UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 18, 1996
NORTHERN ILLINOIS FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
______________________________
Illinois 0-17728 36-6137500
(State or other jurisdiction (Commission file number)
(I.R.S. employer
of incorporation)
identification no.)
486 West Liberty Street 60084-2489
Wauconda, Illinois (Zip Code)
(Address of principal
executive office)
Registrant's telephone number, include area code: (708) 487-1818
Not Applicable
(Former name or former address, if changed since last year)
Page 1 of ___ pages
Exhibit Index at sequentially numbered page 4.
Item 5. Other Events.
On January 18, 1996, Northern Illinois Financial Corporation,
an Illinois corporation ("Northern Illinois") and Premier Financial
Services, Inc., a Delaware corporation ("Premier") announced that
they had reached an understanding on substantially all material
terms to merge their assets and operations into a new financial
services organization to be named Grand Premier Financial, Inc., a
Delaware corporation ("GPF"), as more fully described in the Press
Release filed as Exhibit 99 to this Report. On January 22, 1996,
(i) Northern Illinois, Premier and GPF entered into an Agreement
and Plan of Reorganization dated as of January 22, 1996 (the
"Merger Agreement"), providing for the merger of Northern Illinois
and Premier with and into GPF, and (ii) Northern Illinois and
Premier entered into Stock Option Agreements pursuant to which
Northern Illinois has granted Premier an option to acquire up to
19.9% of the outstanding shares of the common stock of Northern
Illinois, and Premier has granted Northern Illinois an option to
acquire up to 19.9% of the outstanding shares of common stock of
Premier, subject in each case to the terms and conditions set forth
therein. Copies of the Merger Agreement and the Stock Option
Agreements are filed as Exhibits to this Report. Consummation of
the merger is subject to the receipt of required regulatory and
shareholder approvals and the satisfaction of other terms and
conditions set forth in the Merger Agreement. Upon consummation of
the merger, the separate corporate existence of Northern Illinois
and Premier shall terminate.
Item 7(c). Exhibits.
Exhibit 2 Agreement and Plan of Reorganization among Northern
Illinois Financial Corporation, Premier Financial
Services, Inc., and Grand Premier Financial, Inc.
dated January 22, 1996.
Exhibit 10.1 Stock Option Agreement, dated January 22,
1996, between Northern Illinois Financial
Corporation, as issuer, and Premier Financial
Services, Inc., as grantee.
Exhibit 10.2 Stock Option Agreement, dated January 22,
1996, between Premier Financial Services,
Inc., as issuer, and Northern Illinois
Financial Corporation, as grantee.
Exhibit 99 Press Release dated January 18, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Northern Illinois Financial
Corporation,
Dated: January 24, 1996 By:
____________________________________
Robert W. Hinman, President
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered Page
2 Agreement and Plan of Reorganization among Northern
Illinois Financial Corporation, Premier Financial
Services, Inc., and Grand Premier Financial, Inc.
dated January 22, 1996
.................................................... 5
10.1 Stock Option Agreement, dated January 22, 1996,
between
Northern Illinois Financial Corporation, as issuer, and
Premier Financial Services, Inc., as
grantee............................
10.2 Stock Option Agreement, dated January 22, 1996,
between
Premier Financial Services, Inc., as issuer, and
Northern Illinois Financial Corporation, as
grantee...................
99 Press Release dated January 18, 1996
...................................
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
NORTHERN ILLINOIS FINANCIAL CORPORATION,
PREMIER FINANCIAL SERVICES, INC.
AND
GRAND PREMIER FINANCIAL, INC.
DATED: JANUARY 22, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time . . . . . . . . . . . . . . . . . . . 1
1.3 Effects of the Merger. . . . . . . . . . . . . . . . 2
1.4 Conversion of Northern Illinois Common Stock, Premier
Common Stock
and Premier Preferred Stock; Treatment of GPF Common
Stock. . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Options. . . . . . . . . . . . . . . . . . . . . . . 4
1.6 Certificate of Incorporation . . . . . . . . . . . . 4
1.7 By-Laws. . . . . . . . . . . . . . . . . . . . . . . 4
1.8 Tax Consequences . . . . . . . . . . . . . . . . . . 5
1.9 Plans for Management Succession. . . . . . . . . . . 5
1.10 Board of Directors; Filling of Vacancies on the Board 5
1.11 Headquarters of GPF. . . . . . . . . . . . . . . . . 6
1.12 Share Purchase Rights Agreement. . . . . . . . . . . 6
1.13 Closing. . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . 6
EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . 6
2.1 GPF to Make Shares Available . . . . . . . . . . . . 6
2.2 Exchange of Shares . . . . . . . . . . . . . . . . . 6
ARTICLE III. . . . . . . . . . . . . . . . . . . . . . . . . . 8
REPRESENTATIONS AND WARRANTIES OF NORTHERN ILLINOIS. . . . . . 8
3.1 Corporate Organization . . . . . . . . . . . . . . . 8
3.2 Capitalization . . . . . . . . . . . . . . . . . . . 9
3.3 Certain Beneficial Owners of Northern Illinois
Common Stock and
Premier Common Stock . . . . . . . . . . . . . . . . 10
3.4 Authority; No Violation. . . . . . . . . . . . . . . 10
3.5 Consents and Approvals . . . . . . . . . . . . . . . 11
3.6 Reports. . . . . . . . . . . . . . . . . . . . . . . 11
3.7 Financial Statements . . . . . . . . . . . . . . . . 12
3.8 Broker's Fees. . . . . . . . . . . . . . . . . . . . 12
3.9 Absence of Certain Changes or Events . . . . . . . . 12
3.10 Legal Proceedings. . . . . . . . . . . . . . . . . . 13
3.11 Taxes and Tax Returns. . . . . . . . . . . . . . . . 13
3.12 Employees. . . . . . . . . . . . . . . . . . . . . . 14
3.13 SEC Reports. . . . . . . . . . . . . . . . . . . . . 15
3.14 Compliance with Applicable Law . . . . . . . . . . . 15
3.15 Certain Contracts. . . . . . . . . . . . . . . . . . 15
3.16 Agreements with Regulatory Agencies. . . . . . . . . 16
3.17 Other Activities of Northern Illinois and its
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.18 Investment Securities. . . . . . . . . . . . . . . . 17
3.19 Undisclosed Liabilities. . . . . . . . . . . . . . . 17
3.20 Environmental Liability. . . . . . . . . . . . . . . 18
3.21 Insurance. . . . . . . . . . . . . . . . . . . . . . 18
3.22 Loan Loss Reserves . . . . . . . . . . . . . . . . . 18
3.23 Approval Delays. . . . . . . . . . . . . . . . . . . 18
3.24 Pooling of Interests . . . . . . . . . . . . . . . . 18
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . 18
REPRESENTATIONS AND WARRANTIES OF PREMIER. . . . . . . . . . . 18
4.1 Corporate Organization . . . . . . . . . . . . . . . 19
4.2 Capitalization . . . . . . . . . . . . . . . . . . . 19
4.3 Certain Beneficial Owners of Premier Common Stock and
Northern
Illinois Common Stock. . . . . . . . . . . . . . . . 21
4.4 Authority; No Violation. . . . . . . . . . . . . . . 21
4.5 Consents and Approvals . . . . . . . . . . . . . . . 22
4.6 Reports. . . . . . . . . . . . . . . . . . . . . . . 22
4.7 Financial Statements . . . . . . . . . . . . . . . . 22
4.8 Broker's Fees. . . . . . . . . . . . . . . . . . . . 23
4.9 Absence of Certain Changes or Events . . . . . . . . 23
4.10 Legal Proceedings. . . . . . . . . . . . . . . . . . 23
4.11 Taxes and Tax Returns. . . . . . . . . . . . . . . . 24
4.12 Employees. . . . . . . . . . . . . . . . . . . . . . 24
4.13 SEC Reports. . . . . . . . . . . . . . . . . . . . . 25
4.14 Compliance with Applicable Law . . . . . . . . . . . 26
4.15 Certain Contracts. . . . . . . . . . . . . . . . . . 26
4.16 Agreements with Regulatory Agencies. . . . . . . . . 27
4.17 Other Activities of Premier and its Subsidiaries . . 27
4.18 Investment Securities. . . . . . . . . . . . . . . . 28
4.19 Undisclosed Liabilities. . . . . . . . . . . . . . . 28
4.20 Environmental Liability. . . . . . . . . . . . . . . 28
4.21 Insurance. . . . . . . . . . . . . . . . . . . . . . 28
4.22 Loan Loss Reserves . . . . . . . . . . . . . . . . . 28
4.23 Approval Delays. . . . . . . . . . . . . . . . . . . 29
4.24 State Takeover Laws. . . . . . . . . . . . . . . . . 29
4.25 Pooling of Interests . . . . . . . . . . . . . . . . 29
ARTICLE V. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
COVENANTS RELATING TO CONDUCT OF BUSINESS. . . . . . . . . . . 29
5.1 Conduct of Businesses Prior to the Effective Time. . 29
5.2 Forbearances . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . 31
6.1 Regulatory Matters; Cooperation with Respect to Filing 31
6.2 Access to Information. . . . . . . . . . . . . . . . 33
6.3 Stockholders' Approvals. . . . . . . . . . . . . . . 34
6.4 Legal Conditions to Merger . . . . . . . . . . . . . 34
6.5 Affiliates; Publication of Combined Financial Results 34
