability insurance
coverage for any individual serving as a fiduciary with respect to such plans.
Such indemnification or liability insurance will be continued by TCF.
In addition to the foregoing, each of the Winthrop Founders has entered into
a Stockholder Agreement pursuant to which he is provided with certain rights of
indemnification and other rights. See "--Stockholder and Affiliate Letter
Agreements."
RESALE CONSIDERATIONS WITH RESPECT TO THE TCF COMMON STOCK
The shares of TCF Common Stock to be issued to stockholders of Winthrop upon
consummation of the Merger have been registered under the Securities Act and
will be freely transferable by those stockholders who are not deemed to be
"affiliates" of Winthrop or TCF, as that term is defined in the rules and
regulations under the Securities Act.
Shares of TCF Common Stock received by those stockholders of Winthrop who
are deemed to be "affiliates" of Winthrop at the time of the Winthrop Special
Meeting may be resold without registration under the Securities Act only as
permitted by Rule 145 under the Securities Act or as otherwise permitted under
the Securities Act.
In addition, pursuant to the Merger Agreement, and in order to ensure that
the Merger will be accounted for under the pooling-of-interests method under
generally accepted accounting principles, each affiliate of Winthrop and TCF,
including the respective directors and executive officers of Winthrop and TCF,
have submitted a letter to TCF and Winthrop agreeing not to sell, pledge,
transfer or otherwise dispose of the shares of TCF Common Stock or Winthrop
Common Stock owned during the period commencing 30 business days prior to the
Effective Time and continuing to the date on which at least 30 days of
post-Merger combined operations of TCF and Winthrop have been published either
by issuance of a quarterly earnings report on Form 10-Q or other public issuance
(such as a press release) which includes such information. Winthrop's transfer
agent has been given an appropriate stop transfer order with respect to shares
of Winthrop Common Stock owned by affiliates of Winthrop or TCF. TCF's transfer
agent has been given an appropriate stop transfer order with respect to shares
of TCF Common Stock owned by affiliates of Winthrop or TCF. For information
concerning additional resale restrictions which are applicable to the directors
of both TCF and Winthrop until the TCF Special Meeting and Winthrop Special
Meeting, see "--Stockholder and Affiliate Letter Agreements."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to be a tax-free reorganization under Section 368(a)
of the Code. The following summary covers only the principal terms of the
opinion KPMG Peat Marwick LLP has given to TCF and Winthrop and is qualified in
its entirety by the full text of the opinion, including certain facts,
representations, and assumptions described therein. This summary should not be
relied upon without first consulting the full text of the opinion, which has
been filed as an exhibit to this Joint Proxy Statement/ Prospectus. The summary
does not discuss all potentially relevant federal income tax matters or
consequences to any stockholders subject to special treatment.
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The Merger will constitute a reorganization as defined in Sections
368(a)(1)(A) and 368 (a)(2)(E) of the Code. TCF and Winthrop will each be a
"party to a reorganization" within the meaning of Section 368(b) of the Code. In
general, no gain or loss will be recognized by TCF or Winthrop as a result of
the Merger. No gain or loss will be recognized by stockholders of Winthrop upon
the exchange of their Winthrop Common Stock solely for shares of TCF Common
Stock pursuant to the Merger (except in connection with the receipt of cash in
lieu of any fractional shares). The basis of the TCF Common Stock to be received
by a Winthrop stockholder receiving solely TCF Common Stock (including any
fractional share interest to which they may be entitled) will be the same as his
or her basis in the Winthrop Common Stock surrendered in exchange therefor. The
holding period of the shares of TCF Common Stock to be received by a Winthrop
stockholder receiving solely TCF Common Stock (including any fractional share
interest to which they may be entitled) will include the period during which
such Winthrop stockholder held the Winthrop Common Stock surrendered in exchange
therefor, provided the surrendered Winthrop Common Stock was held by such
stockholder as a capital asset on the date of the Merger.
Stockholders of Winthrop will receive cash in lieu of fractional shares of
TCF Common Stock and such fractional share interests will be treated as if the
stockholders actually received the fractional shares from TCF and then TCF
redeemed them for cash. Such cash payments will be treated by the former
Winthrop stockholders as having been received as full payment in exchange for
the fractional share interests so redeemed. Gain or loss will be realized and
recognized by each such Winthrop stockholder equal to the difference between the
amount of cash received for the fractional share and the tax basis of the
fractional share interest. If the fractional share is a capital asset in the
hands of a Winthrop stockholder, then the gain or loss recognized will
constitute a capital gain or loss.
No income, gain or loss shall be recognized by TCF Financial, Winthrop or
the Winthrop Stockholders if, as intended, Winthrop, as the Surviving
Corporation following the Merger, is contributed to TCF Minnesota.
The opinion of KPMG Peat Marwick LLP is based on certain stated facts and
representations of TCF and Winthrop which have not been independently verified
by KPMG Peat Marwick LLP. Further, such opinion is based on relevant provisions
of the Code, the regulations thereunder, and judicial and administrative
interpretations thereof, all of which are subject to change by subsequent
legislative, regulatory, administrative or judicial decisions.
The opinion of KPMG Peat Marwick LLP represents an expression of KPMG Peat
Marwick LLP's professional judgment regarding the subject matter of the opinion
and, unlike a private letter ruling issued by the Internal Revenue Service, is
not binding upon the Internal Revenue Service and has no official status of any
kind; no assurance or guarantee can be given that the Internal Revenue Service
will not take a position contrary to any opinion expressed by KPMG Peat Marwick
LLP or that, if the Internal Revenue Service took such a position, it would not
be sustained by the courts.
THE PRECEDING DISCUSSION SUMMARIZES FOR GENERAL INFORMATION PURPOSES THE
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO WINTHROP STOCKHOLDERS.
THE TAX CONSEQUENCES TO ANY PARTICULAR STOCKHOLDER MAY DEPEND ON THE
STOCKHOLDER'S INDIVIDUAL CIRCUMSTANCES. EACH WINTHROP STOCKHOLDER IS URGED TO
CONSULT WITH A TAX ADVISOR IN ORDER TO DETERMINE THE SPECIFIC TAX CONSEQUENCES
TO THE STOCKHOLDER AS A RESULT OF THE MERGER, INCLUDING FEDERAL, FOREIGN, STATE,
AND LOCAL TAX CONSEQUENCES. THIS DISCUSSION DOES NOT INCLUDE THE TAX
CONSEQUENCES THAT MAY RESULT FROM ANY FOREIGN, STATE, LOCAL, OR OTHER TAX LAW.
ACCOUNTING TREATMENT OF THE MERGER
Consummation of the Merger is conditioned upon the Merger being accounted
for as a pooling of interests and the receipt, if required, by TCF of an opinion
to such effect from KPMG Peat Marwick LLP,
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TCF's independent public accountants. Under the pooling-of-interests method of
accounting, the historical cost basis of the assets and liabilities of TCF and
Winthrop will be carried forward at their previously recorded amounts, and the
stockholders' equity accounts of TCF and Winthrop will be combined on TCF's
consolidated balance sheet. Revenues and expenses will be restated retroactively
to reflect the consolidated operations of TCF and Winthrop as if the Merger had
taken place prior to the periods covered by such financial statements.
For information concerning certain restrictions on the transferability of
Winthrop Common Stock and TCF Common Stock owned by affiliates of Winthrop or
TCF in order to, among other things, ensure pooling-of-interests accounting
treatment, see "--Resale Considerations With Respect to the TCF Common Stock."
DISSENTERS' RIGHTS--WINTHROP
The following discussion is not a complete statement of the law applicable
to Winthrop pertaining to dissenters' rights under the MBCA and is qualified in
its entirety by reference to the full text of Sections 302A.471 and 302A.473 of
the MBCA attached to this Joint Proxy Statement/Prospectus as Appendix D. Any
stockholder of Winthrop who wishes to exercise such dissenters' rights or who
wishes to preserve his or her right to do so should review the following
discussion and Appendix D carefully because failure to timely and properly
comply with the procedures specified will result in the loss of dissenters'
rights under the MBCA. TCF stockholders are not entitled to dissenters' rights
in connection with the Merger.
PROCEDURE TO PRESERVE DISSENTERS' RIGHTS. Under Minnesota law, any Winthrop
stockholder who follows the procedures set forth in Section 302A.473 of the MBCA
will be entitled to receive payment in cash of the "fair value" of such
stockholder's shares.
Under Section 302A.473 of the MBCA, if a corporation calls a stockholder
meeting at which a plan of merger to which such corporation is a party is to be
voted upon, the notice of the meeting must inform each stockholder of the right
to dissent and must include a copy of Section 302A.471 and Section 302A.473 of
the MBCA and a brief description of the procedure to be followed under such
sections. This Joint Proxy Statement/Prospectus constitutes such notice to the
stockholders of Winthrop and the applicable statutory provisions of the MBCA are
attached to this Proxy Statement/Prospectus as Appendix D.
The Merger Agreement must be approved by the holders of a majority of the
outstanding shares of Winthrop Common Stock. A stockholder who wishes to
exercise dissenters' rights must file with Winthrop before the vote on the
Merger Agreement a written notice of intent to demand the fair value of the
shares owned by such dissenting stockholder and must not vote his shares in
favor of the Merger Agreement.
As used in this Section regarding dissenters' rights, the "fair value" of
dissenting shares means the value of the shares of the corporation immediately
before the Effective Date of the Merger.
After the proposed Merger Agreement has been approved by the stockholders of
Winthrop, Winthrop must send a written notice to its stockholders who have not
voted their shares in favor of the Merger Agreement and who have filed with
Winthrop, before the vote on the Merger Agreement, a written notice of intent to
demand the fair value of the shares owned by such stockholder. The notice from
Winthrop must contain:
(1) The address to which a demand for payment and stock certificates
must be sent in order to obtain payment and the date by which they must be
received;
(2) A form to be used to certify the date on which the stockholder, or
the beneficial owner on whose behalf the stockholder dissents, acquired the
shares or an interest in them and to demand payment; and
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(3) A copy of Sections 302A.471 and 302A.473 and a brief description of
the procedures to be followed under such sections.
In order to receive the fair value of the dissenting shares, a dissenting
stockholder must demand payment and deposit his shares with Winthrop within 30
days after the notice was given, but the dissenter retains all other rights of a
stockholder until the Merger takes effect.
A Winthrop stockholder may not assert dissenters' rights as to less than all
of the shares of Winthrop Common Stock registered in the name of such
stockholder, unless the stockholder dissents with respect to all the shares that
are beneficially owned by another person but registered in the name of the
stockholder and discloses the name and address of each beneficial owner on whose
behalf the stockholder dissents. In that event, the rights of the dissenter will
be determined as if the shares as to which the stockholder has dissented and the
other shares were registered in the names of different stockholders.
A beneficial owner of shares who is not the stockholder may assert
dissenters' rights with respect to shares held on behalf of such beneficial
owner, and will be treated as a dissenting stockholder under the terms of
Sections 302A.471 and 302A.473, if the beneficial owner submits written consent
of the stockholder holding such beneficial owner's shares to Winthrop at the
time of or before the assertion of dissenters' rights.
PROCEDURES FOLLOWING AN ASSERTION OF DISSENTERS' RIGHTS. After the Merger
takes effect, or after Winthrop receives a valid demand for payment, whichever
is later, Winthrop must remit to each dissenting stockholder who has not voted
his shares in favor of the Merger Agreement and has filed with Winthrop before
the vote on the Merger Agreement a written notice of intent to demand the fair
value of the shares owned by such stockholder, the amount Winthrop estimates to
be the fair value of the shares, plus interest ("interest" commences five days
after the Effective Date of the Merger up to and including the date of payment,
calculated at a rate provided under Minnesota law for interest on verdicts and
judgments), accompanied by:
(1) Winthrop's balance sheet and statement of income for a fiscal year
ending not more than 16 months before the Effective Date of the Merger,
together with the latest available interim financial statements;
(2) An estimate by Winthrop of the fair value of the shares and a brief
description of the method used to reach the estimate; and
(3) A copy of Sections 302A.471 and 302A.473, and a brief description of
the procedure to be followed in demanding supplemental payment.
Winthrop may withhold the above-described remittance from a person who was
not a stockholder on the date the Merger was first announced to the public or
who is dissenting on behalf of a person who was not a beneficial owner on that
date. If the dissenter has not voted his shares in favor of the Merger Agreement
and has filed with Winthrop before the vote on the Merger Agreement a written
notice of intent to demand the fair value of the shares owned by such
stockholder, Winthrop must forward to the dissenter the materials described in
the preceding paragraph, a statement of reason for withholding the remittance,
and an offer to pay to the dissenter the amount listed in the materials if the
dissenter agrees to accept that amount in full satisfaction. The dissenter may
decline the offer and demand payment of the dissenter's own estimate of the fair
value of the shares, plus interest, by written notice to Winthrop. Failure to do
so entitles the dissenter only to the amount offered. If the dissenter makes a
demand, the procedures, costs, fees and expenses described below for petitioning
the court shall apply.
If Winthrop fails to remit payment within 60 days of the deposit of
certificates, it must return all deposited certificates and cancel all transfer
restrictions. However, Winthrop may require deposit at a later time and again
give notice that contains:
(1) The address to which a demand for payment; and share certificates
must be sent in order to obtain payment and the date by which they must be
received;
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(2) A form to be used to certify the date on which the stockholder, or
the beneficial owner on whose behalf the stockholder dissents, acquired the
shares or an interest in them and the demand for payment; and
(3) A copy of Sections 302A.471 and 302A.473 and a brief description of
the procedures to be followed under such sections.
If a dissenter believes that the amount remitted by Winthrop is less than
the fair value of the shares plus interest, the dissenter may give written
notice to Winthrop of the dissenter's own estimate of the fair value of shares,
plus interest, within 30 days after Winthrop mails the remittance, and demand
payment of the difference (a "Demand"). Otherwise, a dissenter is entitled only
to the amount remitted by Winthrop.
If Winthrop receives a Demand, it must, within 60 days after receiving the
Demand, either pay to the dissenter the amount demanded or agreed to by the
dissenter after discussion with Winthrop or file in court a petition requesting
that the court determine the fair value of the shares, plus interest. The
petition must be filed in Hennepin County, Minnesota. The petition must name as
parties all dissenters who made a Demand for payment and who have not reached
agreement with Winthrop. The jurisdiction of the court is plenary and exclusive.
The court may appoint appraisers, with powers and authorities the court deems
proper, to receive evidence on and recommend the amount of the fair value of the
shares. The court must determine whether the stockholder or stockholders in
question have fully complied with the requirements of Section 302A.473, and must
determine the fair value of the Winthrop shares, taking into account any and all
factors the court finds relevant, computed by any method or combination of
methods that the court, in its discretion, sees fit to use, whether or not used
by Winthrop or by a dissenter. The fair value of the shares as determined by the
court is binding on all dissenting stockholders, wherever located. A dissenter
is entitled to judgment for the amount by which the fair value of the shares as
determined by the court, plus interest, exceeds the amount, if any, remitted by
Winthrop, but shall not be liable to Winthrop for the amount, if any, by which
the amount, if any, remitted to the dissenter exceeds the fair value of the
shares as determined by the court, plus interest.
The court must determine the costs and expenses of any appraisers in a
proceeding under the preceding paragraph, including the reasonable expenses and
compensation of any appraisers appointed by the court, and must assess those
costs and expenses against Winthrop, except that the court may assess part or
all of those costs and expenses against a dissenter whose Demand is found to be
arbitrary, vexatious, or not in good faith.
If the court finds that Winthrop has failed to comply substantially with
Section 302A.473, the court may assess all fees and expenses of any experts or
attorneys as the court deems equitable. These fees and expenses may also be
assessed against a person who has acted arbitrarily, vexatiously, or not in good
faith in bringing the proceeding, and may be awarded to a party injured by those
actions. The court may award, in its discretion, fees and expenses to any
attorney for the dissenters out of the amount awarded to the dissenters, if any.
EXPENSES OF THE MERGER
The Merger Agreement provides that TCF and Winthrop shall each bear and pay
all costs and expenses incurred by it in connection with the Merger Agreement
and the transactions contemplated thereby except that TCF and Winthrop will each
pay one-half of all filing fees in connection with HSR Act filings and TCF will
bear the cost of any indenture supplement governing the Winthrop Senior Notes.
STOCKHOLDER AND AFFILIATE LETTER AGREEMENTS
The following description of the Stockholder Agreements and Affiliate Letter
Agreements does not purport to be complete and is qualified in its entirety by
reference to the Agreements themselves which are attached as Exhibits A, C and D
of Appendix A to this Joint Proxy Statement/Prospectus.
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In conjunction with the Merger Agreement, TCF has entered into a Stockholder
Agreement with each of the Winthrop Founders, the form of which is attached as
Appendix A to the Merger Agreement. Under the Stockholder Agreements, each
Winthrop Founder has agreed among other things: (i) to vote all of his shares of
Winthrop Common Stock at the Winthrop Special Meeting in favor of the Merger
Agreement; (ii) not to sell, pledge, transfer or otherwise dispose of those
shares prior to the Winthrop Special Meeting; (iii) not to directly or
indirectly encourage or solicit or hold discussions or negotiations with, or
provide any information to, any person, entity or group (other than TCF or an
affiliate of TCF) concerning any merger, sale of substantial assets or
liabilities not in the ordinary course of business, sale of shares of capital
stock or similar transactions involving Winthrop or any subsidiary of Winthrop;
provided that nothing will be deemed to affect the ability of the Winthrop
Founder to fulfill his fiduciary duties as a director or officer of Winthrop;
(iv) consistent with his fiduciary duties as an officer or director of Winthrop
to use his reasonable good faith efforts to take or cause to be taken all
action, and to do or cause to be done all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
agreements contemplated by the Merger Agreement; and (v) to execute and deliver
Affiliate Letter Agreements. The Winthrop Founders are relieved of the foregoing
obligations if the Merger Agreement terminates prior to the Winthrop
stockholders' vote on the Merger Agreement. Under the Stockholder Agreement, TCF
agrees to register the shares of a Winthrop Founder, if required, for any of the
Winthrop Founders to sell their shares (after the no sale period for pooling of
interests purposes has expired). TCF will further indemnify the Winthrop
Founders against any claims based on untrue statements or omissions or alleged
omission to state a material fact required to be stated therein or to make the
statements not misleading in connection with the registration and sale of the
shares of TCF Common Stock of the Winthrop Founders, including costs of defense
and reasonable legal fees. The Winthrop Founders will indemnify TCF against any
claims arising out of materially misleading statements, omissions or alleged
omissions if the information was furnished in writing to TCF by or on behalf of
the Winthrop Founder.
In conjunction with the Merger Agreement, TCF has also entered into
Affiliate Letter Agreements dated as of February 28, 1997 with each of the
directors, executive officers and stockholders of Winthrop (the "Winthrop
Affiliates") who may reasonably be deemed to be "affiliates" for purposes of
Rule 145 of the Securities Act, and Winthrop has entered into Affiliate Letter
Agreements dated as of February 28, 1997 with each of the "affiliates" of TCF.
Pursuant to such Affiliate Letters, copies of the form of which are attached to
this Joint Proxy Statement/Prospectus as Exhibits C and D, respectively, to the
Merger Agreement which is Appendix A, such persons have agreed, among other
things, not to sell, pledge, transfer or otherwise dispose of their shares of
Winthrop Common Stock or TCF Common Stock during the period beginning 30
business days prior to the Effective Date and continuing to the date on which
financial results covering at least 30 days of combined operations of TCF and
Winthrop have been published. The Winthrop Affiliates also acknowledged that
they may transfer the TCF Common Stock received in the Merger only: (i) if sold
in compliance with paragraph (c) and (d) of Rule 145; or (ii) pursuant to
another exemption under the Securities Act. These agreements are intended to
assist in qualifying the Merger for pooling-of-interests accounting treatment.
DESCRIPTION OF TCF CAPITAL STOCK
GENERAL
TCF is authorized to issue 170,000,000 shares of capital stock, par value
$.01 per share, consisting of 140,000,000 shares of TCF Common Stock and
30,000,000 shares of preferred stock. As of the TCF Record Date, there were
issued and outstanding 34,721,954 shares of TCF Common Stock, and shares of
Series A Junior Participating Preferred Stock were reserved for issuance upon
the exercise of certain preferred share purchase rights (the "Rights") described
below.
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TCF COMMON STOCK
GENERAL. TCF common stockholders have no preemptive rights. The outstanding
shares of TCF Common Stock are, and the TCF Common Stock offered hereby will be,
fully paid and nonassessable. Each outstanding share of TCF Common Stock also
includes, and each share offered hereby will include, one Right.
VOTING. TCF common stockholders are entitled to one vote for each share
held on each matter submitted to a vote of the holders of TCF Common Stock.
Cumulative voting for the election of directors is not permitted.
DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS. Subject to the preferential
dividend rights of any issued and outstanding preferred stock, TCF's common
stockholders are entitled to receive dividends as and when declared by the Board
of Directors of TCF. Under Delaware corporate law, TCF may declare and pay
dividends out of surplus, or if there is no surplus, out of net profits for the
fiscal year in which the dividend is declared and/or the preceding year. No
dividends may be declared, however, if the capital of TCF has been diminished by
depreciation, losses or otherwise to an amount less than the aggregate amount of
capital represented by any issued and outstanding stock having a preference on
distribution.
If TCF were liquidated, the holders of TCF Common Stock would be entitled to
receive, pro rata, all assets available for distribution to them after full
satisfaction of TCF's liabilities and any required payments applicable to the
preferred stock then outstanding.
TRANSFER AGENT AND REGISTRAR. The transfer agent and registrar for the TCF
Common Stock is Boston Equiserve, Boston, Massachusetts.
PREFERRED SHARE PURCHASE RIGHTS. On May 23, 1989, the Board of Directors of
TCF declared a dividend of one Right for each outstanding share of TCF Common
Stock. The dividend was paid on June 9, 1989 to the holders of record of TCF
Common Stock on that date. Holders of shares of TCF Common Stock issued
subsequent to that date receive one Right with each such share issued. The
Rights are transferred with and only with the shares of TCF Common Stock until
they become exercisable. The Rights become exercisable only under certain
circumstances described below. The Rights are designed to ensure that holders of
TCF Common Stock receive fair and equal treatment in the event of any proposed
takeover of TCF and to discourage certain abusive takeover techniques. They are
also intended to enable holders of TCF Common Stock to realize the long-term
value of their investment in TCF. While not preventing a takeover, the Rights
are designed to encourage any person seeking to acquire TCF to negotiate with
the Board of Directors of TCF. The Rights may have the effect of discouraging,
but are not intended to deter, takeover proposals.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of TCF, including the right to vote or receive dividends. Upon
becoming exercisable, each Right entitles the registered holder to purchase from
TCF one-hundredth of a share of Series A Junior Participating Preferred Stock
("Series A Junior Preferred Stock") of TCF at a price (the "Purchase Price") of
$180 per one one-hundredth of a share of Series A Junior Preferred Stock,
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") between TCF and Boston Equiserve as
rights agent. The Purchase Price payable, and the number of shares of Series A
Junior Preferred Stock or other securities or property issuable, upon exercise
of the Rights are subject to adjustment from time to time to prevent dilution
upon the occurrence of certain events specified in the Rights Agreement.
The Rights will become exercisable only if a person or group acquires or
announces an offer to acquire 15% or more of the outstanding shares of TCF
Common Stock. The Rights have certain additional features that will be triggered
upon the occurrence of any one of certain specified events:
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(i) In the event that any person or group becomes the beneficial owner
of 15% or more of the outstanding shares of TCF Common Stock, subject to
certain exceptions for shares owned by TCF, a subsidiary or an employee
benefit plan or issued directly by TCF, proper provision shall be made so
that each holder of a Right, other than any person or group beneficially
owning 15% or more of the outstanding TCF Common Stock (whose Rights will
thereafter be void), will thereafter have the right to receive upon exercise
that number of shares of TCF Common Stock having a market value of two times
the exercise price of the Right (or, at the option of TCF, an equivalent
number of one one-hundredths of a share of Series A Junior Preferred Stock).
(ii) In the event that TCF is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or
earnings power is sold, proper provision will be made so that each holder of
a Right will thereafter have the right to receive, upon the exercise thereof
at the then-current exercise price of the Right, that number of shares of
common stock of the acquiring company which at the time of such transaction
will have a market value of two times the exercise price of the Right.
(iii) At any time after the acquisition by a person or group of
beneficial owners of 15% or more of the outstanding shares of TCF Common
Stock and prior to the acquisition by such person or group of 50% or more of
the outstanding TCF Common Stock, the Board of Directors of TCF may exchange
the Rights (other than Rights owned by such person or group which have
become void), in whole or in part, at an exchange ratio of one share of TCF
Common Stock, or one one-hundredth of a share of Series A Junior Preferred
Stock (or of a share of a class or series of TCF's preferred stock having
equivalent rights, preferences and privileges), per Right (subject to
adjustment).
At any time prior to the acquisition by a person or group of beneficial
ownership of 15% or more of the outstanding TCF Common Stock, a majority of
TCF's directors prior to the time of such an acquisition may vote to redeem the
Rights in whole, but not in part, at a price of $.01 per right. The redemption
of the Rights may be made effective at such time on such basis and with such
conditions as such directors in their sole discretion may establish. Immediately
upon any redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
redemption price.
The terms of the Rights may be amended by the Board of Directors of TCF
without the consent of the holders of the Rights, including an amendment to
lower the 15% triggering thresholds described above to not less than the greater
of (i) any percentage greater than the largest percentage of the outstanding
Common Stock then known to TCF to be beneficially owned by any person or group
of affiliated or associated persons and (ii) 10%, except that from and after
such time as any person or group acquires 15% or more of the outstanding TCF
Common Stock, no such amendment may adversely effect the interests of the
holders of the Rights.
The Rights will expire on June 9, 1999, unless extended or earlier redeemed
by TCF.
PREFERRED STOCK
GENERAL
Pursuant to the TCF Certificate, there are authorized 30,000,000 shares of
preferred stock, par value $.01 per share, and the Board of Directors of TCF has
the authority, without further stockholder action, to issue from time to time
one or more series of preferred stock with such terms and for such consideration
as the TCF Board of Directors may determine. The TCF Board of Directors is
authorized to fix the dividend rights and terms, conversion rights, voting
rights, redemption rights and terms, liquidation preferences, sinking funds and
any other rights, preferences, privileges and restrictions applicable to each
such series of preferred stock.
The issuance of preferred stock, while providing flexibility in connection
with possible acquisitions and other corporate purposes, could, among other
things, adversely affect the voting power and other rights of
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the holders of TCF Common Stock and under certain circumstances have the effect
of delaying or preventing a change in control of TCF.
SERIES A JUNIOR PREFERRED STOCK
The Board of Directors of TCF has established a series of preferred stock,
designated Series A Junior Preferred Stock, issuable upon the exercise of Rights
issued to holders of the TCF Common Stock. As of the TCF Record Date there were
347,220 shares of Series A Junior Preferred Stock reserved for issuance upon the
exercise of the Rights. See "--TCF Common Stock--Preferred Share Purchase
Rights" and "Comparison of the Rights of Stockholders." Series A Junior
Preferred Stock ranks junior to all other series of preferred stock that might
be created and is not redeemable. Each share of Series A Junior Preferred Stock
is, subject to the rights of senior securities of TCF, entitled to a minimum
preferential quarterly dividend payment of $1.00 per share, however, each such
share is limited to an aggregate dividend of 100 times the dividend declared per
share of TCF Common Stock. In the event of liquidation, the holders of the
Series A Junior Preferred Stock, upon issuance, are entitled to a minimum
preferential liquidation payment of $100 per share but such payment is limited
to an aggregate payment of 100 times the payment made per share of TCF Common
Stock. Each share of Series A Junior Preferred Stock, upon issuance, will have
100 votes, voting together with the TCF Common Stock. Finally, in the event of
any merger, consolidation or other transaction in which TCF Common Stock is
exchanged, each share of Series A Junior Preferred Stock will be entitled to
receive 100 times the amount received per share of TCF Common Stock. These
rights are protected by customary antidilution provisions.
ANTITAKEOVER EFFECTS OF PROVISIONS OF TCF'S CERTIFICATE OF INCORPORATION AND
BYLAWS
Certain provisions of the TCF Certificate and the TCF Bylaws could
discourage potential takeover attempts and could delay or prevent a change in
control of TCF. See "Comparison of the Rights of Stockholders."
DESCRIPTION OF WINTHROP SECURITIES
The authorized capital stock of Winthrop consists of 15,000,000 shares of
common stock, par value $.01 per share (the "Winthrop Common Stock"), and
2,000,000 shares of preferred stock, par value $.01 per share (the "Winthrop
Preferred Stock").
COMMON STOCK
As of the Winthrop Record Date, there were 8,600,300 shares of Winthrop
Common Stock issued and outstanding. All outstanding shares of Winthrop Common
Stock are fully paid and nonassessable. The stockholders of Winthrop Common
Stock are entitled to one vote for each share held on the record date on all
matters voted upon by stockholders and may not use cumulative voting for the
election of directors. Subject to the rights of the stockholders of any future
series of shares of Winthrop Preferred Stock, each share of outstanding Winthrop
Common Stock is entitled to participate equally in any distribution of net
assets made to the stockholders in liquidation, dissolution or winding up of
Winthrop and is entitled to participate equally in dividends and other
distributions if, as and when declared by its Board of Directors. There are no
redemption, sinking fund, conversion or preemptive rights with respect to the
shares of Winthrop Common Stock. All shares of Winthrop Common Stock have equal
rights and preferences. The Winthrop Common Stock is described more fully in
Winthrop's Registration Statement on Form 8-A, dated April 23, 1992, including
any amendment or report filed for the purpose of updating such description filed
subsequent to the date of this Joint Proxy Statement/Prospectus and prior to the
termination of the offering described herein.
The transfer agent and registrar for the shares of Winthrop Common Stock is
Norwest Bank Minnesota, National Association.
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PREFERRED STOCK
None of Winthrop's 2,000,000 authorized shares of Winthrop Preferred Stock
has been issued or authorized by the Winthrop Board of Directors for issuance.
Under the MBCA and Winthrop's Restated Articles of Incorporation, no action by
Winthrop's stockholders is necessary, and only action of the Board of Directors
is required, to establish and designate one or more series of Winthrop Preferred
Stock and to authorize the issuance of shares of any such series. The Winthrop
Board of Directors is empowered to set the terms of each such series (including
terms with respect to redemption, sinking fund, dividend, liquidation,
preemptive, conversion and voting rights and preferences). Accordingly, the
Winthrop Board of Directors, without stockholder approval, may issue shares of
Winthrop Preferred Stock in one or more series with terms that could adversely
affect the voting power and other rights of holders of the Winthrop Common
Stock.
The authorization or issuance of one or more series of Winthrop's Preferred
Stock may have the effect of discouraging an attempt, through acquisition of a
substantial number of shares of Winthrop Common Stock, to acquire control of
Winthrop with a view to effecting a merger, sale or exchange of assets or a
similar transaction. The anti-takeover effects of any such series of Winthrop
Preferred Stock may deny stockholders the receipt of a premium on their Winthrop
Common Stock and may also have a depressive effect on the market price of the
Winthrop Common Stock.
WINTHROP SENIOR NOTES
As of March 31, 1997, Winthrop had outstanding $28,750,000 aggregate
principal amount of Winthrop Senior Notes. The Winthrop Senior Notes are
unsecured and senior to all other unsecured obligations of Winthrop. The
Winthrop Senior Notes provide that, beginning on June 24, 2001, Winthrop may
redeem the Winthrop Senior Notes, in whole or in part, upon not less than 30 nor
more than 60 days prior written notice at par plus accrued interest to the date
fixed for redemption. The Winthrop Senior Notes are subject to an Indenture
dated July 1, 1996 between Winthrop and Norwest Bank Minnesota, National
Association, as Trustee, (the "Indenture"), which Indenture sets forth certain
restrictive covenants applying to Winthrop which limit, among other things: (1)
the amount of funded recourse debt; (2) the declaration of cash dividends and
acquisition of capital stock of Winthrop; (3) Winthrop's ability to consolidate
or merge where Winthrop is not the surviving corporation unless such other
entity assumes Winthrop's obligations under the Indenture; (4) the ranking of
future funded recourse debt senior to the Winthrop Senior Notes; (5) the
restriction of subsidiary dividends; and (6) transactions with affiliates. At
March 31, 1997, Winthrop was in compliance with all covenants.
Upon consummation of the Merger and subject to receipt of consents from the
record holders of a majority in principal amount of the outstanding Winthrop
Senior Notes, TCF and Winthrop propose entering into a Supplemental Indenture
which would modify the terms of the Indenture governing the Winthrop Senior
Notes to do the following:
1. Cause TCF to assume and agree to be obligated to perform, jointly and
severally with Winthrop, all of Winthrop's obligations under the
Indenture (as modified by the Supplemental Indenture) and the Winthrop
Senior Notes.
2. Eliminate certain covenants in the Indenture, including restrictions on
dividends, redemptions and other payments, limitations on the amount of
funded recourse debt, limitations on ranking of future indebtedness,
limitations restricting subsidiary dividends and limitations on
transactions with affiliates.
3. Modify the periodic report filing and transmittal requirements of the
Indenture to provide that such reports will be provided with respect to
TCF only and Winthrop would have no further reporting requirements.
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TCF is seeking to eliminate covenants from the Indenture in order to provide
it with additional flexibility in the operation of Winthrop following the
Merger. In return for eliminating these covenants, TCF will agree to assume, as
a co-obligor, all of Winthrop's obligations under the Indenture (as modified by
the Supplemental Indenture) and the Winthrop Senior Notes, including, without
limitation, the due and punctual payment of the principal of (and premium, if
any) and interest on all the Notes and the performance and observance of every
covenant and term of the Indenture (as modified) on the part of Winthrop to be
performed or observed. Elimination of these covenants is not a condition to the
Merger.
Following the Merger, TCF intends to cause Winthrop to terminate its
registration of the Winthrop Common Stock under the Exchange Act, thereby
suspending Winthrop's obligation to file reports with the Commission pursuant to
the Exchange Act. The Winthrop Senior Notes are not registered under the
Exchange Act so no reports on Winthrop pursuant to the Exchange Act will be
available after the Merger. In connection with this de-registration, TCF is
proposing that the Indenture be amended to provide that the required filing with
the Trustee or transmission to holders of the Winthrop Senior Notes of all
information, documents and other reports, including annual and quarterly
financial statements, will be met by filing or transmitting such reports and
other information with respect to TCF rather than with respect to Winthrop.
Following such an amendment, holders of Winthrop Senior Notes will be able to
access such information and reports (on a consolidated basis) as they relate to
TCF, which will be a co-obligor under the Indenture (as modified by the
Supplemental Indenture) and the Winthrop Senior Notes, but will no longer be
able to obtain such reports and information concerning Winthrop.
Following is a discussion of the covenants that are proposed to be
eliminated under the Supplemental Indenture:
RESTRICTION ON DIVIDENDS, REDEMPTIONS AND OTHER PAYMENTS
Section 1006 of the Indenture currently restricts Winthrop's ability to pay
dividends, purchase, redeem or retire any shares of its capital stock or any
warrants, rights or options to purchase or acquire any shares of its capital
stock or make any other payment or distribution in respect of its capital stock,
if, after giving effect thereto, an Event of Default (as defined in the
Indenture) would have occurred, or the aggregate amount of any such payments
made after December 31, 1995 would exceed the sum of $5 million plus 50% of the
Company's consolidated net income for fiscal years 1996 and beyond (with 100%
reduction for a loss in any fiscal year) plus the proceeds of any stock sales
after June 30, 1996. Elimination of this covenant would allow Winthrop the
unrestricted right to dividend or otherwise distribute upstream any or all of
its available funds following the Merger. Furthermore, TCF would also not be
subject to any such covenant restriction, but it will be obligated as a
co-obligor under the Indenture (as modified) and the Winthrop Senior Notes.
LIMITATION ON FUNDED RECOURSE DEBT
Section 1007 of the Indenture currently prohibits Winthrop from incurring
Funded Recourse Debt (as defined in the Indenture generally to include
indebtedness of Winthrop with a term greater than one year other than
nonrecourse debt) if the aggregate amount of Funded Recourse Debt of Winthrop
would exceed 300% of Winthrop's consolidated net worth. The removal of this
covenant would allow Winthrop (and TCF) to incur an unlimited amount of Funded
Recourse Debt.
LIMITATION ON RANKING OF FUTURE INDEBTEDNESS
Section 1013 of the Indenture currently prohibits Winthrop from issuing or
guaranteeing any Funded Recourse Debt that is senior in right of payment to the
Winthrop Senior Notes. Elimination of this covenant would allow the Winthrop
Senior Notes to be subordinate in right of payment to any other indebtedness of
Winthrop or TCF.
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LIMITATIONS ON RESTRICTING SUBSIDIARY DIVIDENDS
Section 1014 of the Indenture currently limits Winthrop's ability to place
any consensual encumbrance or restriction of any kind on the ability of any
subsidiary of Winthrop to pay dividends to Winthrop, pay any indebtedness owed
to Winthrop or make loans, advances or capital contributions to Winthrop except
in certain limited circumstances. Although Winthrop currently has no
subsidiaries, elimination of this covenant would allow restrictions to be placed
on any future subsidiary's rights to make any such payments to Winthrop, thereby
limiting Winthrop's repayment sources with respect to the Winthrop Senior Notes.
Such a restriction would not limit TCF's ability to repay the Winthrop Senior
Notes as a co-obligor, but TCF would also not be subject to limitations on its
ability to place restrictions on access to the funds of its subsidiaries.
LIMITATION ON TRANSACTIONS WITH AFFILIATES
Section 1015 of the Indenture currently limits transactions involving
payments in excess of $60,000 with any affiliate of Winthrop (as defined in the
Indenture and not including any wholly-owned subsidiary of Winthrop) on terms
and conditions less favorable to Winthrop than would be available in a
comparable arm's-length transaction with an unrelated person, with such
determination to be made by Winthrop's Board of Directors. Elimination of this
covenant would allow such transactions to occur without the requirement that
such a prior determination be made by Winthrop's Board of Directors, and would
permit Winthrop, as a subsidiary of TCF or of one of TCF's national bank
subsidiaries, to engage in transactions with affiliates to the extent permitted
by laws and regulations applicable to affiliate transactions of national banks
and national bank subsidiaries.
In order to enter into the Supplemental Indenture, consents must be received
from Holders (as defined in the Indenture) of a majority in interest of the
Winthrop Senior Notes. TCF intends to solicit such consents on or about May 27,
1997 to Holders of record of the Winthrop Senior Notes as of May 21, 1997.
Winthrop's Board of Directors has approved the amendments to the Indenture
reflected in the Supplemental Indenture, subject to receipt of the required
consents of Holders, and established May 21, 1997 as the record date for the
consent solicitation. At the close of business on May 21, 1997, $28,750,000 in
principal amount of the Winthrop Senior Notes was outstanding, requiring the
consent of more than $14,375,000 in principal amount to approve the amendments
to the Indenture contained in the Supplemental Indenture as discussed above.
THE BOARDS OF DIRECTORS OF TCF AND WINTHROP UNANIMOUSLY RECOMMEND THAT THE
HOLDERS OF WINTHROP SENIOR NOTES CONSENT TO THE SUPPLEMENTAL INDENTURE.
Holders of Winthrop Senior Notes who consent to the amendment of the
Indenture must consent to all of the proposed amendments reflected in the
Supplemental Indenture as a whole. Regardless of the outcome of the solicitation
of consents, the Winthrop Senior Notes will continue to be outstanding and will
continue to bear interest as provided in the Indenture. If the Supplemental
Indenture is approved and entered into, the amendments to the Indenture
contained therein will be binding on all Holders and their transferees, whether
or not such Holders deliver their consents.
TCF reserves the right to extend, amend or terminate the solicitation of
consents at any time prior to the effectiveness of the proposed amendments
contained in the Supplemental Indenture, or to delay accepting consents.
Adoption and effectiveness of the proposed amendments to the Indenture contained
in the Supplemental Indenture are in any event subject to and contingent upon
occurrence of the Merger, regardless of the receipt from Holders of the
requisite consents. Consummation of the Merger is not conditioned upon the
receipt of the requisite consents from the Holders of the Winthrop Senior Notes
to the Supplemental Indenture.
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COMPARISON OF THE RIGHTS OF STOCKHOLDERS
GENERAL
As a result of the Merger, holders of Winthrop Common Stock, whose rights
are presently governed by the MBCA and the Winthrop Articles and Bylaws, will
become stockholders of TCF, a Delaware corporation. Accordingly, their rights
will be governed by the DGCL, the TCF Certificate and the TCF Bylaws. Certain
differences in the rights of stockholders arise from distinctions between the
MBCA and the DGCL and the Winthrop Articles and Winthrop Bylaws as compared to
the TCF Certificate and TCF Bylaws. The following is a brief description of
those differences. The discussion herein is not intended to be a complete
statement of the differences but rather summarizes the more significant
differences affecting the rights of such stockholders and certain important
similarities. The following summary is qualified in its entirety by reference to
the MBCA, the DGCL, the Winthrop Articles and Winthrop Bylaws and the TCF
Certificate and TCF Bylaws.
Each Winthrop stockholder should carefully consider these differences,
including but not limited to provisions of the TCF Certificate and TCF Bylaws
that may have an anti-takeover effect, in connection with the decision to vote
for or against the adoption and approval of the Merger Agreement.
AUTHORIZED CAPITAL STOCK
The Winthrop Articles authorize the issuance of up to 15,000,000 shares of
Winthrop Common Stock, par value $.01 per share, of which 8,600,300 shares were
issued and outstanding as of the Winthrop Record Date, and up to 2,000,000
shares of Winthrop Preferred Stock, par value $.01 per share, of which none were
issued and outstanding as of the Winthrop Record Date. See "Description of
Winthrop Capital Stock--Preferred Stock."
The TCF Certificate authorizes the issuance of up to 140,000,000 shares of
TCF Common Stock, par value $.01 per share, of which 34,721,954 shares were
issued and outstanding as of the TCF Record Date, and up to 30,000,000 shares of
preferred stock, par value $.01 per share, of which no shares were issued and
outstanding as of the TCF Record Date. The TCF preferred stock is issuable in
series, each series having such rights and preferences as TCF's Board of
Directors may fix and determine by resolution. Although TCF does not currently
contemplate taking such action, it is possible that additional shares of TCF
Common Stock or TCF preferred stock would be issued for the purpose of making an
acquisition by an unwanted suitor of a controlling interest in TCF more
difficult, time consuming or costly or to otherwise discourage an attempt to
acquire control of TCF.
The MBCA does not allow treasury shares. Under the DGCL, TCF may hold
treasury shares. Treasury shares under Delaware Law may be held, sold, lent,
pledged or exchanged by TCF. Such shares, however, are not outstanding shares
and therefore do not receive any dividends and do not have voting rights.
AMENDMENT OF GOVERNING INSTRUMENTS
Under the MBCA and the Winthrop Articles, amendments to the Winthrop
Articles require the affirmative vote of the holders of a majority of the shares
entitled to vote on the amendment. Prior to submitting the resolution for a
stockholder vote, the resolution must be approved by a majority of directors
present at a meeting where the resolution is considered, unless the resolution
is proposed by a stockholder or stockholders holding three percent or more of
the voting power of the outstanding shares entitled to vote. Stockholders shall
take action by the affirmative vote of the holders of the greater of (a) a
majority of the shares present and entitled to vote on an item of business, or
(b) a majority of the voting power of the minimum number of shares that would
constitute a quorum for the transaction of business at the meeting.
Under the MBCA and the Winthrop Bylaws, the power to adopt, amend or repeal
the Winthrop Bylaws is vested in the board and is subject to the power of the
stockholders to adopt, amend or repeal
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bylaws adopted, amended, or repealed by the board. The board shall not, without
stockholder approval, amend, or repeal a bylaw fixing a quorum for meetings of
stockholders, prescribing procedures for removing directors or filling vacancies
in the board, or fixing the number of directors or their classifications,
qualifications, or terms of office, but may adopt or amend a bylaw to increase
the number of directors. A stockholder or stockholders holding three percent or
more of the voting power of the shares entitled to vote may propose a resolution
for action by the stockholders to adopt, amend, or repeal bylaws adopted,
amended or repealed by the board. The Winthrop Bylaws may be amended by a
majority vote of the full Board of Directors, or by a majority vote of the votes
cast by the stockholders of Winthrop at any legal meeting, except that
amendments to the provisions of the Winthrop Bylaws inconsistent with or
modifying or permitting circumvention of the provisions of the Winthrop Articles
governing (i) directors and (ii) certain business combinations, may be adopted
only if the amendment is first proposed by the Board of Directors of Winthrop,
upon the affirmative vote of at least two-thirds of the directors, and is
thereafter approved by the holders of at least 75% of the outstanding shares of
capital stock of Winthrop entitled to vote generally in the election of
directors, voting as a single class; provided however, that this 75% vote will
not be required for any amendment recommended to the stockholders by the
affirmative vote of not less than 75% of the directors.
The DGCL generally provides that the affirmative vote of a majority of a
corporation's outstanding voting shares is required to amend its certificate of
incorporation, unless the certificate of incorporation requires a greater vote.
The TCF Certificate provides that, except for provisions relating to: (i) more
than 10% acquisitions of TCF equity securities; (ii) the Board of Directors;
(iii) certain business combinations; (iv) actions by written consent; (v)
special meetings of stockholders; (vi) amendment of the TCF Bylaws; (vii)
limitation of liability of directors; (viii) indemnification of directors and
officers; and (ix) the article that relates to amendments in the TCF
Certificate, the TCF Certificate may be amended by the affirmative vote of the
holders of a majority of TCF's outstanding voting shares.
Pursuant to the TCF Certificate, certain provisions, including many of the
"anti-takeover" provisions referred to under the "Description of TCF Capital
Stock" in the TCF Certificate may not be altered, amended or repealed without
the affirmative vote of at least a majority of the Board of Directors of TCF or
the affirmative vote of at least 80% of the total votes eligible to be cast by
stockholders.
CLASSIFIED BOARD AND CUMULATIVE VOTING
The MBCA requires that a corporation shall have at least one director and
permits the board of directors to be divided into classes without regard to the
size of the board of directors. The Winthrop Bylaws require that its Board of
Directors shall consist of three directors. The Winthrop Board of Directors is
not classified. In addition, the Winthrop Articles prohibit cumulative voting
for the election of directors.
The DGCL requires that a corporation shall have at least one director. The
number of directors shall be fixed by, or in the manner provided in, the bylaws,
unless the certificate of incorporation fixes the number of directors. The TCF
Certificate provides for its Board of Directors to consist of seven (7) to
twenty-five (25) members divided into three classes of as nearly equal size as
possible. Within such limits, the exact number of directors shall be fixed from
time to time pursuant to a resolution adopted by a majority of the "Continuing
Directors," which is defined in the TCF Certificate. The terms of the directors
are staggered such that the terms of approximately one-third of the directors
expire at each annual election of directors. TCF's Certificate does not permit
cumulative voting.
REMOVAL OF DIRECTORS AND VACANCIES
Under the MBCA, any director may be removed by the board at any time, with
or without cause, if the director was named, by the board, to fill a vacancy,
the stockholders have not elected directors in the interval between the time of
the appointment to fill a vacancy and the time of the removal of such director,
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and a majority of the remaining directors affirmatively vote for the removal of
such director. Stockholders may remove directors at any time, with or without
cause, by an affirmative vote of the stockholders. Under the MBCA, unless the
articles or bylaws provide otherwise, (i) a vacancy on a corporation's board of
directors may be filled by the vote of a majority of directors then in office,
although less than a quorum, (ii) a newly created directorship resulting from an
increase in the number of directors may be filled by the board, and (iii) any
director so elected pursuant to (i) or (ii) above shall hold office only until a
qualified successor is elected at the next regular or special meeting of
stockholders. The Winthrop Bylaws follow these provisions.
Under the TCF Certificate, any director may be removed for cause by the
holders of at least a majority of the outstanding voting shares and which vote
may only be taken at a meeting of stockholders (and not by written consent).
Cause for removal shall be deemed to exist only if the director whose removal is
proposed has been convicted of a felony by a court of competent jurisdiction to
be liable for gross negligence or misconduct in the performance of such
director's duty to the corporation and such adjudication is no longer subject to
direct appeal. Vacancies in TCF's Board of Directors, including vacancies
created by newly created directorships resulting from an increase in the number
of directors, shall be filled by TCF's Board of Directors, acting by a vote of
at least a majority of the directors then in office, even if less than a quorum,
and any director so chosen shall serve for the remainder of the term of the
class of directors in which the vacancy occurred. Vacancies on the TCF Board
resulting from the death, resignation or removal of a director may be filled by
the affirmative vote of a majority of the Continuing Directors, or if there are
no Continuing Directors, by the affirmative vote of a majority of directors then
in office, even though less than a quorum.
LIMITATION OF DIRECTOR LIABILITY
Both the MBCA and DGCL allow a corporation to include in its charter a
provision that eliminates or limits the ability of the corporation and its
stockholders to recover monetary damages from a director for a breach of
fiduciary duty, except for (a) any breach of the director's duty of loyalty, (b)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (c) distributions that are illegal under applicable
law or (d) any transaction from which the director derived an improper personal
benefit. Both the TCF Certificate and the Winthrop Articles include such a
provision.
INDEMNIFICATION
The MBCA requires indemnification for all directors, officers and employees
if such person (a) acted in good faith, (b) reasonably believed that such
conduct was in or not opposed to the corporation's best interests, and (c) in
the case of any criminal proceeding, had no reasonable cause to believe such
conduct was unlawful, and the person being indemnified received no improper
personal benefit and has not been indemnified from another source. The Winthrop
Bylaws require Winthrop to indemnify its directors, officers and employees to
the fullest extent permissible under the MBCA.
The TCF Certificate and TCF Bylaws provide that each person who was or is
made a party or is threatened to be made a party to or is involved in any
action, suit, or proceeding, whether civil, criminal, administrative or
investigative (hereinafter, a "proceeding"), by reason of the fact that he or
she, or a person of whom he or she is the legal representative, is or was a
director or officer of TCF or a subsidiary thereof, or is or was serving at the
request of TCF, as a director, officer, partner, member or trustee of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, shall be indemnified
and held harmless by TCF to the fullest extent authorized by the DGCL against
all expense, liability, and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties, and amounts paid in settlement) reasonably
incurred or suffered by such person in connection therewith; provided, however,
that such indemnification does not extend to an indemnitee in connection with a
proceeding (or portion thereof) initiated by such indemnitee unless such
proceeding was authorized by the TCF Board of Directors.
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Under the DGCL as currently in effect, other than in actions brought by or
in the right of TCF, such indemnification would apply if it was determined in
the specific case that the proposed indemnitee acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
TCF and, with respect to any criminal proceeding, if he had no reasonable cause
to believe that his conduct was unlawful. In actions brought by or in the right
of TCF, such indemnification would probably be limited to reasonable expenses
(including attorneys' fees), and would apply if it were determined in the
specific case that the proposed indemnitee acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of TCF,
except that no indemnification may be made with respect to any claim, issue or
matter as to which such person is adjudged liable to TCF unless, and only to the
extent that, a court determines upon application that, in view of all the
circumstances of the case, the proposed indemnitee is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper. To the extent
that any director, officer, employee or agent of TCF has been successful on the
merits or otherwise in defense of any proceeding, he must be indemnified against
reasonable expenses incurred by him in connection therewith.
The TCF Certificate and TCF Bylaws provide that the right of such directors
and officers to indemnification includes the right to advancement by TCF of
expenses incurred in defending any such proceeding in advance of its final
disposition upon delivery to TCF of an undertaking by such indemnitee to repay
any amount so advanced if it is ultimately determined by final judicial decision
that the proposed indemnitee is not entitled to be indemnified for such
expenses.
The TCF Certificate further provides that TCF may, to the extent authorized
from time to time by TCF's Board of Directors, grant rights to indemnification,
and to the advancement of expenses, to any person who is or was an employee or
agent of TCF or a subsidiary thereof or is or was serving at the request of TCF
as an employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans.
The TCF Certificate provides that a director of TCF, to the maximum extent
now or hereafter permitted by the DGCL or any successor provision or provisions,
will have no personal liability to TCF or its stockholders for monetary damages
for breach of fiduciary duty as a director, except (i) for any breach of the
director's duty of loyalty to TCF or its stockholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law, (iii) for the payment of certain unlawful dividends and the
making of certain stock purchases or redemptions, or (iv) for any transaction
from which the director derived an improper personal benefit. The Winthrop
Articles do not contain such a liability limitation provision for its directors.
For information concerning TCF's indemnification of directors, officers,
employees and agents of Winthrop for claims arising out of or in connection with
activities in such capacity prior to the Effective Time, see "The
Merger--Interests of Certain Persons in the Merger."
SPECIAL MEETINGS OF STOCKHOLDERS
Pursuant to the MBCA and the Winthrop Bylaws, special meetings of
stockholders of Winthrop may be called for any purpose at any time by the chief
executive officer, the chief financial officer, two or more directors or a
stockholder or stockholders holding 10% or more of the voting power of all
shares entitled to vote, except that a special meeting for the purpose of
considering a business combination, including any action to change or otherwise
affect the composition of the board of directors for that purpose, must be
called by 25% or more of the voting power of all shares entitled to vote.
Under the DGCL and the TCF Certificate, special meetings of stockholders of
TCF may be called only by the Continuing Directors of TCF. As a result,
stockholders and non-Continuing Directors of TCF do not have any right to call
special meetings of stockholders or to require TCF's Board of Directors to call
such meetings.
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ACTIONS BY STOCKHOLDERS WITHOUT A MEETING
Under the MBCA, an action required or permitted to be taken at a meeting of
the stockholders may be taken without a meeting by written action signed by all
of the stockholders entitled to vote on that action.
The TCF Certificate provides that, except for removal of a director, any
action required to be taken or which may be taken at any annual or special
meeting of stockholders may be taken without a meeting if a consent in writing,
setting forth the action so taken, is given by the holders of all outstanding
shares entitled to vote thereon.
STOCKHOLDER NOMINATIONS AND PROPOSALS
The Winthrop Bylaws do not specifically provide for stockholder nominations
of persons for election to the Board of Directors or to make proposals, except
proposals to amend the Bylaws (see "--Amendment of Governing Instruments").
The TCF Bylaws provide that all nominations for election to the Board of
Directors, other than those made by, or at the direction of, a majority of
Continuing Directors, be made by a stockholder who has complied with the notice
provisions set forth in the TCF Bylaws. The TCF Bylaws require that any director
nominations made by a stockholder be delivered to or mailed and received at the
principal executive offices of TCF not less than 60 days nor more than 90 days
prior to the date of the scheduled annual meeting, provided, however, that if
less than 70 days notice of the date of the scheduled annual meeting is given,
notice by the stockholder, to be timely, must be so delivered or received not
later than the close of business on the tenth day following the day on which
such notice of the date of the scheduled annual meeting was mailed or given.
Each such notice shall include, among other things: (i) as to each person whom
the stockholder proposes to nominate for election as a director (A) the name,
age, business address and residence address of such person, (B) the principal
occupation or employment of such person, (C) the class and number of shares of
TCF Common Stock which are beneficially owned by such person on the date of such
stockholder notice, and (D) any other information relating to such person that
would be required to be disclosed pursuant to Schedule 13D under the Exchange
Act in connection with the acquisition of shares, and pursuant to Regulation 14A
under the Exchange Act in connection with the solicitation of proxies with
respect to nominees for election as directors, including, but not limited to,
information required to be disclosed by Items 4(b) and 6 of Schedule 14A under
the Exchange Act and information which would be required to be filed on Schedule
14B under the Exchange Act with the Commission; and (ii) as to the stockholder
giving the notice (A) the name and address, as they appear on TCF's books, of
such stockholder and any other stockholders known by such stockholder to be
supporting such nominees and (B) the class and number of shares of TCF Common
Stock which are beneficially owned by such stockholder on the date of such
stockholder notice and, to the extent known, by any other stockholders known by
such stockholder to be supporting such nominees on the date of such stockholder
notice. The presiding officer of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedures.
The TCF Bylaws also provide that only such business as shall have been
properly brought before an annual meeting of stockholders shall be conducted at
the annual meeting. To be properly brought before an annual meeting, business
must be specified in the notice of the meeting (or any supplement thereto) given
by, or at the direction of, a majority of the Continuing Directors, otherwise
properly brought before the meeting by or at the direction of the Board of
Directors, or otherwise properly brought before the meeting by a stockholder.
For business to be properly brought before an annual meeting by a stockholder,
notice must be delivered to or mailed to the Secretary and received at the
principal executive offices of TCF not less than 60 days nor more than 90 days
prior to the scheduled annual meeting; provided, however, that if less than 70
days notice of the date of the scheduled annual meeting is given, notice by the
stockholder, to be timely, must be so delivered or received not later than the
close of business on the tenth day following the day on which such notice of the
date of the scheduled annual meeting was mailed or given.
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The TCF Bylaws also require that the notice must contain certain information
in order to be considered. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting: (i) a brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business at the annual
meeting; (ii) the name and address, as they appear on TCF's books, of the
stockholder proposing such business and any other stockholders known by such
stockholder to be supporting such proposal; (iii) the class and number of shares
of TCF Common Stock which are beneficially owned by the stockholder on the date
of such stockholder notice and, to the extent known, by any other stockholders
known by such stockholder to be supporting such proposal on the date of such
stockholder notice; and (iv) any financial or other interest of the stockholder
in such proposal. The presiding officer of the meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the TCF Bylaws, and if he should
so determine, he shall so declare to the meeting that any such business not
properly brought before the meeting shall not be transacted.
MERGERS, SHARE EXCHANGES, SALES OF ASSETS, BUSINESS COMBINATIONS WITH CERTAIN
PERSONS AND ACQUISITIONS OF SHARES
The MBCA generally requires the affirmative vote of the holders of a
majority of the voting power of all shares entitled to vote for approval of
mergers and consolidations or the sale or exchange of all or substantially all
of a corporation's assets. Under the MBCA, stockholder approval is not required
for a merger or consolidation if the articles of incorporation will not be
amended in the transaction, if stockholders will, before the transaction,
continue to hold the same number of shares with identical rights in the
transaction, and if the number of shares issuable with voting power and the
number of participating shares (i.e., shares that entitle the holder to
participate without limitation in distributions) immediately after the
transaction, plus those issuable upon conversion or exercise of other securities
or obligations issued in the transaction, will not exceed by more than 20% the
number of shares with voting power and the numbers of participating shares, as
the case may be, immediately before the transaction.
The DGCL requires the approval of the Board of Directors and the holders of
a majority of the outstanding TCF Common Stock entitled to vote thereon for
mergers or consolidations, and for sales, leases or exchanges of substantially
all of TCF's property and assets. The DGCL does not provide explicitly for share
exchanges. The DGCL permits TCF to merge with another corporation without
obtaining the approval of TCF's stockholders if: (i) TCF is the surviving
corporation of the merger; (ii) the merger agreement does not amend the TCF
Certificate; (iii) each share of TCF Common Stock outstanding immediately prior
to the effective date of the merger is to be an identical outstanding or
treasury share of TCF Common Stock after the merger; and (iv) any authorized but
unissued shares or treasury shares of TCF Common Stock to be issued or delivered
under the plan of merger plus those initially issuable upon conversion of any
other securities or obligations to be issued or delivered under such plan do not
exceed 20% of the shares of TCF Common Stock outstanding immediately prior to
the effective date of the merger.
The MBCA contains provisions intended to protect stockholders from
individuals or companies attempting a takeover of a corporation in certain
circumstances. The Minnesota control share acquisition statute establishes
various disclosure and stockholder approval requirements to be met by
individuals or companies attempting a takeover. Delaware has no comparable
provision. The Minnesota control share acquisition statute applies to an
"issuing public corporation." An "issuing public corporation" is one which is
incorporated under or governed by the MBCA and has at least fifty (50)
stockholders. Winthrop is subject to the Minnesota control share acquisition
statute; TCF, because it is a Delaware corporation, is not subject to such
statute.
The Minnesota control share acquisition statute requires disinterested
stockholder approval for any acquisition of shares of an "issuing public
corporation" which results in the "acquiring person" owning more than a
designated percentage of the outstanding shares of such corporation.
Stockholders which
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exceed certain share ownership thresholds whose shares are acquired without
stockholder approval lose their voting rights and are subject to certain
redemption privileges of the corporation. Such shares regain their voting rights
only if the acquiring person discloses certain information to the corporation
and such voting rights are granted by the stockholders at a special or annual
meeting of the stockholders. The Minnesota control share acquisition statute
applies unless the "issuing public corporation" opts out of the statute in its
articles of incorporation or bylaws. Winthrop has not opted out of such
provisions. Under Minnesota law, control share acquisitions do not include,
among other things:
(i) mergers or consolidations if the issuing public corporation is a
party to the transaction;
(ii) an acquisition from the issuing public corporation; and
(iii) an acquisition subsequent to January 1, 1991, pursuant to an offer
to purchase for cash pursuant to a tender offer all shares of the voting
stock of the issuing public corporation which has been approved by a
majority vote of the members of a committee comprised of the disinterested
members of the board of directors of the issuing public corporation formed
before the commencement of, or the public announcement of the intent to
commence, the tender offer and pursuant to acquisitions which the acquiring
person will become the owner of over 50 percent (50%) of the voting stock of
the issuing public corporation outstanding at the time of the transaction.
TCF is subject to the provisions of Section 203 of the DGCL ("Section 203")
which prohibits a "business combination" (defined in Section 203 as generally
including mergers, sales and leases of assets, issuances of securities, and
similar transactions) by TCF or a subsidiary with an "interested stockholder"
(defined in Section 203 as generally the beneficial owner of 15% or more of a
corporation's outstanding voting stock) within three years after the person or
entity becomes an interested stockholder, unless (i) prior to the person or
entity becoming an interested stockholder, the business combination or the
transaction pursuant to which such person or entity became an interested
stockholder shall have been approved by TCF's Board of Directors, (ii) upon
consummation of the transaction in which he became an interested stockholder,
the interested stockholder holds at least 85% of the TCF Common Stock
outstanding at the time the transaction commenced (excluding shares held by
persons who are both officers and directors and shares held by certain employee
benefit plans), or (iii) following the transaction in which such person became
an interested stockholder, the business combination is approved by TCF's Board
of Directors and by the holders of at least two-thirds of the outstanding TCF
Common Stock, excluding shares owned by the interested stockholder. The
restrictions imposed on interested stockholders under Section 203 do not apply
under certain limited circumstances set forth therein, including certain
business combinations proposed by an interested stockholder following the
announcement or notification of certain extraordinary transactions involving the
corporation and a person who had not been an interested stockholder during the
previous three years or who became an interested stockholder with the approval
of a majority of the corporation's directors.
Section 203 provides that during such three-year period, the corporation may
not merge or consolidate with an interested stockholder or any affiliate or
associate thereof, and also may not engage in certain other transactions with an
interested stockholder or any affiliate or associate thereof, including, without
limitation, (i) any merger or consolidation of the corporation or a direct or
indirect majority-owned subsidiary of the corporation with (A) the interested
stockholder, or (B) with any other corporation if the merger or consolidation is
caused by the interested stockholder and as a result of such merger or
consolidation the above limitations of Section 203 are not applicable to the
surviving corporation; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (except proportionately as a stockholder of the
corporation) to or with the interested stockholder of assets having an aggregate
market value equal to 10% or more of the aggregate market value of all assets of
the corporation determined on a consolidated basis or the aggregate market value
of all the outstanding stock of a corporation; (iii) any transaction which
results in the issuance or transfer by the corporation or by any majority owned
subsidiary thereof of any stock of the corporation of such subsidiary to the
interested stockholder, except, among
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<PAGE>
other things, pursuant to a transaction which affects a pro rata distribution to
all stockholders of the corporation; (iv) any transaction involving the
corporation or any majority owned subsidiary thereof which has the effect of
increasing the proportionate share of the stock of any class or series, or
securities convertible into the stock of any class or series, of the corporation
or any such subsidiary which is owned by the interested stockholder (except,
among other things, as a result of immaterial changes due to fractional share
adjustments); or (v) any receipt by the interested stockholder of the benefit
(except proportionately as a stockholder of such corporation) of any loans,
advances, guarantees, pledges or other financial benefits provided by or through
the corporation.
The TCF Certificate contains a "fair price" provision which provides that,
subject to certain exceptions, a "business combination" (which is defined to
include a merger, reorganization, sale or transfer of all or substantially all
of TCF's assets or a liquidation or dissolution of TCF having an aggregate fair
market value of $10,000,000 or more) involving TCF and a "related person"
(defined as a person who, together with any affiliate or associate, beneficially
owns more than 10% of the outstanding TCF Common Stock), must be approved by
holders of at least 80% of the outstanding shares entitled to vote thereon,
excluding all shares of TCF Common Stock beneficially owned or controlled by a
related person, unless (i) a majority of the Continuing Directors approves the
transaction, (ii) the business combination is solely between TCF and a direct or
indirect subsidiary of TCF, or (iii) certain price and other procedural
conditions are satisfied.
The Merger is not a "business combination" as defined in Section 203 or the
fair price provisions of the DGCL and, therefore, neither the provision of
Section 203 nor the "fair price" provisions are applicable to the transaction
contemplated by the Merger Agreement.
ANTI-GREENMAIL PROVISIONS
The MBCA contains a provision which limits the ability of a corporation to
pay greenmail. Pursuant to the statue, a publicly held corporation is prohibited
from purchasing or agreeing to purchase any shares from a person (or two or more
persons who act as a partnership, limited partnership, syndicate, or other group
pursuant to any written or oral agreement, arrangement, relationship,
understanding, or otherwise for the purpose of acquiring, owning or voting
shares of the publicly held corporation) who beneficially owns more than five
percent (5%) of the voting power of the corporation if the shares had been
beneficially owned by that person for less than two years, and if the purchase
price would exceed the market value of those shares. However, such a purchase
would not violate the statute if the purchase is approved at a meeting of the
stockholders by a majority of the voting power of all shares entitled to vote or
if the corporation's offer is at least of equal value per share and is made to
all holders of any class or series into which the securities may be converted.
There is no provision of the DGCL which is analogous to the MBCA with
respect to greenmail and the TCF Certificate does not contain an anti-greenmail
provision.
STOCKHOLDER RIGHTS PLAN
On May 23, 1989, the Board of Directors of TCF declared a dividend
distribution of one Right for each outstanding share of TCF Common Stock. For
discussion of the Rights, see "Description of TCF Capital Stock--TCF Common
Stock--Preferred Share Purchase Rights" and "Description of TCF Capital
Stock--Preferred Stock--Series A Junior Preferred Stock." Winthrop has not
adopted a stockholder rights plan.
DISSENTERS' RIGHTS OF APPRAISAL
Under the MBCA and DGCL, stockholders have the right, under certain
circumstances, to dissent from certain corporate transactions, principally
mergers and consolidations, by demanding payment in cash for their shares equal
to the fair value (excluding, under the DGCL, any appreciation or depreciation
as a
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<PAGE>
consequence or in expectation of the transaction), as determined by the
corporation or by an independent appraiser appointed by a court in an action
timely brought by the dissenters. Under the MBCA, Winthrop stockholders would
have dissenters' rights if Winthrop amends its articles in such a way that
materially and adversely affects the rights or preferences of the shares of the
dissenting stockholder, enters into a sale, lease, transfer, or other
disposition of all of substantially all of the property and assets of the
corporation, a plan of merger, a plan of exchange or any other action taken
pursuant to a stockholder vote if the articles, the bylaws or a resolution
approved by the board directs that dissenting stockholders may obtain payment
their shares. For a discussion of Winthrop stockholders' dissenters' rights of
appraisal in connection with the Merger, see "The Merger--Dissenters'
Rights--Winthrop--Procedure to Preserve Dissenters' Rights."
Under the DGCL, no dissenters' rights exist for shares of stock of a
constituent corporation in a merger or consolidation that are either listed on a
national securities exchange or held of record by more than 2,000 stockholders.
However, dissenters' rights will exist if the stockholders receive anything
other than: (i) shares of stock of the corporation surviving or resulting from
such merger or consolidation; (ii) shares of stock of any other corporation
which at the effective date of the merger or consolidation will be either listed
on a national securities exchange or held of record by more than 2,000
stockholders; (iii) cash in lieu of fractional shares of the corporation
described in the foregoing clauses (i) and (ii); or (iv) any combination of
clause (i), (ii) or (iii). The TCF Certificate does not provide for any
dissenters' rights in addition to those provided by the DGCL. TCF stockholders
will not have any dissenters' rights of appraisal in connection with the Merger.
STOCKHOLDER'S RIGHT TO EXAMINE BOOKS AND RECORDS
The MBCA provides that any stockholder or group of stockholders of a
publicly held corporation have the right, upon written demand stating the
purpose, to examine and copy the corporation's share register and other
corporate records upon demonstrating a proper purpose. The DGCL provides that a
stockholder of a Delaware corporation may inspect books and records of the
corporation upon written demand under oath stating the purpose of the
inspection, if such purpose is reasonably related to such person's interest as a
stockholder.
PAYMENT OF DIVIDENDS
Under the MBCA, Winthrop may declare a dividend to its stockholders if the
board determines that Winthrop will be able to pay its debts in the ordinary
course of business after making the distribution and the board does not know
before the dividend is made that the determination was or has become erroneous.
A dividend may be made to the holders of a class or series of shares only if all
amounts payable to the holders of shares having a preference for the payment are
paid and the distribution does not reduce the remaining net assets of Winthrop
below the aggregate preferential amount payable in the event of liquidation to
the holders of shares having preferential rights, unless the distribution is
made to those stockholders in the order and to the extent of their respective
priorities.
TCF is not subject to advance notice requirements and regulatory limitations
relating to the payment of dividends or making other forms of capital
distributions. Dividends from the TCF Banks to TCF, however, are subject to
potential restrictions under the administration of the OCC. The DGCL provides
that, subject to any restrictions in the corporation's certificate of
incorporation, dividends may be declared from the corporation's surplus or, if
there is no surplus, from its net profits for the fiscal year in which the
dividend is declared and the preceding fiscal year. However, if the
corporation's capital (generally defined in the DGCL as the sum of the aggregate
par value of all shares of the corporation's capital stock, where all such
shares have a par value and the board of directors has not established a higher
level of capital) has been diminished to an amount less than the aggregate
amount of the capital represented by the issued and outstanding stock of all
classes having a preference upon the distribution of assets, dividends may not
be declared and paid out of such net profits until the deficiency in such
capital has been repaired.
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<PAGE>
DISSOLUTION
Under the DGCL, voluntary dissolution of a corporation requires the adoption
of a resolution by a majority of the members of the board of directors and the
affirmative vote of the holders of a majority of the outstanding shares entitled
to vote thereon. Under Minnesota law, voluntary dissolution may be approved by
the affirmative vote of the holders of a majority of the voting power of all
shares entitled to vote.
RECENT DEVELOPMENTS
BOC FINANCIAL. On January 16, 1997, TCF Illinois acquired the stock of BOC
Financial Corporation ("BOC") and its wholly-owned indirect subsidiary, Bank of
Chicago, s.b., an Illinois state-chartered savings bank ("Bank of Chicago").
Effective April 7, 1997, Bank of Chicago was merged with and into TCF Illinois,
with TCF Illinois as the resulting institution. The acquisition of BOC and
subsequent merger are not considered to be material events for purposes of the
Unaudited Pro Forma Combined Financial Information presented elsewhere herein.
STANDARD. TCF Financial signed a definitive agreement dated as of March 16,
1997 to acquire Standard and its wholly-owned subsidiary, Standard Bank,
headquartered in Chicago, Illinois. Standard had total assets of $2.5 billion
and Standard Bank had 14 branches at March 31, 1997. Standard's Annual Report on
Form 10-K for the year ended December 31, 1996 and Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997 are hereby incorporated by reference to
Exhibits 13 (a) and (b) to this Registration Statement, on file with the
Commission. The financial information contained on those reports is summarized
in "Unaudited Pro Forma Combined Financial Information."
Under the agreement with Standard, pursuant to the steps of reorganization
described therein, the assets and liabilities of Standard will be transferred
to, and Standard Bank will be merged with, TCF Illinois. As of March 31, 1997,
Standard had outstanding 16,204,235 shares of its common stock and options to
acquire 1,275,937 shares of its common stock. Pursuant to the Standard Merger
Agreement, the Standard acquisition will be structured as a cash election merger
in which Standard stockholders will have the right to choose either cash or TCF
Common Stock, or a combination of the two. Between 40% and 55.5% of the
estimated purchase price of $419 million will be paid in shares of TCF Common
Stock with the remainder paid in cash. The Standard acquistion will be accounted
for by the purchase method of accounting. Consummation of the acquisition is
subject to regulatory approval and certain other conditions and is expected to
occur by October 31, 1997. The Merger is not contingent upon the closing of
TCF's acquisition of Standard. Subject to satisfaction or waiver of the
conditions in the Merger Agreement, the Merger of a wholly-owned subsidiary of
TCF with and into Winthrop may occur before the Standard acquisition is
completed by TCF. However, there can be no assurance that the Standard
acquisition will be consummated because the transaction is subject to various
conditions, including requisite regulatory approvals and clearances, and rights
of termination, including the right of Standard to terminate if the average
trading price of TCF Common Stock is below $37.50 per share during a specified
period of time. It is also possible that the Standard acquisition could close
before consummation of the Merger.
REDEMPTION OF GREAT LAKES DEBENTURES. On May 12, 1997, TCF called for
redemption the 7 1/4% Convertible Subordinated Debentures due 2011 of Great
Lakes Michigan (the "Great Lakes Debentures") which TCF assumed in connection
with its acquisition of Great Lakes in February 1995. As of May 12, 1997, $7.1
million principal amount of Great Lakes Debentures were outstanding. The Great
Lakes Debentures are convertible into TCF Common Stock at a conversion price of
$17.04 per share. The redemption date is June 16, 1997. It is expected that
approximately 400,000 shares of TCF Common Stock will be issued in connection
with the redemption of the Great Lakes Debentures.