6.6 Listing of GPF Common Stock. . . . . . . . . . . . . 34
6.7 Employee Benefit Plans . . . . . . . . . . . . . . . 34
6.8 Indemnification; Directors' and Officers' Insurance. 35
6.9 Additional Agreements. . . . . . . . . . . . . . . . 37
6.10 Advice of Changes. . . . . . . . . . . . . . . . . . 37
6.11 Dividends. . . . . . . . . . . . . . . . . . . . . . 37
6.12 No Conduct Inconsistent with this Agreement. . . . . 37
ARTICLE VII. . . . . . . . . . . . . . . . . . . . . . . . . . 38
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . 38
7.1 Conditions to Each Party's Obligation To Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.2 Conditions to Obligations of Northern Illinois . . . 39
7.3 Conditions to Obligations of Premier . . . . . . . . 40
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . 41
TERMINATION AND AMENDMENT. . . . . . . . . . . . . . . . . . . 41
8.1 Termination. . . . . . . . . . . . . . . . . . . . . 41
8.2 Effect of Termination. . . . . . . . . . . . . . . . 43
8.3 Amendment. . . . . . . . . . . . . . . . . . . . . . 43
8.4 Extension; Waiver. . . . . . . . . . . . . . . . . . 43
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . 44
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 44
9.1 Non-survival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.2 Expenses . . . . . . . . . . . . . . . . . . . . . . 44
9.3 Notices. . . . . . . . . . . . . . . . . . . . . . . 44
9.4 Interpretation . . . . . . . . . . . . . . . . . . . 45
9.5 Counterparts . . . . . . . . . . . . . . . . . . . . 46
9.6 Entire Agreement . . . . . . . . . . . . . . . . . . 46
9.7 Governing Law. . . . . . . . . . . . . . . . . . . . 46
9.9 Publicity. . . . . . . . . . . . . . . . . . . . . . 46
9.10 Assignment; Third Party Beneficiaries. . . . . . . . 46
Exhibit A - Form of Northern Illinois Stock Option
Agreement
Exhibit B - Form of Premier Stock Option Agreement
Exhibit C - Form of Amended and Restated Certificate of
Incorporation
of Newco
Exhibit D - Form of By-laws of Newco
Exhibit E - Form of Share Purchase Rights Agreement
Exhibit F - Form of Affiliate Letter
Exhibit G - Form of Agreement Governing Right of First
Refusal
Exhibit H - Form of Opinion of Schiff Hardin & Waite
Exhibit I - Form of Opinion of Crowley Barrett & Karaba,
Ltd.
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated January 22, 1996, by
and among NORTHERN ILLINOIS FINANCIAL CORPORATION, an Illinois
corporation ("Northern Illinois"), PREMIER FINANCIAL SERVICES,
INC., a Delaware corporation ("Premier"), and Grand Premier
Financial, Inc., a Delaware corporation ("GPF").
WHEREAS, the Boards of Directors of Northern Illinois,
Premier and GPF have determined that it is in the best interests of
their respective companies and their stockholders to consummate the
business combination transaction provided for herein in which
Northern Illinois and Premier will each, subject to the terms and
conditions set forth herein, merge with and into GPF (the
"Merger"), so that GPF is the resulting corporation (hereinafter
sometimes called the "Resulting Corporation") in the Merger; and
WHEREAS, it is the intent of the respective Boards of
Directors of Northern Illinois and Premier that the Merger be
structured as a "merger of equals" of Northern Illinois and Premier
and that the Resulting Corporation be governed and operated on this
basis; and
WHEREAS, as a condition to, and immediately after the
execution of, this Agreement, Northern Illinois and Premier are
entering into a Northern Illinois stock option agreement (the
"Northern Illinois Option Agreement") attached hereto as Exhibit A;
and
WHEREAS, as a condition to, and immediately after the
execution of, this Agreement, Northern Illinois and Premier are
entering into a Premier stock option agreement (the "Premier Option
Agreement"; and together with the Northern Illinois Option
Agreement, the "Option Agreements") attached hereto as Exhibit B;
and
WHEREAS, the parties desire to make certain
representations, warranties and agreements in connection with the
Merger and also to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of
this Agreement, in accordance with the Delaware General Corporation
Law (the "DGCL") and the Illinois Business Corporation Act of 1983,
as amended (the "IBCA"), at the Effective Time (as defined in
Section 1.2), Northern Illinois and Premier shall merge with and
into GPF which shall be the Resulting Corporation in the Merger and
shall continue its corporate existence under the laws of the State
of Delaware. Upon consummation of the Merger, the separate
corporate existence of Northern Illinois and Premier shall
terminate.
1.2 Effective Time. The Merger shall become effective
upon the later of (i) the issuance of a certificate of merger by
the Secretary of State of the State of Illinois (the "Illinois
Secretary"), following the filing of articles of merger with such
office, and (ii) the time and date on which a certificate of merger
is filed with the Secretary of State of the State of Delaware (the
"Delaware Secretary"). The parties shall each use reasonable
efforts to cause articles of merger to be filed, and a certificate
of merger to be issued, by the Illinois Secretary and a certificate
of merger to be filed with the Delaware Secretary on the Closing
Date. The term "Effective Time" shall be the date and time when
the Merger becomes effective, in accordance with this Section 1.2.
1.3 Effects of the Merger. At and after the Effective
Time, the Merger shall have the effects set forth in Sections 259
and 261 of the DGCL and Section 11.50 of the IBCA.
1.4 Conversion of Northern Illinois Common Stock,
Premier Common Stock and Premier Preferred Stock; Treatment of GPF
Common Stock. At the Effective Time, in each case, subject to
Section 2.2(e), by virtue of the Merger and without any action on
the part of Northern Illinois, Premier or the holder of any of the
following securities:
(a) Each share of the common stock, no par value,
of Northern Illinois (the "Northern Illinois Common Stock")
issued and outstanding immediately prior to the Effective Time
(other than shares of Northern Illinois Common Stock with
respect to which the holders have validly asserted, and not
withdrawn or forfeited, dissenters' rights pursuant to
Sections 11.65 and 11.70 of the IBCA ("Dissenting Shares"))
shall be converted into the right to receive 4.250 shares (the
"Northern Illinois Exchange Ratio") of the common stock, par
value $0.01 per share, of GPF (the "GPF Common Stock").
(b) Each share of common stock, par value $5.00 per
share, of Premier (the "Premier Common Stock") issued and
outstanding immediately prior to the Effective Time (other
than shares of Premier Common Stock held in Premier's
treasury) shall be converted into the right to receive 1.116
shares (the "Premier Exchange Ratio") of GPF Common Stock.
(c) Each share of Series A Perpetual Preferred
Stock of Premier, par value $1.00 per share and with a stated
value of $1,000 per share (the "Premier Series A Perpetual
Preferred Stock"), issued and outstanding immediately prior to
the Effective Time (other than shares of Premier Series A
Perpetual Preferred Stock with respect to which the holders
have validly asserted, and not withdrawn, dissenters' rights
pursuant to Section 262 of the DGCL) shall be converted into
the right to receive one share of Series A Perpetual Preferred
Stock of GPF, par value $0.01 per share and with a stated
value of $1,000 per share (the "GPF Series A Perpetual
Preferred Stock," and together with the GPF Series B Perpetual
Preferred Stock (as defined below) and the GPF Series C
Perpetual Preferred Stock (as defined below), the "GPF
Preferred Stock"), together with accrued but unpaid dividends
on the Premier Series A Perpetual Preferred Stock to but not
including the Effective Time. The terms of the GPF Series A
Perpetual Preferred Stock shall be substantially identical to
the terms of the Premier Series A Perpetual Preferred Stock.
(d) Each share of Premier Series B Perpetual
Preferred Stock of Premier, par value $1.00 per share and with
a stated value of $1,000 per share, with a right of conversion
into shares of Premier Common Stock (the "Premier Series B
Perpetual Preferred Stock"), issued and outstanding
immediately prior to the Effective Time (other than shares of
Premier Series B Perpetual Preferred Stock with respect to
which the holders have validly asserted, and not withdrawn,
dissenters' rights pursuant to Section 262 of the DGCL) shall
be converted into the right to receive one share of
convertible preferred stock of GPF, par value $0.01 per share
and with a stated value of $1,000 per share (the "GPF Series
B Perpetual Preferred Stock"), together with accrued but
unpaid dividends on the Premier Series B Perpetual Preferred
Stock to but not including the Effective Time. The terms of
the GPF Series B Perpetual Preferred Stock shall be
substantially identical to the terms of the Premier Series B
Perpetual Preferred Stock.
(e) Each share of Series D Perpetual Preferred
Stock of Premier, par value $1.00 per share and with a stated
value of $1,000 per share (the "Series D Perpetual Preferred
Stock"), issued and outstanding immediately prior to the
Effective Time (other than shares of Premier Series D
Perpetual Preferred Stock with respect to which the holders
have validly asserted, and not withdrawn, dissenters' rights
pursuant to Section 262 of the DGCL) shall be converted into
the right to receive one share of perpetual preferred stock of
GPF (the "GPF Series C Perpetual Preferred Stock"), together
with accrued but unpaid dividends on the Premier Series D
Perpetual Preferred Stock to but not including the Effective
Time. The terms of the GPF Series C Perpetual Preferred Stock
shall be substantially identical to the terms of the Premier
Series D Perpetual Preferred Stock.
(f) All of the shares of Northern Illinois Common
Stock and Premier Common Stock converted into GPF Common Stock
pursuant to this Article I shall no longer be outstanding and
shall automatically be canceled and shall cease to exist as of
the Effective Time, and each certificate (each a "Common Stock
Certificate") previously representing any such shares of
Northern Illinois Common Stock or Premier Common Stock shall
thereafter represent only the right to receive (i) a
certificate representing the number of whole shares of GPF
Common Stock and (ii) cash in lieu of fractional shares into
which the shares of Northern Illinois Common Stock or Premier
Common Stock represented by such Common Stock Certificate have
been converted pursuant to this Section 1.4 and Section
2.2(e). Common Stock Certificates previously representing
shares of Northern Illinois Common Stock and Premier Common
Stock shall be exchanged for certificates representing whole
shares of GPF Common Stock and cash in lieu of fractional
shares issued in consideration therefor upon the surrender of
such Common Stock Certificates in accordance with Section 2.2,
without any interest thereon. If, prior to the Effective
Time, the outstanding shares of Northern Illinois Common Stock
or Premier Common Stock shall have been increased, decreased,
changed into or exchanged for a different number or kind of
shares or securities as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock
split, reverse stock split, or other similar change in
capitalization, then an appropriate and proportionate
adjustment shall be made to the Northern Illinois Exchange
Ratio and the Premier Exchange Ratio, respectively.
(g) At the Effective Time, all shares of Premier
Common Stock that are owned by Premier as treasury stock, if
any, shall be canceled and shall cease to exist, and no stock
of GPF or other consideration shall be delivered in exchange
therefor.
(h) All of the shares of Premier Series A Perpetual
Preferred Stock, Series B Perpetual Preferred Stock, and
Series D Perpetual Preferred Stock converted into GPF
Preferred Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be canceled and shall
cease to exist as of the Effective Time, and each certificate
(each a "Preferred Stock Certificate") previously representing
any such shares of Premier Preferred Stock shall thereafter
represent only the right to receive a certificate representing
the number of whole shares of corresponding GPF Preferred
Stock into which the shares of Premier Preferred Stock
represented by such Preferred Stock Certificate have been
converted pursuant to this Section 1.4. Preferred Stock
Certificates previously representing shares of Premier
Preferred Stock shall be exchanged for certificates
representing whole shares of corresponding GPF Preferred Stock
issued in consideration therefor upon the surrender of such
Preferred Stock Certificates in accordance with Section 2.2
hereof, without any interest thereon.
(i) Any Dissenting Shares shall not be converted
pursuant to this Agreement, and the holders thereof shall be
entitled only to such rights as are granted by Sections 11.65
and 11.70 of the IBCA; provided that if any holder of shares
of Northern Illinois Common Stock shall fail to perfect his or
her rights to payment pursuant to Section 11.70 of the IBCA,
each share of Northern Illinois Common Stock held by such
holder shall be converted into the right to receive the
consideration specified in subparagraph (a) of this Section
1.4.
(j) Each share of GPF Common Stock which is issued
and outstanding immediately prior to the Effective Time shall
at the Effective Time be automatically canceled without
consideration and without further action.
1.5 Options. At the Effective Time, each option granted
by Premier to purchase shares of Premier Common Stock which is
outstanding and unexercised immediately prior thereto shall cease
to represent a right to acquire shares of Premier Common Stock and
shall be converted automatically into an option to purchase shares
of GPF Common Stock in an amount and at an exercise price
determined as provided below, subject to the terms of the Premier
benefit plans under which they were issued (collectively, the
"Premier Stock Plans") and the agreements evidencing grants of such
options thereunder:
(a) The number of shares of GPF Common Stock to be
subject to each new option shall be equal to the product of
the number of shares of Premier Common Stock subject to the
original option and the Premier Exchange Ratio, provided that
any fractional shares of GPF Common Stock resulting from such
multiplication shall be rounded to the nearest whole share;
and
(b) The exercise price per share of GPF Common Stock
under the new option shall be equal to the exercise price per
share of Premier Common Stock under the original option
divided by the Premier Exchange Ratio, provided that such
exercise price shall be rounded down to the nearest whole
cent.
1.6 Certificate of Incorporation. Subject to the terms
and conditions of this Agreement, at the Effective Time, an amended
and restated Certificate of Incorporation of GPF shall be filed
with the Delaware Secretary so that the Amended and Restated
Certificate of Incorporation of GPF, substantially in the form
attached as Exhibit C hereto, shall be the Amended and Restated
Certificate of Incorporation of the Resulting Corporation until
thereafter amended in accordance with applicable law.
1.7 By-Laws. Subject to the terms and conditions of
this Agreement, at the Effective Time, the By-Laws of GPF,
substantially in the form attached as Exhibit D hereto, shall be
the By-Laws of the Resulting Corporation until thereafter amended
in accordance with applicable law.
1.8 Tax Consequences. It is intended that the Merger
shall constitute a reorganization within the meaning of Section
368(a)(i)(A) of the Code, and that this Agreement shall constitute
a "plan of reorganization" for the purposes of Section 368 of the
Code.
1.9 Plans for Management Succession. At the Effective
Time, (a) Richard L. Geach shall be the Chief Executive Officer of
GPF, (b) Robert W. Hinman shall be the President and Chief
Operating Officer of GPF, and (c) David L. Murray shall be an
Executive Vice President and Chief Financial Officer of GPF. Mr.
Hinman, or such other person nominated for the office of President
by the Northern Illinois Representatives (as defined in Section
1.10), shall immediately and without further action of the Board of
Directors become Chief Executive Officer of GPF on the date upon
which Mr. Geach ceases to be Chief Executive Officer of GPF, which
date shall in no event be later than December 31 of the third full
calendar year following the year in which the Effective Time
occurs. Nothing in this Section 1.9 shall preclude the Board of
Directors of GPF from subsequently removing any person appointed as
an officer of GPF pursuant to this Section 1.9.
1.10 Board of Directors; Filling of Vacancies on the
Board. (a) From and after the Effective Time, the Board of
Directors of GPF shall consist of sixteen (16) persons, including
Mr. Geach, Mr. Hinman and Mr. Murray. Seven (7) directors, in
addition to Mr. Hinman, shall have been selected by Northern
Illinois (the "Northern Illinois Representatives"), and six (6)
directors, in addition to Mr. Geach and Mr. Murray, shall have been
selected by Premier (the "Premier Representatives"). The Northern
Illinois Representatives and the Premier Representatives,
respectively, shall be divided as equally as practicable among the
three classes of directors of GPF, in accordance with Schedule
1.10, and shall serve in such capacities until their successors
shall have been elected or appointed and shall have qualified in
accordance with the Amended and Restated Certificate of
Incorporation of GPF and By-laws of GPF and the DGCL. Directors
chosen from among the Northern Illinois Representatives and the
Premier Representatives shall be equally represented on the
executive committee of the Board of Directors.
(b) Prior to the third annual meeting of the
stockholders of GPF, the Northern Illinois Representatives and the
Premier Representatives, respectively, shall have the right to
designate (i) the person or persons to fill any vacancies occurring
on the Board of Directors of GPF as the result of the death,
resignation or removal of any of the Northern Illinois
Representatives or the Premier Representatives, respectively, (ii)
the person or persons to be nominated in place of each of the
Northern Illinois Representatives and Premier Representatives,
respectively, whose terms of offices expire at each of the first
three annual meetings of the stockholders of GPF, and (iii) the
person or persons to serve on the executive committee in place of
any Northern Illinois Representatives or Premier Representatives,
respectively, previously appointed to the executive committee. For
purposes of Section 1.9 and this Section 1.10, the terms "Northern
Illinois Representatives" and "Premier Representatives" shall
include any person or persons subsequently appointed or elected
directors of GPF following their designation as nominees for
director by the Northern Illinois Representatives or Premier
Representatives, respectively, in accordance with the preceding
sentence.
1.11 Headquarters of GPF. At the Effective Time, the
headquarters and principal executive offices of GPF shall be in
Wauconda, Illinois, or in such other place as may be mutually
agreed upon by Northern Illinois and Premier prior to the Effective
Time.
1.12 Share Purchase Rights Agreement. At the Effective
Time, GPF shall be a party to a Share Purchase Rights Agreement,
substantially in the form of Exhibit E hereto (the "Rights
Agreement"), and such Rights Agreement shall remain in effect from
and after the Effective Time until such Rights Agreement is amended
or terminated in accordance with its terms.