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<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The Merger Agreement provides that at the Effective Time all of the issued
and outstanding shares of Winthrop Common Stock (other than shares held by TCF
or any subsidiary thereof, other than shares held in a fiduciary capacity or in
satisfaction of debt) will be cancelled and converted into the number of shares
of TCF Common Stock determined by multiplying the number of shares of such
Winthrop Common Stock by 0.7766, the Exchange Ratio. The Merger Agreement may be
terminated by Winthrop if the Average TCF Stock Price is less than $42.30 per
share and by TCF if the Average TCF Stock Price is more than $51.70 per share.
The following Unaudited Pro Forma Combined Financial Information has been
prepared using the Exchange Ratio of 0.7766. See "The Merger--The Exchange
Ratio." The following Unaudited Pro Forma Combined Financial Information
reflects the Merger and the acquisition of Standard, including the issuance of
4,876,000 shares of TCF Common Stock to Standard shareholders using the May 13,
1997 closing TCF Common Stock price of $43.00. See "Recent Developments."
The following Unaudited Pro Forma Combined Statement of Financial Condition
as of March 31, 1997 combines the historical consolidated statements of
financial condition of TCF, Winthrop and Standard as if the Merger and the
acquisition of Standard had been effective on March 31, 1997, after giving
effect to certain pro forma adjustments described in the accompanying notes.
The following Unaudited Pro Forma Combined Statements of Operations for the
year ended December 31, 1996 and for the three months ended March 31, 1997 and
1996 are presented as if the Merger had been effective January 1, 1994 and the
acquisition of Standard had been effective January 1, 1996, after giving effect
to certain pro forma adjustments described in the accompanying notes. TCF's,
Winthrop's and Standard's fiscal years end December 31. The following Unaudited
Pro Forma Combined Statements of Operations for the two years ended December 31,
1995 and 1994 are presented as if the Merger had been effective January 1, 1994.
The Unaudited Pro Forma Combined Financial Information and notes thereto
reflect the application of the pooling-of-interests method of accounting for the
acquisition of Winthrop. Under this method of accounting, the recorded assets,
liabilities, income and expenses of TCF and Winthrop are combined and recorded
at their historical cost-based amounts, except as noted below and in the notes
thereto. Certain historical information of Winthrop has been reclassified to
conform to TCF's financial statement presentation.
The Unaudited Pro Forma Combined Financial Information and notes thereto
reflect the application of the purchase method of accounting for the acquisition
of Standard. Under this method of accounting, the assets acquired and
liabilities assumed from Standard are recorded at their fair market values. The
amount of the purchase price in excess of the fair market value of the tangible
and indentifiable intangible assets acquired less the liabilities assumed is
recorded as goodwill. Certain historical information of Standard has been
reclassified to conform to TCF's financial statement presentation.
The Unaudited Pro Forma Combined Financial Information does not reflect the
effects of the anticipated additional offering of up to 800,000 shares of TCF
Common Stock in order to qualify the Merger as a pooling of interests and
anticipated issuance of approximately 400,000 shares of TCF Common Stock in
connection with the conversion of Great Lakes Michigan's 7 1/4% Convertible
Subordinated Debentures due 2011. See "Summary--Terms of the Merger."
The significant accounting and reporting policies of TCF, Winthrop and
Standard differ in minor respects and no effect has been given to such
differences in this Unaudited Pro Forma Combined Financial Information. The
Unaudited Pro Forma Combined Financial Information included herein is not
necessarily indicative of the consolidated financial position or results of
future operations of the combined entity or the actual results that would have
been achieved had the acquisitions of Winthrop and Standard been consummated
prior to the periods indicated. The Unaudited Pro Forma Combined Financial
Information
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<PAGE>
should be read in conjunction with and are qualified in their entirety by the
separate historical consolidated financial statements and notes thereto of TCF,
Winthrop and Standard, which are incorporated by reference herein. See
"Incorporation of Certain Documents by Reference."
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TCF FINANCIAL CORPORATION AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
STANDARD FINANCIAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF FINANCIAL CONDITION
AT MARCH 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
------------------------ -------------------------
ASSETS TCF WINTHROP ADJUSTMENTS COMBINED STANDARD ADJUSTMENTS COMBINED
---------- -------- ----------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and due from banks................... $ 187,103 $ 5,592 $ -- $ 192,695 $ 17,929 $ -- $ 210,624
Interest-bearing deposits with banks...... 1,793 3,937 -- 5,730 27,375 -- 33,105
U.S. Government and other marketable
securities held to maturity............. 3,918 -- -- 3,918 -- -- 3,918
Federal Home Loan Bank stock, at cost..... 50,810 -- -- 50,810 20,500 -- 71,310
Securities available for sale............. 1,242,457 -- -- 1,242,457 860,405 (200,000)(2) 1,902,862
Loans held for sale....................... 199,154 -- -- 199,154 29,065 -- 228,219
Loans and lease financings:
Total loans............................. 5,028,741 -- -- 5,028,741 1,490,141 (6,509)(3) 6,512,373
Total lease financings.................. -- 326,200 -- 326,200 -- -- 326,200
---------- -------- ----------- ---------- ---------- ------------ ----------
Total loans and lease financings...... 5,028,741 326,200 -- 5,354,941 1,490,141 (6,509) 6,838,573
Allowance for loan and lease losses... (71,475) (1,398 ) -- (72,873) (7,401) -- (80,274)
---------- -------- ----------- ---------- ---------- ------------ ----------
Net loans and lease financings...... 4,957,266 324,802 -- 5,282,068 1,482,740 (6,509) 6,758,299
Premises and equipment.................... 137,559 1,080 -- 138,639 27,187 (1,630)(4) 164,196
Real estate............................... 15,559 -- -- 15,559 160 -- 15,719
Accrued interest receivable............... 44,050 -- -- 44,050 14,943 -- 58,993
Goodwill.................................. 25,052 5,436 -- 30,488 387 152,510(5) 183,385
Deposit base intangibles.................. 13,501 -- -- 13,501 -- 17,333(6) 30,834
Mortgage servicing rights................. 16,561 -- -- 16,561 764 81(3) 17,406
Other assets.............................. 69,336 29,132 -- 98,468 7,399 -- 105,867
---------- -------- ----------- ---------- ---------- ------------ ----------
$6,964,119 $369,979 $ -- $7,334,098 $2,488,854 $ (38,215) $9,784,737
---------- -------- ----------- ---------- ---------- ------------ ----------
---------- -------- ----------- ---------- ---------- ------------ ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Total deposits............................ $5,291,894 $ -- $ -- $5,291,894 $1,776,848 $ 6,496(3) $7,075,238
---------- -------- ----------- ---------- ---------- ------------ ----------
Securities sold under repurchase
agreements.............................. 328,977 -- -- 328,977 -- -- 328,977
Federal Home Loan Bank advances........... 630,307 -- -- 630,307 410,000 (2,745)(3) 1,037,562
Discounted lease rentals.................. -- 203,286 -- 203,286 -- -- 203,286
Subordinated debt......................... 13,392 28,750 -- 42,142 -- -- 42,142
Collateralized obligations................ 40,374 -- -- 40,374 -- -- 40,374
Other borrowings.......................... 28,325 -- -- 28,325 -- 580(7) 28,905
---------- -------- ----------- ---------- ---------- ------------ ----------
Total borrowings........................ 1,041,375 232,036 -- 1,273,411 410,000 (2,165) 1,681,246
Accrued expenses and other liabilities.... 88,981 53,096 -- 142,077 30,749 19,043(8) 191,869
---------- -------- ----------- ---------- ---------- ------------ ----------
Total liabilities....................... 6,422,250 285,132 -- 6,707,382 2,217,597 23,374 8,948,353
---------- -------- ----------- ---------- ---------- ------------ ----------
Stockholders' equity:
Preferred stock......................... -- -- -- -- -- -- --
Common stock............................ 359 86 (19)(1) 426 191 (142)(9) 475
Additional paid-in capital.............. 253,186 23,191 19(1) 276,396 190,266 19,353(9) 486,015
Unamortized deferred compensation....... (22,128) -- -- (22,128) (3,475) 3,475(9) (22,128)
Retained earnings, subject to certain
restrictions.......................... 366,655 61,570 -- 428,225 132,902 (132,902)(9) 428,225
Loans to Executive Deferred Compensation
Plan.................................. (52) -- -- (52) -- -- (52)
Unrealized gain (loss) on securities
available for sale.................... (4,515) -- -- (4,515) 1,750 (1,750)(9) (4,515)
Employee Stock Ownership Plan shares.... -- -- -- -- (9,292) 9,292(10) --
Treasury stock, at cost................. (51,636) -- -- (51,636) (41,085) 41,085(9) (51,636)
---------- -------- ----------- ---------- ---------- ------------ ----------
Total stockholders' equity............ 541,869 84,847 -- 626,716 271,257 (61,589) 836,384
---------- -------- ----------- ---------- ---------- ------------ ----------
$6,964,119 $369,979 $ -- $7,334,098 $2,488,854 $ (38,215) $9,784,737
---------- -------- ----------- ---------- ---------- ------------ ----------
---------- -------- ----------- ---------- ---------- ------------ ----------
</TABLE>
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TCF FINANCIAL CORPORATION AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
STANDARD FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF
FINANCIAL CONDITION
Pursuant to the Merger Agreement and Standard purchase agreement, and
consistent with generally accepted accounting principles ("GAAP"), TCF expects
that certain pooling-of-interest and purchase accounting adjustments relating to
Winthrop and Standard, respectively, will be recorded. The purchase accounting
adjustments are preliminary estimates and are subject to revision as economic
conditions change or as more information becomes available. The following notes
further explain the adjustments.
(1) Represents the adjustment to reflect the par value of TCF Common Stock to
be issued in connection with the Merger, with a related adjustment to
additional paid-in capital.
(2) Represents the planned sale of $200 million of securities available for
sale in connection with the acquisition of Standard.
(3) Represent the mark-to-market adjustments to reflect the fair market value
of the Standard assets acquired and liabilities assumed under the purchase
method of accounting.
(4) Represents the write-off of certain Standard fixed assets and duplicative
data processing hardware and software.
(5) Represents the excess of the purchase price paid for Standard over the fair
market value of the tangible and identifiable intangible assets acquired and
liabilities assumed under the purchase method of accounting, less Standard's
pre-existing goodwill. Goodwill is assumed to amortize on a straight-line
basis over 25 years.
(6) Represents identifiable deposit base intangibles ("DBI") relating to
Standard's deposits. The DBI will be amortized using an accelerated method.
(7) Represents the planned increase in TCF's short-term borrowings to fund the
acquisition of Standard, net of proceeds from the planned sale of securities
available for sale and the planned repayment of the loan to the Standard
Employee Stock Ownership Plan and Trust ("ESOP").
(8) Represents accruals for other merger related costs such as data processing
contract termination costs, investment banking fees, severance and other
anticipated reorganization and consolidation costs.
(9) Represents the elimination of Standard's stockholders' equity under the
purchase method of accounting and the issuance of approximately 4.9 million
shares of TCF Common Stock.
(10) Represents the repayment of the loan to the ESOP and the allocation of the
remaining unallocated ESOP shares to the plan participants.
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TCF FINANCIAL CORPORATION AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
STANDARD FINANCIAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
--------------------------
TCF WINTHROP ADJUSTMENTS COMBINED STANDARD
--------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Interest income:
Loans.................................... $ 119,077 $ -- $ -- $ 119,077 $ 27,239
Lease financings......................... -- 8,205 -- 8,205 --
Loans held for sale...................... 3,513 -- -- 3,513 646
Securities available for sale............ 21,383 -- -- 21,383 14,278
Investments.............................. 1,163 153 -- 1,316 716
--------- ----------- ------ ----------- -----------
Total interest income.................. 145,136 8,358 -- 153,494 42,879
--------- ----------- ------ ----------- -----------
Interest expense:
Deposits................................. 42,158 -- -- 42,158 20,003
Borrowings............................... 16,960 4,171 -- 21,131 6,148
--------- ----------- ------ ----------- -----------
Total interest expense................. 59,118 4,171 -- 63,289 26,151
--------- ----------- ------ ----------- -----------
Net interest income.................. 86,018 4,187 -- 90,205 16,728
Provision for credit losses................ 1,090 408 -- 1,498 475
--------- ----------- ------ ----------- -----------
Net interest income after provision for
credit losses........................ 84,928 3,779 -- 88,707 16,253
--------- ----------- ------ ----------- -----------
Non-interest income:
Fee and service charge revenues.......... 25,638 -- -- 25,638 691
ATM network revenues..................... 3,536 -- -- 3,536 128
Title insurance revenues................. 2,749 -- -- 2,749 --
Commissions on sales of annuities........ 1,934 -- -- 1,934 66
Leasing revenues......................... -- 6,358 -- 6,358 --
Gain on sale of loans held for sale...... 877 -- -- 877 192
Gain (loss) on sale of securities
available for sale..................... 1,369 16 -- 1,385 (146)
Gain on sale of loan servicing........... 1,622 -- -- 1,622 --
Other.................................... 2,656 -- -- 2,656 160
--------- ----------- ------ ----------- -----------
Total non-interest income.............. 40,381 6,374 -- 46,755 1,091
--------- ----------- ------ ----------- -----------
Non-interest expense:
Compensation and employee benefits....... 39,716 1,745 -- 41,461 5,133
Occupancy and equipment.................. 13,578 244 -- 13,822 2,058
Advertising and promotions............... 4,929 64 -- 4,993 516
Federal deposit insurance premiums and
assessments............................ 1,071 -- -- 1,071 148
Amortization of goodwill and other
intangibles............................ 1,095 98 -- 1,193 45
Provision for real estate losses......... 98 -- -- 98 --
Other.................................... 17,441 1,175 -- 18,616 3,159
--------- ----------- ------ ----------- -----------
Total non-interest expense............. 77,928 3,326 -- 81,254 11,059
--------- ----------- ------ ----------- -----------
Income before income tax expense and
extraordinary item................. 47,381 6,827 -- 54,208 6,285
Income tax expense......................... 18,450 2,731 -- 21,181 2,201
--------- ----------- ------ ----------- -----------
Income before extraordinary item......... $ 28,931 $ 4,096 $ -- $ 33,027 $ 4,084
--------- ----------- ------ ----------- -----------
--------- ----------- ------ ----------- -----------
Per common share (6)(7):
Income before extraordinary item:
Primary................................ $ .83 $ .46 $ .79 $ .26
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
Fully diluted.......................... $ .82 $ .46 $ .79 $ .26
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
Weighted average shares outstanding
(000's):
Primary................................ 34,797 8,901 41,710 15,559
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
Fully diluted.......................... 35,216 8,901 42,129 15,659
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
<CAPTION>
PRO FORMA
--------------------------
ADJUSTMENTS COMBINED
------------ -----------
<S> <C> <C>
Interest income:
Loans....................................$ 322(1) $ 146,638
Lease financings......................... -- 8,205
Loans held for sale...................... -- 4,159
Securities available for sale............ (3,750)(2) 31,911
Investments.............................. -- 2,032
------------ -----------
Total interest income.................. (3,428) 192,945
------------ -----------
Interest expense:
Deposits................................. (1,299)(1) 60,862
Borrowings............................... 120(3) 27,399
------------ -----------
Total interest expense................. (1,179) 88,261
------------ -----------
Net interest income.................. (2,249) 104,684
Provision for credit losses................ -- 1,973
------------ -----------
Net interest income after provision for
credit losses........................ (2,249) 102,711
------------ -----------
Non-interest income:
Fee and service charge revenues.......... -- 26,329
ATM network revenues..................... -- 3,664
Title insurance revenues................. -- 2,749
Commissions on sales of annuities........ -- 2,000
Leasing revenues......................... -- 6,358
Gain on sale of loans held for sale...... -- 1,069
Gain (loss) on sale of securities
available for sale..................... -- 1,239
Gain on sale of loan servicing........... -- 1,622
Other.................................... -- 2,816
------------ -----------
Total non-interest income.............. -- 47,846
------------ -----------
Non-interest expense:
Compensation and employee benefits....... -- 46,594
Occupancy and equipment.................. (169)(4) 15,711
Advertising and promotions............... -- 5,509
Federal deposit insurance premiums and
assessments............................ -- 1,219
Amortization of goodwill and other
intangibles............................ 2,341(5) 3,579
Provision for real estate losses......... -- 98
Other.................................... -- 21,775
------------ -----------
Total non-interest expense............. 2,172 94,485
------------ -----------
Income before income tax expense and
extraordinary item................. (4,421) 56,072
Income tax expense......................... (1,144) 22,238
------------ -----------
Income before extraordinary item.........$ (3,277) $ 33,834
------------ -----------
------------ -----------
Per common share (6)(7):
Income before extraordinary item:
Primary................................ $ .73
-----------
-----------
Fully diluted.......................... $ .72
-----------
-----------
Weighted average shares outstanding
(000's):
Primary................................ 46,586
-----------
-----------
Fully diluted.......................... 47,005
-----------
-----------
</TABLE>
83
<PAGE>
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
STANDARD FINANCIAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
-------------------------- -------------
TCF WINTHROP ADJUSTMENTS COMBINED STANDARD ADJUSTMENTS
--------- ----------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Loans.................................... $ 122,850 $ -- $ -- $ 122,850 $ 20,303 $ 322(1)
Lease financings......................... -- 6,838 -- 6,838 -- --
Loans held for sale...................... 4,574 -- -- 4,574 -- --
Securities available for sale............ 20,351 -- -- 20,351 16,459 (3,750)(2)
Investments.............................. 1,118 41 -- 1,159 626 --
--------- ----------- ------ ----------- ----------- -------------
Total interest income.................. 148,893 6,879 -- 155,772 37,388 (3,428)
--------- ----------- ------ ----------- ----------- -------------
Interest expense:
Deposits................................. 44,696 -- -- 44,696 17,423 (1,299)(1)
Borrowings............................... 19,743 3,619 -- 23,362 3,970 120(3)
--------- ----------- ------ ----------- ----------- -------------
Total interest expense................. 64,439 3,619 -- 68,058 21,393 (1,179)
--------- ----------- ------ ----------- ----------- -------------
Net interest income.................. 84,454 3,260 -- 87,714 15,995 (2,249)
Provision for credit losses................ 2,802 100 -- 2,902 800 --
--------- ----------- ------ ----------- ----------- -------------
Net interest income after provision for
credit losses........................ 81,652 3,160 -- 84,812 15,195 (2,249)
--------- ----------- ------ ----------- ----------- -------------
Non-interest income:
Fee and service charge revenues.......... 22,600 -- -- 22,600 928 --
ATM network revenues..................... 2,512 -- -- 2,512 126 --
Title insurance revenues................. 3,587 -- -- 3,587 -- --
Commissions on sales of annuities........ 2,169 -- -- 2,169 31 --
Leasing revenues......................... -- 5,399 -- 5,399 -- --
Gain on sale of loans held for sale...... 1,483 -- -- 1,483 28 --
Gain on sale of securities available for
sale................................... 85 -- -- 85 1,569 --
Gain on sale of branches................. 1,245 -- -- 1,245 -- --
Other.................................... 2,148 -- -- 2,148 318 --
--------- ----------- ------ ----------- ----------- -------------
Total non-interest income.............. 35,829 5,399 -- 41,228 3,000 --
--------- ----------- ------ ----------- ----------- -------------
Non-interest expense:
Compensation and employee benefits....... 36,434 1,512 -- 37,946 5,036 --
Occupancy and equipment.................. 12,837 196 -- 13,033 2,079 (169)(4)
Advertising and promotions............... 4,732 63 -- 4,795 457 --
Federal deposit insurance premiums and
assessments............................ 3,161 -- -- 3,161 948 --
Amortization of goodwill and other
intangibles............................ 795 78 -- 873 23 2,341(5)
Provision for real estate losses......... 448 -- -- 448 -- --
Other.................................... 17,399 1,397 -- 18,796 1,872 --
--------- ----------- ------ ----------- ----------- -------------
Total non-interest expense............. 75,806 3,246 -- 79,052 10,415 2,172
--------- ----------- ------ ----------- ----------- -------------
Income before income tax expense and
extraordinary item................. 41,675 5,313 -- 46,988 7,780 (4,421)
Income tax expense......................... 15,388 2,178 -- 17,566 2,859 (1,144)
--------- ----------- ------ ----------- ----------- -------------
Income before extraordinary item......... $ 26,287 $ 3,135 $ -- $ 29,422 $ 4,921 $ (3,277)
--------- ----------- ------ ----------- ----------- -------------
--------- ----------- ------ ----------- ----------- -------------
Per common share (6)(7):
Income before extraordinary item:
Primary................................ $ .73 $ .40 $ .70 $ .31
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
Fully diluted.......................... $ .72 $ .40 $ .69 $ .31
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
Weighted average shares outstanding
(000's):
Primary................................ 35,986 7,872 42,253 16,026
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
Fully diluted.......................... 36,417 7,872 42,695 16,036
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
<CAPTION>
COMBINED
-----------
<S> <C>
Interest income:
Loans.................................... $ 143,475
Lease financings......................... 6,838
Loans held for sale...................... 4,574
Securities available for sale............ 33,060
Investments.............................. 1,785
-----------
Total interest income.................. 189,732
-----------
Interest expense:
Deposits................................. 60,820
Borrowings............................... 27,452
-----------
Total interest expense................. 88,272
-----------
Net interest income.................. 101,460
Provision for credit losses................ 3,702
-----------
Net interest income after provision for
credit losses........................ 97,758
-----------
Non-interest income:
Fee and service charge revenues.......... 23,528
ATM network revenues..................... 2,638
Title insurance revenues................. 3,587
Commissions on sales of annuities........ 2,200
Leasing revenues......................... 5,399
Gain on sale of loans held for sale...... 1,511
Gain on sale of securities available for
sale................................... 1,654
Gain on sale of branches................. 1,245
Other.................................... 2,466
-----------
Total non-interest income.............. 44,228
-----------
Non-interest expense:
Compensation and employee benefits....... 42,982
Occupancy and equipment.................. 14,943
Advertising and promotions............... 5,252
Federal deposit insurance premiums and
assessments............................ 4,109
Amortization of goodwill and other
intangibles............................ 3,237
Provision for real estate losses......... 448
Other.................................... 20,668
-----------
Total non-interest expense............. 91,639
-----------
Income before income tax expense and
extraordinary item................. 50,347
Income tax expense......................... 19,281
-----------
Income before extraordinary item......... $ 31,066
-----------
-----------
Per common share (6)(7):
Income before extraordinary item:
Primary................................ $ .66
-----------
-----------
Fully diluted.......................... $ .65
-----------
-----------
Weighted average shares outstanding
(000's):
Primary................................ 47,129
-----------
-----------
Fully diluted.......................... 47,571
-----------
-----------
</TABLE>
84
<PAGE>
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
STANDARD FINANCIAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
-------------------------- ------------------------
TCF WINTHROP ADJUSTMENTS COMBINED STANDARD ADJUSTMENTS COMBINED
--------- ----------- ------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income:
Loans................................. $ 486,140 $ -- $ -- $ 486,140 $ 93,554 $ 1,286(1) $ 580,980
Lease financings...................... -- 29,914 -- 29,914 -- -- 29,914
Loans held for sale................... 17,080 -- -- 17,080 469 -- 17,549
Securities available for sale......... 75,303 1 -- 75,304 61,265 (15,000)(2) 121,569
Investments........................... 4,338 109 -- 4,447 2,208 -- 6,655
--------- ----------- ------------- ----------- ----------- ----------- -----------
Total interest income............... 582,861 30,024 -- 612,885 157,496 ( 13,714) 756,667
--------- ----------- ------------- ----------- ----------- ----------- -----------
Interest expense:
Deposits.............................. 171,375 -- -- 171,375 73,955 (5,197)(1) 240,133
Borrowings............................ 71,346 15,595 -- 86,941 19,980 478(3) 107,399
--------- ----------- ------------- ----------- ----------- ----------- -----------
Total interest expense.............. 242,721 15,595 -- 258,316 93,935 (4,719) 347,532
--------- ----------- ------------- ----------- ----------- ----------- -----------
Net interest income............... 340,140 14,429 -- 354,569 63,561 (8,995) 409,135
Provision for credit losses............. 19,820 1,426 -- 21,246 2,500 -- 23,746
--------- ----------- ------------- ----------- ----------- ----------- -----------
Net interest income after provision
for credit losses................. 320,320 13,003 -- 333,323 61,061 (8,995) 385,389
--------- ----------- ------------- ----------- ----------- ----------- -----------
Non-interest income:
Fee and service charge revenues....... 100,422 -- -- 100,422 3,825 -- 104,247
ATM network revenues.................. 11,480 -- -- 11,480 535 -- 12,015
Title insurance revenues.............. 13,492 -- -- 13,492 -- -- 13,492
Commissions on sales of annuities..... 9,134 -- -- 9,134 271 -- 9,405
Leasing revenues...................... -- 23,814 -- 23,814 -- -- 23,814
Gain on sale of loans held for sale... 5,038 -- -- 5,038 1,386 -- 6,424
Gain on sale of securities available
for sale............................ 85 1 -- 86 1,578 -- 1,664
Gain on sale of loans................. 5,443 -- -- 5,443 -- -- 5,443
Gain on sale of branches.............. 2,747 -- -- 2,747 -- -- 2,747
Other................................. 9,956 -- -- 9,956 1,285 -- 11,241
--------- ----------- ------------- ----------- ----------- ----------- -----------
Total non-interest income........... 157,797 23,815 -- 181,612 8,880 -- 190,492
--------- ----------- ------------- ----------- ----------- ----------- -----------
Non-interest expense:
Compensation and employee benefits.... 151,745 5,809 -- 157,554 20,629 -- 178,183
Occupancy and equipment............... 51,136 822 -- 51,958 8,728 (675)(4) 60,011
Advertising and promotions............ 16,711 303 -- 17,014 1,745 -- 18,759
Federal deposit insurance premiums and
assessments......................... 12,019 -- -- 12,019 3,992 -- 16,011
Amortization of goodwill and other
intangibles......................... 3,167 564 -- 3,731 135 9,365(5) 13,231
Provision for real estate losses...... 433 -- -- 433 -- -- 433
FDIC special assessment............... 34,803 -- -- 34,803 9,577 -- 44,380
Other................................. 71,056 4,959 -- 76,015 7,159 -- 83,174
--------- ----------- ------------- ----------- ----------- ----------- -----------
Total non-interest expense.......... 341,070 12,457 -- 353,527 51,965 8,690 414,182
--------- ----------- ------------- ----------- ----------- ----------- -----------
Income before income tax expense
and extraordinary item.......... 137,047 24,361 -- 161,408 17,976 (17,685) 161,699
Income tax expense...................... 51,384 9,647 -- 61,031 6,064 (4,576) 62,519
--------- ----------- ------------- ----------- ----------- ----------- -----------
Income before extraordinary item.... $ 85,663 $ 14,714 $ -- $ 100,377 $ 11,912 $ (13,109) $ 99,180
--------- ----------- ------------- ----------- ----------- ----------- -----------
--------- ----------- ------------- ----------- ----------- ----------- -----------
Per common share (6)(7):
Income before extraordinary item:
Primary............................. $ 2.42 $ 1.76 $ 2.39 $ .76 $ 2.12
--------- ----------- ----------- ----------- -----------
--------- ----------- ----------- ----------- -----------
Fully diluted....................... $ 2.40 $ 1.76 $ 2.38 $ .75 $ 2.11
--------- ----------- ----------- ----------- -----------
--------- ----------- ----------- ----------- -----------
Weighted average shares outstanding
(000's):
Primary............................. 35,342 8,369 41,926 15,635 46,802
--------- ----------- ----------- ----------- -----------
--------- ----------- ----------- ----------- -----------
Fully diluted....................... 35,773 8,375 42,364 15,882 47,240
--------- ----------- ----------- ----------- -----------
--------- ----------- ----------- ----------- -----------
</TABLE>
85
<PAGE>
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
------------------------
TCF WINTHROP ADJUSTMENTS COMBINED
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income:
Loans............................................................ $ 488,433 $ -- $ -- $ 488,433
Lease financings................................................. -- 23,330 -- 23,330
Loans held for sale.............................................. 18,253 -- -- 18,253
Securities available for sale.................................... 4,021 34 -- 4,055
Investments...................................................... 5,946 144 -- 6,090
Mortgage-backed securities held to maturity...................... 91,037 -- -- 91,037
--------- ----------- ----------- -----------
Total interest income.......................................... 607,690 23,508 -- 631,198
--------- ----------- ----------- -----------
Interest expense:
Deposits......................................................... 193,244 -- -- 193,244
Borrowings....................................................... 95,248 13,614 -- 108,862
--------- ----------- ----------- -----------
Total interest expense......................................... 288,492 13,614 -- 302,106
--------- ----------- ----------- -----------
Net interest income.......................................... 319,198 9,894 -- 329,092
Provision for credit losses........................................ 15,212 842 -- 16,054
--------- ----------- ----------- -----------
Net interest income after provision for credit losses.......... 303,986 9,052 -- 313,038
--------- ----------- ----------- -----------
Non-interest income:
Fee and service charge revenues.................................. 89,712 -- -- 89,712
ATM network revenues............................................. 10,568 -- -- 10,568
Title insurance revenues......................................... 11,509 -- -- 11,509
Commissions on sales of annuities................................ 8,557 -- -- 8,557
Leasing revenues................................................. -- 19,739 -- 19,739
Gain on sale of loans held for sale.............................. 3,735 -- -- 3,735
Gain (loss) on sale of securities available for sale............. (190) 38 -- (152)
Loss on sale of mortgage-backed securities....................... (21,037) -- -- (21,037)
Gain on sale of loan servicing................................... 1,535 -- -- 1,535
Gain on sale of branches......................................... 1,103 -- -- 1,103
Other............................................................ 7,284 -- -- 7,284
--------- ----------- ----------- -----------
Total non-interest income...................................... 112,776 19,777 -- 132,553
--------- ----------- ----------- -----------
Non-interest expense:
Compensation and employee benefits............................... 139,548 4,274 -- 143,822
Occupancy and equipment.......................................... 50,554 399 -- 50,953
Advertising and promotions....................................... 16,651 156 -- 16,807
Federal deposit insurance premiums and assessments............... 13,540 -- -- 13,540
Amortization of goodwill and other intangibles................... 3,163 -- -- 3,163
Provision for real estate losses................................. 1,804 -- -- 1,804
Merger-related expenses.......................................... 21,733 -- -- 21,733
Cancellation cost on early termination of interest-rate exchange
contracts...................................................... 4,423 -- -- 4,423
Other............................................................ 65,917 4,740 -- 70,657
--------- ----------- ----------- -----------
Total non-interest expense..................................... 317,333 9,569 -- 326,902
--------- ----------- ----------- -----------
Income before income tax expense and extraordinary item...... 99,429 19,260 -- 118,689
Income tax expense................................................. 37,778 7,704 -- 45,482
--------- ----------- ----------- -----------
Income before extraordinary item................................. $ 61,651 $ 11,556 $ -- $ 73,207
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
Per common share (6)(8):
Income before extraordinary item:
Primary........................................................ $ 1.71 $ 1.46 $ 1.73
--------- ----------- -----------
--------- ----------- -----------
Fully diluted.................................................. $ 1.70 $ 1.46 $ 1.71
--------- ----------- -----------
--------- ----------- -----------
Weighted average shares outstanding (000's):
Primary........................................................ 35,686 7,912 41,965
--------- ----------- -----------
--------- ----------- -----------
Fully diluted.................................................. 36,260 7,912 42,545
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
86
<PAGE>
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
------------------------
TCF WINTHROP ADJUSTMENTS COMBINED
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income:
Loans............................................................ $ 403,095 $ -- $ -- $ 403,095
Lease financings................................................. -- 16,201 -- 16,201
Loans held for sale.............................................. 16,917 -- -- 16,917
Securities available for sale.................................... 13,325 18 -- 13,343
Investments...................................................... 10,476 163 -- 10,639
Mortgage-backed securities held to maturity...................... 108,669 -- -- 108,669
--------- ----------- ----------- -----------
Total interest income.......................................... 552,482 16,382 -- 568,864
--------- ----------- ----------- -----------
Interest expense:
Deposits......................................................... 183,179 -- -- 183,179
Borrowings....................................................... 90,151 10,091 -- 100,242
--------- ----------- ----------- -----------
Total interest expense......................................... 273,330 10,091 -- 283,421
--------- ----------- ----------- -----------
Net interest income.......................................... 279,152 6,291 -- 285,443
Provision for credit losses........................................ 10,802 109 -- 10,911
--------- ----------- ----------- -----------
Net interest income after provision for credit losses.......... 268,350 6,182 -- 274,532
--------- ----------- ----------- -----------
Non-interest income:
Fee and service charge revenues.................................. 83,744 -- -- 83,744
ATM network revenues............................................. 8,988 -- -- 8,988
Title insurance revenues......................................... 10,274 -- -- 10,274
Commissions on sales of annuities................................ 11,310 -- -- 11,310
Leasing revenues................................................. -- 18,096 -- 18,096
Gain on sale of loans held for sale.............................. 2,124 -- -- 2,124
Gain on sale of securities available for sale.................... 981 -- -- 981
Gain on sale of loan servicing................................... 2,353 -- -- 2,353
Other............................................................ 5,445 -- -- 5,445
--------- ----------- ----------- -----------
Total non-interest income...................................... 125,219 18,096 -- 143,315
--------- ----------- ----------- -----------
Non-interest expense:
Compensation and employee benefits............................... 129,794 4,646 -- 134,440
Occupancy and equipment.......................................... 48,217 324 -- 48,541
Advertising and promotions....................................... 14,119 183 -- 14,302
Federal deposit insurance premiums and assessments............... 14,779 -- -- 14,779
Amortization of goodwill and other intangibles................... 3,282 -- -- 3,282
Provision for real estate losses................................. 4,022 -- -- 4,022
Other............................................................ 62,771 3,523 -- 66,294
--------- ----------- ----------- -----------
Total non-interest expense..................................... 276,984 8,676 -- 285,660
--------- ----------- ----------- -----------
Income before income tax expense and extraordinary item...... 116,585 15,602 -- 132,187
Income tax expense................................................. 46,402 6,241 -- 52,643
--------- ----------- ----------- -----------
Income before extraordinary item................................. $ 70,183 $ 9,361 $ -- $ 79,544
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
Per common share (6)(8):
Income before extraordinary item:
Primary........................................................ $ 1.95 $ 1.16 $ 1.88
--------- ----------- -----------
--------- ----------- -----------
Fully diluted.................................................. $ 1.92 $ 1.16 $ 1.85
--------- ----------- -----------
--------- ----------- -----------
Weighted average shares outstanding (000's):
Primary........................................................ 34,527 8,047 40,891
--------- ----------- -----------
--------- ----------- -----------
Fully diluted.................................................. 35,347 8,047 41,716
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
87
<PAGE>
TCF FINANCIAL CORPORATION AND SUBSIDIARIES
WINTHROP RESOURCES CORPORATION
STANDARD FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
Pursuant to the Merger Agreement and the Standard purchase agreement, and
consistent with GAAP, TCF expects that certain adjustments will be recorded,
primarily to accrue for specific, identified costs related to the acquisition of
Standard. The amounts of the merger-related costs are preliminary estimates and
are subject to revision as economic conditions change or as more information
becomes available. TCF does not expect to record any merger-related charges
relating to the Merger.
TCF expects to achieve operating cost savings primarily through reductions
in staff and the consolidation of certain functions such as data processing,
investments and other back office operations at Standard. The operating cost
savings are expected to be achieved in various amounts at various times during
the years subsequent to the acquisition of Standard and not ratably over, or at
the beginning or end of, such periods. No adjustments have been reflected in the
Unaudited Pro Forma Combined Statements of Operations for the year ended
December 31, 1996 or for the three months ended March 31, 1997 and 1996 for the
anticipated cost savings.
(1) Represents amortization of the Standard mark-to-market adjustments under the
purchase method of accounting.
(2) Represents foregone interest income resulting from the planned sale of $200
million of securities available for sale.
(3) Represents amortization of the Standard mark-to-market adjustments, and the
net interest cost of funding the acquisition of Standard.
(4) Represents the reduction in occupancy and equipment expenses resulting from
the write-off of certain Standard fixed assets and duplicative data
processing hardware and software.
(5) Represents amortization of the Standard goodwill and deposit base
intangibles balances.
(6) The pro forma combined per common share data for TCF and Winthrop has been
computed based on the combined historical income before extraordinary item
and on the combined historical weighted average common and common equivalent
shares outstanding. For purposes of this calculation, Winthrop's weighted
average common and common equivalent shares outstanding were multiplied by
0.7766, the Exchange Ratio.