1.13 Closing. Subject to the terms and conditions of
this Agreement and the Option Agreements, including but not limited
to the provisions of Article VII of this Agreement, the closing of
the Merger (the "Closing") will take place at 10:00 a.m. on a date
and at a place to be specified by the parties, which shall be no
later than the last business day in the calendar month in which all
of the conditions precedent to the Merger set forth in Section
7.1(a), (b), (c) and (e) have occurred, unless such date is
extended by mutual agreement of the parties (the "Closing Date").
ARTICLE II
EXCHANGE OF SHARES
2.1 GPF to Make Shares Available. At or prior to the
Effective Time, GPF shall deposit, or shall cause to be deposited,
with a bank, trust company or other entity (including any
subsidiary bank or trust company of GPF as of the Effective Time)
reasonably acceptable to each of Northern Illinois and Premier (the
"Exchange Agent"), for the benefit of the holders of Common Stock
Certificates and Preferred Stock Certificates (collectively, the
"Certificates"), for exchange in accordance with this Article II,
certificates representing the shares of GPF Common Stock and GPF
Preferred Stock and cash in lieu of any fractional shares of GPF
Common Stock (such cash and certificates for shares of GPF Common
Stock and GPF Preferred Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund") to be issued pursuant to Section 1.4 and
paid pursuant to Section 2.2(a) in exchange for outstanding shares
of Northern Illinois Common Stock, Premier Common Stock or Premier
Preferred Stock, respectively.
2.2 Exchange of Shares. (a) As soon as practicable
after the Effective Time, and in no event later than ten business
days thereafter, the Exchange Agent shall mail to each holder of
record of one or more Certificates a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in
effecting the surrender of the Certificates in exchange for
certificates representing the shares of GPF Common Stock, GPF
Preferred Stock and any cash in lieu of fractional shares into
which the shares of Northern Illinois Common Stock, Premier Common
Stock and Premier Preferred Stock represented by such Certificate
or Certificates shall have been converted pursuant to this
Agreement. Upon proper surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with such properly
completed letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor, as
applicable, (i) a certificate representing that number of whole
shares of GPF Common Stock or GPF Preferred Stock to which such
holder of Northern Illinois Common Stock, Premier Common Stock or
Premier Preferred Stock shall have become entitled pursuant to the
provisions of Article I, and (ii) a check representing the amount
of any cash in lieu of fractional shares and, in the case of the
Premier Preferred Stock, any accrued but unpaid dividends thereon,
which such holder has the right to receive in respect of the
Certificates surrendered pursuant to the provisions of this Article
II, and the Certificate so surrendered shall forthwith be canceled.
No interest will be paid or accrued on any cash in lieu of
fractional shares or on any unpaid dividends and distributions
payable to holders of Certificates.
(b) No dividends or other distributions declared with
respect to GPF Common Stock or GPF Preferred Stock with a record
date following the Effective Time shall be paid to the holder of
any unsurrendered Certificate until the holder thereof shall have
surrendered such Certificate in accordance with this Article II.
Subject to Section 2.2(e) and to the effect of applicable laws,
after the surrender of a Certificate in accordance with this
Article II, the record holder thereof shall be entitled to receive
any such dividends or other distributions with a record date
following the Effective Time, without any interest thereon, which
had theretofore become payable with respect to shares of GPF Common
Stock or GPF Preferred Stock represented by such Certificate.
(c) If any certificate representing shares of GPF Common
Stock or GPF Preferred Stock is to be issued in a name other than
that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of the issuance thereof that
the Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise
in proper form for transfer, and that the person requesting such
exchange shall pay to the Exchange Agent in advance any transfer or
other taxes required by reason of the issuance of a certificate
representing shares of GPF Common Stock or GPF Preferred Stock in
any name other than that of the registered holder of the
Certificate surrendered, or required for any other reason, or shall
establish to the satisfaction of the Exchange Agent that such tax
has been paid or is not payable.
(d) After the Effective Time, there shall be no
transfers on the stock transfer books of Northern Illinois of the
shares of Northern Illinois Common Stock and no transfers on the
stock transfer books of Premier of the shares of Premier Common
Stock or Premier Preferred Stock which were issued and outstanding
immediately prior to the Effective Time. If, after the Effective
Time, Certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be canceled and
exchanged for certificates representing shares of GPF Common Stock
or GPF Preferred Stock as provided in this Article II.
(e) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of
GPF Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to GPF
Common Stock shall be payable on or with respect to any fractional
share, and such fractional share interests shall not entitle the
owner thereof to vote or to any other rights of a stockholder of
GPF. In lieu of the issuance of any such fractional share, GPF
shall pay to each former stockholder of Northern Illinois and
Premier who otherwise would be entitled to receive such fractional
share an amount in cash determined by multiplying (i) $9.75 by (ii)
the fraction of a share (rounded to the nearest thousandth when
expressed as an Arabic number) of GPF Common Stock to which such
holder would otherwise be entitled to receive pursuant to Section
1.4.
(f) Any portion of the Exchange Fund that remains
unclaimed by the stockholders of Northern Illinois and Premier for
12 months after the Effective Time shall be paid to GPF. Any
stockholders of Northern Illinois and Premier who have not
theretofore complied with this Article II shall thereafter look
only to GPF for the issuance of certificates representing shares of
GPF Common Stock or GPF Preferred Stock and the payment of cash in
lieu of any fractional shares and any unpaid dividends and
distributions on the GPF Common Stock or GPF Preferred Stock
deliverable in respect of each share of Northern Illinois Common
Stock, Premier Common Stock or Premier Preferred Stock, as the case
may be, such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
Notwithstanding the foregoing, none of GPF, Northern Illinois,
Premier, the Exchange Agent or any other person shall be liable to
any former holder of shares of Northern Illinois Common Stock,
Premier Common Stock or Premier Preferred Stock for any amount
delivered in good faith to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or
destroyed and, if reasonably required by GPF, the posting by such
person of a bond in such amount as GPF may determine is reasonably
necessary as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the
shares of GPF Common Stock, GPF Preferred Stock and any cash in
lieu of fractional shares deliverable in respect thereof pursuant
to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NORTHERN ILLINOIS
Except as disclosed in the Northern Illinois disclosure
schedules delivered to Premier concurrently herewith (the "Northern
Illinois Disclosure Schedules"), Northern Illinois hereby
represents and warrants to Premier as follows:
3.1 Corporate Organization. (a) Northern Illinois is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Illinois. Northern Illinois has the
corporate power and authority to own or lease all of its properties
and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or
the character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not
have a Material Adverse Effect (as defined below) on Northern
Illinois. Northern Illinois is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended (the
"BHC Act"). True and complete copies of the Articles of
Incorporation and By-Laws of Northern Illinois, as in effect as of
the date of this Agreement, have previously been made available by
Northern Illinois to Premier. As used in this Agreement, the term
"Material Adverse Effect" means, with respect to Northern Illinois,
Premier or GPF, as the case may be, a material adverse effect on
the business, results of operations, financial condition, or
(insofar as they can reasonably be foreseen) prospects of such
party and its Subsidiaries taken as a whole. The word "Subsidiary"
when used with respect to any party means any bank, corporation,
partnership, limited liability company, or other organization,
whether incorporated or unincorporated, which is consolidated with
such party for financial reporting purposes.
(b) As of the date of this Agreement, Northern Illinois
has, as its sole direct or indirect Subsidiaries, Grand National
Bank (South Chicago Heights), a national banking association, First
National Bank of Niles, a national banking association, Grand
National Bank (Waukegan), a national banking association, Grand
National Bank (Crystal Lake), a national banking association, and
American Suburban Mortgage Corporation, an Illinois corporation
(the "Northern Illinois Subsidiaries"). On November 27, 1995,
Northern Illinois filed an application with the Office of the
Comptroller of the Currency (the "Comptroller") requesting the
Comptroller's approval to effect the merger of the Northern
Illinois Subsidiaries that are organized as national banks into a
single national banking association under the charter of Grand
National Bank (Crystal Lake) and with the name of Grand National
Bank (the "Northern Illinois Subsidiary Bank Merger"). In the
event that such application is approved and the Northern Illinois
Subsidiary Bank Merger is effected prior to the Effective Time, at
the Effective Time Northern Illinois will have, as its sole
Subsidiaries, Grand National Bank and American Suburban Mortgage
Corporation. Except as set forth in Schedule 3.1(b) of the
Northern Illinois Disclosure Schedules, Northern Illinois does not
own any voting stock or equity securities of any bank, corporation,
partnership, limited liability company, or other organization,
whether incorporated or unincorporated, other than the Northern
Illinois Subsidiaries.
(c) Each Northern Illinois Subsidiary (i) is duly
organized and validly existing as a bank or corporation under the
laws of its jurisdiction of organization, (ii) is duly qualified to
do business and in good standing in all jurisdictions (whether
federal, state, local or foreign) where its ownership or leasing of
property or the conduct of its business requires it to be so
qualified and in which the failure to be so qualified would have a
Material Adverse Effect on Northern Illinois, and (iii) has all
requisite corporate power and authority to own or lease its
properties and assets and to carry on its business as now
conducted. Except as set forth in Schedule 3.1(c) of the Northern
Illinois Disclosure Schedules, none of the Northern Illinois
Subsidiaries owns any voting stock or equity securities of any
bank, corporation, partnership, limited liability company, or other
organization, whether incorporated or unincorporated.
(d) The minute books of Northern Illinois and of each of
the Northern Illinois Subsidiaries accurately reflect in all
material respects all corporate meetings held or actions taken
since January 1, 1994 by the stockholders and Boards of Directors
of Northern Illinois and each Northern Illinois Subsidiary,
respectively, (including committees of the Boards of Directors of
Northern Illinois and the Northern Illinois Subsidiaries).
3.2 Capitalization. (a) The authorized capital stock of
Northern Illinois consists of 10,000,000 shares of Northern
Illinois Common Stock, of which, as of December 31, 1995, 2,956,784
shares were issued and outstanding and no shares were held in
treasury. All of the issued and outstanding shares of Northern
Illinois Common Stock have been duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof.
Except for the Northern Illinois Option Agreement, Northern
Illinois does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares
of Northern Illinois Common Stock or any other equity securities of
Northern Illinois or any securities representing the right to
purchase or otherwise receive any shares of Northern Illinois
Common Stock. No shares of Northern Illinois Common Stock have
been reserved for issuance, other than the shares of Northern
Illinois Common Stock reserved for issuance under the Northern
Illinois Option Agreement. Since December 31, 1995, Northern
Illinois has not issued any shares of its capital stock or any
securities convertible into or exercisable for any shares of its
capital stock.
(b) Northern Illinois owns, directly or indirectly, all
of the issued and outstanding shares of capital stock of each of
the Northern Illinois Subsidiaries, free and clear of any liens,
pledges, charges, encumbrances and security interests whatsoever
("Liens"), and all of such shares are duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership
thereof. No Northern Illinois Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of
any shares of capital stock or any other equity security of such
Northern Illinois Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock
or any other equity security of such Northern Illinois Subsidiary.
3.3 Certain Beneficial Owners of Northern Illinois
Common Stock and Premier Common Stock. Schedule 3.3 of the
Northern Illinois Disclosure Schedules sets forth the name and the
number of shares of Northern Illinois Common Stock and the
percentage of the outstanding shares of Northern Illinois Common
Stock beneficially owned by any individual, entity or group,
including any "person" within the meaning of Sections 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), known to Northern Illinois to be the beneficial
owner, alone or together with such person's affiliates or
associates (as such terms are defined in Rule 12b-2 under the
Exchange Act), of 10% or more of the outstanding shares of Northern
Illinois Common Stock as of the date of this Agreement. To the
best knowledge of Northern Illinois, no person listed on Schedule
3.3 beneficially owns any shares of Premier Common Stock as of the
date of this Agreement. For purposes of this Agreement,
"beneficial ownership" shall have the meaning given such term in
Rule 13d-3 under the Exchange Act.
3.4 Authority; No Violation. (a) Northern Illinois has
full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Northern Illinois. The Board
of Directors of Northern Illinois has directed that this Agreement
and the transactions contemplated hereby be submitted to Northern
Illinois' stockholders for approval at a meeting of such
stockholders and, except for the adoption of this Agreement by the
affirmative vote of the holders of two-thirds of the outstanding
shares of Northern Illinois Common Stock, no other corporate
proceedings on the part of Northern Illinois are necessary to
approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly
executed and delivered by Northern Illinois and (assuming due
authorization, execution and delivery by Premier and GPF)
constitutes a valid and binding obligation of Northern Illinois,
enforceable against Northern Illinois in accordance with its terms.
(b) Neither the execution and delivery of this Agreement
by Northern Illinois nor the consummation by Northern Illinois of
the transactions contemplated hereby, nor compliance by Northern
Illinois with any of the terms or provisions hereof, will (i)
violate any provision of the Articles of Incorporation or By-Laws
of Northern Illinois, or (ii) assuming that the consents and
approvals referred to in Section 3.5 are duly obtained, (x) violate
any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to Northern Illinois or any
of the Northern Illinois Subsidiaries or any of their respective
properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation
of any Lien upon any of the respective properties or assets of
Northern Illinois or any of its Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Northern Illinois or any of its
Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected, except
(in the case of clause (y) above) for such violations, conflicts,
breaches or defaults which, either individually or in the
aggregate, will not have or be reasonably likely to have a Material
Adverse Effect on Northern Illinois or GPF.
3.5 Consents and Approvals. No consents or approvals of
or filings or registrations with any court, administrative agency
or commission or other governmental authority or instrumentality
(each a "Governmental Entity") or with any third party are
necessary in connection with the execution and delivery by Northern
Illinois of this Agreement and the consummation by Northern
Illinois of the Merger and the other transactions contemplated
hereby except for (a) the filing by GPF of an application with the
Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") under the BHC Act and the approval of such
application, (b) the filing with the Securities and Exchange
Commission (the "SEC") of a joint proxy statement in definitive
form relating to the meetings of Northern Illinois' and Premier's
stockholders to be held in connection with this Agreement and the
transactions contemplated hereby (the "Joint Proxy Statement") and
the registration statement on Form S-4 (the "S-4") in which such
Joint Proxy Statement will be included as a prospectus, (c) the
filing of a registration statement on Form 8-A (the "8-A")
registering the GPF Common Stock under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(d) the filing of articles of merger with, and the issuance of a
certificate of merger by, the Illinois Secretary under the IBCA,
and the filing of a certificate of merger with the Delaware
Secretary pursuant to the DGCL, (e) the filing of a consent to
service of process, an appointment of the Illinois Secretary as
agent for service of process, and an agreement with respect to any
Dissenting Shares required to be filed by GPF with the Illinois
Secretary pursuant to Section 11.35 of the IBCA, (f) such filings
and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with
the issuance of the shares of GPF Common Stock and GPF Preferred
Stock pursuant to this Agreement, (g) the approval of an
application to list the GPF Common Stock on The Nasdaq Stock
Market's National Market, subject to official notice of issuance,
and (h) the approval of this Agreement by the requisite vote of the
stockholders of Northern Illinois and Premier.
3.6 Reports. Northern Illinois and each of the Northern
Illinois Subsidiaries have timely filed all reports, registrations
and statements, together with any amendments required to be made
with respect thereto, that they were required to file since January
1, 1994 with (i) the Federal Reserve Board, (ii) the Federal
Deposit Insurance Corporation (the "FDIC"), (iii) any state
regulatory authority (each a "State Regulator"), (iv) the
Comptroller, (vi) the SEC, and (vii) any self-regulatory
organization ("SRO") with jurisdiction over any of the activities
of Northern Illinois or any of its Subsidiaries (collectively
"Regulatory Agencies"), and all other reports and statements
required to be filed by them since January 1, 1994, including,
without limitation, any report or statement required to be filed
pursuant to the laws, rules or regulations of the United States,
any state, or any Regulatory Agency, and have paid all fees and
assessments due and payable in connection therewith, except where
the failure to file such report, registration or statement or to
pay such fees and assessments, either individually or in the
aggregate, will not have a Material Adverse Effect on Northern
Illinois or GPF. Except for normal examinations conducted by a
Regulatory Agency in the regular course of the business of Northern
Illinois and the Northern Illinois Subsidiaries, no Regulatory
Agency has initiated any proceeding or, to the best knowledge of
Northern Illinois, investigation into the business or operations of
Northern Illinois or any of the Northern Illinois Subsidiaries
since January 1, 1994. There is no unresolved written violation,
written criticism, or written exception by any Regulatory Agency
with respect to any report or statement relating to any
examinations of Northern Illinois or any of the Northern Illinois
Subsidiaries, which is likely, either individually or in the
aggregate, to have a Material Adverse Effect on Northern Illinois
or GPF.
3.7 Financial Statements. Northern Illinois has
previously made available to Premier copies of (a) the consolidated
balance sheets of Northern Illinois and its Subsidiaries as of
December 31, 1993 and 1994 and the related consolidated statements
of income, changes in stockholders' equity and cash flows for the
fiscal years ended December 31, 1992, 1993 and 1994, inclusive, as
reported in Northern Illinois' Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 filed with the SEC under the
Exchange Act, in each case accompanied by the audit report of
Hutton, Nelson and McDonald LLP, independent public accountants
with respect to Northern Illinois, and (b) the unaudited
consolidated balance sheet of Northern Illinois and its
Subsidiaries as of September 30, 1995 and September 30, 1994 and
the related unaudited consolidated statements of income, cash flows
and changes in stockholders' equity for the three- and nine-month
periods then ended as reported in Northern Illinois' Quarterly
Report on Form 10-Q for the period ended September 30, 1995 filed
with the SEC under the Exchange Act (the "Northern Illinois Third
Quarter 10-Q"). The December 31, 1994 consolidated balance sheet
of Northern Illinois (including the related notes, where
applicable) fairly presents the consolidated financial position of
Northern Illinois and its Subsidiaries as of the date thereof, and
the other financial statements referred to in this Section 3.7
(including the related notes, where applicable) fairly present the
results of the consolidated operations and changes in stockholders'
equity and consolidated financial position of Northern Illinois and
its Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth, subject, in the case of the
unaudited statements, to recurring audit adjustments normal in
nature and amount; each of such statements (including the related
notes, where applicable) comply in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto; and each of such
statements (including the related notes, where applicable) has been
prepared in all material respects in accordance with generally
accepted accounting principles ("GAAP") consistently applied during
the periods involved, except, in each case, as indicated in such
statements or in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q. The books and records of
Northern Illinois and its Subsidiaries have been, and are being,
maintained in all material respects in accordance with GAAP and any
other applicable legal and accounting requirements and reflect only
actual transactions.