(7) The pro forma combined per common share data for TCF, Winthrop and Standard
has been computed based on the pro forma combined historical income before
extraordinary item and on the combined historical weighted average common
and common equivalent shares outstanding for TCF and Winthrop, and the
assumed issuance of an additional 4.9 million shares of TCF Common Stock
with respect to the acquisition of Standard. For purposes of this
calculation, Winthrop's weighted average common and common equivalent shares
outstanding were multiplied by 0.7766, the Exchange Ratio.
(8) Amounts are after preferred stock dividends.
88
<PAGE>
ADJOURNMENT OF SPECIAL MEETINGS
Each proxy solicited hereby by TCF or Winthrop requests authority to vote
for an adjournment of the TCF Special Meeting, in the case of TCF, or the
Winthrop Special Meeting, in the case of Winthrop, if an adjournment of such
respective meeting is deemed to be necessary. TCF may seek an adjournment of the
TCF Special Meeting and Winthrop may seek an adjournment of the Winthrop Special
Meeting, in each case for not more than 29 days, in order to enable each such
party to solicit additional votes in favor of the Merger Agreement and the
transactions contemplated thereby (the "Merger Proposal") in the event that the
Merger Proposal has not received the requisite vote of stockholders at each such
meeting and has not received the negative votes of a majority of the outstanding
TCF Common Stock or one-third of the outstanding Winthrop Common Stock. If TCF
or Winthrop desires to adjourn their respective meeting with respect to the
Merger Proposal, such party will request a motion that the meeting be adjourned
for up to 29 days with respect to such proposal (and solely with respect to the
Merger Proposal, provided that a quorum is present at such meeting), and no vote
will be taken on the Merger Proposal at the originally scheduled meeting. Each
proxy solicited hereby, if properly signed and returned to TCF or Winthrop (as
applicable) and not revoked prior to its use, will be voted on any motion for
adjournment in accordance with the instructions contained therein. If no
contrary instructions are given, each proxy received will be voted in favor of
any motion to adjourn the respective meeting. Unless revoked prior to its use,
any proxy solicited for the TCF Special Meeting or the Winthrop Special Meeting
will continue to be valid for any adjournment of such meeting, and will be voted
in accordance with instructions contained therein, and if no contrary
instructions are given, for the applicable proposal.
Any adjournment will permit TCF and/or Winthrop to solicit additional
proxies and will permit a greater expression of the stockholders' views with
respect to the Merger Proposal. Such an adjournment would be disadvantageous to
stockholders who are against the Merger Proposal, because an adjournment will
give TCF and/or Winthrop additional time to solicit favorable votes and thus
increase the chances of approving the Merger Proposal.
If a quorum is not present at the TCF Special Meeting and/or the Winthrop
Special Meeting, no proposal will be acted upon and the respective boards of
directors of TCF and Winthrop will adjourn their respective meeting to a later
date in order to solicit additional proxies on each of the proposals being
submitted to stockholders.
An adjournment for up to 29 days will not require either the setting of a
new record date or notice of the adjourned meeting as in the case of an original
meeting. Neither TCF nor Winthrop has any reason to believe that an adjournment
of the TCF Special Meeting and/or the Winthrop Special Meeting will be necessary
at this time.
BECAUSE THE BOARD OF DIRECTORS OF TCF RECOMMENDS THAT ITS STOCKHOLDERS VOTE
"FOR" THE MERGER PROPOSAL, THE BOARD OF DIRECTORS OF TCF RECOMMENDS THAT
STOCKHOLDERS ALSO VOTE "FOR" THE POSSIBLE ADJOURNMENT OF THE TCF SPECIAL
MEETING. BECAUSE THE BOARD OF DIRECTORS OF WINTHROP RECOMMENDS THAT ITS
STOCKHOLDERS VOTE "FOR" THE MERGER PROPOSAL, THE BOARD OF DIRECTORS OF WINTHROP
RECOMMENDS THAT STOCKHOLDERS ALSO VOTE "FOR" THE POSSIBLE ADJOURNMENT OF THE
WINTHROP SPECIAL MEETING. THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF
THE TCF COMMON STOCK REPRESENTED IN PERSON OR BY PROXY AT THE TCF SPECIAL
MEETING WILL BE REQUIRED TO APPROVE A MOTION TO ADJOURN THE TCF SPECIAL MEETING
ON THE MERGER PROPOSAL. THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE
WINTHROP COMMON STOCK REPRESENTED IN PERSON OR BY PROXY AT THE WINTHROP SPECIAL
MEETING WILL BE REQUIRED TO APPROVE A MOTION TO ADJOURN THE WINTHROP SPECIAL
MEETING ON THE MERGER PROPOSAL.
89
<PAGE>
LEGAL OPINIONS
The validity of the TCF Common Stock offered hereby and certain other
matters will be passed upon for TCF by Kaplan, Strangis and Kaplan, P.A.,
Minneapolis, Minnesota. Mr. Strangis, a director of TCF, is a member of Kaplan,
Strangis and Kaplan, P.A. Certain legal matters in connection with the Merger
will be passed upon for Winthrop by Oppenheimer Wolff & Donnelly, Minneapolis,
Minnesota.
EXPERTS
The discussions included under "The Merger--Certain Federal Income Tax
Consequences" were prepared for TCF by KPMG Peat Marwick LLP, independent
certified public accountants, and have been included herein upon the authority
of said firm as experts in tax accounting.
The consolidated financial statements of TCF as of December 31, 1996 and
1995, and for each of the years in the three-year period ended December 31,
1996, have been incorporated by reference in this Joint Proxy
Statement/Prospectus in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Winthrop as of December 31, 1996
and 1995, and for each of the years in the three-year period ended December 31,
1996, have been incorporated by reference in this Joint Proxy
Statement/Prospectus in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Standard incorporated by reference
in Standard's Annual Report on Form 10-K for the year ended December 31, 1996
and incorporated by reference in this Joint Proxy Statement, which is referred
to and made a part of this Prospectus and Registration Statement, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon incorporated by reference therein and incorporated by reference herein.
Such consolidated financial statements are incorporated by reference herein in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
OTHER MATTERS
The Boards of Directors of TCF and Winthrop are not aware of any business to
come before the Special Meetings other than those matters described in this
Joint Proxy Statement/Prospectus. However, if any other matter should properly
come before the Special Meetings, it is intended that holders of the proxies
solicited hereby will act in accordance with their best judgment.
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APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
TCF FINANCIAL CORPORATION
AND
WINTHROP RESOURCES CORPORATION
------------------------
FEBRUARY 28, 1997
------------------------
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TABLE OF CONTENTS
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ARTICLE I--THE MERGER.................................................................................. 5
1.1 The Merger............................................................................... 5
1.2 Effects of the Merger.................................................................... 5
1.3 Effect of Outstanding Shares of Target Common Stock and Target Options................... 6
1.4 Rights of Holders of Target Common Stock................................................. 6
1.5 No Fractional Shares..................................................................... 7
1.6 Procedure for Exchange of Target Common Stock............................................ 7
1.7 Dissenting Shares........................................................................ 8
1.8 Effect on Common Stock of Acquisition.................................................... 9
1.9 Corporate Matters........................................................................ 9
1.10 Tax Consequences......................................................................... 9
1.11 Contributions to TCF Bank................................................................ 9
1.12 Alternative Structure.................................................................... 9
ARTICLE 2--REPRESENTATIONS AND WARRANTIES OF PURCHASER................................................. 10
2.1 Organization and Qualification........................................................... 10
2.2 Authority Relative to this Agreement; Non-Contravention.................................. 10
2.3 Capitalization........................................................................... 11
2.4 1934 Act Reports......................................................................... 11
2.5 Financial Statements..................................................................... 12
2.6 Subsidiaries............................................................................. 12
2.7 Absence of Undisclosed Liabilities....................................................... 12
2.8 No Material Adverse Changes.............................................................. 12
2.9 Absence of Certain Developments.......................................................... 12
2.10 Litigation............................................................................... 13
2.11 No Brokers or Finders.................................................................... 13
2.12 Compliance with Laws; Permits............................................................ 13
2.13 Prospectus/Proxy Statement............................................................... 14
2.14 Pooling of Interests..................................................................... 14
2.15 Validity of Purchaser Common Stock....................................................... 14
2.16 Reports and Filings...................................................................... 15
2.17 Employee Benefit Plans................................................................... 15
2.18 Disclosure............................................................................... 15
ARTICLE 3--REPRESENTATIONS AND WARRANTIES OF TARGET.................................................... 15
3.1 Organization and Qualification........................................................... 15
3.2 Authority Relative to this Agreement; Non-Contravention.................................. 15
3.3 Capitalization........................................................................... 16
3.4 1934 Act Reports and Regulatory Reports.................................................. 16
3.5 Financial Statements..................................................................... 16
3.6 Leases................................................................................... 17
3.7 Subsidiaries............................................................................. 17
3.8 Absence of Undisclosed Liabilities....................................................... 18
3.9 No Material Adverse Changes.............................................................. 18
3.10 Absence of Certain Developments.......................................................... 18
3.11 Properties............................................................................... 19
3.12 Tax Matters.............................................................................. 20
3.13 Contracts and Commitments................................................................ 21
3.14 Litigation............................................................................... 21
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3.15 No Brokers or Finders.................................................................... 21
3.16 Employees................................................................................ 21
3.17 Employee Benefits Plans.................................................................. 21
3.18 Insurance................................................................................ 23
3.19 Related Party Transactions............................................................... 23
3.20 Compliance with Laws; Permits............................................................ 23
3.21 Prospectus/Proxy Statement............................................................... 24
3.22 Pooling of Interests..................................................................... 24
3.23 Interest Rate Risk Management Instruments................................................ 24
3.24 State Takeover Laws...................................................................... 24
3.25 Disclosure............................................................................... 24
ARTICLE 4--CONDUCT OF BUSINESS PENDING THE MERGER...................................................... 25
4.1 Conduct of Business by Target............................................................ 25
4.2 Conduct of Business by Purchaser......................................................... 27
ARTICLE 5--ADDITIONAL COVENANTS AND AGREEMENTS......................................................... 28
5.1 Filings and Approvals.................................................................... 28
5.2 Certain Lease and Related Matters........................................................ 28
5.3 Monthly Financial Statements............................................................. 28
5.4 Expenses................................................................................. 28
5.5 No Negotiations, etc..................................................................... 28
5.6 Notification of Certain Matters.......................................................... 29
5.7 Access to Information; Confidentiality................................................... 29
5.8 Filing of Tax Returns and Adjustments.................................................... 30
5.9 Registration Statement................................................................... 31
5.10 Affiliate Letters........................................................................ 32
5.11 Disposition of Tainted Shares............................................................ 32
5.12 Employee Benefit Plans................................................................... 32
5.13 Pooling of Interests; Tax Treatment...................................................... 33
5.14 Press Releases........................................................................... 33
5.15 Indemnification and Insurance............................................................ 33
5.16 Purchaser SEC Reports.................................................................... 34
5.17 Securities Reports....................................................................... 34
5.18 Stock Exchange Listing................................................................... 34
5.19 Shareholder Approvals.................................................................... 34
5.20 Publication of Combined Financial Results................................................ 34
5.21 Employment Agreement Amendments.......................................................... 34
5.22 Failure to Fulfill Conditions............................................................ 35
5.23 Registration Relating to Target Options.................................................. 35
5.24 Target Debt.............................................................................. 35
ARTICLE 6--CONDITIONS.................................................................................. 35
6.1 Conditions to Obligations of Each Party.................................................. 35
6.2 Additional Conditions to Obligation of Target............................................ 36
6.3 Additional Conditions to Obligation of Purchaser......................................... 38
ARTICLE 7--TERMINATION, AMENDMENT AND WAIVER........................................................... 40
7.1 Termination.............................................................................. 40
7.2 Effect of Termination.................................................................... 41
7.3 Amendment................................................................................ 42
7.4 Waiver................................................................................... 42
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ARTICLE 8--GENERAL PROVISIONS.......................................................................... 42
8.1 Public Statements........................................................................ 42
8.2 Notices.................................................................................. 42
8.3 Interpretation........................................................................... 43
8.4 Severability............................................................................. 44
8.5 Miscellaneous............................................................................ 44
8.6 Survival of Representations; Warranties and Covenants.................................... 44
8.7 Schedules................................................................................ 44
8.8 Descriptive Headings..................................................................... 44
8.9 Parties in Interest...................................................................... 44
8.10 Counterparts............................................................................. 44
EXHIBITS
A Form of Stockholder Agreement
B Form of Articles of Merger
C Form of Target Affiliate Letter
D Form of Purchaser Affiliate Letter
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT is made and entered into as of February 28, 1997, by and
between TCF FINANCIAL CORPORATION, a Delaware corporation ("Purchaser") and
WINTHROP RESOURCES CORPORATION, a Minnesota corporation ("Target").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Purchaser and Target have determined
that it is in the best interests of Purchaser and Target and their respective
shareholders to consummate the merger of Target and a newly formed corporation
incorporated under the laws of the state of Minnesota ("Acquisition"), which
will be a wholly owned first tier subsidiary of Purchaser (the "Merger") and,
after consummation of the Merger, Purchaser will contribute the stock of the
Surviving Corporation to one of its subsidiaries which is either a federal
savings bank or a national bank ("TCF Bank");
WHEREAS, as a condition and inducement to Purchaser's willingness to enter
into this Agreement, each of certain shareholders of Target and Purchaser are
simultaneously with execution of this Agreement entering into agreements in the
form of Exhibit A attached hereto (the "Stockholder Agreement") pursuant to
which such shareholders agree to vote in favor of the Merger at the meeting of
Target's shareholders to consider the Merger;
WHEREAS, Purchaser and Target desire that the Merger be made on the terms
and subject to the conditions set forth in this Agreement and qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger be
accounted for as a pooling of interests.
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement, in
accordance with the Minnesota Business Corporation Act (the "MBCA"), at the
Effective Time (as defined herein), Acquisition shall merge with and into
Target. Target shall be the surviving corporation (hereinafter sometimes called
the "Surviving Corporation") in the Merger and shall continue its corporate
existence under the laws of the State of Minnesota. The "Effective Date" shall
be the date on which the Merger is consummated in accordance with the terms and
conditions of this Agreement and shall be on the date mutually agreed by the
parties but no later than ten (10) business days after the last of the
conditions set forth in Article 6 having been satisfied or waived (subject to
applicable law) or on such other date to which the parties may mutually agree.
The Merger shall become effective as set forth in and upon filing of the
articles of merger in the form of Exhibit B attached hereto (the "Articles of
Merger") with the Secretary of State of the State of Minnesota (the "Minnesota
Secretary") on the Effective Date. The term "Effective Time" shall be the date
and time when the Merger becomes effective, upon the filing of the Articles of
Merger with the Minnesota Secretary.
1.2 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in Section 302A.641 of the MBCA. At the
Effective Time, the Surviving Corporation shall thereupon and thereafter (a) be
responsible and liable for all the liabilities, debts and obligations of each of
Acquisition and Target, and (b) possess all the rights, privileges, immunities
and franchises, of a public as well as of a private nature, of each of
Acquisition and Target; all property, real, personal and mixed, and all debts
due on any account, including subscriptions to shares and all choses in action,
and all and every other interest,
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of or belonging to or due to each of Acquisition and Target shall be taken and
deemed to be transferred to and vested in the Surviving Corporation without
further act or deed; and the title to any real estate or any interest therein,
vested in Acquisition and Target shall not revert or be in any way impaired by
reason of the Merger.
1.3 EFFECT ON OUTSTANDING SHARES OF TARGET COMMON STOCK AND TARGET
OPTIONS. To effectuate the Merger, and subject to the terms and conditions of
this Agreement, at the Effective Time:
(a) TARGET COMMON STOCK. Each issued and outstanding share of common
stock, par value $.01 per share, of Target ("Target Common Stock") (other than
the following shares of Target Common Stock which shall be cancelled: (i)
Dissenting Shares (as defined in Section 1.7(a)) and (ii) shares of Target
Common Stock held directly or indirectly by Purchaser except for such shares
held in a fiduciary capacity or in satisfaction of a debt previously
contracted), shall be converted into and exchangeable for the Merger
Consideration (as herein defined). The "Merger Consideration" shall consist of
(i) .7766 of one (1) share of common stock, par value $.01 per share, of
Purchaser ("Purchaser Common Stock") for each share of Target Common Stock (the
"Exchange Ratio"), plus (ii) cash in lieu of any fractional share of Purchaser
Common Stock as provided in Section 1.5. The Merger Consideration shall be paid
to the holders of Target Common Stock as provided in Section 1.6. All of the
shares of Target Common Stock converted into and exchangeable for the Merger
Consideration pursuant to this Article 1 shall no longer be outstanding and
shall automatically be cancelled and shall cease to exist as of the Effective
Time, and each certificate previously representing any such shares of Target
Common Stock shall thereafter represent the right to receive the Merger
Consideration pursuant to this Section 1.3(a).
(b) TARGET OPTIONS. Each option granted by Target to purchase shares of
Target Common Stock (each a "Target Option" and collectively the "Target
Options") which is outstanding and unexercised immediately prior to the
Effective Time shall after the Effective Time be assumed by the Purchaser and
shall thereafter be deemed to constitute an option to acquire, on the same terms
and conditions as were applicable under such option, the same number of shares
of Purchaser Common Stock as the holder of such option would have been entitled
to receive pursuant to the Merger had such holder exercised such option in full
immediately prior to the Effective Date, at a price per share equal to (x) the
aggregate exercise price for the shares of Target Common Stock otherwise
purchasable pursuant to such option divided by (y) the number of full shares of
Purchaser Common Stock deemed purchasable pursuant to such option; provided
however, that in the case of any option to which Section 421 of the Code applies
by reason of its qualification under Section 422 of the Code ("incentive stock
options"), the option price, the number of shares purchasable pursuant to such
option and the terms and conditions of exercise of such options shall be
determined in order to comply with Section 424(a) of the Code. Target agrees
that the committee administering Target's 1992 Stock Incentive Plan (the "Target
Stock Plan") will not exercise its discretion to permit holders of Target
Options to receive a cash payment under Section 12.3 of the Target Stock Plan.
1.4 RIGHTS OF HOLDERS OF TARGET COMMON STOCK.
(a) On and after the Effective Date and until surrendered for exchange, each
outstanding stock certificate which immediately prior to the Effective Date
represented shares of Target Common Stock shall be deemed for all purposes,
except as provided in Section 1.6(c) hereof, to evidence ownership of and to
represent the number of whole shares of Purchaser Common Stock into which such
shares of Target Common Stock shall have been converted pursuant to Section
1.3(a), and the record holder of such outstanding certificate shall, after the
Effective Date, be entitled to vote the shares of Purchaser Common Stock into
which such shares of Target Common Stock shall have been converted on any
matters on which the holders of record of Purchaser Common Stock, as of any date
subsequent to the Effective Date, shall be entitled to vote. In any matters
relating to such certificates of Target Common Stock, Purchaser may rely
conclusively upon the record of shareholders maintained by Target or Target's
stock transfer agent
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containing the names and addresses of the holders of record of Target Common
Stock on the Effective Date.
(b) On and after the Effective Date, Purchaser shall reserve a sufficient
number of authorized but unissued shares of Purchaser Common Stock for issuance
in connection with the exercise of the Target Options as provided in Section
1.3(c).
1.5 NO FRACTIONAL SHARES. No fractional shares of Purchaser Common Stock,
and no certificates representing such fractional shares, shall be issued upon
the surrender for exchange of certificates representing Target Common Stock. In
lieu of any fractional share, Purchaser shall pay to each holder of Target
Common Stock who otherwise would be entitled to receive a fractional share of
Purchaser Common Stock an amount of cash (without interest) equal to (a) the
closing sales price of the Purchaser Common Stock on the New York Stock Exchange
on the Effective Date, multiplied by (b) the fractional share interest to which
such holder would otherwise be entitled.
1.6 PROCEDURE FOR EXCHANGE OF TARGET COMMON STOCK.
(a) After the Effective Date, holders of certificates theretofore evidencing
outstanding shares of Target Common Stock (other than the following shares of
Target Common Stock which shall be cancelled: (i) Dissenting Shares and (ii)
shares of Target Common Stock held directly or indirectly by Purchaser except
for such shares held in a fiduciary capacity or in satisfaction of a debt
previously contracted), upon surrender of such certificates to an exchange agent
appointed by Purchaser (the "Exchange Agent"), shall be entitled to receive the
Merger Consideration as follows: (i) certificates representing the number of
whole shares of Purchaser Common Stock into which shares of Target Common Stock
theretofore represented by the certificates so surrendered shall have been
converted as provided in Section 1.3(a) hereof, and (ii) cash payments in lieu
of fractional shares, if any, as provided in Section 1.5 hereof. As soon as
practicable after the Effective Date, Purchaser shall cause the Exchange Agent
to mail appropriate and customary transmittal materials (which shall specify
that delivery shall be effected, and risk of loss and title to the certificates
theretofore representing shares of Target Common Stock shall pass, only upon
proper delivery of such certificates to the Exchange Agent) to each holder of
Target Common Stock of record as of the Effective Date advising such holder of
the effectiveness of the Merger and the procedure for surrendering to the
Exchange Agent outstanding certificates formerly evidencing Target Common Stock
in exchange for the Merger Consideration. Purchaser shall not be obligated to
deliver the Merger Consideration to which any former holder of shares of Target
Common Stock is entitled as a result of the Merger until such holder surrenders
the certificate or certificates representing such shares for exchange as
provided in such transmittal materials and this Section 1.6(a). In addition,
certificates surrendered for exchange by any "affiliate" of Target (as defined
in Section 5.10 hereof) shall not be exchanged for such consideration until the
earlier of (i) the receipt by Purchaser of a written agreement from such person
as provided in Section 5.10 hereof or (ii) the expiration of the restricted
period for pooling of interests accounting treatment as contemplated by Section
5.10 hereof.
(b) On the Effective Date, Purchaser shall deposit, or shall cause to be
deposited, with the Exchange Agent, for exchange in accordance with this Section
1.5, certificates representing the aggregate of the shares of Purchaser Common
Stock and cash of $100,000 to be used to pay for any fractional share interests
under Section 1.5 (such cash and certificates are hereinafter referred to as the
"Exchange Fund") to be paid or issued by Purchaser pursuant to this Article 1 in
connection with the Merger. After the Effective Date, Purchaser shall, on the
payment or distribution date, tender to the Exchange Agent as an addition to the
Exchange Fund all dividends and other distributions applicable to certificates
for Purchaser Common Stock held in the Exchange Fund.
(c) Until outstanding certificates formerly representing Target Common Stock
are surrendered as provided in Section 1.6(a) hereof, no dividend or
distribution payable to holders of record of Purchaser Common Stock shall be
paid to any holder of such outstanding certificates, but upon surrender of such
outstanding certificates by such holder there shall be paid to such holder the
amount of any dividends or
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distributions (without interest) theretofore paid with respect to such whole
shares of Purchaser Common Stock, but not paid to such holder, and which
dividends or distributions had a record date occurring subsequent to the
Effective Date.
(d) After the Effective Date, there shall be no further registration of
transfers on the records of Target of outstanding certificates formerly
representing shares of Target Common Stock and, if a certificate formerly
representing such shares is presented to Target or Purchaser, it shall be
forwarded to the Exchange Agent for cancellation and exchange for certificates
representing shares of Purchaser Common Stock as herein provided.
(e) Any portion of the Exchange Fund (including the proceeds of any
investments thereof, any Purchaser Common Stock or any dividends or
distributions thereon and any cash) that remains unclaimed by the holders of
Target Common Stock for six months after the Effective Date shall be returned or
repaid to Purchaser. Any holders of Target Common Stock who have not theretofore
complied with this Section 1.6 shall thereafter look only to Purchaser for
delivery and payment of the Merger Consideration and any unpaid dividends and
distributions on the Purchaser Common Stock deliverable in respect of each share
of Target Common Stock that such holder holds as determined pursuant to this
Agreement, in each case, without any interest thereon. If outstanding
certificates for shares of Target Common Stock are not surrendered or the
payment for them not claimed prior to the date on which such payments would
otherwise escheat to or become the property of any governmental unit or agency,
the unclaimed items shall, to the extent not prohibited by abandoned property
law and any other applicable law, become the property of Purchaser (and to the
extent not in its possession shall be paid over to it), free and clear of all
claims or interest of any person previously entitled to such claims.
Notwithstanding the foregoing, none of Purchaser, the Surviving Corporation, the
Exchange Agent or any other person shall be liable to any former holder of
Target Common Stock for any amount delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(f) In the event any certificate for Target Common Stock shall have been
lost, stolen or destroyed, the Exchange Agent shall issue and pay in exchange
for such lost, stolen or destroyed certificate, upon the making of an affidavit
of that fact by the holder thereof, such shares of Purchaser Common Stock and
cash for fractional shares, if any, as may be required pursuant to this
Agreement, provided, however, that Purchaser, in its discretion and as a
condition precedent to the issuance and payment thereof, may require the owner
of such lost, stolen or destroyed certificate to deliver a bond in such sum as
it may direct as indemnity against any claim that may be made against Purchaser,
Target, the Surviving Corporation, the Exchange Agent or any other party with
respect to the certificate alleged to have been lost, stolen or destroyed.
1.7 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary, the
holder (a "Dissenting Shareholder") of any shares of Target Common Stock who has
demanded and perfected such holder's demand for appraisal of said shares (the
"Dissenting Shares") in accordance with Section 302A.471 and 302A.473 of the
MBCA and as of the Effective Time, has neither effectively withdrawn nor lost
his or her right to such appraisal shall not have a right to receive the
aggregate Merger Consideration for such Dissenting Shares pursuant to Section
1.3 above and shall only be entitled to such rights as are granted by the MBCA.
The Surviving Corporation shall make any and all payments due to holders of
Dissenting Shares.
(b) Notwithstanding the provisions of Section 1.7(a) above, if any
Dissenting shareholder demanding appraisal of such Dissenting Shareholder's
Dissenting Shares under the MBCA shall effectively withdraw or lose (through
failure to perfect or otherwise) his right to appraisal, then as of the
Effective Time or the occurrence of such event, whichever later occurs, such
Dissenting Shares shall automatically be converted into and represent only the
right to receive the Merger Consideration as provided in Section 1.3 above upon
surrender of the certificate or certificates representing such Dissenting
Shares.
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(c) Target shall give Purchaser prompt notice of any demands by a Dissenting
Shareholder for payment, or notices of intent to demand payment received by
Target under Sections 302A.471 and 302A.473 of the MBCA and Purchaser shall have
the right to participate in all negotiations and proceedings with respect to
such demands. Target shall not, except with the prior written consent of
Purchaser (which will not be unreasonably withheld or delayed) or as otherwise
required by law, make any payment with respect to, or settle, or offer to
settle, any such demands.
1.8 EFFECT ON COMMON STOCK OF ACQUISITION. To effectuate the Merger, and
subject to the terms and conditions of this Agreement, at the Effective Time all
outstanding shares of common stock, $.01 par value, of Acquisition held by
Purchaser will remain outstanding and shall be shares of common stock, $.01 par
value, of the Surviving Corporation.
1.9 CORPORATE MATTERS. At the Effective Time:
(a) CERTIFICATE OF INCORPORATION. The Articles of Incorporation of Target,
as in effect at the Effective Time, shall be the Articles of Incorporation of
the Surviving Corporation.
(b) BYLAWS. The Bylaws of Target as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended in accordance with applicable law.
(c) BOARD OF DIRECTORS. At the Effective Time, the Board of Directors of
the Surviving Corporation shall be as set forth in Schedule 1.9(c). On the
Effective Date, Target will deliver to Purchaser the resignations of its
directors who are not listed in Schedule 1.9(c). In addition, Purchaser shall
cause its Board of Directors to be expanded by one (1) seat as of the Effective
Time and such directorship shall, as of such time, be filled by one person
serving on the Board of Directors of Target immediately prior to the Effective
Time who shall be jointly selected by the Board of Directors of each of
Purchaser and Target; it being the parties present intention that such person
shall be John L. Morgan.
(d) OFFICERS. Each person serving as an officer of Target immediately
prior to the Effective Time shall continue to serve in such office for the
Surviving Corporation at the Effective Time subject to the right of the Board of
Directors of the Surviving Corporation to elect officers after the Effective
Date.
(e) EMPLOYMENT AGREEMENT AMENDMENTS. The Surviving Corporation and the
officers of Target listed on Schedule 1.9(e) will enter into amendments to their
respective employment agreements in the form of the amendment included in
Schedule 1.9(e) (the "Employment Agreement Amendments"), which amendment extends
the term of the respective employment agreement for a period through the third
anniversary of the Effective Date, modifies the definition of "good reason" and
the non-competition provisions thereof.
1.10 TAX CONSEQUENCES. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code, and that this
Agreement shall constitute a "plan of reorganization" for purposes of the Code.
1.11 CONTRIBUTION TO TCF BANK. As part of the transactions contemplated by
this Agreement, Purchaser intends to contribute the stock of the Surviving
Corporation to TCF Bank after the Effective Time of the Merger.
1.12 ALTERNATIVE STRUCTURE. Purchaser may structure the acquisition of
Target contemplated by this Agreement through the merger of a wholly-owned
subsidiary of TCF Bank with and into Target; provided that (i) there are no
material adverse federal income tax consequences to shareholders of Target,
Purchaser or the Surviving Corporation as a result of such modification, (ii)
the consideration to be received by the shareholders of Target is not changed or
altered and (iii) such modification will not materially delay or jeopardize
receipt of any required regulatory approvals.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Target as follows:
2.1 ORGANIZATION AND QUALIFICATION. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite corporate power to carry on its business as now
conducted. Purchaser is registered as a savings and loan holding company with
the Office of Thrift Supervision ("OTS") under the Home Owners' Loan Act (the
"HOLA") and is authorized under the HOLA to carry on its business as now
conducted. Purchaser has filed an application with the Federal Reserve Board to
become a bank holding company under the Bank Holding Company Act (the "BHCA")
and the foregoing representation is subject to modification upon approval of
such application and consummation of the conversion of Purchaser's savings bank
subsidiaries to national banks to the effect that Purchaser will then be a bank
holding company under the BHCA. The copies of the Charter (as defined below) and
Bylaws of Purchaser which have been made available to Target prior to the date
of this Agreement are correct and complete copies of such documents as in effect
as of the date of this Agreement. As used in this Agreement, the term "Charter"
with respect to any corporation or depository institution shall mean those
instruments that at that time constitute its charter as filed or recorded under
the general corporation or other applicable law of the jurisdiction of its
incorporation or organization, including the articles or certificate of
incorporation or association and any and all amendments thereto. Purchaser is
licensed or qualified to do business in every jurisdiction in which the nature
of its business or its ownership of property requires it to be licensed or
qualified, except where the failure to be so licensed or qualified would not
have a Material Adverse Effect on Purchaser. As used in this Agreement, the term
"Material Adverse Effect" with respect to an entity means any condition, event,
change or occurrence that has or may reasonably be expected to have a material
adverse effect on the business, prospects, operations, results of operations or
financial condition of such entity on a consolidated basis, it being understood
that a Material Adverse Effect shall not include a change with respect to, or
effect on, such entity resulting from a change in law, rule, regulation,
generally accepted accounting principles ("GAAP") or regulatory accounting
principles, as such would apply to the financial statements of such entity, a
change with respect to, or effect on, such entity resulting from expenses
incurred in connection with this Agreement or the transactions contemplated by
this Agreement. At the Effective Time, Acquisition will be duly organized and
validly existing under the laws of the state of Minnesota and will have the
requisite corporate power and authority to carry on its business.
2.2 AUTHORITY RELATIVE TO THIS AGREEMENT; NON-CONTRAVENTION. Purchaser has
the requisite corporate power and authority to enter into this Agreement and the
Stockholder Agreement and to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and the Stockholder Agreement by
Purchaser and the Articles of Merger by Acquisition and the consummation by
Purchaser and Acquisition of the transactions contemplated hereby and thereby
have been duly authorized by the Board of Directors of Purchaser and, in the
case of Acquisition, will be duly authorized by the Board of Directors of
Acquisition and by the Board of Directors of Purchaser, acting on behalf of
Purchaser as the sole shareholder of Acquisition and, except for approval of
this Agreement and the Merger by the requisite vote of Purchaser's shareholders,
the organization of Acquisition as a Minnesota corporation and the disposition
of the "tainted" shares of TCF Common Stock necessary for the Merger to be
accounted for as a pooling of interests as contemplated by Section 5.11, no
other corporate proceedings on the part of Purchaser are necessary to authorize
this Agreement and the consummation of the transactions contemplated hereby.
This Agreement and the Stockholder Agreement have been duly executed and
delivered by Purchaser and, assuming they are the valid and binding obligations
of the other parties thereto, constitute the valid and binding obligations of
Purchaser enforceable in accordance with their respective terms except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally. Except as set forth in
Schedule 2.2, none of Purchaser or the Purchaser Subsidiaries (as defined in
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Section 2.6) is subject to, or obligated under, any provision of (a) its Charter
or Bylaws, (b) any agreement, arrangement or understanding, (c) any license,
franchise or permit or (d) subject to obtaining the approvals referred to in the
next sentence, any law, regulation, order, judgment or decree, which would be
breached or violated, or in respect of which a right of termination or
acceleration or any encumbrance on any of its assets would be created, by the
execution, delivery or performance of this Agreement, the Articles of Merger,
the Stockholder Agreement or the consummation of the transactions contemplated
hereby or thereby, other than any such breaches, violations, rights of
termination or acceleration or encumbrances which will not, in the aggregate,
have a Material Adverse Effect on the Purchaser. Except for (a) the filings
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR"),
(b) the filing and effectiveness with the Securities and Exchange Commission
(the "SEC") of a joint proxy statement/prospectus in definitive form relating to
the meetings of Purchaser's and Target's shareholders to be held in connection
with this Agreement and the transactions contemplated hereby, (c) the filing and
effectiveness with the SEC of a Registration Statement on Form S-4 relating to
the Purchaser to be issued in connection with this Agreement and the
transactions contemplated hereby, and effectiveness of such Registration
Statement, (d) the filing and effectiveness with the SEC of a Registration
Statement on Form S-3 or other applicable form for the disposition of the
tainted shares as contemplated by Section 5.11, (e) the approval of this
Agreement by the requisite vote of the shareholders of Purchaser and Target, (f)
requisite approvals under applicable blue sky laws, (g) the filing of the
Articles of Merger with the Minnesota Secretary pursuant to the MBCA, and (h)
such filings, authorizations or approvals as may be set forth in Schedule 2.2,
no authorization, consent or approval of, or filing with, any public body, court
or authority is necessary on the part of Purchaser, any of the Purchaser
Subsidiaries or Acquisition for the consummation by Purchaser and Acquisition of
the transactions contemplated by this Agreement, including the contribution of
the stock of the Surviving Corporation by Purchaser to TCF Bank after the
Effective Time of the Merger, except for such authorizations, consents,
approvals and filings as to which the failure to obtain or make the same will
not, in the aggregate, have a Material Adverse Effect on Purchaser.
2.3 CAPITALIZATION. The authorized, issued and outstanding shares of
capital stock of Purchaser as of the date hereof is correctly set forth on
Schedule 2.3. The issued and outstanding shares of capital stock of Purchaser
are duly authorized, validly issued, fully paid and nonassessable and have not
been issued in violation of any preemptive rights. Except as disclosed on
Schedule 2.3, there are as of the date hereof, no options, warrants, conversion
privileges or other rights, agreements, arrangements or commitments obligating
Purchaser to issue, sell, purchase or redeem any shares of its capital stock or
securities or obligations of any kind convertible into or exchangeable for any
shares of its capital stock or of any of its affiliates, nor are there any stock
appreciation, phantom or similar rights outstanding based upon the book value or
any other attribute of any of the capital stock of Purchaser or the earnings or
other attributes of Purchaser. Schedule 2.3 contains true and correct copies of
all such agreements, arrangements (including all stock plans, but excluding
individual stock option or restricted stock agreements) or commitments. No
bonds, debentures, notes or other indebtedness having the right to vote (or
convertible into or exercisable for securities having the right to vote) on any
matters on which shareholders may vote of the Purchaser are issued or
outstanding except as set forth in Schedule 2.3.
2.4 1934 ACT REPORTS. Prior to the execution of this Agreement, Purchaser
has delivered or made available to Target complete and accurate copies of (a)
Purchaser's Annual Reports on Form 10-K for the years ended December 31, 1993,
1994 and 1995 (the "Purchaser 10-K Reports") as filed with the SEC, (b) all
Purchaser proxy statements and annual reports to shareholders used in connection
with meetings of Purchaser shareholders held since January 1, 1991 and (c)
Purchaser's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1996, June 30, 1996 and September 30, 1996 (the "Purchaser 10-Q Reports") as
filed with the SEC. As of their respective dates or as subsequently amended
prior to the date hereof, such documents (i) 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 and (ii) complied as to
form in all material
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respects with the applicable rules and regulations of the SEC. Since January 1,
1991, Purchaser has filed in a timely manner all reports that it was required to
file with the SEC pursuant to the Securities and Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the "1934 Act").
2.5 FINANCIAL STATEMENTS.
(a) The Purchaser financial statements (including any footnotes thereto)
contained in the Purchaser 10-K Reports and the Purchaser 10-Q Reports have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved, except as indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q, and fairly present the
consolidated financial position of Purchaser and the Purchaser Subsidiaries as
of the dates thereof and the consolidated results of operations, changes in
shareholders' equity and cash flows for the periods then ended (subject, in the
case of the unaudited statements, to recurring year end adjustments normal in
nature and amount and the absence of footnotes).
(b) The books and records of Purchaser have been, and are being, maintained
in material compliance with applicable legal and accounting requirements, and
such books and records accurately reflect in all material respects all material
transactions customarily reflected in such books and records in respect of the
business, assets, liabilities and affairs of Purchaser on a consolidated basis.
2.6 SUBSIDIARIES. Schedule 2.6 correctly sets forth the name and
jurisdiction of incorporation of each corporation, fifty percent or more of the
voting securities of which is owned directly or indirectly by Purchaser (each a
"Purchaser Subsidiary" and collectively the "Purchaser Subsidiaries"). All of
the issued and outstanding shares of capital stock of each Purchaser Subsidiary
are owned directly or indirectly by Purchaser free and clear of any lien,
pledge, security interest, encumbrance or charge of any kind.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. All of the obligations or
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due, and regardless of when asserted) arising out of
transactions or events heretofore entered into, or any action or inaction,
including Taxes (as defined in Section 3.12) with respect to or based upon
transactions or events heretofore occurring that are required to be reflected,
disclosed or reserved against in audited consolidated financial statements in
accordance with GAAP ("Liabilities") have, in the case of Purchaser and the
Purchaser Subsidiaries, been so reflected, disclosed or reserved against in the
audited balance sheet included in the audited consolidated financial statements
of Purchaser as at the end of its last fiscal year (the "Latest Purchaser
Balance Sheet Date") for which Purchaser has filed Purchaser 10-K Reports or in
the notes thereto, and Purchaser and the Purchaser Subsidiaries have no other
Liabilities except (a) Liabilities incurred since the Latest Purchaser Balance
Sheet Date in the ordinary course of business, (b) as otherwise disclosed on
Schedule 2.7, or (c) other Liabilities which, in aggregate, are not material.
2.8 NO MATERIAL ADVERSE CHANGES. Since the end of the last fiscal year for
which Purchaser has filed Purchaser 10-K Reports to the date hereof, there has
been no event, occurrence or development in the business of Purchaser or the
Purchaser Subsidiaries that, taken together with other events, occurrences and
developments with respect to such business, has had or would reasonably be
expected to have a Material Adverse Effect on Purchaser or adversely affect the
ability of Purchaser to consummate the transactions contemplated hereby.
2.9 ABSENCE OF CERTAIN DEVELOPMENTS. Except as disclosed in Purchaser's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, in any
Current Reports of Purchaser on Form 8-K filed prior to the date of this
Agreement, or on Schedule 2.9 unless otherwise expressly contemplated or
permitted by this Agreement, since September 30, 1996 to the date hereof,
Purchaser has not:
(a) issued or sold any of its equity securities, securities convertible into
or exchangeable for its equity securities, warrants, options or other rights to
acquire its equity securities, except (i) deposit and other bank obligations in
the ordinary course of business, (ii) pursuant to the exercise of stock options
and
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warrants issued under, or otherwise pursuant to, the agreements, arrangements or
commitments identified on Schedule 2.3, or (iii) the grant to employees and
directors of stock options and restricted stock under Purchaser's 1995 Incentive
Stock Program and Director Stock Program (the "Purchaser Stock Plans") in the
ordinary course of business;
(b) redeemed, purchased, acquired or offered to acquire, directly or
indirectly, any shares of capital stock of Purchaser or any of the Purchaser
Subsidiaries or other securities of Purchaser or any of the Purchaser
Subsidiaries, except pursuant to the exercise of stock options and warrants
issued under, or otherwise pursuant to, the agreements, arrangements or
commitments identified on Schedule 2.3, or stock options issued in the ordinary
course of business after the date hereof;
(c) split, combined or reclassified any of its outstanding shares of capital
stock or declared, set aside or paid any dividends or other distribution payable
in cash, property or otherwise with respect to any shares of its capital stock
or other securities, except (i) dividends paid in cash by the Purchaser
Subsidiaries which are wholly owned by Purchaser to Purchaser or to another
wholly owned Purchaser Subsidiary and (ii) the regular quarterly cash dividend
of $.1875 for each share of Purchaser Common Stock;
(d) suffered any theft, damage, destruction or loss of or to any property or
properties owned or used by it, whether or not covered by insurance, which
would, individually or in the aggregate, have a Material Adverse Effect on
Purchaser.
(e) acquired (by merger, exchange, consolidation, acquisition of stock or
assets or otherwise) any corporation, partnership, joint venture or other
business organization or division or material assets thereof, or assets or
deposits that are material to Purchaser on a consolidated basis, except in
exchange for debt previously contracted, including real estate acquired through
foreclosure or deed in lieu of foreclosure ("REO");
(f) taken any other material action or entered into any material transaction
other than in the ordinary course of business; or
(g) agreed to do any of the foregoing.
2.10 LITIGATION. Except as set forth on Schedule 2.10, there are no
actions, suits, proceedings, orders, audits or investigations pending or, to the
Knowledge of Purchaser, threatened against Purchaser or any of the Purchaser
Subsidiaries or any employee benefit plan of Purchaser or any of the Purchaser's
Subsidiaries, at law or in equity, or before or by any federal, state or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign in which the adverse party or parties seeks or could be
reasonably expected to receive recovery from Purchaser or any Purchaser
Subsidiary, or their respective properties or assets, of an amount or value in
excess of $350,000, or injunctive or other equitable relief.
2.11 NO BROKERS OR FINDERS. Except as disclosed on Schedule 2.11, there
are no claims for brokerage commissions, finders' fees, investment advisory fees
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement, understanding, commitment or agreement made
by or on behalf of Purchaser or any of the Purchaser Subsidiaries.
2.12 COMPLIANCE WITH LAWS; PERMITS. Each of Purchaser and the Purchaser
Subsidiaries has complied with all applicable laws and regulations of foreign,
federal, state and local governments and all agencies thereof which affect the
business or any owned or leased properties or employee benefit plans of
Purchaser or any of the Purchaser Subsidiaries and to which Purchaser or any of
the Purchaser Subsidiaries may be subject (including, without limitation, the
Occupational Safety and Health Act of 1970, the Employee Retirement Income
Security Act of 1974 ("ERISA"), the HOLA (if applicable), the BHCA (if
applicable), the National Bank Act (if applicable), the Federal Deposit
Insurance Act (the "FDIA"), the Real Estate Settlement Procedures Act, the Home
Mortgage Disclosure Act of 1975, the Fair Housing Act and the Equal Credit
Opportunity Act, each as amended, and any other state or federal acts (including
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rules and regulations thereunder) regulating or otherwise affecting employee
health and safety or the environment), except where failure to so comply would
not, individually or in the aggregate, have a Material Adverse Effect on
Purchaser or adversely affect Purchaser's ability to consummate the transactions
contemplated hereby; and, to the Knowledge (as defined herein) of Purchaser, no
claims have been filed by any such governments or agencies against Purchaser or
any of the Purchaser Subsidiaries alleging such a violation of any such law or
regulation which have not been resolved to the satisfaction of such governments
or agencies which would, individually or in the aggregate, have a Material
Adverse Effect on Purchaser or adversely affect Purchaser's ability to
consummate the transactions contemplated hereby. As used in this Agreement, the
terms "Knowledge" of an entity or "Known" by an entity means the knowledge
actually possessed by any director or executive officer of such entity after due
inquiry as may be reasonably appropriate in the circumstances. Each of Purchaser
and the Purchaser Subsidiaries holds all of the permits, license, certificates
and other authorizations of foreign, federal, state and local governmental
agencies required for the conduct of its business as currently conducted, except
where failure to obtain such authorizations would not, individually or in the
aggregate, have a Material Adverse Effect on Purchaser or adversely affect the
ability of Purchaser to consummate the transactions contemplated hereby. Neither
Purchaser nor any of the Purchaser Subsidiaries is subject to any cease and
desist order, written agreement or memorandum of understanding with, or is a
party to any commitment letter or similar undertaking to, or is subject to any
order or directive by, or is a recipient of any supervisory agreement letter
from, or has adopted any board resolutions at the request of, federal or state
governmental authorities charged with the supervision or regulation of Purchaser
or any Purchaser Subsidiary (individually, a "Bank Regulator" and collectively,
the "Bank Regulators"), which would have a Material Adverse Effect on Purchaser
nor have any of Purchaser or any of the Purchaser Subsidiaries been advised by
any Bank Regulator that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
directive, written agreement, memorandum of understanding, supervisory letter,
commitment letter, board resolutions or similar undertaking.
2.13 PROSPECTUS/PROXY STATEMENT. At the time the Registration Statement
(as defined in Section 5.9(a) hereof) becomes effective and at the time the
Prospectus/Proxy Statement (as defined in Section 5.9(a) hereof) is mailed to
the shareholders of Target and Purchaser in order to obtain approvals referred
to in Section 5.19 and at all times subsequent to such mailing up to and
including the times of such approvals, the Registration Statement and the
Prospectus/Proxy Statement (including any amendments or supplements thereto),
with respect to all information set forth therein relating to Purchaser
(including the Purchaser Subsidiaries) and its shareholders, Purchaser Common
Stock, this Agreement, the Articles of Merger, the Merger and all other
transactions contemplated hereby, will (a) comply in all material respects with
applicable provisions of the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder ("1933 Act") and the 1934 Act, and (b)
not contain any untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they are made, not
misleading, except that, in each case, no such representations shall apply to
any written information or representations under this Agreement, including
financial statements, of or provided by Target for such Prospectus/Proxy
Statement.
2.14 POOLING OF INTERESTS. Except as disclosed on Schedule 2.14, to the
Knowledge of Purchaser, neither Purchaser nor any of the Purchaser Subsidiaries
has taken or agreed to take any action, or omitted or agreed to omit to take any
action, which would disqualify the Merger as a "pooling of interests" for
accounting purposes.
2.15 VALIDITY OF PURCHASER COMMON STOCK. The shares of Purchaser Common
Stock to be issued pursuant to this Agreement will be, when issued, duly
authorized, validly issued, fully paid and nonassessable.
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2.16 REPORTS AND FILINGS. Since January 1, 1991, each of the Purchaser and
the Purchaser Subsidiaries have filed each report or other filing it was
required to file with any Banking Regulator having jurisdiction over it
(together with all exhibits thereto, the "Purchaser Regulatory Reports"), except
for such reports and filings which the failure to so file would not have a
Material Adverse Effect on the Purchaser, or the ability of the Purchaser to
consummate the transactions contemplated hereby. As of their respective dates or
as subsequently amended prior to the date hereof, each of the Purchaser
Regulatory Reports was true and correct in all material respects and complied in
all material respects with applicable laws, rules and regulations.
2.17 EMPLOYEE BENEFIT PLANS. Purchaser is not aware of any facts or
circumstances with respect to any "Purchaser Employee Benefit Plan" that could
reasonably be expected to have a Material Adverse Effect on Purchaser. For
purposes of this Section 2.17, a Purchaser Employee Benefit Plan is any plan,
policy, practice, arrangement or agreement providing for benefits, compensation
(other than current cash compensation) or perquisites to any current or former
employee or independent contractor, or the dependents or family members of any
such current or former employee or independent contractor, with respect to which
Purchaser, any Purchaser Subsidiary or any other person who under applicable law
would, together with Purchaser, be deemed to be a single employer, could have
any liability.
2.18 DISCLOSURE. The representations and warranties of Purchaser contained
in this Agreement are true and correct in all material respects, and such
representations and warranties do not omit any material fact necessary to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact Known to Purchaser which has not
been disclosed to Target pursuant to this Agreement, the Schedules hereto and
the Purchaser 10-K Reports and the Purchaser 10-Q Reports, all taken together as
a whole, which would have or would reasonably be expected to have a Material
Adverse Effect on Purchaser or materially adversely affect the ability of
Purchaser to consummate in a timely manner the transactions contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TARGET
Target hereby represents and warrants to Purchaser as follows:
3.1 ORGANIZATION AND QUALIFICATION. Target is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of Minnesota and has the requisite corporate power to carry on its business as
now conducted. The copies of the Charter and Bylaws of Target which have been
made available to Purchaser prior to the date of this Agreement are correct and
complete copies of such documents as in effect as of the date of this Agreement.
Target is licensed or qualified to do business in every jurisdiction in which
the nature of its business or its ownership of property requires it to be
licensed or qualified, except where the failure to be so licensed or qualified
would not have a Material Adverse Effect on Target.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT; NON-CONTRAVENTION. Target has
the requisite corporate power and authority to enter into this Agreement and the
Articles of Merger and to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and the Articles of Merger by
Target and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by the Board of Directors of Target and, except for
approval of this Agreement and the Merger by the requisite vote of Target's
shareholders, no other corporate proceedings on the part of Target are necessary
to authorize this Agreement and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Target and, assuming it is a valid and binding obligation of Purchaser,
constitutes a valid and binding obligation of Target enforceable in accordance
with its terms except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
Except as set forth in Schedule 3.2, Target is not subject to, or obligated
under, any
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provision of (a) its Charter or Bylaws, (b) any agreement, arrangement or
understanding, (c) any license, franchise or permit or (d) subject to obtaining
the approvals referred to in the next sentence, any law, regulation, order,
judgment or decree, which would be breached or violated, or in respect of which
a right of termination or acceleration or any encumbrance on any of its assets
would be created, by the execution, delivery or performance of this Agreement,
the Plan of Merger or the consummation of the transactions contemplated hereby
or thereby, other than any such breaches, violations, rights of termination or
acceleration or encumbrances which will not, in the aggregate, have a Material
Adverse Effect on Target. Except for (a) the filings, notices, consents and
approvals described in Section 2.2 hereof and (b) such filings, authorizations
or approvals as may be set forth in Schedule 3.2, no authorization, consent or
approval of, or filing with, any public body, court or authority is necessary on
the part of Target for the consummation by Target of the transactions
contemplated by this Agreement, except for such authorizations, consents,
approvals and filings as to which the failure to obtain or make the same will
not, in the aggregate, be materially adverse to Target on a consolidated basis
or adversely affect the consummation of the transactions contemplated hereby.
3.3 CAPITALIZATION. The authorized, issued and outstanding shares of
capital stock of Target as of the date hereof is correctly set forth on Schedule
3.3. The issued and outstanding shares of capital stock of each of Target are
duly authorized, validly issued, fully paid and nonassessable and have not been
issued in violation of any preemptive rights. Except as disclosed on Schedule
3.3, there are no options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments obligating Target to issue, sell,
purchase or redeem any shares of its capital stock or securities or obligations
of any kind convertible into or exchangeable for any shares of its capital stock
or of any of its subsidiaries or affiliates, nor are there any stock
appreciation, phantom or similar rights outstanding based upon the book value or
any other attribute of any of the capital stock of Target, or the earnings or
other attributes of Target. Schedule 3.3 contains true and correct copies of all
such agreements, arrangements (including all stock plans, but excluding
individual stock option or restricted stock agreements) or commitments.
3.4 1934 ACT REPORTS AND REGULATORY REPORTS. Prior to the execution of
this Agreement, Target has delivered or made available to Purchaser complete and
accurate copies of (a) Target's Annual Reports on Form 10-K for the years ended
December 31, 1993, 1994 and 1995 (the "Target 10-K Reports") as filed with the
SEC, (b) all Target proxy statements and annual reports to shareholders used in
connection with meetings of Target shareholders held since January 1, 1993 and
(c) Target's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1996, June 30, 1996 and September 30, 1996 (the "Target 10-Q Reports") as filed
with the SEC. As of their respective dates or as subsequently amended prior to
the date hereof, such documents (i) 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 statement therein, in light of the circumstances under
which they were made, not misleading and (ii) complied as to form in all
material respects with the applicable rules and regulations of the SEC. Since
January 1, 1993, Target has filed in a timely manner all reports that it was
required to file with the SEC (the "Target Regulatory Reports"). As of their
respective dates or as subsequently amended prior to the date hereof, each of
the Target Regulatory Reports was true and correct in all material respects and
complied in all material respects with applicable laws, rules and regulations.
3.5 FINANCIAL STATEMENTS.
(a) The Target financial statements (including any footnotes thereto)
contained in the Target 10-K Reports and the Target 10-Q Reports have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved, except as indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q, and fairly present the
consolidated financial position of Target as of the dates thereof and the
consolidated results of operations, changes in shareholders' equity and cash
flows for the periods then ended (subject, in the case of the unaudited
statements, to recurring year end adjustments normal in nature and amount and
the absence of footnotes).
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(b) The books and records of Target have been, and are being, maintained in
material compliance with applicable legal and accounting requirements, and such
books and records accurately reflect in all material respects all material
transactions customarily reflected in such books and records in respect of the
business, assets, liabilities and affairs of Target.
3.6 LEASES. Target has delivered to Purchaser (i) a true, correct and
complete list of all leases, licenses or other agreements (each a "Lease" and
collectively the "Leases") in effect on the date hereof under which Target as
lessor or licensor affords another person the use of tangible or intangible
property and (ii) the forms of the Leases used by Target. The Leases (i) were
made for valuable consideration, (ii) constitute the valid obligations of
parties thereto, (iii) are legally enforceable in all material respects
according to their terms (except as enforceability may be affected by
bankruptcy, insolvency, reorganization or other similar laws relating to or
affecting the enforcement of creditor's rights generally), (iv) comply with all
legal requirements applicable to the provisions of the Leases in all material
respects, and (v) constitute "net" leases and "full-payout" leases as those
terms are defined in rules and regulations of the Office of the Comptroller of
the Currency, except for Leases which, in aggregate, have a net asset value less
than 1% of the Target's overall lease portfolio. Except as set forth in Schedule
3.6, each party to the Leases has performed its respective obligations under the
Lease in all material respects. Schedule 3.6 sets forth, as of January 31, 1997,
each Lease for which (A) the lessee's obligation to pay the "Monthly Lease
Charge" (as such term is used in the schedules to the Leases) is more than
thirty (30) days past due, (B) such past due amount exceeds $50,000, and (C) the
remaining Monthly Lease Charges under such Lease exceed $250,000. Target
represents and warrants that since the date it acquired the assets of Capital
Business Leasing, Inc., all information provided to Colonial Pacific Leasing
("Colonial") or to any other purchaser of leases originated by Target ("Lease
Purchasers"), whether in the term of lease applications submitted to Colonial
and/or Lease Purchasers or otherwise, has been an accurate reflection of all
material information available to Target as independently verified by Target
according to Target's policies and procedures (which are included in Schedule
3.6), and that Target has complied in all material respects with all policies
and procedures required by Colonial and/or Lease Purchasers pursuant to any of
their respective manuals, or agreements with Target. Each Lease was originated
by Target in the ordinary course of its business and contains customary remedies
provisions intended to enable realization against the lessee and/or the tangible
and intangible property leased which, in the aggregate, should be adequate for
the practical realization of the intended benefits of such remedies, except for
Leases of equipment having in the aggregate original equipment cost equal to or
less than $500,000. No person has a participation in or other right to receive
any remaining scheduled payments under any Lease, and Target has not taken any
action to convey any right to any person that would result in such person having
a right to any remaining scheduled payments received with respect to any Lease
except for (i) assignments and security interests granted in connection with
loans, the proceeds of which were used to finance or refinance the purchase of
the property subject to the Lease, provided that such financings are scheduled
to be paid in full from the scheduled payments under the Leases, and (ii) the
arrangements disclosed in Schedule 3.6. Each Lease was originated or purchased
by, or assigned to, Target without any fraud or intentional or reckless
misrepresentation on the part of Target. Each lessee under each Lease had a
location in the United States at the inception of the Lease, except for Leases
which, in the aggregate, have a net asset value of less than 1% of the Target's
overall lease portfolio. All material filings and other material actions
required to be made, taken or performed by any person in any jurisdiction to
give or evidence Target's ownership interest in the Leases and the tangible and
intangible personal property subject to the Leases have been made, taken or
performed, except with respect to leased equipment contained on a Lease schedule
having an initial purchase price of $150,000 or less.
3.7 SUBSIDIARIES. Target does not own or otherwise hold fifty percent or
more of the voting securities of any corporation. Except as otherwise disclosed
on Schedule 3.7, Target does not own any stock, partnership interest, joint
venture interest or any other security issued by any other corporation,
organization or entity, except readily marketable securities owned by Target in
the ordinary course of its business.
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3.8 ABSENCE OF UNDISCLOSED LIABILITIES. All of the Liabilities of Target
are reflected, disclosed or reserved against in the audited balance sheet
included in the audited consolidated financial statements of Target as at the
end of its last fiscal year (the "Latest Target Balance Sheet Date") for which
Target has filed Target Regulatory Reports or in the notes thereto, except (a)
Liabilities incurred since the Latest Target Balance Sheet Date in the ordinary
course of business, (b) as otherwise disclosed on Schedule 3.8 or (c) other
Liabilities which, in the aggregate, are not material. As of September 30, 1996,
except those leases or licenses entered into by Target in the ordinary course of
business, there are no agreements or commitments binding Target to enter into a
lease or license with any person for property having an aggregate value in the
amount of $100,000 or more, except as set forth on Schedule 3.8.
3.9 NO MATERIAL ADVERSE CHANGES. Since the end of the last fiscal year for
which Target has filed Target 10-K Reports to the date hereof, there has been no
event, occurrence or development in the business of Target that, taken together
with other events, occurrences and developments with respect to such business,
has had or would reasonably be expected to have a Material Adverse Effect on
Target or adversely affect the ability of Target to consummate the transactions
contemplated hereby.
3.10 ABSENCE OF CERTAIN DEVELOPMENTS. Except as disclosed in Target's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 or in any
Current Reports of Target on Form 8-K filed prior to the date of this Agreement,
or on Schedule 3.10, unless otherwise expressly contemplated or permitted by
this Agreement, since September 30, 1996 to the date hereof, Target has not:
(a) issued, sold or modified any of its equity securities, securities
convertible into or exchangeable for its equity securities, warrants, options or
other rights to acquire its equity securities or granted any options or
restricted stock grants, except the issuance of shares of Target Common Stock
pursuant to the exercise of stock options identified on Schedule 3.3;
(b) redeemed, purchased, acquired or offered to acquire, directly or
indirectly, any shares of capital stock of Target or other securities of Target,
except pursuant to the exercise of stock options and warrants issued under, or
otherwise pursuant to, the agreements, arrangements or commitments identified on
Schedule 3.3;
(c) split, combined or reclassified any of its outstanding shares of capital
stock or declared, set aside or paid any dividends or other distribution payable
in cash, property or otherwise with respect to any shares of its capital stock
or other securities, except the regular quarterly cash dividend of $.05 per
share on the Target Common Stock which has been declared to shareholders of
record on March 14, 1997 and is payable on April 1, 1997;
(d) borrowed any amount or incurred or became subject to any material
liability, except liabilities (x) incurred in the ordinary course of business or
(y) incurred under the contracts and commitments disclosed in Schedule 3.13;
(e) discharged or satisfied any material lien or encumbrance on the
properties or assets of Target or paid any material liability other than in the
ordinary course of business;
(f) leased, sold, assigned, transferred, mortgaged, pledged or subjected to
any lien or other encumbrance any of its assets with an aggregate market value
in excess of $100,000 except (i) in the ordinary course of business, (ii) liens
and encumbrances for current property taxes not yet due and payable and (iii)
liens and encumbrances which do not materially affect the value of or interfere
with the current use or ability to convey, the property subject thereto or
affected thereby;
(g) canceled any material debts or claims or waived any rights of material
value, except in the ordinary course of business or upon payment in full;
(h) suffered any theft, damage, destruction or loss of or to any property or
properties owned or used by it, whether or not covered by insurance, which
would, individually or in the aggregate, have a Material Adverse Effect on
Target;
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(i) made or granted any bonus or any wage, salary or compensation increase
or severance or termination payment to, or promoted, any director, officer,
employee, group of employees or consultant, or entered into any employment
contract or hired any employee with an annual salary in excess of $100,000 other
than bonuses, compensation increases, promotions or new hires in the ordinary
course and in a manner consistent with past practices as previously disclosed to
Purchaser;
(j) made or granted any increase in the benefits payable under any employee
benefit plan or arrangement, amended or terminated any existing employee benefit
plan or arrangement or adopted any new employee benefit plan or arrangement
except as set forth on Schedule 3.10(j);
(k) made any single or group of related capital expenditures or commitment
therefor in excess of $100,000 or entered into any lease or group of related
leases as lessee with the same party which involves aggregate lease payments
payable of more than $100,000 for any group of related leases in the aggregate
except as set forth on Schedule 3.10(k);
(l) acquired (by merger, exchange, consolidation, acquisition of stock or
assets or otherwise) any corporation, partnership, joint venture or other
business organization or division or material assets thereof, or assets or
deposits that are material to Target on a consolidated basis, except in exchange
for debt previously contracted except as set forth on Schedule 3.10(l);
(m) taken any other material action or entered into any material transaction
other than in the ordinary course of business; or
(n) agreed to do any of the foregoing.
3.11 PROPERTIES.
(a) Target does not and has never owned title to any real property and has
good and marketable title to all of the personal property, fixtures, furniture
and equipment reflected on the consolidated balance sheet as of September 30,
1996 of Target included in the Target 10-Q Report for such quarterly period (the
"Target Latest Balance Sheet") or acquired since the date thereof, free and
clear of all liens and encumbrances, except for (i) liens on property which
Target leases or licenses to third parties which were incurred in the ordinary
course of business, (ii) liens, encumbrances or security interests set forth on
Schedule 3.11(a), (iii) utility and other easements, encumbrances and
restrictions that do not interfere with the present use of the property for the
business being conducted thereon, (iv) liens for current taxes and special
assessments not delinquent, (v) leasehold estates with respect to multi-tenant
buildings owned by Target, which leases are identified on Schedule 3.11(a), (vi)
landlords' and statutory liens and (vii) property disposed of since the date of
the Target Latest Balance Sheet in the ordinary course of business.
(b) Schedule 3.11(b) contains complete and correct copies of (i) all leases
relating to real property leased by Target, and (ii) each lease or license for
personal property to which Target is a party as lessee or licensee and which (A)
has a remaining term of one year or more and which involves annual payments of
more than $50,000, has a term of less than one year and which involves remaining
payments in excess of $100,000, or any group of leases or licenses with the same
party which have remaining terms of one year or more and which involve annual
payments of more than $50,000 in the aggregate or which have remaining terms of
less than one year and which involve remaining payments in excess of $100,000 in
the aggregate, (B) is a "material contract" within the meaning of Item
601(b)(10) of Regulation S-K promulgated by the SEC, or (C) was not entered into
in the ordinary course of business. The leases and licenses contained in
Schedule 3.11(b) are in full force and effect. Target (if a lessee under such
lease or licensee under such license) has a valid and existing interest under
each such lease or license for the term set forth therein. With respect to such
leases and licenses, Target is not in default, nor, to the Knowledge of Target,
are any of the other parties to any of such leases and licenses in default. To
the Knowledge of Target, there has been no cancellation or material breach by
any other party to any lease or license required to be disclosed in Schedule
3.11(b).
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(c) Except as set forth in Schedule 3.11(c), all of the real property and
material personal property necessary for the conduct of the business of Target
are in good condition and repair, ordinary wear and tear excepted, and are
usable in the ordinary course of business. Target owns, or leases under valid
leases, all buildings, fixtures, furniture, personal property, land improvements
and equipment sufficient for the conduct of its business as it is presently
being conducted.
(d) Except as set forth in Schedule 3.11(d), neither Target nor any of the
real property leased by Target is, to the Knowledge of Target, in violation of
any applicable zoning ordinance or other law, regulation or requirement relating
to the operation of any properties used in the operation of its business,
including applicable environmental protection laws and regulations, which
violations would, individually or in the aggregate, have a Material Adverse
Effect on Target; and Target has not received any notice of any such violation
which has not been remedied or cured, or of the existence of any condemnation
proceeding with respect to any real properties owned or leased by Target. Except
as set forth in Schedule 3.11(d), to the Knowledge of Target, no hazardous
substances, hazardous wastes, pollutants or contaminants have been deposited or
disposed of in, on or under any real properties currently leased by Target,
except in compliance with applicable law. Except as set forth in Schedule
3.11(d), to the Knowledge of Target, the amount or level of asbestos or
ureaformaldehyde materials which exist in or on any of Target's currently leased
properties does not constitute a health hazard to individual occupants or users
of such properties, and no electrical transformers or capacitors, other than
those owned by public utility companies, located on such properties contain any
PCBs, except to the extent not likely to constitute a health hazard to
individual occupants or users of such properties. Except as set forth in
Schedule 3.11(d), to the Knowledge of Target, no prior owners, occupants or
operators of any real property currently leased by Target ever used such
properties as a dump or gasoline service station, and no real property currently
or within the last ten years prior to the date hereof leased by Target is or was
located in or in proximity to any real properties Known by Target to be listed
on the Comprehensive Environmental Response, Compensation and Liability
Information System or on the National Priorities List.
3.12 TAX MATTERS. Except as disclosed in Schedule 3.12, Target and all
members of any consolidated, affiliated, combined or unitary group of which
Target is a member have filed or will file all Tax and Tax information returns
or reports required to be filed (taking into account permissible extensions) by
them on or prior to the Effective Date except for those returns (other than
income tax returns) for which the failure to file would not result in any
material penalty, fine or other consequence for Target, and have paid (or have
accrued or reserved or will accrue or reserve, prior to the Effective Date,
amounts for the payment of) all Taxes shown to be due on such returns and
reports relating to the time periods covered thereby. The accrued taxes payable
accounts for Taxes and provision for deferred income taxes, specifically
identified as such, on the Target Latest Balance Sheet are sufficient for the
payment of all unpaid Taxes of Target accrued for all periods ended on or prior
to the date of the Target Latest Balance Sheet. Except as disclosed on Schedule
3.12, Target has not waived any statute of limitations with respect to Taxes or
agreed to any extension of time with respect to an assessment or deficiency for
Taxes. Target has paid or will pay in a timely manner and as required by law all
Taxes due and payable by it or which it is obligated to withhold from amounts
owing to any employee or third party in any material respect. All Taxes which
will be due and payable, whether now or hereafter, for any period ending on,
prior to or including the Effective Date shall have been paid by or on behalf of
Target or shall be reflected on the books of Target as an accrued Tax liability
determined in a manner which is consistent with past practices. No Tax returns
(with the exception of state sales tax returns) of Target have, during the past
five (5) years, been audited by any governmental authority other than as
disclosed on Schedule 3.12; and, except as set forth on Schedule 3.12, there are
no unresolved questions, claims or disputes asserted by any relevant taxing
authority concerning the liability for Taxes of Target. Target has not made an
election under Section 341(f) of the Code for any taxable years not yet closed
for statute of limitations purposes. No demand or claim is pending or
outstanding against Target with respect to any Taxes arising out of membership
or participation in any consolidated, affiliated, combined or unitary group of
which Target was at any time a member. For purposes of this Agreement, the term
"Tax" shall mean any federal, state, local or foreign income, gross receipts,
license, payroll,
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employment, excise, severance, stamp, occupation, premium, property or windfall
profits tax, environmental tax, customs duty, capital stock, franchise,
employees' income withholding, foreign or domestic withholding, social security,
unemployment, disability, workers' compensation, employment-related insurance,
real property, personal property, sales, use, transfer, value added, alternative
or add-on minimum or other tax, fee, assessment or charge of any kind
whatsoever, including any interest, penalties or additions to, or additional
amounts in respect of the foregoing, for each party hereto and its commonly
controlled entities and all members of any consolidated, affiliated, combined or
unitary group of which any of them is a member.
3.13 CONTRACTS AND COMMITMENTS. Except as set forth on Schedule 3.13,
Target (i) is not a party to any collective bargaining agreement or contract
with any labor union, (ii) is not a party to any written or oral contract for
the employment of any officer, individual employee or other person on a
full-time or consulting basis, or relating to severance pay for any such person
except oral or written offers of employment for employment "at will", (iii) is
not a party to any written or oral agreement or understanding to repurchase
assets previously sold or leased (or to indemnify or otherwise compensate the
purchaser in respect of such assets), except for securities sold under a
repurchase agreement, (iv) is not a party as of the date hereof to any (A)
except for contracts entered into in the ordinary course of its business,
contract with a remaining term in excess of one year which is not terminable,
without penalty, on 30 or fewer days notice at any time before or after the
expiration of such one-year period for the purchase or sale of assets, products
or services, under which the undelivered balance of such assets, products and
services has a purchase price in excess of $100,000 for any individual contract
or $100,000 in the aggregate for any group of contracts with the same party, (B)
other contract which is a "material contract" within the meaning of Item
601(b)(10) of Regulation S-K, of the SEC to be performed after the date of this
Agreement, or (C) other material agreement or contract which was not entered
into in the ordinary course of business and which is not disclosed on Schedules
3.11(a) or 3.11(b), or (v) does not have any commitment for a capital
expenditure in excess of $100,000.
3.14 LITIGATION. Except as set forth on Schedule 3.14, there are no
actions, suits, proceedings, audits, orders or investigations (i) pending or, to
the Knowledge of Target, threatened against Target or any employee benefit plan
of Target, at law or in equity, or before or by any federal, state or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign in which the adverse party or parties seeks or could be
reasonably expected to receive recovery from Target, or its respective
properties or assets, of an unspecified amount, an amount or value in excess of
$100,000, or injunctive or other equitable relief, or (ii) asserted by Target
against any other party in which Target claims damages of more than $250,000 or
injunctive or other equitable relief.
3.15 NO BROKERS OR FINDERS. Except as disclosed on Schedule 3.15, there
are no claims for brokerage commissions, finders' fees, investment advisory fees
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement, understanding, commitment or agreement made
by or on behalf of Target.
3.16 EMPLOYEES. Except as set forth on Schedule 3.16, Target has complied
in all material respects with all laws relating to the employment of labor,
including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining, non-discrimination and the payment of social security and
other taxes.
3.17 EMPLOYEE BENEFIT PLANS.
(a) DEFINITIONS. For the purposes of this Agreement, unless the context
clearly requires otherwise, the term "Plan" or "Plans" includes all employee
benefit plans as defined in Section 3(3) of ERISA, and all other benefit
arrangements (including, without limitation, any employment agreement or any
program, agreement, policy or commitment providing for severance payments,
insurance coverage of employees, workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
life, health, disability or accident benefits) applicable to the employees of
Target, to which
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Target contributes, or which Target has committed, prior to the date of this
Agreement, to implement after the date of this Agreement for its employees.
Unless the context clearly requires otherwise, "Plan" or "Plans" shall also
include any similar program or arrangement maintained by any organization
affiliated by ownership with Target for which Target is or would be completely
or partially liable for the funding or the administration either as a matter of
law or by agreement but excluding customers of the trust departments of
affiliates of Target where there is no ownership affiliation between such
customers and Target.
(b) Except as disclosed on Schedule 3.17:
(i) FULL DISCLOSURE OF ALL PLANS. With respect to all employees and
former employees of Target (and all dependents and beneficiaries of such
employees and former employees) does not:
(A) maintain or contribute to any nonqualified deferred compensation
or retirement plans, contracts or arrangements;
(B) maintain or contribute to any qualified defined contribution
plans (as defined in Section 3(34) of ERISA or Section 414(i) of the
Code);
(C) maintain or contribute to any qualified defined benefit plans (as
defined in Section 3(35) of ERISA or Section 414(j) of the Code)("Defined
Benefit Plans");
(D) maintain or contribute to any employee welfare benefit plans (as
defined in Section 3(1) of ERISA);
(E) maintain or contribute to any retiree medical program; and
(F) maintain or are obligated under any severance policy or other
severance arrangement for employees.
(ii) FUNDING. With respect to the Plans, (A) all required contributions
which are due have either been made or properly accrued and (B) Target is
not liable for any accumulated funding deficiency as that term is defined in
Section 412 of the Code.
(iii) PLAN DOCUMENTS. With respect to all Plans sponsored, maintained or
administered by Target and all Plans to which Target is or may be obligated
to contribute, Target has delivered to Purchaser true and complete copies of
(A) the most recent determination letter, if any, received by Target from
the Internal Revenue Service regarding each qualified Plan, (B) the Form
5500 and all schedules and accompanying financial statements, if any, for
each Plan for which such form is required to be filed for the three most
recent fiscal Plan years, (C) the most recently prepared actuarial valuation
report, if any, for each Plan, and (D) copies of the current Plan documents,
trust agreements, insurance contracts and summary plan descriptions
(including summary of material modifications) with respect to each Plan.