3.8 Broker's Fees. Except as set forth in Schedule 3.8,
neither Northern Illinois nor any Northern Illinois Subsidiary nor
any of their respective officers or directors has employed any
broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with the Merger or
related transactions contemplated by this Agreement or the Option
Agreements.
3.9 Absence of Certain Changes or Events. (a) Except
as publicly disclosed in Northern Illinois Reports (as defined in
Section 3.13) filed prior to the date hereof, since September 30,
1995, (i) Northern Illinois and its Subsidiaries taken as a whole
have not incurred any material liability, except in the ordinary
course of their business, and (ii) no event has occurred which has
had, individually or in the aggregate, a Material Adverse Effect on
Northern Illinois or will have a Material Adverse Effect on GPF.
(b) Except as publicly disclosed in the Northern
Illinois Reports filed prior to the date hereof, since September
30, 1995, Northern Illinois and its Subsidiaries have carried on
their respective businesses in all material respects in the
ordinary and usual course.
(c) Since December 31, 1994, neither Northern Illinois
nor any of its Subsidiaries has (i) except for such actions as are
in the ordinary course of business consistent with past practice or
except as required by applicable law, (A) increased the wages,
salaries, compensation, pension, or other fringe benefits or
perquisites payable to any executive officer, employee, or director
from the amount thereof in effect as of December 31, 1994, or (B)
granted any severance or termination pay, entered into any contract
to make or grant any severance or termination pay, or paid any
bonuses, other than customary year-end bonuses for the 1994 and
1995 fiscal years which did not exceed, in the aggregate, 5% of
Northern Illinois' 1994 salary and employee benefits, or (ii)
suffered any strike, work stoppage, slowdown, or other labor
disturbance.
3.10 Legal Proceedings. (a) Except as set forth in
Schedule 3.10(a), there are no pending or, to the best of Northern
Illinois' knowledge, threatened, legal, administrative, arbitration
or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against Northern Illinois or any of
its Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement or the Northern
Illinois Option Agreement.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction (other than those that apply to similarly
situated bank holding companies or banks) imposed upon Northern
Illinois, any of its Subsidiaries or the assets of Northern
Illinois or any of its Subsidiaries.
3.11 Taxes and Tax Returns. (a) Each of Northern
Illinois and its Subsidiaries has duly filed all federal, state,
county, foreign and, to the best of Northern Illinois' knowledge,
local information returns and tax returns required to be filed by
it on or prior to the date hereof (all such returns being accurate
and complete in all material respects) and has duly paid or made
provisions for the payment of all Taxes (as defined in Section
3.11(b)) and other governmental charges which have been incurred or
are due or claimed to be due from it by federal, state, county,
foreign or local taxing authorities on or prior to the date of this
Agreement (including, without limitation, if and to the extent
applicable, those due in respect of its properties, income,
business, capital stock, deposits, franchises, licenses, sales and
payrolls) other than Taxes or other charges which are not yet
delinquent or are being contested in good faith and have not been
finally determined. The income tax returns of Northern Illinois
and its Subsidiaries have never been examined by the Internal
Revenue Service (the "IRS"). There are no material disputes
pending, or claims asserted for, Taxes or assessments upon Northern
Illinois or any of its Subsidiaries for which Northern Illinois
does not have adequate reserves, nor has Northern Illinois or any
of its Subsidiaries given any currently effective waivers extending
the statutory period of limitation applicable to any federal,
state, county or local income tax return for any period. In
addition, (i) proper and accurate amounts have been withheld by
Northern Illinois and its Subsidiaries from their employees for all
prior periods in compliance in all material respects with the tax
withholding provisions of applicable federal, state and local laws,
except where failure to do so would not have a Material Adverse
Effect on Northern Illinois, (ii) federal, state, county and local
returns which are accurate and complete in all material respects
have been filed by Northern Illinois and its Subsidiaries for all
periods for which returns were due with respect to income tax
withholding, Social Security and unemployment taxes, (iii) the
amounts shown on such federal, state, local or county returns to be
due and payable have been paid in full or adequate provision
therefor has been included by Northern Illinois in its consolidated
financial statements as of December 31, 1994, and (iv) there are no
Tax liens upon any property or assets of Northern Illinois or its
Subsidiaries except liens for current taxes not yet due. Except as
set forth in Schedule 3.11, neither Northern Illinois nor any of
its Subsidiaries has been required to include in income any
adjustment pursuant to Section 481 of the Code by reason of a
voluntary change in accounting method initiated by Northern
Illinois or any of its Subsidiaries, and the IRS has not initiated
or proposed any such adjustment or change in accounting method.
Except as set forth in the financial statements described in
Section 3.7, neither Northern Illinois nor any of its Subsidiaries
has entered into a transaction which is being accounted for as an
installment obligation under Section 453 of the Code.
(b) As used in this Agreement, the term "Tax" or "Taxes"
means all federal, state, county, local, and foreign income,
excise, gross receipts, gross income, ad valorem, profits, gains,
property, capital, sales, transfer, use, payroll, employment,
severance, withholding, duties, intangibles, franchise, backup
withholding, and other taxes, charges, levies or like assessments
together with all penalties and additions to tax and interest
thereon.
3.12 Employees. (a) Schedule 3.12 in the Northern
Illinois Disclosure Schedules sets forth a true and complete list
of each employee benefit plan, arrangement, commitment, agreement
or understanding that is maintained as of the date of this
Agreement (the "Northern Illinois Benefit Plans") (i) by Northern
Illinois or any of its Subsidiaries or (ii) by any trade or
business, whether or not incorporated which (A) is under "common
control," as described in Section 414(c) of the Code, with Northern
Illinois, or (B) is a member of a "controlled group," as defined in
Section 414(b) of the Code, which includes Northern Illinois (a
"Northern Illinois ERISA Affiliate"), all of which together with
Northern Illinois would be deemed a "single employer" within the
meaning of Section 4001 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
(b) Northern Illinois has heretofore delivered to
Premier true and complete copies of each of the Northern Illinois
Benefit Plans and certain related documents, including, but not
limited to, (i) the actuarial report for such Northern Illinois
Benefit Plan (if applicable) for each of the last two years, and
(ii) the most recent determination letter from the IRS (if
applicable) for such Northern Illinois Benefit Plan.
(c) (i) Each of the Northern Illinois Benefit Plans has
been operated and administered in all material respects with
applicable laws, including, but not limited to, ERISA and the Code,
(ii) each of the Northern Illinois Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code is so
qualified, (iii) with respect to each Northern Illinois Benefit
Plan which is subject to Title IV of ERISA, the present value of
accrued benefits under such Northern Illinois Benefit Plan, based
upon the actuarial assumptions used for funding purposes in the
most recent actuarial report prepared by such Northern Illinois
Benefit Plan's actuary with respect to such Northern Illinois
Benefit Plan, did not, as of its latest valuation date, exceed the
then current value of the assets of such Northern Illinois Benefit
Plan allocable to such accrued benefits, (iv) no Northern Illinois
Benefit Plan provides benefits, including, without limitation,
death or medical benefits (whether or not insured), with respect to
current or former employees of Northern Illinois, its Subsidiaries
or any ERISA Affiliate beyond their retirement or other termination
of service, other than (A) coverage mandated by applicable law, (B)
death benefits or retirement benefits under any "employee pension
plan" (as such term is defined in Section 3(2) of ERISA), (C)
deferred compensation benefits accrued as liabilities on the books
of Northern Illinois, its Subsidiaries or the ERISA Affiliates, or
(D) benefits the full cost of which is borne by the current or
former employee (or his beneficiary), (v) no material liability
under Title IV of ERISA has been incurred by Northern Illinois, its
Subsidiaries or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to
Northern Illinois, its Subsidiaries or any ERISA Affiliate of
incurring a material liability thereunder, (vi) no Northern
Illinois Benefit Plan is a "multiemployer pension plan" (as such
term is defined in Section 3(37) of ERISA), (vii) all contributions
or other amounts payable by Northern Illinois or its Subsidiaries
as of the Effective Time with respect to each Northern Illinois
Benefit Plan in respect of current or prior plan years have been
paid or accrued in accordance with GAAP and Section 412 of the
Code, (viii) neither Northern Illinois, its Subsidiaries nor any
ERISA Affiliate has engaged in a transaction in connection with
which Northern Illinois, its Subsidiaries or any ERISA Affiliate
reasonably could be subject to either a material civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a material
tax imposed pursuant to Section 4975 or 4976 of the Code, and (ix)
to the best knowledge of Northern Illinois, there are no pending,
threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Northern Illinois
Benefit Plans or any trusts related thereto which are, in the
reasonable judgment of Northern Illinois, likely, either
individually or in the aggregate, to have a Material Adverse Effect
on Northern Illinois.
3.13 SEC Reports. Northern Illinois has previously made
available to Premier an accurate and complete copy of each (a)
final registration statement, prospectus, report, schedule and
definitive proxy statement filed since January 1, 1994 by Northern
Illinois with the SEC pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act (the "Northern
Illinois Reports") and prior to the date hereof and (b)
communication mailed by Northern Illinois to its stockholders since
January 1, 1994 and prior to the date hereof. None of the Northern
Illinois Reports or such communications to stockholders contained
any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances in
which they were made, not misleading, except that information as of
a later date shall be deemed to modify information as of an earlier
date. Since January 1, 1994, Northern Illinois has timely filed all
Northern Illinois Reports and other documents required to be filed
by it under the Securities Act and the Exchange Act, and, as of
their respective dates, all Northern Illinois Reports complied in
all material respects with the published rules and regulations of
the SEC with respect thereto.
3.14 Compliance with Applicable Law. Northern Illinois
and each of its Subsidiaries hold all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied
with and are not in default under any, applicable laws, statutes,
orders, rules, regulations, policies and/or guidelines of any
Governmental Entity relating to Northern Illinois or any of its
Subsidiaries, except where the failure to hold such license,
franchise, permit or authorization or such noncompliance or default
would not, individually or in the aggregate, have a Material
Adverse Effect on Northern Illinois.
3.15 Certain Contracts. (a) Except as set forth in
Schedule 3.15 of the Northern Illinois Disclosure Schedules,
neither Northern Illinois nor any of its Subsidiaries is a party to
or bound by:
(i) any contract, arrangement, commitment or
understanding (whether written or oral) with respect to the
employment of any directors, officers or employees other than
in the ordinary course of business consistent with past
practice;
(ii) any contract, arrangement, commitment or
understanding (whether written or oral) which, upon the
consummation of the transactions contemplated by this
Agreement will (either alone or upon the occurrence of any
additional acts or events) result in any payment (including,
without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due from Northern
Illinois, Premier, GPF or any of their respective Subsidiaries
to any officer, director or employee thereof;
(iii) any contract, arrangement, commitment or
understanding (whether written or oral) which is a "material
contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of
this Agreement that has not been filed or incorporated by
reference in the Northern Illinois Reports;
(iv) any contract, arrangement, commitment or
understanding (whether written or oral)which materially
restricts the conduct of any line of business by Northern
Illinois;
(v) any contract, arrangement, commitment or
understanding (whether written or oral) with a labor union or
guild (including any collective bargaining agreement); or
(vi) any contract, arrangement, commitment or
understanding (whether written or oral), including any stock
option plan, stock appreciation rights plan, restricted stock
plan or stock purchase plan, any of the benefits of which will
be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the
benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
Northern Illinois has previously made available to Premier true and
correct copies of all employment and deferred compensation
agreements which are in writing and to which Northern Illinois is
a party. Each contract, arrangement, commitment or understanding
of the type described in this Section 3.15(a), whether or not set
forth in the Northern Illinois Disclosure Schedules, is referred to
herein as a "Northern Illinois Contract", and neither Northern
Illinois nor any of its Subsidiaries knows of, or has received
notice of, any violation of the above by any of the other parties
thereto, which, individually or in the aggregate, would have a
Material Adverse Effect on Northern Illinois or GPF.
(b) (i) Each Northern Illinois Contract is valid and binding
on Northern Illinois or any of its Subsidiaries, as applicable, and
is in full force and effect, (ii) Northern Illinois and each of its
Subsidiaries has performed all obligations required to be performed
by it to date under each Northern Illinois Contract, except where
such noncompliance, individually or in the aggregate, would not
have a Material Adverse Effect on Northern Illinois, and (iii) no
event or condition exists which constitutes or, after notice or
lapse of time or both, would constitute, a default on the part of
Northern Illinois or any of its Subsidiaries under any such
Northern Illinois Contract, except where any such default,
individually or in the aggregate, would not have a Material Adverse
Effect on Northern Illinois or GPF.
3.16 Agreements with Regulatory Agencies. Neither
Northern Illinois nor any of its Subsidiaries is subject to any
cease-and-desist or other order issued by, or is a party to any
written agreement, consent 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 has been since
January 1, 1994, a recipient of any supervisory letter from, or
since January 1, 1994, has adopted any board resolutions at the
request of any Regulatory Agency or other Governmental Entity that
currently restricts the conduct of its business or that relates to
its capital adequacy, its credit policies, its management or its
business (each, whether or not set forth in the Northern Illinois
Disclosure Schedules, a "Northern Illinois Regulatory Agreement"),
nor has Northern Illinois or any of its Subsidiaries been advised
since January 1, 1994, by any Regulatory Agency or other
Governmental Entity that it is considering issuing or requesting
any such Northern Illinois Regulatory Agreement.
3.17 Other Activities of Northern Illinois and its
Subsidiaries.
(a) Neither Northern Illinois nor any of its
Subsidiaries that is neither a bank, a bank operating subsidiary or
a bank service corporation directly or indirectly engages in any
activity prohibited by the Federal Reserve Board. Without limiting
the generality of the foregoing, no equity investment of Northern
Illinois and each Northern Illinois Subsidiary that is not a bank,
bank operating subsidiary or a bank service corporation is
prohibited by the Federal Reserve Board.
(b) Each Northern Illinois Subsidiary that engages in
personal trust, corporate trust and other fiduciary activities
("Trust Activities") engages in such Trust Activities with
requisite authority under the applicable law of Governmental
Entities and in accordance in all material respects with the terms
of the agreements and instruments governing such Trust Activities
and applicable law and regulation (specifically including, but not
limited to, applicable law governing such Northern Illinois
Subsidiary's performance of its fiduciary obligations and Section
9 of Title 12 of the Code of Federal Regulations); there is no
investigation or inquiry by any Governmental Entity pending, or to
the best knowledge of Northern Illinois, threatened, against or
affecting Northern Illinois or any Northern Illinois Subsidiary
relating to the compliance by Northern Illinois or any Northern
Illinois Subsidiary with sound fiduciary principles and applicable
regulations; and except where any such failure would not have a
Material Adverse Effect on Northern Illinois, each employee of a
Northern Illinois Subsidiary had the authority to act in the
capacity in which he or she acted with respect to Trust Activities,
in each case, in which such employee held himself or herself out as
a representative of a Northern Illinois Subsidiary; and each
Northern Illinois Subsidiary has established policies and
procedures for the purpose of complying with applicable laws of
Governmental Entities relating to Trust Activities, has followed
such policies and procedures in all material respects and has
performed appropriate internal audit reviews of, and has engaged
independent accountants to perform audits of, Trust Activities,
which audits since January 1, 1994 have disclosed no material
violations of applicable laws of Governmental Entities or such
policies and procedures.
3.18 Investment Securities. Each of Northern Illinois
and its Subsidiaries has good and marketable title to all
securities held by it (except securities sold under repurchase
agreements or held in any fiduciary or agency capacity), free and
clear of any Lien, except to the extent such securities are pledged
in the ordinary course of business consistent with prudent banking
practices to secure obligations of Northern Illinois or any of the
Northern Illinois Subsidiaries. Such securities are valued on the
books of Northern Illinois and the Northern Illinois Subsidiaries
in accordance with GAAP.
3.19 Undisclosed Liabilities. Except for those
liabilities that are fully reflected or reserved against on the
consolidated balance sheet of Northern Illinois included in the
Northern Illinois Third-Quarter 10-Q and for liabilities incurred
in the ordinary course of business consistent with past practice,
since September 30, 1995 neither Northern Illinois nor any of the
Northern Illinois Subsidiaries has incurred any liability of any
nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that, either alone or
when combined with all similar liabilities, has had, or could
reasonably be expected to have, a Material Adverse Effect on
Northern Illinois.
3.20 Environmental Liability. There are no legal,
administrative, arbitration or other proceedings, claims, actions,
causes of action, private environmental investigations or
remediation activities or governmental investigations of any nature
pending or, to the best of Northern Illinois' knowledge, threatened
against Northern Illinois seeking to impose, or that could
reasonably result in the imposition, on Northern Illinois of any
liability or obligation arising under common law or under any
local, state or federal environmental statute, regulation or
ordinance including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"). To the best of Northern Illinois' knowledge,
there is no reasonable basis for any such proceeding, claim, action
or governmental investigation that would impose any such liability
or obligation. Northern Illinois is not subject to any agreement,
order, judgment, decree, letter or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing
any such liability or obligation.