(iv) DEFINED BENEFIT PLANS. Neither Target nor any affiliate of Target
maintains or has maintained any Defined Benefit Plans that would result,
based upon a termination or otherwise, in any unfunded liability to Target
or Purchaser under Title IV of ERISA as of the Effective Date. There are no
unfunded vested liabilities (determined using the assumptions used by the
Plan for funding and without regard to future salary increases) with respect
to Defined Benefit Plans sponsored by Target. There have been no reportable
events under Section 4043 of ERISA (with respect to which the 30-day notice
requirement has not been waived by regulation) with respect to any Defined
Benefit Plan maintained by Target. No Defined Benefit Plan has been
terminated that will result in a material liability by Target to the Pension
Benefit Guaranty Corporation.
(v) MULTIEMPLOYER PLANS. Target does not have any actual or potential
liabilities under Sections 4201 or 4205 of ERISA for any complete or partial
withdrawal from any multiemployer plan.
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(vi) FIDUCIARY BREACH; CLAIMS. Neither Target nor, to Target's
Knowledge, any of its respective directors, officers, employees or other
fiduciaries has committed any breach of fiduciary duty imposed by ERISA or
any other applicable law with respect to the Plans which would subject
Target, directly or indirectly, to any material liability under ERISA or any
applicable law. There are no actions, suits or claims pending against Target
relating to benefits other than routine, uncontested claims for benefits.
(vii) PROHIBITED TRANSACTIONS. Neither Target nor, to Target's
Knowledge, any of their respective officers, directors, employees, or any
other fiduciaries of any Plan has incurred any material liability for any
civil penalty imposed by Section 4975 of the Code or Section 502(i) of
ERISA.
(viii) MATERIAL COMPLIANCE WITH LAW. All Plans have been consistently
administered in accordance with their terms in all material respects. To the
extent required either as a matter of law or to obtain the intended tax
treatment and tax benefits, all Plans comply in all material respects with
the requirements of ERISA and the Code. Target has not incurred any material
liability in connection with any failure to file timely any Tax information
returns or reports or other required filings, disclosures and contributions
with respect to all Plans. No condition exists that limits the right of
Target to amend or terminate any such Plan (except as provided in such Plans
or limited under ERISA, the Code or other applicable law).
(ix) VEBA FUNDING. No Plan is funded in whole or in part through a
voluntary employees' beneficiary association exempt from tax under Section
501(c)(9) of the Code. To the extent applicable, the limitations under
Sections 419 and 419A of the Code have been computed, all unrelated business
income tax returns have been filed and appropriate adjustments have been
made on all other Tax returns.
(x) RETIREMENT AND COBRA BENEFITS. Target does not have actual or
potential material liability under current law for benefits after separation
from employment other than (i) benefits under Plans listed on Schedule 3.17
or described in Section 3.17(b)(i) hereof, and (ii) health care continuation
benefits described in Section 4980B of the Code or Part G of Subtitle B of
Title I of ERISA or any comparable provisions under the laws of any state.
(xi) COLLECTIVE BARGAINING. No Plan is maintained in whole or in part
pursuant to collective bargaining.
(xii) EMPLOYEE STATUS. As of the date of this Agreement, no employee of
Target is absent due to (A) a disability that currently entitles the
employee to current benefits under any long-term disability plan sponsored
by Target or (B) to the Knowledge of the Target, military service leave of
absence. Except as otherwise disclosed in other Sections of this Agreement
or the Schedules thereto, all employees of Target are "at will" employees.
3.18 INSURANCE. Schedule 3.18 contains each insurance policy maintained by
Target with respect to its business, operations, properties and assets. All such
insurance policies are in full force and effect, and Target is not in default
with respect to its obligations under any of such insurance policies.
3.19 RELATED PARTY TRANSACTIONS. Except as set forth on Schedule 3.19,
neither Target nor any executive officer or director of Target, nor any member
of the immediate family of any such officer or director (which for the purposes
hereof shall mean a spouse, minor child or adult child living at the home of any
such officer or director), nor any entity which any of such persons "controls"
(within the meaning of Regulation O of the Federal Reserve Board ("FRB")), has
any loan agreement, note or borrowing arrangement or any other agreement with
Target (other than normal employment arrangements) or any interest in any
property, real, personal or mixed, tangible or intangible, used in or pertaining
to the business of Target.
3.20 COMPLIANCE WITH LAWS; PERMITS. Target has complied with all
applicable laws and regulations of foreign, federal, state and local governments
and all agencies thereof which affect the business or any
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owned or leased properties of Target and to which Target may be subject, except
where failure to so comply would not, individually or in the aggregate, have a
Material Adverse Effect on Target or adversely affect Target's ability to
consummate the transactions contemplated hereby; and, to the Knowledge of
Target, no claims have been filed by any such governments or agencies against
Target alleging such a violation of any such law or regulation which have not
been resolved to the satisfaction of such governments or agencies. Target holds
all of the permits, licenses, certificates and other authorizations of foreign,
federal, state and local governmental agencies required for the conduct of its
business as currently conducted, except where failure to obtain such
authorizations would not, individually or in the aggregate, have an Material
Adverse Effect on Target or adversely affect the ability of Purchaser to
consummate the transactions contemplated hereby.
3.21 PROSPECTUS/PROXY STATEMENT. At the time the Prospectus/Proxy
Statement is mailed to the shareholders of Purchaser and Target in order to
obtain approvals referred to in Section 5.19 hereof and at all times subsequent
to such mailing up to and including the times of such approvals, such
Prospectus/ Proxy Statement (including any supplements thereto), with respect to
all information furnished to Purchaser by Target (as provided in Section 5.9(c)
hereof) for inclusion in the Prospectus/Proxy Statement or consistent with
information so furnished by Target and set forth therein relating to Target and
its shareholders, this Agreement, the Plan of Merger and all other transactions
contemplated hereby, will (a) comply in all material respects with applicable
provisions of the 1933 Act and the 1934 Act, and (b) not contain any untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they are made, not misleading.
3.22 POOLING OF INTERESTS. To the Knowledge of Target, Target has not
taken or agreed to take any action, or omitted or agreed to omit to take any
action, which would disqualify the Merger as a "pooling of interests" for
accounting purposes.
3.23 INTEREST RATE RISK MANAGEMENT INSTRUMENTS. There are no interest rate
swaps, caps, floors and option agreements and any similar interest rate risk
management agreements to which Target is a party or by which any of its
properties or assets may be bound.
3.24 STATE TAKEOVER LAWS. The Board of Directors of Target has approved
the execution of this Agreement and authorized and approved the Merger prior to
the execution by the Company of this Agreement in accordance with the Section
302A.673 of the MBCA, so that such section will not apply to this Agreement, the
transactions contemplated hereby or the Stockholders Agreements. The Board of
Directors of Target has taken all such action required to be taken by it to
provide that this Agreement and the transactions contemplated hereby and thereby
shall be exempt from the requirements of any "moratorium," "control share,"
"fair price" or other antitakeover laws or regulations of any state.
3.25 DISCLOSURE. The representations and warranties of Target contained in
this Agreement are true and correct in all material respects, and such
representations and warranties do not omit any material fact necessary to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact Known to Target which has not been
disclosed to Purchaser pursuant to this Agreement, the Schedules hereto and the
Target 10-K Reports and the Target 10-Q Reports, all taken together as a whole,
which would have or would reasonably be expected to have a Material Adverse
Effect on Target or materially adversely affect the ability of Target to
consummate in a timely manner the transactions contemplated hereby.
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ARTICLE 4
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 CONDUCT OF BUSINESS BY TARGET. From the date of this Agreement to the
Effective Date, unless Purchaser shall otherwise agree in writing or as
otherwise expressly contemplated or permitted by other provisions of this
Agreement, including but not limited to, this Section 4.1:
(a) the business of Target shall be conducted only in, and Target shall not
take any action except in, the ordinary course, on an arms-length basis and in
accordance, in all material respects, with all applicable laws, rules and
regulations and with prudent leasing practices;
(b) Target shall not, directly or indirectly:
(i) amend or propose to amend its Charter or Bylaws;
(ii) issue or sell any of its equity securities, securities convertible
into or exchangeable for its equity securities, warrants, options or other
rights to acquire its equity securities, or any bonds or other securities,
except pursuant to the exercise of the options set forth on Schedule 3.3 on
the date of this Agreement;
(iii) redeem, purchase, acquire or offer to acquire, directly or
indirectly, any shares of capital stock of Target or other securities of
Target, except pursuant to the agreements, arrangements or commitments
identified on Schedule 3.3;
(iv) split, combine or reclassify any outstanding shares of capital
stock of Target, or declare, set aside or pay any dividend or other
distribution payable in cash, stock, property or otherwise with respect to
shares of capital stock of Target except the regular quarterly cash
dividends of not more than $.05 per share which is, subject to declaration
by its Board of Directors, to be payable to shareholders of record on or
about June 15, 1997 and payable on or about July 1, 1997;
(v) borrow any amount or incur or become subject to any material
liability, except borrowings and liabilities incurred in the ordinary course
of business;
(vi) discharge or satisfy any material lien or encumbrance on the
properties or assets of Target or pay any material liability, except in the
ordinary course of business;
(vii) sell, assign, transfer, mortgage, pledge or subject to any lien or
other encumbrance any of its assets with an aggregate market value in excess
of $100,000, except (A) in the ordinary course of business; (B) liens and
encumbrances for current property taxes not yet due and payable and (C)
liens and encumbrances which do not materially affect the value of, or
interfere with the current use or ability to convey, the property subject
thereto or affected thereby;
(viii) cancel any material lease, debt or claims or waive any rights of
material value, except in the ordinary course of business or upon payment in
full;
(ix) acquire (by merger, exchange, consolidation, acquisition of stock
or assets or otherwise) any corporation, partnership, joint venture or other
business organization or division or material assets thereof, or assets or
deposits that are material to Target on a consolidated basis, except in
exchange for debt previously contracted;
(x) other than as set forth on Schedule 3.11 on the date of this
Agreement, make any single or group of related capital expenditures or
commitments therefor in excess of $100,000 (other than pursuant to binding
commitments existing on the date hereof and other than expenditures
necessary to maintain assets in good repair) or enter into any lease or
group of leases as lessee with the same party which involves aggregate lease
payments payable of more than $100,000 for any individual lease or involves
more than $100,000 for any group of leases with the same party in the
aggregate;
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(xi) other than as set forth on Schedule 3.11 on the date of this
Agreement, commit to enter into any Lease or contemporaneously enter into a
group of lease schedules with the same party or enter into any Lease or
contemporaneously enter into a group of lease schedules with the same party
which involves aggregate Monthly Lease Charges (as defined in such Lease or
lease schedules) payable during the term of the Lease of more than
$10,000,000 without prior consultation with Purchaser's Chief Financial
Officer;
(xii) enter into or propose to enter into, or modify or propose to
modify, any agreement, arrangement, or understanding with respect to any of
the matters set forth in this Section 4.1(b) except in the ordinary course
of business;
(xiii) without prior consultation with Purchaser, purchase or otherwise
acquire any investments, direct or indirect, in any derivative securities
other than occasional overnight investments of excess cash; or
(xiii) without prior consultation with Purchaser, enter into any interest
rate swap, floors and option agreements or other similar interest rate
management agreements;
(c) Target shall not, directly or indirectly, enter into, modify or
terminate any employment, severance or similar agreements or arrangements with,
or grant any bonuses, wage, salary or compensation increases, or severance or
termination pay to, or promote, any director, officer, employee, group of
employees or consultant or hire any employee with an annual salary over
$100,000, other than (i) in the ordinary course and in a manner consistent with
past practices or (ii) as contemplated by this Agreement, and shall promptly
notify Purchaser of any termination or resignation of any officer or key
employee;
(d) Target shall not adopt or amend any profit sharing, stock option,
pension, retirement, deferred compensation, or other employee benefit plan,
trust, fund, contract or arrangement for the benefit or welfare of any
employees, except as required by law or shall grant any stock option except as
set forth in Schedule 3.10(j);
(e) Target shall use reasonable efforts to cause its current insurance
policies not to be canceled or terminated or any of the coverage thereunder to
lapse, unless simultaneously with such termination, cancellation or lapse,
replacement policies providing coverage substantially equal to the coverage
under the canceled, terminated or lapsed policies are in full force and effect;
(f) Target shall not enter into any settlement or similar agreement with
respect to, or take any other significant action with respect to the conduct of,
any action, suit, proceeding, order or investigation which is required to be set
forth on Schedule 3.14 or to which Target becomes a party after the date of this
Agreement which is required to be disclosed in an updated Schedule 3.14, without
prior consultation with Purchaser's General Counsel;
(g) Target shall use commercially reasonable efforts to preserve intact in
all material respects the business organization and the goodwill of Target and
to keep available the services of its officers and employees as a group and
preserve intact material agreements, and Target shall establish a committee of
senior management personnel which will confer on a regular and frequent basis
with a committee of senior management personnel of Purchaser, as reasonably
requested by Purchaser, to report on operational matters and the general status
of ongoing operations and to plan for the operations of the Surviving
Corporation upon consummation of the Merger;
(h) Target shall not take any significant action with respect to any of the
Leases inconsistent with past practices or then current prudent practices,
materially alter its leasing portfolio or, without prior consultation with
Purchaser, voluntarily take any action that will have or can reasonably be
expected to have a Material Adverse Effect on leases or licenses of Target;
(i) with respect to real properties leased by Target and any material
personal property leased or licensed by Target for its use, Target shall not
renew, exercise an option to extend, cancel or surrender any
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such lease or license nor allow any such lease or license to lapse, without
prior consultation with Purchaser; and
(j) Target shall not agree to any action prohibited by any of the foregoing;
provided, however, that in the event Target would be prohibited from taking any
action by reason of this Section 4.1 without the prior written consent of
Purchaser, such action may nevertheless be taken if Target is expressly required
to do so by law and Target promptly informs Purchaser of such action. For
purposes of this Agreement, the words "prior consultation" with respect to any
action means advance notice of such proposed action and a reasonable opportunity
to discuss such action in good faith prior to taking such action.
4.2 CONDUCT OF BUSINESS BY PURCHASER. From the date of this Agreement to
the Effective Date, unless Target shall otherwise agree in writing or as
otherwise expressly contemplated or permitted by other provisions of this
Agreement, including but not limited to, this Section 4.2:
(a) Purchaser shall not issue or sell any of its equity securities,
securities convertible into or exchangeable for its equity securities, warrants,
options or other rights to acquire its equity securities, or any bonds or other
securities, except (i) pursuant to the exercise of the options or warrants or
the conversion of convertible securities set forth on Schedule 2.3 and pursuant
to the exercise of options granted under clause (iii) below, (ii) issuances of
Purchaser Common Stock to satisfy the employer matching obligations under the
Purchaser's 401-K Plan for the participants in such plan who elect to invest in
Purchaser common Stock, (iii) grants of options and restricted stock under the
Purchaser Stock Plans in the ordinary course of business, (iv) pursuant to
Purchaser's dividend reinvestment plan, or (v) issuance of shares of Purchaser
common Stock to satisfy the "tainted shares" requirement to have the Merger
treated as a pooling of interests for accounting purposes;
(b) Purchaser shall not redeem, purchase, acquire or offer to acquire,
directly or indirectly, any shares of capital stock of Purchaser or other
securities of Purchaser, except pursuant to the agreements, arrangements or
commitments identified on Schedule 2.3 and any redemption of redeemable debt,
including but not limited to Purchaser's outstanding convertible debentures;
(c) Purchaser shall not split, combine or reclassify any outstanding shares
of capital stock of Purchaser or declare, set aside or pay any dividend or other
distribution payable in cash, stock, property or otherwise with respect to
shares of capital stock of Purchaser except the regular quarterly cash dividends
of not more than $.32 per share;
(d) Purchaser shall not borrow any amount or incur or become subject to any
material liability, except borrowings and liabilities incurred in the ordinary
course of business or borrowings to redeem outstanding debentures;
(e) Neither Purchaser nor any Purchaser Subsidiary shall amend its Charter
or Bylaws in a manner which would adversely affect in any manner the terms of
the Purchaser Common Stock, or the ability of Purchaser to consummate the
transactions contemplated hereby in a timely manner;
(f) Neither Purchaser nor any Purchaser Subsidiary shall make any
acquisition (including acquisitions of branch offices and related deposit
liabilities) or take any other action that individually or in the aggregate
would adversely affect the ability of Purchaser or Acquisition to consummate the
transactions contemplated hereby in a timely manner; or
(g) Purchaser shall not agree to do any of the foregoing.
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ARTICLE 5
ADDITIONAL COVENANTS AND AGREEMENTS
5.1 FILINGS AND APPROVALS. Each party will use all reasonable efforts and
will cooperate with the other party in the preparation and filing, as soon as
practicable, of all applications or other documents required to comply with
applicable laws and regulatory requirements in connection with the Merger
contemplated by this Agreement, and provide copies of such applications, filings
and related correspondence to the other party. Prior to filing each application,
registration statement or other document with the applicable regulatory
authority, each party will provide the other party with an opportunity to review
and comment on each such application, registration statement or other document.
Each party will use all reasonable efforts and will cooperate with the other
party in making such filings and taking any other actions necessary to obtain
such regulatory or other approvals and consents at the earliest practicable
time, including participating in any required hearings or proceedings. Subject
to the terms and conditions herein provided, each party will use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement.
5.2 CERTAIN LEASE AND RELATED MATTERS. Target will furnish to Purchaser a
complete and accurate list on the date hereof as of the most recent date the
reports referred to below have been prepared and, within fifteen (15) business
days after the end of its reporting cycle (which shall be no less frequently
than monthly), of (a) all of Target's periodic internal account receivable aging
reports prepared during such reporting period (which reports will be prepared in
a manner consistent with past practice), (b) any Leases for which (i) the lessee
is in any bankruptcy or receivership proceeding, or (ii) the lessee's obligation
to pay Monthly Lease Charges in an amount in excess of $50,000 is more than
thirty (30) days past due and the aggregate remaining Monthly Lease Charges due
from such lessee under such lessee's Lease exceeds $250,000, and (c) a list of
all Leases entered into by Target as lessee or licensee during the reporting
period. The representations set forth in Section 3.6 shall also apply to any
Leases entered into by Target.
5.3 MONTHLY FINANCIAL STATEMENTS. Target shall furnish Purchaser with
Target's balance sheet as of the end of each calendar month after January, 1997
and the related statements of income, within fifteen (15) business days after
the end of each such calendar month. Such financial statements shall be prepared
on a basis consistent with current practice and shall fairly present the
financial positions of Target as of the dates thereof and the results of
operations of Target for the periods then ended.
5.4 EXPENSES. Except as otherwise provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses; provided, however, Purchaser and Target shall each pay one-half of all
filing fees in connection with the HSR filings for the transactions contemplated
by this Agreement.
5.5 NO NEGOTIATIONS, ETC. Target will not, and will use its best efforts
to cause the Target's officers, directors, employees, agents and affiliates not
to, directly or indirectly, solicit, authorize, initiate or encourage submission
of, any proposal, offer, tender offer or exchange offer from any person or
entity (including any of its or their officers or employees) relating to any
liquidation, dissolution, recapitalization, merger, consolidation or acquisition
or purchase of all or a material portion of the assets or deposits of, or any
equity interest in, Target or other similar transaction or business combination
involving Target (the "Acquisition Proposal") or, unless the Board of Directors
of Target shall have determined, after consultation with Target's counsel, that
there is a reasonable likelihood that the Board of Directors of Target has a
fiduciary duty to do so, (a) participate in any negotiations in connection with
or in furtherance of any of the foregoing or (b) permit any person other than
Purchaser and its representatives to have any access to the facilities of, or
furnish to any person other than Purchaser and its representatives any
non-public information with respect to, Target in connection with or in
furtherance of any of the foregoing. Target shall promptly notify Purchaser if
any such proposal or offer, or any inquiry from or contact with any
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person with respect thereto, is made, and shall promptly provide Purchaser with
such information regarding such proposal, offer, inquiry or contact as Purchaser
may request.
5.6 NOTIFICATION OF CERTAIN MATTERS.
(a) Each party shall give prompt notice to the other party of (a) the
occurrence or failure to occur of any event or the discovery of any information,
which occurrence, failure or discovery would be likely to cause any
representation or warranty on its part contained in this Agreement to be untrue,
inaccurate or incomplete after the date hereof or, in case of any representation
or warranty given as of a specific date, would be likely to cause any such
representation on its part contained in this Agreement to be untrue, inaccurate
or incomplete in any material respect as of such specific date and (b) any
material failure of such party to comply with or satisfy any covenant or
agreement to be complied with or satisfied by it hereunder.
(b) From time to time prior to the Effective Time, each party shall promptly
supplement or amend any of its representations and warranties which apply to the
period after the date hereof by delivering an updated Schedule to the other
party pursuant hereto with respect to any matter hereafter arising which would
render any such representation or warranty after the date of this Agreement
materially inaccurate or incomplete as a result of such matter arising. Such
supplement or amendment to a party's representations and warranties contained in
an updated Schedule shall be deemed to have modified the representations and
warranties of the disclosing party, and no such supplement or amendment, or the
information contained in an updated Schedule, shall constitute a breach of a
representation or warranty of the disclosing party; provided that no such
supplement or amendment may cure any breach of a covenant or agreement of any
party under Articles 4 or 5. Within 20 days after receipt of such supplement or
amendment (or if cure is promptly commenced by the disclosing party, but is not
effected within the Cure Period (as defined below)), the receiving party may
exercise its right to terminate this Agreement pursuant to Section 7.1(i) hereof
if the information in such supplement or amendment together with the information
in any or all of the supplements or amendments previously provided by the
disclosing party indicate that the disclosing party has suffered or is
reasonably likely to suffer a Material Adverse Effect which either has not or
cannot be cured within 30 days after disclosure to the receiving party (the
"Cure Period").
5.7 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Target shall permit Purchaser full access on reasonable notice and at
reasonable hours to its properties and shall disclose and make available
(together with the right to copy) to Purchaser and to the internal auditors,
loan review officers, employees, attorneys, accountants and other
representatives of Purchaser all books, papers and records relating to the
assets, stock, properties, operations, obligations and liabilities of Target,
including, without limitation, all books of account (including, without
limitation, the general ledger), tax records, minute books of directors' and
shareholders' meetings, organizational documents, Bylaws, contracts and
agreements, filings with any regulatory authority, accountants' work papers,
litigation files (including, without limitation, legal research memoranda),
documents relating to assets and title thereto (including, without limitation,
abstracts, title insurance policies, surveys, environmental reports, opinions of
title and other information relating to real or personal property), plans
affecting employees, securities transfer records and shareholder lists, and any
books, papers and records relating to other assets or business activities in
which Purchaser may have a reasonable interest, including, without limitation,
its interest in planning for integration and transition with respect to the
business of Target; provided, however, that the foregoing rights granted to
Purchaser shall, whether or not and regardless of the extent to which the same
are exercised, in no way affect the nature or scope of the representations,
warranties and covenants of Target set forth herein. In addition, Target shall
instruct its officers, employees, counsel and accountants to be available for,
and respond to any questions of, such Purchaser representatives, as arranged
through the committee described in Section 4.1(g) hereof, at reasonable hours
and with reasonable notice by Purchaser to such individuals, and to cooperate
fully with
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Purchaser in planning for the integration of the business of Target with the
business of Purchaser and the Purchaser Subsidiaries.
(b) Purchaser shall, and shall cause each of the Purchaser Subsidiaries to,
provide to Target, its officers, employees and representatives the same rights
being granted by Target to Purchaser pursuant to Section 5.7(a); provided,
however, that the foregoing rights granted to Target shall, whether or not and
regardless of the extent to which the same are exercised, in no way affect the
nature or scope of the representations, warranties and covenants of Purchaser
set forth herein. In addition, Purchaser shall instruct its officers, employees,
counsel and accountants to be available for, and respond to reasonable questions
of, representatives of Target at reasonable hours and with reasonable notice by
Target to such individuals.
(c) All information furnished by Target or Purchaser pursuant hereto shall
be treated as the sole property of the party furnishing the information until
the Effective Date, and, if the Effective Date shall not occur, the receiving
party shall return to the party which furnished such information, or destroy,
all documents or other materials (including copies thereof) containing,
reflecting or referring to such information. In addition, the receiving party
shall keep confidential all such information and shall not directly or
indirectly use such information for any competitive or other commercial purpose.
The obligation to keep such information confidential shall not apply to (i) any
information which (A) was already in the receiving party's possession prior to
the disclosure thereof to the receiving party by the party furnishing the
information, (B) was then generally known to the public, (C) became known to the
public through no fault of the receiving party or its representatives or (D) was
disclosed to the receiving party by a third party not bound by an obligation of
confidentiality or (ii) disclosures required by law or by governmental or
regulatory authority.
5.8 FILING OF TAX RETURNS AND ADJUSTMENTS.
(a) Target shall file (or cause to be filed) at its own expense, on or prior
to the due date, all Tax returns, including all Plan returns and reports, for
all Tax periods ending on or before the Effective Date where the due date for
such returns or reports (taking into account valid extensions of the respective
due dates) falls on or before the Effective Date; provided, however, that Target
shall not file any Tax returns, or other returns, elections or information
statements with respect to any material liabilities for Taxes (other than
federal, state or local sales, use, personal property, withholding or employment
tax returns or statements), or consent to any material adjustment or otherwise
compromise or settle any material matters with respect to Taxes, without prior
consultation with Purchaser; provided, further, that Target shall not make any
election or take any other discretionary position with respect to any material
amount of Taxes, in a manner inconsistent with past practices, without the prior
written approval of Purchaser, which approval shall not be unreasonably
withheld. In the event the granting or withholding of such approval by Purchaser
results in additional Taxes owing for any Tax period ending on or before the
Effective Date, the liability for such additional Taxes shall not constitute or
be deemed to be a breach, violation of or failure to satisfy any representation,
warranty, covenant, condition or other provision of this Agreement or otherwise
be considered in determining whether any such breach, violation or failure to
satisfy shall have occurred. Target shall provide Purchaser with a copy of
appropriate workpapers, schedules, drafts and final copies of each material
federal and state income Tax return or election of Target (including returns of
all Plans) as soon as practicable before filing such return or election and the
parties shall reasonably cooperate with each other in connection therewith.
(b) Purchaser, in its sole and absolute discretion, will file (or cause to
be filed) all Tax returns of Target due after the Effective Date. After the
Effective Date, Purchaser, in its sole and absolute discretion and to the extent
permitted by law, shall have the right to amend, modify or otherwise change all
Tax returns of Target for all Tax periods.
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5.9 REGISTRATION STATEMENT.
(a) For the purpose (i) of holding meetings of shareholders of Purchaser and
Target to approve this Agreement and (ii) of registering with the SEC and with
applicable state securities authorities the Purchaser Common Stock to be issued
as contemplated by this Agreement, the parties hereto shall cooperate in the
preparation of an appropriate registration statement (such registration
statement, together with all and any amendments and supplements thereto, being
herein referred to as the "Registration Statement"), which shall include a
prospectus/joint proxy statement satisfying all applicable requirements of the
1933 Act, the 1934 Act, applicable state securities laws and the rules and
regulations thereunder (such prospectus/joint proxy statement, together with any
and all amendments or supplements thereto, being herein referred to as the
"Prospectus/Proxy Statement").
(b) Purchaser shall furnish such information concerning Purchaser and the
Purchaser Subsidiaries as is necessary in order to cause the Prospectus/Proxy
Statement, insofar as it relates to Purchaser, the Purchaser Subsidiaries and
Purchaser Common Stock, to be prepared in accordance with Section 5.9(a).
Purchaser agrees promptly to advise Target if at any time prior to the Purchaser
or Target shareholders' meetings any information provided by Purchaser in the
Prospectus/Proxy Statement becomes incorrect or incomplete in any material
respect, and to share with Target the information needed to correct such
inaccuracy or omission.
(c) Target shall furnish Purchaser with such information concerning Target
as is necessary in order to cause the Prospectus/Proxy Statement, insofar as it
relates to Target, and the Target securities, to be prepared in accordance with
Section 5.9(a). Purchaser agrees to provide the Target with reasonable
opportunity to review and comment on the Prospectus/Proxy Statement. Target
agrees promptly to advise Purchaser if at any time prior to the Purchaser or
Target shareholders' meetings any information provided by Target in the
Prospectus/Proxy Statement becomes incorrect or incomplete in any material
respect, and to provide Purchaser with the information needed to correct such
inaccuracy or omission.
(d) Purchaser shall promptly file the Registration Statement with the SEC
and applicable state securities agencies. Purchaser shall use reasonable efforts
to cause the Registration Statement to become effective under the 1933 Act and
applicable state securities laws at the earliest practicable date. Target
authorizes Purchaser to utilize in the Registration Statement the information
concerning Target and Target securities provided to Purchaser for the purpose of
inclusion in the Prospectus/Proxy Statement. Purchaser shall advise Target
promptly when the Registration Statement has become effective and of any
supplements or amendments thereto, and Purchaser shall furnish Target with
copies of all such documents. Prior to the Effective Date or the termination of
this Agreement, each party shall consult with the other with respect to any
material (other than the Prospectus/Proxy Statement) that might constitute a
"prospectus" relating to the Merger within the meaning of the 1933 Act prior to
using or disseminating such prospectus.
(e) Purchaser shall use reasonable efforts to cause to be delivered to
Target a letter relating to the Registration Statement from KPMG Peat Marwick
LLP, Purchaser's independent auditors, dated a date within two business days
before the date on which the Registration Statement shall become effective and
addressed to Target, in form and substance reasonably satisfactory to Target and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement.
(f) Target shall use reasonable efforts to cause to be delivered to
Purchaser a letter relating to the Registration Statement from KPMG Peat Marwick
LLP, Target's independent auditors, dated a date within two business days before
the date on which the Registration Statement shall become effective and
addressed to Purchaser, in form and substance reasonably satisfactory to
Purchaser and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
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(g) Purchaser shall bear (i) the costs of all SEC filing fees with respect
to the Registration Statement and the costs of qualifying the Purchaser
securities to be issued in connection with the transactions contemplated by this
Agreement under state blue sky laws to the extent necessary and (ii) all
printing and mailing costs in connection with the preparation and mailing of the
Prospectus/Proxy Statement to Purchaser shareholders. Target shall bear all
printing and mailing costs in connection with the preparation and mailing of the
Prospectus/Proxy Statement to Target shareholders. Purchaser and Target shall
each bear their own legal and accounting expenses in connection with the
Registration Statement.
(h) Purchaser shall use reasonable efforts to cause to be issued the letter
regarding pooling of interests accounting treatment for the Merger from KPMG
Peat Marwick LLP, Purchaser's independent auditors if required by the SEC.
(i) Target shall use reasonable efforts to cause to be issued the letter
regarding pooling of interests accounting treatment for the Merger from KPMG
Peat Marwick LLP, Target's independent auditors if required by the SEC.
5.10 AFFILIATE LETTERS. Target shall obtain and deliver to Purchaser as
promptly as practicable after (and shall use its reasonable best efforts to
obtain and deliver within five days after) the date hereof a signed
representation letter substantially in the form of Exhibit C hereto from each
executive officer and director of Target and each shareholder of Target who may
reasonably be deemed an "affiliate" of Target within the meaning of such term as
used in Rule 145 under the 1933 Act and for purposes of qualifying for pooling
of interests accounting treatment for the Merger, and shall obtain and deliver
to Purchaser a signed representation letter substantially in the form of Exhibit
C from any person who becomes an executive officer or director of Target or any
shareholder who becomes such an "affiliate" after the date hereof as promptly as
practicable after (and shall use its reasonable best efforts to obtain and
deliver within five days after) such person achieves such status. Purchaser
shall use its best reasonable efforts to obtain and deliver to Target as
promptly as practicable after (and shall use its reasonable best efforts to
obtain and deliver within five days after) the date hereof a signed
representation letter substantially in the form of Exhibit D hereto from each
executive officer and director of Purchaser and each shareholder of Purchaser
who may reasonably be deemed an "affiliate" of Purchaser within the meaning of
such term as used in Rule 145 under the 1933 Act and for purposes of qualifying
for pooling of interests accounting treatment for the Merger. Purchaser may
place appropriate legends on the stock certificates, warrant certificates and
convertible debentures of affiliates of Target and Purchaser and shall obtain
and deliver to Target a signed representation letter substantially in the form
of Exhibit D from any person who becomes an executive officer or director of
Purchaser or any shareholder who becomes such an "affiliate" after the date
hereof as promptly as practicable after (and shall use its reasonable best
efforts to obtain and deliver within five days after) such person achieves such
status.
5.11 DISPOSITION OF TAINTED SHARES. Due to the share repurchase program by
Purchaser and the extent to which there are Dissenting Shares in connection with
the Merger, Purchaser may be required to dispose of these so-called "tainted"
shares prior to the Effective Time in order for the Merger to qualify as a
pooling of interests. Subject to confirmation by Target that all of the
conditions precedent under Article VI to consummate the Merger have been
satisfied, Purchaser agrees to use all reasonable efforts to dispose of such
shares before the Effective Date, including the filing of a Form S-3
registration statement with the SEC to register the sale of such shares of
Purchaser Common Stock (the "S-3 Registration Statement") as set forth in
Schedule 5.11.
5.12 EMPLOYEE BENEFIT PLANS. Subject to the following agreements, from and
after the Effective Date Purchaser shall have the right to continue, amend or
terminate any of the Plans (as defined in Section 3.17 hereof) in accordance
with the terms thereof and subject to any limitation arising under applicable
law. It is the parties' current intention that Target will retain its employee
plans in effect for the benefit of employees of Target and Target's Subsidiaries
subject to any changes which are deemed necessary or desirable in order for the
employee plans of Target and Purchaser to remain qualified under
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applicable provisions of the Internal Revenue Code. However, nothing in this
statement of current intentions or in this Agreement shall be deemed to confer
any rights to persons who are not parties to this Agreement (such as, but not
limited to, employees, former employees or independent contractors of Target or
Purchaser) to continuation of their current benefit plans or to any particular
forms or types of benefits. Target, subject to the provisions of Section 4.1,
and Purchaser each reserve full authority to amend, terminate, discontinue or
otherwise revise their employee plans and/or to adopt new plans from time to
time subject solely to the discretion of their respective boards of directors.
5.13 POOLING OF INTERESTS; TAX TREATMENT. Target shall not and neither
Purchaser nor any of the Purchaser Subsidiaries shall voluntarily take any
action which would disqualify the Merger as a "pooling of interests" for
accounting purposes or as a "reorganization" that would be tax free to the
shareholders of Target pursuant to Section 368(a) of the Code. Target and
Purchaser shall each take all reasonable actions within its control for the
Merger to qualify as a "pooling of interests" for accounting purposes.
5.14 PRESS RELEASES. Purchaser and Target shall agree with each other as
to the form and substance of any press release related to this Agreement or the
transactions contemplated hereby, and shall consult with each other as to the
form and substance of other public disclosures which may relate to the
transactions contemplated by this Agreement, provided, however, that nothing
contained herein shall prohibit either party, following notification to the
other party, from making any disclosure which is required by law or regulation.
5.15 INDEMNIFICATION AND INSURANCE.
(a) From and after the Effective Date, Purchaser shall indemnify, defend and
hold harmless each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Date, an officer, director,
employee or agent of Target (the "Indemnified Parties") against all losses,
claims, damages, costs, expenses (including attorney's fees), liabilities or
judgments or amounts that are paid in settlement (which settlement shall require
the prior written consent of Purchaser, which consent shall not be unreasonably
withheld) of or in connection with any claim, action, suit, proceeding or
investigation (a "Claim") in which an Indemnified Party is, or is threatened to
be made, a party or a witness based in whole or in part on or arising in whole
or in part out of the fact that such person is or was a director, officer,
employee or agent of Target if such Claim pertains to any matter or fact
arising, existing or occurring on or prior to the Effective Date (including,
without limitation, the Merger and other transactions contemplated by this
Agreement), regardless of whether such Claim is asserted or claimed prior to, at
or after the Effective Date (the "Indemnified Liabilities") to the fullest
extent permitted by Purchaser's Charter and Bylaws and applicable Delaware law.
Any Indemnified Party wishing to claim indemnification under this Section
5.15(a), upon learning of any Claim, shall notify Purchaser (but the failure so
to notify Purchaser shall not relieve it from any liability which Purchaser may
have under this Section 5.15(a) except to the extent such failure prejudices
Purchaser) and shall deliver to Purchaser any undertaking required by Delaware
law. The obligations of Purchaser described in this Section 5.15(a) shall
continue in full force and effect, without any amendment thereto, for a period
of not less than six years from the Effective Date; provided, however, that all
rights to indemnification in respect of any Claim asserted or made within such
period shall continue until the final disposition of such Claim; and provided
further that nothing in this Section 5.15(a) shall be deemed to modify
applicable Delaware law regarding indemnification of former officers and
directors. The foregoing indemnification shall not apply to any actions, suits
proceedings, orders or investigations which at the date hereof are pending or,
to the Knowledge of Target or its directors, threatened unless disclosed on
Schedule 5.15(a).
(b) From and after the Effective Date, the directors, officers and employees
of Target who become directors, officers or employees of Purchaser, the
Surviving Corporation or any other of the Purchaser Subsidiaries, shall also
have indemnification rights with prospective application. The prospective
indemnification rights shall consist of such rights to which directors, officers
and employees of Purchaser are entitled under the provisions of the Charter,
Bylaws or similar governing documents of Purchaser, the
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Surviving Corporation and the other Purchaser Subsidiaries, as in effect from
time to time after the Effective Date, as applicable, and provisions of
applicable law as in effect from time to time after the Effective Date.
(c) Purchaser shall cause the Surviving Corporation and any successor
thereto to maintain directors and officers liability insurance comparable to
that being maintained by Purchaser on the date hereof, or continue the existing
insurance being maintained by Target, for the benefit of the current and former
directors and officers of Target for a period of three years after the Effective
Time, which insurance shall provide coverage for acts and omissions occurring on
or prior to the Effective Date; provided, further, that officers and directors
of Target may be required to make application and provide customary
representations and warranties to Purchaser's or the Surviving Corporation's
insurance carrier for the purpose of obtaining such insurance; and provided,
further, that such coverage will have a single aggregate for such three-year
period in an amount not less than the annual aggregate of such coverage
currently provided by Target.
(d) The contractual obligations of Purchaser provided under Sections 5.15(a)
through 5.15(c) hereof are intended to benefit, and be enforceable against
Purchaser directly by, the Indemnified Parties, and shall be binding on all
respective successors of Purchaser.
5.16 PURCHASER SEC REPORTS. Purchaser shall continue to file all reports
with the SEC necessary to permit the shareholders of Target who are "affiliates"
of Target (within the meaning of such term as used in Rule 145 under the 1933
Act) to sell the Purchaser Common Stock received by them in connection with the
Merger pursuant to Rules 144 and 145(d) under the 1933 Act if they would
otherwise be so permitted. After the Effective Date, Purchaser will file with
the SEC such reports and other materials required to be filed by Purchaser under
the federal securities laws on a timely basis.
5.17 SECURITIES REPORTS. Each of Purchaser and Target agree to provide to
the other party copies of all reports and other documents filed under the 1933
Act or 1934 Act with the SEC by it between the date hereof and the Effective
Date within five days after the date such reports or other documents are filed
with the SEC.
5.18 STOCK EXCHANGE LISTING. Purchaser shall use its best efforts to list
on the NYSE, subject to official notice of issuance, the shares of Purchaser
Common Stock to be issued in the Merger.
5.19 SHAREHOLDER APPROVALS. Each of Purchaser and Target shall call a
meeting of its shareholders for the purpose of voting upon this Agreement and
the Merger, and shall schedule such meeting based on consultation with the other
party. The Board of Directors of each of Purchaser and Target shall recommend
approval of this Agreement and the Merger, and use its best efforts (including,
without limitation, soliciting proxies for such approvals) to obtain approvals
from its shareholders. Provided, however, the Board of Directors of Target may
fail to make the recommendation, and/or to seek to obtain the shareholder
approval, referred to in the immediately preceding sentence, or withdraw, modify
or change any such recommendation, if such Board of Directors determines, after
consultation with counsel to Target, that the making of such recommendation, the
seeking to obtain such shareholder approval, or the failure to so withdraw,
modify or change its recommendation, is reasonably likely to constitute a breach
of the fiduciary or legal obligations of Target's Board of Directors.
5.20 PUBLICATION OF COMBINED FINANCIAL RESULTS. Purchaser shall use
reasonable efforts to publish as soon as practicable, and shall publish no later
than 30 days, after the end of its first fiscal quarter which includes at least
30 days of post-Merger combined operations, combined sales and net income
figures and any other financial information necessary as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 135 and any
related accounting rules.
5.21 EMPLOYMENT AGREEMENT AMENDMENTS. On the Effective Date and prior to
the Effective Time, Target shall deliver to Purchaser the Employment Agreement
Amendments signed by the persons listed in Schedule 1.9(e), which agreements
shall be effective at the Effective Time, and, on the Effective Date, and
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promptly after the Effective Time, Purchaser shall cause the Surviving
Corporation to execute such agreements and deliver one fully executed copy to
the other respective party to each such agreement.
5.22 FAILURE TO FULFILL CONDITIONS. In the event that either of the
parties hereto determines that a condition to its respective obligations to
consummate the transactions contemplated hereby cannot be fulfilled on or prior
to the termination of this Agreement, it will promptly notify the other party.
Each party will promptly inform the other party of any facts applicable to it
that would be likely to prevent or materially delay approval of the Merger by
any governmental or regulatory authority or third party or which would otherwise
prevent or materially delay completion of the Merger.
5.23 REGISTRATION RELATING TO TARGET OPTIONS. Purchaser shall register the
shares of Purchaser Common Stock issuable upon exercise of the Target Options
after the Effective Time in either the Registration Statement or in a
registration statement on Form S-8 and maintain the effectiveness of either such
registration statement as may be necessary to permit, beginning promptly after
the Effective Time, resales of the shares of Purchaser Common Stock issued upon
exercise of the Target Options, and shall cause such shares, when issued, to be
listed on the NYSE.
5.24 TARGET DEBT. Target (a) acknowledges that it is aware that Purchaser
may determine to solicit, or request Target to solicit, consents to amend
certain covenants contained in the indenture relating to Target's outstanding
9.50% senior notes due 2003 (the "Senior Notes") (the "Solicitation") and (b)
agrees (i) that, if Purchaser determines to so commence the Solicitation,
Purchaser and Target will cooperate in good faith with each other in connection
with the Solicitation (including the possibility that Purchaser may determine to
act as co-obligor or guarantor of the Senior Notes or to provide any other
reasonable incentives that may be needed to successfully complete the
Solicitation), and (ii) that, if Purchaser so requests, Target will commence and
make the Solicitation, upon terms and conditions as advised by, and with the
good faith cooperation of, Purchaser (it being understood, however, that the
prior occurrence of the Closing will be a condition to the closing of the
execution of any supplemental indenture). All expenses and fees of such
Solicitation (including the expenses and fees of any investment banker and any
registration statement determined by Purchaser to be necessary) shall be paid by
Purchaser.
ARTICLE 6
CONDITIONS
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
of each party to effect the transactions contemplated hereby shall be subject to
the fulfillment at or prior to the Effective Date of the following conditions:
(a) REGULATORY APPROVAL. Regulatory approval for the consummation of the
transactions contemplated hereby, including the contribution of the stock of the
Surviving Corporation by Purchaser to TCF Bank after the Effective Time of the
Merger, shall have been obtained from any governmental authority from which
approval is required and all applicable statutory or regulatory waiting periods
shall have lapsed. No Bank Regulator or any other regulating authority shall
have objected to the transactions contemplated by this Agreement or the
contribution by Purchaser of the stock of the Surviving Corporation after the
Effective Time to any of Purchaser's Subsidiaries.
(b) NO INJUNCTION. No injunction or other order entered by a state or
federal court of competent jurisdiction shall have been issued and remain in
effect which would prohibit or make illegal the consummation of the transactions
contemplated hereby.
(c) NO PROHIBITIVE CHANGE OF LAW. There shall have been no law, statute,
rule or regulation, domestic or foreign, enacted or promulgated which would
prohibit or make illegal the consummation of the transactions contemplated
hereby.
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(d) REGISTRATION STATEMENTS. The Registration Statement and the S-3
Registration Statement, if any, required pursuant to Section 5.11 shall have
been declared effective and shall not be subject to a stop order of the SEC,
and, if the offer and sale of Purchaser securities in the Merger pursuant to
this Agreement is required to be registered under the securities laws of any
state, the Registration Statement shall not be subject to a stop order of the
securities commission in such state. Purchaser shall have completed the sale of
the shares of Purchaser Common Stock, if any, required to be sold under the S-3
Registration Statement to permit the Merger to be accounted for as a pooling of
interests.
(e) FEDERAL TAX OPINION. A tax opinion addressed to both Purchaser and
Target by KPMG Peat Marwick LLP or such counsel or other independent certified
accountants mutually acceptable to Purchaser and Target shall have been obtained
with respect to the Merger, based on customary reliance and subject to customary
qualifications, to the effect that for federal income tax purposes:
(i) The Merger will qualify as a "reorganization" under Section 368(a)
of the Code;
(ii) No gain or loss will be recognized by any Target shareholder
(except in connection with the receipt of cash in lieu of fractional shares)
upon the exchange of Target Common Stock for Purchaser Common Stock in the
Merger;
(iii) The basis of the Purchaser Common Stock received by a Target
shareholder who exchanges Target Common Stock for Purchaser Common Stock
will be the same as the basis of the Target Common Stock surrendered in
exchange therefor (subject to any adjustments required as the result of
receipt of cash in lieu of a fractional share of Purchaser Common Stock);
(iv) The holding period of Purchaser Common Stock received by a Target
shareholder receiving Purchaser common Stock will include the period during
which the Target Common Stock surrendered in exchange thereof was held
(provided that the Target Common Stock of such target shareholder was held
as a capital asset at the Effective Time);
(v) Cash received by a Target shareholder in lieu of a fractional share
interest of Purchaser common Stock will be treated as having been received
as a distribution in full payment in exchange for the fractional share
interest of Purchaser Common Stock which he would otherwise be entitled to
receive, and will qualify as capital gain or loss (assuming the Target
Common Stock was a capital asset in his hands at the Effective Time).
(vi) No income, gain or loss shall be recognized upon the contribution
of the Surviving Corporation stock to TCF Bank pursuant to Section
368(a)(2)(C) of the Code.
Such opinion shall be delivered on and dated as of the Effective Date and on
and as of such earlier date as may be required by the SEC in connection with the
Registration Statement.
(f) The Purchaser Common Stock to be issued to holders of Target Common
Stock shall have been approved for listing on the NYSE subject to official
notice of issuance.
6.2 ADDITIONAL CONDITIONS TO OBLIGATION OF TARGET. The obligation of
Target to consummate the transactions contemplated hereby in accordance with the
terms of this Agreement is also subject to the following conditions:
(a) REPRESENTATIONS AND COMPLIANCE. The representations and warranties of
Purchaser set forth in Article 2 shall have been true and correct as of the date
hereof, and shall be true and correct as of the Effective Date as updated
pursuant to Section 5.6(b) if made at and as of the Effective Date, except where
the failure to be true and correct would not have, or would not reasonably be
expected to have, a Material Adverse Effect on Purchaser. Purchaser shall in all
material respects have performed each obligation and agreement and complied with
each covenant to be performed and complied with by it hereunder at or prior to
the Effective Date.
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(b) OFFICERS' CERTIFICATE OF PURCHASER. Purchaser shall have furnished to
Target a certificate of the Chief Executive Officer or the President and the
Chief Financial Officer of Purchaser, dated as of the Effective Date, in which
such officers shall certify to their best Knowledge that they have no reason to
believe that the conditions set forth in Section 6.2(a) have not been fulfilled.
(c) PURCHASER'S SECRETARY'S CERTIFICATE. Purchaser shall have furnished to
Target (i) copies of the text of the resolutions by which the corporate action
on the part of Purchaser and Acquisition necessary to approve this Agreement,
the Plan of Merger and the transactions contemplated hereby and thereby were
taken, (ii) a certificate dated as of the Effective Date executed on behalf of
Purchaser by its corporate secretary or one of its assistant corporate
secretaries certifying to Target that such copies are true, correct and complete
copies of such resolutions and that such resolutions were duly adopted and have
not been amended or rescinded and (iii) an incumbency certificate dated as of
the Effective Date executed on behalf of each of Purchaser and Acquisition by
its corporate secretary or one of its assistant corporate secretaries certifying
the signature and office of each officer of Purchaser or Acquisition executing
this Agreement, the Plan of Merger or any other agreement, certificate or other
instrument executed pursuant hereto by Purchaser or Acquisition, as the case may
be.
(d) OPINION OF COUNSEL TO PURCHASER. Target shall have received an opinion
letter dated as of the Effective Date addressed to Target from Gregory J.
Pulles, Esq., General Counsel and Secretary of Purchaser, based on customary
reliance and subject to customary qualifications to the effect that:
(i) Purchaser is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware. Acquisition is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Minnesota.
(ii) Purchaser has the corporate power to consummate the transactions on
its part contemplated by this Agreement. Purchaser has taken all requisite
corporate action to authorize this Agreement, and the Merger and Acquisition
has taken all requisite corporate action to authorize the Merger and the
Articles of Merger. This Agreement has been duly executed and delivered by
Purchaser and the Articles of Merger have been duly executed by Acquisition
and, assuming they are the valid and binding obligation of Target,
constitute the valid and binding obligations of Purchaser and Acquisition to
which it is a party enforceable in accordance with their terms, subject as
to the enforcement of remedies to applicable bankruptcy, insolvency,
moratorium and other laws affecting the rights of creditors generally and to
judicial limitations on the enforcement of the remedy of specific
performance.
(iii) The execution and delivery of this Agreement by Purchaser and the
Articles of Merger by Acquisition and the consummation of the transactions
contemplated hereby and thereby will not constitute a breach, default or
violation under their respective Charter or Bylaws or, to his knowledge, (A)
any material agreement, arrangement or understanding to which Purchaser or
Acquisition is a party, (B) any material license, franchise or permit
affecting Purchaser or Acquisition, or (C) any law, regulation, order,
judgment or decree applicable to Purchaser or Acquisition.
(iv) No authorization, consent or approval of, or filing with, any
public body, court or authority is necessary for the consummation by
Purchaser or Acquisition of the transactions contemplated hereby which has
not been obtained or made.
(v) The shares of Purchaser Common Stock to be issued pursuant to this
Agreement will be, when issued, duly authorized, validly issued, fully paid
and nonassessable.
(e) SHAREHOLDER APPROVAL. This Agreement and the Merger shall have been
approved by the affirmative vote of the holders of the percentage of Target
capital stock required for such approval under the provisions of Target's
Charter and Bylaws and the MBCA.
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(f) MATERIAL ADVERSE EFFECT. Since the date of this Agreement, Purchaser
has not suffered or experienced a Material Adverse Effect, except this
subsection shall not apply to matters properly disclosed to Target by Purchaser
in a supplement or amendment delivered by Purchaser pursuant to Section 5.6(b)
for which Target has a specific right of termination under Section 7.1(i)
hereof.
(g) FAIRNESS OPINION. Within five days prior to mailing the
Prospectus/Proxy Statement to the shareholders of Target, Target shall have
received a written opinion in a form reasonably acceptable to Target from Dain
Bosworth Incorporated (or another investment banking firm reasonably acceptable
to Target) to the effect that the consideration to be delivered in the Merger is
fair from a financial point of view to the holders of Target Common Stock.
(h) AFFILIATE LETTERS. Target shall have received the letters referred to
in Section 5.10 from all executive officers and directors of Purchaser and all
shareholders who are affiliates of Purchaser.
6.3 ADDITIONAL CONDITIONS TO OBLIGATION OF PURCHASER. The obligation of
Purchaser to consummate the transactions contemplated hereby in accordance with
the terms of this Agreement is also subject to the following conditions:
(a) REPRESENTATIONS AND COMPLIANCE. The representations and warranties of
Target in this Agreement shall have been true and correct as of the date hereof,
and such representations and warranties shall be true and correct as of the
Effective Date as updated pursuant to Section 5.6(b) as if made at and as of the
Effective Date, except where the failure to be true and correct would not have,
or would not reasonably be expected to have, a Material Adverse Effect on
Target; and Target shall in all material respects have performed each obligation
and agreement and complied with each covenant to be performed and complied with
by it hereunder at or prior to the Effective Date.
(b) OFFICERS' CERTIFICATE OF TARGET. Target shall have furnished to
Purchaser a certificate of the Chief Executive Officer and the Chief Financial
Officer of Target, dated as of the Effective Date, in which such officers shall
certify to their best Knowledge that they have no reason to believe that the
conditions set forth in Section 6.3(a) have not been fulfilled.
(c) TARGET SECRETARY'S CERTIFICATE. Target shall have furnished to
Purchaser (i) copies of the text of the resolutions by which the corporate
action on the part of Target necessary to approve this Agreement the Plan of
Merger and the transactions contemplated hereby and thereby were taken, (ii)
certificates dated as of the Effective Date executed on behalf of Target by its
corporate secretary or one of its assistant corporate secretaries certifying to
Purchaser that such copies are true, correct and complete copies of such
resolutions and that such resolutions were duly adopted and have not been
amended or rescinded and (iii) an incumbency certificate dated as of the
Effective Date executed on behalf of Target by its corporate secretary or one of
its assistant corporate secretaries certifying the signature and office of each
officer executing this Agreement, the Plan of Merger or any other agreement,
certificate or other instrument executed pursuant hereto.
(d) OPINION OF COUNSEL TO TARGET. Purchaser shall have received an opinion
letter dated as of the Effective Date addressed to Purchaser from Oppenheimer
Wolff & Donnelly, counsel to Target, based on customary reliance (including
reliance on in-house and/or local counsel as to matters other than federal law)
and subject to customary qualifications, to the effect that:
(i) Target is a Minnesota corporation duly incorporated, validly
existing and in good standing under the laws of the state of Minnesota.
(ii) Target has the requisite corporate and other power and authority
(including all licenses, permits and authorizations) to own and operate its
properties and to carry on its business as now conducted.
(iii) The execution and delivery of this Agreement and the Plan of Merger
by Target and the consummation of the transactions contemplated hereby and
thereby will not constitute a breach,
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default or violation under the respective Charter or Bylaws of Target or, to
the best of such counsel's knowledge, (A) any material agreement,
arrangement or understanding to which Target is a party, (B) any material
license, franchise or permit affecting Target, or (C) any material law,
regulation, order, judgment or decree applicable to Target.
(iv) The authorized capital of Target consists of (A) 15,000,000 shares
of Target Common Stock of which 8,600,300 shares are duly issued and
outstanding and 439,500 shares are reserved for issuance upon exercise of
the Target Options, and (B) 2,000,000 shares of preferred stock, $.01 par
value, of which no shares are duly issued and outstanding. To the best of
such counsel's knowledge, no holder of the capital stock of Target is
entitled to any preemptive or other similar rights with respect to the
capital stock of Target.
(v) All of the issued and outstanding shares of Target are duly
authorized, validly issued, fully paid and nonassessable.
(vi) Except as set forth in Schedule 3.14 or updated Schedules 3.14, to
the Knowledge of such counsel, there are no actions, suits, proceedings,
orders or investigations pending or threatened against Target, at law or in
equity, or before or by any federal, state or other governmental department,
commission, board, bureau, agency or instrumentality which may have a
Material Adverse Effect on Target.
(vii) Target has the corporate power to consummate the transactions on
its part contemplated by this Agreement and the Articles of Merger. Target
has duly taken all requisite corporate action to authorize this Agreement
and the Plan of Merger, and this Agreement and the Articles of Merger have
been duly executed and delivered by Target and, assuming they are the valid
and binding obligations of Purchaser and Acquisition, constitute the valid
and binding obligations of Target enforceable in accordance with their
terms, subject as to the enforcement of remedies to applicable bankruptcy,
insolvency, moratorium and other laws affecting the rights of creditors
generally and to judicial limitations on the enforcement of the remedy of
specific performance.
(viii) No authorization, consent or approval of, or filing with any public
body, court or public authority by Target, is necessary for the consummation
by Target of the transactions contemplated hereby which has not been
obtained or made.
(e) SHAREHOLDER APPROVAL. This Agreement and the Merger shall have been
approved by the affirmative vote of holders of the percentage of Purchaser
capital stock required for such approval under the Charter and Bylaws of
Purchaser, the Delaware General Corporation Law and the rules of the NYSE.
(f) AFFILIATE LETTERS. Purchaser shall have received the letters referred
to in Section 5.10 from all executive officers and directors of Target and all
shareholders who are affiliates of Target.
(g) POOLING OF INTERESTS ACCOUNTING. No event shall have occurred which,
in the reasonable opinion of Purchaser and concurred in by KMPG Peat Marwick
LLP, would prevent the Merger from being accounted for as a pooling of
interests, and Purchaser shall have received from KPMG Peat Marwick LLP opinions
that the Merger shall qualify as a pooling of interests for accounting purposes.
(h) ADVERSE PROCEEDINGS. There shall not be threatened, instituted or
pending any action or proceeding before any court or governmental authority or
agency, domestic or foreign, (i) challenging or seeking to make illegal, or to
delay or otherwise directly or indirectly to restrain or prohibit, the
consummation of the transactions contemplated hereby or seeking to obtain
material damages in connection with the transactions contemplated hereby, (ii)
seeking to prohibit direct or indirect ownership or operation by Purchaser of
all or a material portion of the business or assets of Target or of Purchaser or
any of Purchaser Subsidiaries, or to compel Purchaser or any of the Purchaser
Subsidiaries or Target to dispose of all or a material portion of the business
or assets of Purchaser or any of the Purchaser Subsidiaries or of Target, as a
result of the transactions contemplated hereby, or (iii) seeking to require
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direct or indirect divestiture by Purchaser of any material portion of its
business or assets or of Target's business or assets.
(i) GOVERNMENTAL ACTION. There shall not be any action taken, or any
statute, rule, regulation, judgment, order or injunction proposed, enacted,
entered, enforced, promulgated, issued or deemed applicable to the transactions
contemplated hereby by any federal, state or other court, government or
governmental authority or agency, which could reasonably be expected to result,
directly or indirectly, in any of the consequences referred to in Section
6.3(h).
(j) MATERIAL ADVERSE EFFECT. Since the date of this Agreement, Target
shall not have suffered or experienced a Material Adverse Effect, except this
subsection shall not apply to matters properly disclosed to Purchaser by Target
in a supplement or amendment delivered by Target pursuant to Section 5.6(b) for
which Purchaser has a specific right of termination under Section 7.1(i) hereof.
(k) FAIRNESS OPINION. Within five days prior to mailing the
Prospectus/Proxy Statement to the shareholders of Purchaser, Purchaser shall
have received a written opinion in a form reasonably acceptable to Purchaser
from Piper Jaffray, Inc. (or another investment banking firm reasonably
acceptable to Purchaser) to the effect that the Merger is fair from a financial
point of view to the holders of Purchaser Common Stock.
(l) ANCILLARY AGREEMENTS. Simultaneous with the execution and delivery of
this Agreement, certain directors of Target shall have executed and delivered to
Purchaser the Stockholder Agreement. On the Effective Date, the Employment
Agreement Amendments shall have been executed by the respective parties thereto
other than the Surviving Corporation and shall have been delivered to Purchaser
as provided in Section 5.22 hereof.
(m) DISSENTING SHARES. The aggregate number of Dissenting Shares shall not
exceed ten percent (10%) of the outstanding shares of Target Common Stock on the
Effective Date.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated prior to the Effective
Date:
(a) by mutual consent of Purchaser and Target, if the board of directors of
each so determines by vote of a majority of the members of its entire board;
(b) by either Purchaser or Target, if any of the conditions to such party's
obligation to consummate the transactions contemplated in this Agreement shall
have become impossible to satisfy;
(c) by either Purchaser or Target, if this Agreement is not duly approved by
the shareholders of each of Target and Purchaser, in each case at a meeting of
shareholders (or any adjournment thereof) duly called and held for such purpose;
(d) by either Purchaser or Target if the Effective Date is not on or before
August 1, 1997 (unless the failure to consummate the Merger by such date shall
be due to the action or failure to act of the party seeking to terminate this
Agreement in breach of such party's obligations under this Agreement);
(e) (i) by Target if the average of the daily closing sales prices of
Purchaser Common Stock (the "Average Purchaser Stock Price") as reported on the
New York Stock Exchange ("NYSE") Composite Transactions reporting system (as
reported by THE WALL STREET JOURNAL or, if not reported thereby, another
authoritative source as mutually agreed by Purchaser and Target) for the 30
consecutive full trading days ending on the third business day immediately prior
to either (x) the last date (as originally scheduled in the notices mailed to
the shareholders of the parties, and without giving effect to any adjournments
or postponements) of the meetings of shareholders to obtain the shareholder
approvals referred to in Section 5.20 hereof or (y) the date on which the last
regulatory approval required to consummate the
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Merger has been obtained and all statutory or regulatory waiting periods in
respect thereof have expired, whichever date is closest to the Effective Date
(the "Determination Date"), is less than $42.30 per share, or (ii) by TCF if the
Average Purchaser Stock Price is more than $51.70 per share;
(f) by Target if (i) any corporation, partnership, person, other entity or
group, as defined in the 1934 Act (other than Purchaser or any affiliate of
Purchaser) (a "Person"), shall have commenced (as such term is used in Rule
14d-2(b) under the 1934 Act) a bona fide tender offer for all outstanding shares
of Target Common Stock or any Person shall have made a bona fide written offer
involving a merger or consolidation of Target or the acquisition of all or
substantially all of its assets or capital stock, (ii) Target's Board of
Directors shall determine, in its good faith judgment, after consultation with
Target's independent financial advisors, that such offer is more favorable to
the Target's shareholders when compared to the Merger, and (iii) Target's Board
of Directors determines upon the advice of its legal counsel that if they failed
to recommend such offer or accept such proposal then such failure would be
likely to result in a breach of the directors' fiduciary or legal duties;
provided, however, that Target may not terminate the Agreement pursuant to this
Section 7.1(f) until the expiration of five business days after written notice
of any such offer or proposal referenced in this Section 7.1(f) has been
delivered to Purchaser, together with a summary of the terms of any such offer
or proposal;
(g) by Purchaser if, after the date hereof, any Person shall have commenced
(as such term is used in Rule 14d-2(b) under the 1934 Act) a bona fide tender
offer or exchange offer to acquire at least 25% of the then outstanding shares
of Target Common Stock, and thereafter the Board of Directors of Target shall
have withdrawn, or materially adversely modified or changed its recommendation
of this Agreement or the Merger;
(h) by either Purchaser or Target, if the other party hereto commits a
willful breach which is not cured within ten days after receipt by the breaching
party of written demand for cure by the non-breaching party. For purposes of
this Agreement, a "willful breach" means a knowing and intentional violation by
a party of any of its covenants, agreements or obligations under this Agreement;
or
(i) by Purchaser or Target pursuant to Section 5.6(b). Any party desiring to
terminate this Agreement shall give written notice of such termination and the
reasons therefor to the other party.
7.2 EFFECT OF TERMINATION.
(a) In the event this Agreement is properly terminated as provided in
Section 7.1(f), Target shall pay to Purchaser, in immediately available funds,
an amount equal to $12,500,000 within ten (10) business days after demand for
payment by Purchaser following such termination.
(b) If this Agreement is terminated (i) by Target as provided in Section
7.1(b) due to the failure to satisfy the conditions of 6.2(e) or (g), (ii) by
Purchaser pursuant to Section 7.1(b) due to the failure of any condition under
Section 6.3(b) or (c), or (iii) by Purchaser pursuant to Sections 7.1(g) or (h),
Target shall pay to Purchaser in immediately available funds, an amount equal to
$1,000,000 within ten (10) business days after demand for payment by Purchaser
following such termination. In the event this Agreement is terminated under the
circumstances set forth in the first sentence of this Section 7.2(b) and both of
the following conditions are satisfied:
(i) Target has received an Acquisition Proposal (as defined in Section
5.5) from a third party after the date hereof and prior to the termination
of this Agreement; and
(ii) Target and such third party or an affiliate of such third party
enter into a definitive agreement for any Acquisition Proposal (the "Signing
Event") within twelve months following the termination of this Agreement,
then Target shall pay to Purchaser, in immediately available funds, an amount
equal to $11,500,000 within ten (10) business days after demand for payment by
Purchaser following the Signing Event.
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(c) In the event this Agreement is terminated (i) by Purchaser pursuant to
Section 7.1(b) due to the failure to satisfy the condition under Section 6.3(k),
(ii) by Purchaser pursuant to Sections 7.1(c), (iii) after the Board of
Directors of Purchaser fails to recommend approval of this Agreement, or
withdraws or adversely modifies its recommendation of this Agreement, (iv) by
Target pursuant to Section 7.1(b) due to the failure of the condition under
Section 6.2(b) or (c), or (v) by Target pursuant to Section 7.1(h), Purchaser
shall pay to Target, in immediately available funds, an amount equal to
$1,000,000 within ten (10) business days after demand for payment by Target
following such termination.
(d) If this Agreement is terminated by reason of a willful breach by a
party, then the breaching party shall be liable to the non-breaching party for
all actual, consequential and incidental damages suffered by the non-breaching
party arising from such willful breach.
(e) Notwithstanding anything in this Agreement to the contrary and except as
provided below, the parties hereto agree that irreparable damage would occur in
the event that the provisions of this Agreement were not performed in accordance
with its specific terms or was otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
Notwithstanding anything contained in Section 7.2(d) or (e) to the contrary,
in the event a party accepts the amount payable pursuant to the provisions of
this Section 7.2, such acceptance thereof shall be in lieu of any and all claims
that the accepting party has, or might have, under Section 7.2(d) or (e) hereof
and such acceptance shall constitute a waiver by the accepting party of all of
its rights to pursue relief under Section 7.2(d) or (e) hereof.
7.3 AMENDMENT. This Agreement may not be amended except by an instrument
in writing approved by the parties to this Agreement and signed on behalf of
each of the parties hereto.
7.4 WAIVER. At any time prior to the Effective Date, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts
of the other party hereto or (b) waive compliance with any of the agreements of
the other party or with any conditions to its own obligations, in each case only
to the extent such obligations, agreements and conditions are intended for its
benefit.
ARTICLE 8
GENERAL PROVISIONS
8.1 PUBLIC STATEMENTS. Neither Target nor Purchaser shall make any public
announcement or statement with respect to the Merger, this Agreement or any
related transactions without the approval of the other party; provided, however,
that either Purchaser or Target may, upon reasonable notice to the other party,
make any public announcement or statement that it believes is required by
federal securities law. To the extent practicable, each of Target and Purchaser
will consult with the other with respect to any such public announcement or
statement.
8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by fax, by
telecopier, by overnight delivery service, or by
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registered or certified mail (postage prepaid and return receipt requested) to
the parties at the following addresses (or at such other address for a party as
shall be specified by it by like notice):
If to Purchaser:
TCF Financial Corporation
801 Marquette Avenue, Suite 302
Minneapolis, MN 55402
Attn: Chairman and Chief Executive Officer
with copies to:
TCF Financial Corporation
801 Marquette Avenue, Suite 302
Minneapolis, MN 55402
Attn: Gregory J. Pulles, Vice Chairman and General Counsel
and
Kaplan, Strangis and Kaplan, P.A.
90 South Seventh Street
5500 Norwest Center
Minneapolis, MN 55402
Attn: Bruce J. Parker
If to Target:
Winthrop Resources Corporation
1015 Opus Center
9900 Bren Road East
Minnetonka, MN 55343
Attention: President
with copies to:
Oppenheimer Wolff & Donnelly
Plaza VII, Suite 3400
45 South Seventh Street
Minneapolis, Minnesota 55402-1609
Attn: Thomas R. Marek
All such notices and other communications shall be deemed to have been duly
given as follows: when delivered by hand, if personally delivered; when
received, if delivered by registered or certified mail (postage prepaid and
return receipt requested); when receipt acknowledged, if faxed or telecopied;
and the next day delivery after being timely delivered to a recognized overnight
delivery service.
8.3 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
Sections and Articles of this Agreement unless otherwise stated. Words such as
"herein," "hereinafter," "hereof," "hereto," "hereby" and "hereunder," and word
of like import, unless the context requires otherwise, refer to this Agreement
(including the Exhibits and Schedules hereto). As used in this Agreement, the
masculine, feminine and neuter genders shall be deemed to include the others if
the context requires.
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<PAGE>
8.4 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties shall negotiate
in good faith to modify this Agreement and to preserve each party's anticipated
benefits under this Agreement.
8.5 MISCELLANEOUS. This Agreement (together with all other documents and
instruments referred to herein): (a) constitutes the entire agreement, and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties, with respect to the subject matter hereof; (b) shall be
governed in all respects, including validity, interpretation and effect, by the
internal laws of the State of Delaware, without giving effect to the principles
of conflict of laws thereof; and (c) shall not be assigned by operation of law
or otherwise.
8.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the parties set forth herein shall not survive
the consummation of the Merger, but covenants that specifically relate to
periods, activities or obligations subsequent to the Merger shall survive the
Merger. In addition, if this Agreement is terminated pursuant to Section 7.1,
the covenants contained in Section 5.4, 5.7(c) and 7.2 shall survive such
termination.
8.7 SCHEDULES. The Schedules and other disclosure referred to in this
Agreement shall be delivered as of the date hereof under cover of a letter from
the Chief Executive Officer, the President or the Chief Financial Officer of
Target or Purchaser, as the case may be.
8.8 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
8.9 PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective successors, and
nothing in this Agreement, express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by reason
of this Agreement.
8.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
IN WITNESS WHEREOF, Target and Purchaser have caused this Agreement to be
executed on the date first written above by their respective officers.
TCF FINANCIAL CORPORATION
By: /s/ WILLIAM A. COOPER
-----------------------------------------
William A. Cooper
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
WINTHROP RESOURCES CORPORATION
By: /s/ JOHN L. MORGAN
-----------------------------------------
John L. Morgan
PRESIDENT AND CHIEF EXECUTIVE OFFICER
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<PAGE>
EXHIBIT A
FORM OF STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT
THIS AGREEMENT is made and entered into as of February , 1997, by and
among TCF FINANCIAL CORPORATION ("TCF"), a Delaware corporation, and
, a resident of the state of Minnesota (the "Stockholder").
WHEREAS, TCF and Winthrop Resources Corporation ("Winthrop") have entered
into the agreement and plan of reorganization dated as of the date hereof (the
"Merger Agreement" and capitalized terms not defined herein are used as defined
in the Merger Agreement), which is being executed simultaneously with the
execution of this Agreement and provides for the acquisition of Winthrop by TCF
through the merger of Winthrop and a direct or indirect wholly-owned subsidiary
of TCF (the "Merger") pursuant to the Merger Agreement; and
WHEREAS, as a condition to the willingness of TCF to enter into the Merger
Agreement, TCF has required that the Stockholder agree to enter into this
Agreement in his capacity as a stockholder of Winthrop;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements set forth herein and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. OWNERSHIP OF WINTHROP COMMON STOCK. The Stockholder represents and
warrants that he has or shares the right to vote and dispose of the number
of shares of common stock of Winthrop, par value $.01 per share ("Winthrop
Common Stock"), for the benefit of TCF set forth opposite the Stockholder's
name on Schedule I hereto.
2. AGREEMENTS OF THE STOCKHOLDER. The Stockholder covenants and agrees
that during the time this Agreement is in effect:
(a) the Stockholder shall, at any meeting of Winthrop's stockholders
called for the purpose, vote, or cause to be voted, all shares of
Winthrop Common Stock in which the Stockholder has the right to vote
(whether owned as of the date hereof or hereafter acquired) in favor of
the Merger Agreement and the transactions contemplated thereby and
against any plan or proposal pursuant to which Winthrop is to be acquired
by or merged with, or pursuant to which Winthrop proposes to sell all or
substantially all of its assets or liabilities to any person, entity or
group (other than TCF or any affiliate thereof);
(b) except as otherwise expressly permitted hereby, the Stockholder
shall not, prior to the meeting of Winthrop's stockholders referred to in
Section 2(a) hereof or the earlier termination of the Merger Agreement in
accordance with its terms, sell, pledge, transfer or otherwise dispose of
his shares of Winthrop Common Stock;
(c) the Stockholder shall not in his capacity as a stockholder of
Winthrop directly or indirectly encourage or solicit or hold discussions
or negotiations with, or provide any information to, any person, entity
or group (other than TCF or an affiliate thereof) concerning any merger,
sale or substantial assets or liabilities not in the ordinary course of
business, sale of shares of capital stock or similar transactions
involving Winthrop or any subsidiary of Winthrop; provided that nothing
herein shall be deemed to affect the ability of the Stockholder to
fulfill his fiduciary duties as a director or officer of Winthrop;
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<PAGE>
(d) to the extent within and consistent with his fiduciary duties as
an officer or director of Winthrop or as a trustee, the Stockholder shall
use his good faith reasonable efforts to take or cause to be taken all
action, and to do or cause to be done all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the agreements contemplated by this Agreement; and
(e) the Stockholder shall execute and deliver the representation
letter required by Section 5.10.
Notwithstanding the foregoing, the provisions of this Section 2 shall not bind
or obligate the Stockholder if, prior to the date of the vote on the Merger
Agreement, the Merger Agreement shall have been terminated in accordance with
its terms, including but not limited to a termination pursuant to Section 7.1(f)
of the Merger Agreement.
3. CONDITIONAL REGISTRATION RIGHTS. In the event that any governmental
regulatory authority concludes that shares of Purchaser Common Stock received by
the Stockholder in connection with the Merger are "restricted securities" within
the meaning of the 1933 Act (the "Restricted Shares") for reasons other than the
Stockholder being a director of TCF, TCF agrees to provide the Stockholder the
registration rights set forth herein with respect to his Restricted Shares. In
the event the Stockholder dies or becomes permanently disabled (as defined in
TCF's employee disability insurance plan), TCF will provide the Stockholder one
demand registration right for each such event suffered by the Stockholder. The
demand registration rights provided hereunder cannot be exercised, or, if
exercised, the use of the registration statement therefor will be suspended, as
the case may be, (i) until after the date on which TCF publishes at least 30
days of post-Merger Combined Financial Information of TCF and Winthrop Resources
Corporation, (ii) during any period (not to exceed 45 days) during which TCF
determines that there exists certain material facts concerning its business,
including potential acquisitions, that have not been publicly disclosed and but
for the filing required by the exercise of a demand registration right hereunder
would not be required, (iii) during any period which would require audited
financial statements when such statements are not required to have been
disclosed in a filing under the 1934 Act, (iv) during any contractual lock-up
period (not to exceed 180 days) following a registered underwritten public
offering of TCF's equity securities, or (v) two years after the Effective Date
of the Merger. Upon written notice to TCF, the Stockholder (or his permitted
assigns) may exercise his demand registration right and, upon receipt of such
notice, TCF will use reasonable best efforts to prepare and file a registration
statement under the 1933 Act covering all of the Restricted Shares of the
Stockholder and any shares of Purchaser Common Stock issued in respect of such
shares (because of stock splits, stock dividends, reclassification,
recapitalizations, or other distributions or similar events) (the "Shares") and
not theretofore sold, will provide copies of such registration statement,
including all amendments and supplements thereto, to the Stockholder, and will
use its reasonable best efforts to cause such registration statement to become
effective under the rules of the SEC. Such registration statement will be on
Form S-3 to the extent permitted by SEC rules. Purchaser will maintain the
effectiveness of such registration statement until the earlier of twelve (12)
months following the effectiveness of such Form S-3 with the SEC, or the date on
which all such Shares have been sold. In connection with such registration
statement the parties agree as follows:
(a) EXPENSES. Purchaser will pay all of its fees, costs and expenses of
any such registration, including the SEC filing fees; provided that the party
exercising the demand registration right shall pay the fees and expenses of such
party's counsel and all underwriting fees, discounts and other expenses which
any underwriter, broker or sales agents requires to effect the sale of the
Shares. Any such underwriter, broker or sales agent must be reasonably
acceptable to TCF.
(b) INDEMNIFICATION. In the event of any registration of any Shares under
the 1933 Act pursuant to this paragraph, TCF will indemnify and hold harmless
the seller of such Shares, each underwriter of such Shares, and each other
person, if any, who controls such seller or underwriter within the meaning of
the 1933 Act or the 1934 Act against any losses, claims, damages or liabilities,
joint or several, to which such
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<PAGE>
seller, underwriter or controlling person may become subject under the 1933 Act,
the 1934 Act, state securities or blue sky laws or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement under which such Shares were
registered under the 1933 Act, any preliminary prospectus or final prospectus
contained in the registration statement, or any amendment or supplement to such
registration statement, or arise out of or are based upon the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and TCF will reimburse
such seller, underwriter and each such controlling person for any legal or any
other expenses reasonably incurred by such seller, underwriter or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that Purchaser will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or omission made
in such registration statement, preliminary prospectus or prospectus, or any
such amendment or supplement, in reliance upon and in conformity with
information furnished to Purchaser, in writing, by or on behalf of such seller,
underwriter or controlling person specifically for use in the preparation
thereof.
In the event of any registration of any Shares under the 1933 Act pursuant
to this Agreement, each seller of Shares ("Seller"), severally and not jointly,
will indemnify and hold harmless TCF, each of its directors and officers and
each underwriter (if any) and each person, if any, who controls Purchaser or any
such underwriter within the meaning of the 1933 Act or the 1934 Act against any
losses, claims, damages or liabilities, joint or several, to which Purchaser,
such directors and officers, underwriter or controlling person may become
subject under the 1933 Act, 1934 Act, state securities or blue sky laws or
otherwise insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of material fact contained in any registration statement under
which such shares were registered under the 1933 Act, any preliminary prospectus
or final prospectus contained in the registration statement, or any amendment or
supplement to the registration statement, or arise out of or are based upon any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, if the
statement or omission was made in reliance upon and in conformity with
information furnished in writing to Purchaser by or on behalf of such Seller,
specifically for use in connection with the preparation of such registration
statement, prospectus, amendment or supplement; provided, however, that the
obligations of each such Seller hereunder shall be limited to an amount equal to
the proceeds to such Seller of Shares sold in connection with such registration.
Each party entitled to indemnification under this paragraph 2(b) (the
"Indemnified Party") will give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and will
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; PROVIDED, that counsel for the Indemnifying
Party, who will conduct the defense of such claim or litigation, will be
approved by the Indemnified Party (whose approval will not be unreasonably
withheld); and PROVIDED, FURTHER, that the failure of any Indemnified Party to
give notice as provided herein will not relieve the Indemnifying Party of its
obligations under this paragraph, except to the extent the Indemnifying Party is
prejudiced by such failure. The Indemnified Party may participate in such
defense at such party's expense; PROVIDED, HOWEVER, that the Indemnifying Party
will pay such expense if representation of such Indemnified Party by the counsel
retained by the Indemnifying Party would be inappropriate due to actual or
potential differing interests between the Indemnified Party and any other party
represented by such counsel in such proceeding but the Indemnifying Party shall
not be responsible to pay the cost of more than one such other counsel for all
Indemnified Parties under such circumstances. No Indemnifying Party, in the
defense of any such claim or litigation will, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect of such claim or litigation, and no Indemnified Party will consent to
entry to any judgment or settle such claim or litigation without the prior
written consent of the Indemnifying Party.
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In order to provide for just and equitable contribution to joint liability
under the 1933 Act in circumstances in which the indemnity provisions provided
for in this section are for any reason held to be unavailable to the indemnified
parties although applicable in accordance with its terms; then, in each such
case, TCF and such Seller will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportions as shall be appropriate to reflect the relative
fault of TCF, on the one hand, and the Seller, on the other hand, with such
relative fault determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by TCF or by
the Seller, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission; PROVIDED,
HOWEVER, that, in any such case, (A) no such Seller will be required to
contribute any amount in excess of the proceeds to it of all Shares sold by it
pursuant to such registration statement, and (B) no person or entity guilty of
fraudulent misrepresentation, within the meaning of Section 11(f) of the 1933
Act, shall be entitled to contribution from any person or entity who is not
guilty of such fraudulent misrepresentation.
(c) RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the SEC which may permit the sale of restricted
securities (as that term is used in Rule 144 under the 1933 Act) to the public
without registration, TCF agrees to:
(i) use its good faith reasonable efforts to make and keep public
information available, as those terms are understood and defined in Rule 144
under the 1933 Act at all times;
(ii) use its good faith reasonable efforts to file with the SEC in a
timely manner all reports and other documents required by TCF under the 1933
Act and 1934 Act; and
(iii) so long as the Stockholder owns any Shares, furnish to such
Affiliate upon request a written statement by TCF as to its compliance with
the reporting requirements of Rule 144 and the 1933 Act and the 1934 Act, a
copy of the most recent annual or quarterly report of TCF and such other
reports and documents so filed as such Stockholder may reasonably request in
availing itself of any rule or regulation of the SEC allowing the
Stockholder to sell any Shares without registration.
(d) MERGERS, ETC. TCF shall not, directly or indirectly, enter into any
merger, consolidation or reorganization in which TCF shall not be the surviving
corporation unless the proposed surviving corporation shall, prior to such
merger, consolidation or reorganization, agree in writing to assume the
obligations of the Purchaser under this Agreement, and for that purpose
references hereunder to "Restricted Shares," or "Shares" shall be deemed to be
references to the securities which the Stockholder would be entitled to receive
in exchange for Shares under any such merger, consolidation or reorganization,
PROVIDED, HOWEVER, that the provisions of clause (d) shall not apply in the
event of any merger, consolidation or reorganization in which TCF is not the
surviving corporation if all Stockholders are entitled to receive in exchange
for their Shares consideration consisting solely of (i) cash, (ii) securities of
the acquiring corporation which may be immediately sold to the public without
registration under the 1933 Act, or (iii) securities of the acquiring
corporation which the acquiring corporation has agreed to register within ninety
(90) days of completion of the transaction for resale to the public pursuant to
the 1933 Act.
4. SUCCESSOR AND ASSIGNS. This Agreement shall be binding and inure to the
benefit of the parties hereto and, in the case of the Stockholder, his personal
representatives or estates, and in the case of TCF, its successors and assigns.
Except as provided in the preceding sentence, the rights of the Stockholder
under paragraph 3 hereof may not be assigned.
5. TERMINATION. The parties agree and intend that this Agreement be a
valid and binding agreement enforceable against the parties hereto and that
damages and other remedies at law for the breach of this Agreement are
inadequate. This Agreement may be terminated at any time prior to the
consummation of the Merger by mutual written consent of the parties hereto and
shall automatically terminate in the event
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that the Merger Agreement is terminated in accordance with its terms, including
but not limited to a termination pursuant to Section 7.1(f) of the Merger
Agreement.
6. NOTICES. Notices may be provided to TCF and the Stockholder in the
manner specified in Section 8.2 of the Merger Agreement, with all notices to the
Stockholder being provided to them at Winthrop in the manner specified in such
section.
7. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware, without giving effect to the principles of conflicts of laws
thereof.
8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same and each of
which shall be deemed an original.
9. HEADINGS AND GENDER. The Section headings contained herein are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Use of the masculine gender herein shall be
considered to represent the masculine, feminine or neuter gender whenever
appropriate.
IN WITNESS WHEREOF, TCF, by a duly authorized officer, and the Stockholder
have caused this Stockholder Agreement to be executed as of the day and year
first above written.
TCF FINANCIAL CORPORATION
By:
-------------------------------------
William A. Cooper
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
WINTHROP STOCKHOLDER:
-------------------------------------
[Name of Stockholder]
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EXHIBIT B
FORM OF ARTICLES OF MERGER
ARTICLES OF MERGER
BETWEEN
WINR ACQUISITION, INC.
AND
WINTHROP RESOURCES CORPORATION
The undersigned, John L. Morgan, the President of Winthrop Resources
Corporation, a Minnesota corporation ("Winthrop"), and William A. Cooper, the
Chairman and Chief Executive Officer of WINR Acquisition, Inc., a Minnesota
corporation ("Merger Sub") and a wholly-owned subsidiary of TCF Financial
Corporation ("TCF"), hereby certify as follows:
1. Attached hereto as Exhibit A is the plan of merger (the "Plan of Merger")
for the merger (the "Merger") of Merger Sub into Winthrop, which has been
duly adopted by the board of directors of each of such corporations.
2. The Plan of Merger has been approved by Merger Sub and Winthrop pursuant to
chapter 302A of the Minnesota Business Corporation Act.
3. The Merger shall be effective upon the filing of these Articles of Merger
with the Secretary of State of Minnesota.
IN WITNESS WHEREOF, the undersigned President of Winthrop Resources
Corporation and the undersigned Chairman and Chief Executive Officer of WINR
Acquisition, Inc. have executed this document for and on behalf of their
respective corporations this day of , 1997.
<TABLE>
<S> <C>
WINTHROP RESOURCES CORPORATION WINR ACQUISITION, INC.
By By
---------------------------------------- ------------------------------------------
John L. Morgan, PRESIDENT William A. Cooper
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
</TABLE>
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EXHIBIT C
FORM OF TARGET AFFILIATE LETTER
February , 1997
TCF Financial Corporation
801 Marquette Avenue
Minneapolis, Minnesota 55402
Gentlemen:
Pursuant to Section 5.10 of the Agreement and Plan of Reorganization dated
as of February , 1997 (the "Merger Agreement") between TCF Financial
Corporation ("Purchaser") and Winthrop Resources Corporation ("Target"), I
hereby agree not to sell, pledge, transfer or otherwise dispose of the shares of
Purchaser Common Stock or Target Common Stock (as such terms are defined in the
Merger Agreement) owned by me during the period commencing 30 business days
prior to the Effective Date (as defined in the Merger Agreement) (the
anticipated date of which shall be set forth in a notice by Target to me as soon
as such information is available) and continuing to the date on which financial
results covering at least 30 days of combined operations of Purchaser and Target
have been published within the meaning of Section 201.01 of the Codification of
Financial Reporting Policies of the Securities and Exchange Commission.
As an affiliate of Target, I acknowledge that I may transfer the shares of
Purchaser Common Stock received in the merger contemplated by the Merger
Agreement, including shares received upon the exercise of any Target Options (as
defined in the Merger Agreement), only (i) in a registration under the
Securities Act of 1933, as amended (the "1933 Act"), (ii) in compliance with the
requirements of paragraphs (c) and (d) of Rule 145 under the 1933 Act, as
indicated in the restrictive legend that will appear on my stock certificate, or
(iii) pursuant to another exemption from registration under the 1933 Act for
such offer and sale.
Purchaser's and Target's transfer agent will be given an appropriate stop
transfer order and will not be required to register any attempted transfer of
the shares of Purchaser Common Stock or Target Common Stock unless the transfer
has been effected in compliance with the terms of this letter agreement.
<TABLE>
<S> <C>
Very truly yours,
[Name of Winthrop Affiliate]
Agreed and accepted this day of February,
1997
TCF FINANCIAL CORPORATION
By
----------------------------------------
William A. Cooper
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
</TABLE>
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<PAGE>
EXHIBIT D
FORM OF PURCHASER AFFILIATE LETTER
February , 1997
Winthrop Resources Corporation
1015 Opus Center
9900 Bren Road East
Minnetonka, MN 55343
Gentlemen:
Pursuant to Section 5.10 of the Agreement and Plan of Reorganization, dated
as of February , 1997 (the "Merger Agreement") between TCF Financial
Corporation ("Purchaser") and Winthrop Resources Corporation ("Target"), I
hereby agree not to sell, pledge, transfer or otherwise dispose of the shares of
Purchaser Common Stock or Target Common Stock (as such terms are defined in the
Merger Agreement) owned by me during the period commencing 30 business days
prior to the Effective Date (as defined in the Merger Agreement) (the
anticipated date of which shall be set forth in a notice by Purchaser to me as
soon as such information is available) and continuing to the date on which
financial results covering at least 30 days of combined operations of Purchaser
and Target have been published within the meaning of Section 201.01 of the
Codification of Financial Reporting Policies of the Securities and Exchange
Commission.
Purchaser's and Target's transfer agent shall be given an appropriate stop
transfer order and will not be required to register any attempted transfer of
the shares of Purchaser Common Stock or Target Common Stock, unless the transfer
has been effected in compliance with the terms of this letter agreement.
<TABLE>
<S> <C>
Very truly yours,
[Name of TCF Affiliate]
Agreed and accepted this day of February,
1997
WINTHROP RESOURCES CORPORATION
By
----------------------------------------
John L. Morgan, PRESIDENT
</TABLE>
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<PAGE>
[LETTERHEAD]
APPENDIX B
May 23, 1997
Board of Directors
TCF Financial Corporation
801 Marquette Avenue
Suite 302
Minneapolis, MN 55402
Members of the Board:
This letter relates to the transaction (the "Transaction") pursuant to that
certain Agreement and Plan of Reorganization (the "Agreement") by and between
TCF Financial Corporation ("TCF" or the "Buyer") and Winthrop Resources
Corporation ("Winthrop"), a Minnesota Corporation, pursuant to which a
subsidiary of TCF will be merged with and into Winthrop in the Transaction, and
Winthrop will become a wholly owned subsidiary of TCF. Pursuant to the
Transaction, as more fully described in the Agreement, shares of common stock,
par value $.01 per share, of Winthrop ("Winthrop Common Stock") will be
converted into the right to receive common stock, par value $.01 per share, of
TCF ("TCF Common Stock") at the rate of 0.7766 of one share of TCF Common Stock
for each share of Winthrop Common Stock (plus cash in lieu of fractional
shares). You have requested our opinion as to the fairness, from a financial
point of view, to TCF stockholders, of the consideration to be paid in the
Transaction (the "Merger Consideration").
Piper Jaffray Inc. ("Piper Jaffray"), as a customary part of its investment
banking business, is engaged in the valuation of businesses and their securities
in connection with mergers and acquisitions, underwritings and secondary
distributions of securities, private placements, and valuations for estate,
corporate and other purposes. Piper Jaffray makes a market in the Common Stock
of TCF and Winthrop and also provides research coverage for TCF and Winthrop.
Piper Jaffray has acted as a manager of underwritings of TCF and Winthrop
securities and provided other investment banking services for TCF in the past
and may continue to do so in the future. For our services in rendering this
opinion, TCF will pay us a fee and indemnify us against certain liabilities.
In arriving at our opinion, we have undertaken such reviews, analyses and
inquiries as we deemed necessary and appropriate under the circumstances. Among
other things, we have:
<PAGE>
TCF Financial Corporation
May 23, 1997
Page 2
1. Reviewed the Agreement dated February 28, 1997.
2. Reviewed the Reports on Form 10-K for TCF for the years ended December 31,
1996, December 31, 1995, December 31, 1994, and December 31, 1993.
3. Reviewed the Reports on Form 10-Q for TCF for the quarters ended March 31,
1997, September 30, 1996, June 30, 1996 and March 31, 1996.
4. Reviewed reports on Form 10-K for Winthrop for the years ended
December 31, 1996, December 31, 1995, December 31, 1994 and December 31,
1993.
5. Reviewed the Reports on Form 10-Q for Winthrop for the quarters ended
March 31, 1997, September 30, 1996, June 30, 1996 and March 31, 1996.
6. Reviewed financial forecasts for TCF for the periods ending December 31,
1997 through 2000 furnished by TCF's management.
7. Reviewed financial forecasts for Winthrop for the periods ending
December 31, 1997 through 2001 furnished by Winthrop's management.
8. Conducted discussions with certain members of management of TCF. Topics
discussed included, but were not limited to, the background and rationale
of the proposed Merger, the financial condition, operating performance, and
the balance sheet characteristics of Winthrop and the prospects for the
combined company after consummation of the proposed Merger.
9. Conducted discussions with members of management of Winthrop. Topics
discussed included, but were not limited to, the background and rationale
for the Merger, the financial condition, operating performance, balance
sheet characteristics and prospects for Winthrop.
10. Reviewed the financial terms, to the extent publicly available, of certain
comparable mergers and acquisitions which we deemed relevant.
11. Performed a discounted implied dividend analysis on the five-year financial
forecasts for Winthrop.
12. Considered the projected proforma effect of the Merger on TCF's earnings
per share for the three years ending December 31, 1999.
13. Considered the projected relative contribution of Winthrop to the combined
company for 1996 and the four years ending December 31, 2000.
<PAGE>
TCF Financial Corporation
May 23, 1997
Page 3
14. Compared certain financial data of Winthrop with certain financial data of
companies deemed similar to Winthrop or within the business sector in which
Winthrop operates.
15. Reviewed such other financial data, performed such other analyses and
considered such other information as we deemed necessary and appropriate
under the circumstances.
We have relied upon and assumed the accuracy and completeness of the financial
statements and other information provided by TCF and Winthrop or otherwise made
available to us and have not assumed responsibility independently to verify such
information. We have further relied upon the assurances of TCF's and Winthrop's
management that the information provided pertaining to TCF and Winthrop has been
prepared on a reasonable basis and, with respect to financial planning data,
reflects the best currently available estimates and that they are not aware of
any information or facts that would make the information provided to us
incomplete or misleading. Without limiting the generality of the foregoing, we
have assumed that neither TCF nor Winthrop is a party to any pending
transaction, including external financing, recapitalizations, acquisitions or
merger discussions, other than the Transaction or in the ordinary course of
business, including the conversion of TCF's savings bank subsidiaries to
national banks, the redemption of the convertible debentures of Great Lakes
Bancorp, the issuance of 1,000,000 to 1,200,000 shares of TCF Common Stock, the
possible guarantee or assumption as co-obligor by TCF of senior debentures of
Winthrop and other actions required to facilitate such pending transactions and
actions.
In arriving at our opinion, we have not performed nor been furnished any
appraisals or valuations of the specific assets or liabilities of Winthrop being
conveyed in the Transaction. We express no opinion regarding the liquidation
value of Winthrop. We have undertaken no independent analysis of any pending or
threatened litigation, possible unasserted claims or other contingent
liabilities, to which either TCF, Winthrop or their affiliates is a party or may
be subject and, at TCF's direction and with its consent, our opinion makes no
assumption concerning and therefore does not consider, the possible assertion of
claims, outcomes or damages arising out of any such matters.
Our opinion is necessarily based upon information available to us, facts and
circumstances and economic, market and other conditions as they exist and are
subject to evaluation on the date hereof; events occurring after the date hereof
could materially affect the assumptions used in preparing this opinion. We have
not undertaken to reaffirm or revise this opinion or otherwise comment upon any
events occurring after the date hereof. We express no opinion herein as to the
prices at which shares of TCF common stock may trade at any future time.
This opinion is directed to the Board of Directors of TCF and shall not be
published or otherwise used, nor shall any public references to Piper Jaffray be
made except in accordance with our engagement letter.
<PAGE>
TCF Financial Corporation
May 23, 1997
Page 4
Based upon and subject to the foregoing and based upon such other factors as we
consider relevant, it is our opinion that the Merger Consideration is fair, from
a financial point of view, to TCF stockholders, as of the date hereof.
Sincerely,
PIPER JAFFRAY INC.
/s/ Piper Jaffray Inc.
<PAGE>
[LETTERHEAD] CORPORATE FINANCE DEPARTMENT
APPENDIX C
May 23, 1997
The Board of Directors
Winthrop Resources Corporation
1015 Opus Center
9900 Bren Road East
Minnetonka, Minnesota 55343
To the Board of Directors:
You have requested our opinion, as of the date hereof, as to the fairness, from
a financial point of view, to the common shareholders of Winthrop Resources
Corporation, a Minnesota corporation (the "Company"), of the consideration to be
received in connection with an Agreement and Plan of Reorganization (the "Merger
Agreement"), dated February 28, 1997, by and among TCF Financial Corporation, a
Delaware corporation ("TCF"), and the Company.
Pursuant to the Merger Agreement, (i) a wholly-owned subsidiary of TCF will be
merged with and into the Company, and (ii) shares of the Company's common stock
will be converted into the right to receive the Merger Consideration (the
"Merger"). The "Merger Consideration" shall consist of 0.7766 shares of TCF
common stock for each share of the Company's common stock, equivalent to $33.01
per share of the Company's common stock based on the closing price for TCF
common stock of $42.50 per share on May 22, 1997. Each of the Company's
outstanding stock options will be converted into options to acquire the Merger
Consideration. The Merger may be terminated (i) by the Company if the Average
TCF Stock Price (as defined below) is less than $42.30 per share, or (ii) by TCF
if the Average TCF Stock Price is more than $51.70 per share. The "Average TCF
Stock Price" shall be equal to the average of the daily closing sale prices of
TCF common stock for the 30 consecutive full trading days ending on the third
business day immediately prior to the later of: (x) the date of the last meeting
of shareholders to obtain shareholder approval for the Merger, or (y) the date
on which the last regulatory approval required to consummate the Merger has been
obtained and all waiting periods in respect thereof have expired. We understand
that after consummation of the Merger, TCF will contribute the stock of the
surviving entity to one of its subsidiaries which is either a federal savings
bank or a national bank.
Dain Bosworth Incorporated ("Dain Bosworth"), as part of its investment banking
business, is continually engaged in the valuation of businesses and their
securities in connection with
<PAGE>
The Board of Directors
Winthrop Resources Corporation
Page 2
mergers and acquisitions, negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities, private placements, and
valuations for estate, corporate, and other purposes. In the ordinary course of
business Dain Bosworth has published research reports and made recommendations
regarding the equity securities of both the Company and TCF, as well as other
companies in the financial services industry. Also, Dain Bosworth has acted as
a market maker in the equity and debt securities of both the Company and TCF, as
well as other publicly traded companies in the financial services industry and,
accordingly, periodically may have positions in such securities. Dain Bosworth
served as a managing underwriter for public offerings by TCF in 1990 and 1992
and received customary fees for such services. In addition, Dain Bosworth acted
as a managing underwriter for a public offering of the Company's common stock
and senior notes in June 1996 and we have been engaged to act as the Company's
financial advisor in connection with the Merger. We will receive a fee for our
advisory services, a portion of which is contingent upon consummation of the
Merger, and will be indemnified against certain liabilities that may arise from
activities related to our engagement.
In connection with this option, we have, among other things, reviewed certain
publicly available information regarding the Company and TCF. In addition, we
have reviewed certain confidential financial, operating and other information
supplied to us by the Company and TCF. We have visited the corporate offices of
both the Company and TCF and made inquiries of management regarding the past and
current business operations, financial condition, and future prospects of each
company. We have reviewed the Merger Agreement and selected other documents
related to the Merger. In addition, we have held discussions with the senior
management of both companies to understand their respective reasons for
completing the Merger.
We have analyzed the historical reported market prices and trading activity of
the common stock of both companies. We have compared financial and stock market
information on the Company and TCF to similar information for certain publicly
traded companies in the financial services industry. We have also reviewed, to
the extent publicly available, the terms of selected relevant mergers and
acquisitions, analyzed the general economic outlook for companies in the
financial services industry, and performed other studies and analyses as we
considered appropriate.
In conducting our review and in rendering our opinion, we have assumed and
relied upon the accuracy and completeness of the financial and other information
provided to us or publicly available and we have not assumed any responsibility
for independent verification of such information. It is understood that we were
retained by the Board of Directors of the Company, and that the Board of
Directors has not looked to us for independent verification with respect to the
financial and other information provided to us or publicly available, including
the projections provided to us relating to the Company. We have further relied
upon the assurances of management of the Company that they are not aware of any
facts that would make the information supplied to us, or publicly available,
inaccurate or misleading.
<PAGE>
The Board of Directors
Winthrop Resources Corporation
Page 3
Our opinion as expressed herein is limited to the fairness to common
shareholders of the Company, from a financial point of view, of the
consideration to be received by such shareholders in connection with the Merger,
and does not address the Company's underlying business decision to proceed with
the Merger. We were not asked to solicit, and did not solicit, proposals from
other parties regarding a merger or acquisition of the Company. We did not make
an independent appraisal of the assets or liabilities of the Company or TCF, and
we do not express an opinion regarding the liquidation value or solvency of
either company or the regulatory compliance of TCF. Our opinion is based solely
on information available to us on or before the date hereof, and reflects
general market, economic, financial, monetary, and other conditions as of such
date.
This opinion is addressed to the Board of Directors of the Company and does not
constitute a recommendation to any shareholder of the Company as to how such
shareholder should vote at the shareholders' meeting to be held in connection
with the Merger. Also, our opinion may not be reproduced, quoted, published, or
referred to in any manner, nor be used for any other purposes, without our prior
written consent. This opinion confirms our opinion delivered orally to the
Board of Directors of the Company on February 26, 1997.
Based upon the foregoing, and other matters that we considered relevant, it is
our opinion that, as of the date hereof, the consideration to be received by the
common shareholders of the Company pursuant to the terms of the Merger is fair
to such shareholders from a financial point of view.
Very truly yours,
/s/ Dain Bosworth Incorporated
DAIN BOSWORTH INCORPORATED
<PAGE>
APPENDIX D
MINNESOTA BUSINESS CORPORATIONS ACT
302A.471. RIGHTS OF DISSENTING STOCKHOLDERS
Subd. 1. ACTIONS CREATING RIGHTS. A stockholder of a corporation may
dissent from, and obtain payment for the fair value of the stockholder's shares
in the event of, any of the following corporate actions:
(a) An amendment of the articles that materially and adversely affects the
rights or preferences of the shares of the dissenting stockholder in that it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the redemption of
the shares, including a provision respecting a sinking fund for the redemption
or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of the shares to
acquire shares, securities other than shares, or rights to purchase shares or
securities other than shares;
(4) excludes or limits the right of a stockholder to vote on a matter, or to
cumulate votes, except as the right may be excluded or limited through the
authorization or issuance of securities of an existing or new class or series
with similar or different voting rights; except that an amendment to the
articles of an issuing public corporation that provides that section 302A.671
does not apply to a control share acquisition does not give rise to the right to
obtain payment under this section;
(b) A sale, lease, transfer, or other disposition of all or substantially
all of the property and assets of the corporation, but not including a
transaction permitted without stockholder approval in section 302A.661,
subdivision 1, or a disposition in dissolution described in section 302A.725,
subdivision 2, or a disposition pursuant to an order of a court, or a
disposition for cash on terms requiring that all or substantially all of the net
proceeds of disposition be distributed to the stockholders in accordance with
their respective interests within one year after the date of disposition;
(c) A plan of merger, whether under this chapter or under chapter 322B, to
which the corporation is a party, except as provided in subdivision 3;
(d) A plan of exchange, whether under this chapter or under chapter 322B, to
which the corporation is a party as the corporation whose shares will be
acquired by the acquiring corporation, if the shares of the stockholder are
entitled to be voted on the plan; or
(e) Any other corporate action taken pursuant to a stockholder vote with
respect to which the articles, the bylaws, or a resolution approved by the board
directs that dissenting stockholders may obtain payment for their shares.
Subd. 2. BENEFICIAL OWNERS. (a) A stockholder shall not assert dissenters'
rights as to less than all of the shares registered in the name of the
stockholder, unless the stockholder dissents with respect to all of the shares
that are beneficially owned by another person but registered in the name of the
stockholder and discloses the name and address of each beneficial owner on whose
behalf the stockholder dissents. In that event, the rights of the dissenter
shall be determined as if the shares as to which the stockholder has dissented
and the other shares were registered in the names of different stockholders.
(b) The beneficial owner of shares who is not the stockholder may assert
dissenters' rights with respect to shares held on behalf of the beneficial
owner, and shall be treated as a dissenting stockholder under the terms of this
section and section 302A.473, if the beneficial owner submits to the corporation
at the time of or before the assertion of the rights a written consent of the
stockholder.
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<PAGE>
Subd. 3. RIGHTS NOT TO APPLY. Unless the articles, the bylaws, or a
resolution approved by the board otherwise provide, the right to obtain payment
under this section does not apply to a stockholder of the surviving corporation
in a merger, if the shares of the stockholder are not entitled to be voted on
the merger.
Subd. 4. OTHER RIGHTS. The stockholders of a corporation who have a right
under this section to obtain payment for their shares do not have a right at law
or in equity to have a corporate action described in subdivision 1 set aside or
rescinded, except when the corporate action is fraudulent with regard to the
complaining stockholder or the corporation.
302A.473. PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS
Subd. 1. DEFINITIONS. (a) For purposes of this section, the terms defined
in this subdivision have the meanings given them.
(b) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action referred to in section 302A.471, subdivision 1 or the
successor by merger of that issuer.
(c) "Fair value of the shares" means the value of the shares of a
corporation immediately before the effective date of the corporate action
referred to in section 302A.471, subdivision 1.
(d) "Interest" means interest commencing five days after the effective date
of the corporate action referred to in section 302A.471, subdivision 1, up to
and including the date of payment, calculated at the rate provided in section
549.09 for interest on verdicts and judgments.
Subd. 2. NOTICE OF ACTION. If a corporation calls a stockholder meeting at
which any action described in section 302A.471, subdivision 1 is to be voted
upon, the notice of the meeting shall inform each stockholder of the right to
dissent and shall include a copy of section 302A.471 and this section and a
brief description of the procedure to be followed under these sections.
Subd. 3. NOTICE OF DISSENT. If the proposed action must be approved by the
stockholders, a stockholder who wishes to exercise dissenters' rights must file
with the corporation before the vote on the proposed action a written notice of
intent to demand the fair value of the shares owned by the stockholder and must
not vote the shares in favor of the proposed action.
Subd. 4. NOTICE OF PROCEDURE; DEPOSIT OF SHARES. (a) After the proposed
action has been approved by the board and, if necessary, the stockholders, the
corporation shall send to all stockholders who have complied with subdivision 3
and to all stockholders entitled to dissent if no stockholder vote was required,
a notice that contains:
(1) The address to which a demand for payment and certificates of
certificated shares must be sent in order to obtain payment and the date by
which they must be received;
(2) Any restrictions on transfer of uncertificated shares that will
apply after the demand for payment is received;
(3) A form to be used to certify the date on which the stockholder, or
the beneficial owner on whose behalf the stockholder dissents, acquired the
shares or an interest in them and to demand payment; and
(4) A copy of Section 302A.471 and this section and a brief description
of the procedures to be followed under these sections.
(b) In order to receive the fair value of the shares, a dissenting
stockholder must demand payment and deposit certificated shares or comply with
any restrictions on transfer of uncertificated shares within 30 days after the
notice required by paragraph (a) was given, but the dissenter retains all other
rights of a stockholder until the proposed action takes effect.
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<PAGE>
Subd. 5. PAYMENT; RETURN OF SHARES. (a) After the corporate action takes
effect, or after the corporation receives a valid demand for payment, whichever
is later, the corporation shall remit to each dissenting stockholder who has
complied with subdivisions 3 and 4 the amount the corporation estimates to be
the fair value of the shares, plus interest, accompanied by:
(1) The corporation's closing balance sheet and statement of income for
a fiscal year ending not more than 16 months before the effective date of
the corporate action, together with the latest available interim financial
statements;
(2) An estimate by the corporation of the fair value of the shares and a
brief description of the method used to reach the estimate; and
(3) A copy of Section 302A.471 and this section, and a brief description
of the procedure to be followed in demanding supplemental payment.
(b) The corporation may withhold the remittance described in paragraph (a)
from a person who was not a stockholder on the date the action dissented from
was first announced to the public or who is dissenting on behalf of a person who
was not beneficial owner on that date. If the dissenter has complied with
subdivisions 3 and 4, the corporation shall forward to the dissenter the
materials described in paragraph (a), a statement of the reason for withholding
the remittance, and an offer to pay to the dissenter the amount listed in the
materials if the dissenter agrees to accept that amount in full satisfaction.
The dissenter may decline the offer and demand payment under subdivision 6.
Failure to do so entitles the dissenter only to the amount offered. If the
dissenter makes demand, subdivisions 7 and 8 apply.
(c) If the corporation fails to remit payment within 60 days of the deposit
of certificates or the imposition of transfer restrictions on uncertificated
shares, it shall return all deposited certificates and cancel all transfer
restrictions. However, the corporation may again give notice under subdivision 4
and require deposit or restrict transfer at a later time.
Subd. 6. SUPPLEMENTAL PAYMENT; DEMAND. If a dissenter believes that the
amount remitted under subdivision 5 is less than the fair value of the shares
plus interest, the dissenter may give written notice to the corporation of the
dissenter's own estimate of the fair value of shares, plus interest, within 30
days after the corporation mails the remittance under subdivision 5, and demand
payment of the difference. Otherwise, a dissenter is entitled only to the amount
remitted by the corporation.
Subd. 7. PETITION; DETERMINATION. If the corporation receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand, either
pay to the dissenter the amount demanded or agreed to by the dissenter after
discussion with the corporation or file in court a petition requesting that the
court determine the fair value of the shares, plus interest. The petition shall
be filed in the county in which the registered office of the corporation is
located, except that a surviving foreign corporation that receives a demand
relating to the shares of a constituent domestic corporation shall file the
petition in the county in this state in which the last registered office of the
constituent corporation was located. The petition must name as parties all
dissenters who have demanded payment under subdivision 6 and who have not
reached agreement with the corporation. The corporation shall, after filing the
petition, serve all parties with a summons and copy of the petition under the
rules of civil procedure. Nonresidents of this state may be served by registered
or certified mail or by publication as provided by law. Except as otherwise
provided, the rules of civil procedure apply to this proceeding. The
jurisdiction of the court is plenary and exclusive. The court may appoint
appraisers, with powers and authorities the court deems proper, to receive
evidence on and recommend the amount of the fair value of the shares. The court
shall determine whether the stockholder or stockholders in question have fully
complied with the requirements of this section, and shall determine the fair
value of the shares, taking into account any and all factors the court finds
relevant, computed by any method or combination of methods that the court, in
its discretion, sees fit to use, whether or not used by the corporation or by a
dissenter. The fair value of the shares as determined by the court is binding on
all stockholders, wherever located. A dissenter is entitled to judgment for cash
for the
D-3
<PAGE>
amount by which the fair value of the shares as determined by the court, plus
interest, exceeds the amount, if any, remitted under subdivision 5, but shall
not be liable to the corporation for the amount, if any, by which the amount, if
any, remitted to the dissenter under subdivision 5 exceeds the fair value of the
shares as determined by the court, plus interest.
Subd. 8. COSTS; FEES; EXPENSES. (a) The court shall determine the costs
and expenses of a proceeding under subdivision 7, including the reasonable
expenses and compensation of any appraisers appointed by the court, and shall
assess those costs and expenses against the corporation, except that the court
may assess part or all of those costs and expenses against a dissenter whose
action in demanding payment under subdivision 6 is found to be arbitrary,
vexatious, or not in good faith.
(b) If the court finds that the corporation has failed to comply
substantially with this section, the court may assess all fees and expenses of
any experts or attorneys as the court deems equitable. These fees and expenses
may also be assessed against a person who has acted arbitrarily, vexatiously, or
not in good faith in bringing the proceeding, and may be awarded to a party
injured by those actions.
(c) The court may award, in its discretion, fees and expenses to an attorney
for the dissenters out of the amount awarded to the dissenters, if any.
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