3.21 Insurance. Schedule 3.21 in the Northern Illinois
Disclosure Schedules describes all policies of insurance in which
Northern Illinois or any of the Northern Illinois Subsidiaries is
named as an insured party or which otherwise relate to or cover any
assets or properties of Northern Illinois or any of the Northern
Illinois Subsidiaries. Each of such policies is in full force and
effect, and the coverage provided under such properties complies
with the requirements of any contracts binding on Northern Illinois
or any of the Northern Illinois Subsidiaries relating to such
assets or properties.
3.22 Loan Loss Reserves. Except as set forth in Schedule
3.22, the reserve for possible loan losses shown on the September
30, 1995 call reports filed for each of the Northern Illinois
Subsidiaries is adequate in all material respects under the
requirements of GAAP to provide for possible losses, net of
recoveries relating to loans previously charged off, on loans
outstanding (including accrued interest receivable) as of September
30, 1995. The aggregate loan balances of each of the Northern
Illinois Subsidiaries at such date in excess of such reserves are,
to the best knowledge and belief of Northern Illinois, collectible
in accordance with their terms.
3.23 Approval Delays. Northern Illinois knows of no
reason why any of the Requisite Regulatory Approvals (as defined in
Section 7.1(c)) should be denied or unduly delayed.
3.24 Pooling of Interests. As of the date of this
Agreement, Northern Illinois has no reason to believe that the
Merger will not qualify as a "pooling of interests" for accounting
purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PREMIER
Except as disclosed in the Premier disclosure schedules
delivered to Northern Illinois concurrently herewith (the "Premier
Disclosure Schedules"), Premier hereby represents and warrants to
Northern Illinois as follows:
4.1 Corporate Organization. (a) Premier is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Premier has the corporate
power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or
the character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not
have a Material Adverse Effect on Premier. Premier is duly
registered as a bank holding company under the BHC Act. True and
complete copies of the Restated Certificate of Incorporation and
By-Laws of Premier, as in effect as of the date of this Agreement,
have previously been made available by Premier to Northern
Illinois.
(b) As of the date of this Agreement, Premier, has as
its sole direct or indirect Subsidiaries, First Bank North, an
Illinois state bank, First Bank South, an Illinois state bank,
First National Bank of Northbrook, a national banking association,
First Security Bank of Cary Grove, an Illinois state bank, Premier
Acquisition Company, a Delaware corporation and an intermediate
holding company for First National Bank of Northbrook and First
Security Bank of Cary Grove, Premier Operating Systems, Inc., an
Illinois corporation, Premier Trust Services, Inc., an Illinois
trust company, and Premier Insurance Services, Inc., an Illinois
corporation (the "Premier Subsidiaries"). Premier does not own,
directly or indirectly, any voting stock or equity securities of
any bank, corporation, partnership, limited liability company, or
other organization, whether incorporated or unincorporated, other
than the Premier Subsidiaries.
(c) Each Premier Subsidiary (i) is duly organized and
validly existing as a bank, trust company or corporation under the
laws of its jurisdiction of organization, (ii) is duly qualified to
do business and in good standing in all jurisdictions (whether
federal, state, local or foreign) where its ownership or leasing of
property or the conduct of its business requires it to be so
qualified and in which the failure to be so qualified would have a
Material Adverse Effect on Premier, and (iii) has all requisite
corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted. None of the
Premier Subsidiaries owns any voting stock or equity securities of
any bank, corporation, partnership, limited liability company, or
other organization, whether incorporated or unincorporated, except
that First Bank North owns all of the issued and outstanding
capital stock of Premier Trust Services, Inc.
(d) The minute books of Premier and of each of the
Premier Subsidiaries accurately reflect in all material respects
all corporate meetings held or actions taken since January 1, 1994
of the stockholders and Boards of Directors of Premier and each
Premier Subsidiary, respectively, (including committees of the
Boards of Directors of Premier and the Premier Subsidiaries).
4.2 Capitalization. (a) The authorized capital stock of
Premier consists of 15,000,000 shares of Premier Common Stock, of
which, as of December 31, 1995, 6,544,347 shares were issued and
outstanding, and 1,000,000 shares of Preferred Stock, par value
$1.00 per share (the "Premier Preferred Stock", of which (i) 7,000
shares were designated and 5,000 shares were issued and outstanding
as Premier Series A Perpetual Preferred Stock, (ii) 7,250 shares
were designated and issued and outstanding as Premier Series B
Perpetual Preferred Stock, and (iii) 2,000 shares were designated
and issued and outstanding as Premier Series D Perpetual Preferred
Stock. During the fiscal year ended December 31, 1994, (i) Premier
redeemed all 1,950 shares of Premier Series C Perpetual Preferred
Stock, with a par value of $1.00 and a stated value of $1,000 per
share, that had previously been authorized and issued, and such
shares reverted to authorized but unissued shares of Premier
Preferred Stock in accordance with the terms of the Certificate of
Designation establishing the Premier Series C Perpetual Preferred
Stock, and (ii) 1,300 shares of Premier Series D Perpetual
Preferred Stock were converted into 1,300 shares of Premier Series
B Perpetual Perpetual Preferred Stock and such 1,300 shares of
Series D Perpetual Preferred Stock reverted to authorized but
unissued shares of Premier Preferred Stock, in accordance with the
terms and conditions of the Certificate of Designation establishing
the Premier Series D Perpetual Preferred Stock. As of December 31,
1995, no shares of Premier Common Stock were held in treasury. On
December 31, 1995, no shares of Premier Common Stock or Premier
Preferred Stock were reserved for issuance, except for (i) 397,799
shares of Premier Common Stock reserved for issuance upon the
exercise of stock options pursuant to the Premier Stock Plans, (ii)
763,157 shares of Premier Common Stock reserved for issuance upon
the conversion of the Series B Perpetual Preferred Stock, (iii) the
shares of Premier Common Stock issuable pursuant to the Premier
Option Agreement, and (iv) 200,000 shares of Premier Common Stock
reserved for issuance pursuant to the Premier Benefit plans, other
than the stock option plans. All of the issued and outstanding
shares of Premier Common Stock and Premier Preferred Stock have
been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date of
this Agreement, except for the Premier Option Agreement, certain
provisions of the Certificates of Designation of the Premier Series
B Perpetual Preferred Stock and the Premier Series D Perpetual
Preferred Stock, and the Premier Stock Plans, Premier does not have
and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling
for the purchase or issuance of any shares of Premier Common Stock
or Premier Preferred Stock or any other equity securities of
Premier or any securities representing the right to purchase or
otherwise receive any shares of Premier Common Stock or Premier
Preferred Stock. Assuming compliance by Northern Illinois and GPF
with Article I of this Agreement, after the Effective Time, there
will not be any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character by which Premier
or any of the Premier Subsidiaries will be bound calling for the
purchase or issuance of any shares of the capital stock of Premier.
Premier has previously provided Northern Illinois with a list of
the option holders, the date of each option to purchase Premier
Common Stock granted, the number of shares subject to each such
option, the expiration date of each such option, and the price at
which each such option may be exercised under an applicable Premier
Stock Plan. Since September 30, 1995, Premier has not issued any
shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, other than
pursuant to the exercise of employee stock options granted prior to
such date.
(b) Premier owns, directly or indirectly, all of the
issued and outstanding shares of capital stock of each of the
Premier Subsidiaries, free and clear of any Liens, except that 100%
of the capital stock of Premier Acquisition Company, First Bank
North, First Bank South, First National Bank of Northbrook and
First Security Bank of Cary Grove have been pledged to Firstar
Bank-Milwaukee to secure Premier's obligations under a $15 million
revolving credit facility maturing in January, 1999. All of the
shares of capital stock of each of the Premier Subsidiaries are
duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. No Premier
Subsidiary has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of
capital stock or any other equity security of such Premier
Subsidiary or any securities representing the right to purchase or
otherwise receive any shares of capital stock or any other equity
security of such Premier Subsidiary.
4.3 Certain Beneficial Owners of Premier Common Stock
and Northern Illinois Common Stock. Schedule 4.3 of the Premier
Disclosure Schedules sets forth the name and the number of shares
of Premier Common Stock and the percentage of the outstanding
shares of Premier Common Stock beneficially owned by any
individual, entity or group, including any "person" within the
meaning of Sections 13(d)(3) or 14(d)(2) of the Exchange Act, known
to Premier to be the beneficial owner, alone or together with such
person's affiliates or associates (as such terms are defined in
Rule 12b-2 under the Exchange Act), of 10% or more of the
outstanding shares of Premier Common Stock as of the date of this
Agreement. To the best knowledge of Premier, no person listed on
Schedule 4.3 beneficially owns any shares of Northern Illinois
Common Stock as of the date of this Agreement.
4.4 Authority; No Violation. (a) Premier has full
corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Premier. The Board of
Directors of Premier has directed that this Agreement and the
transactions contemplated hereby be submitted to Premier's
shareholders for approval at a meeting of such shareholders and,
except for the adoption of this Agreement by the affirmative vote
of the holders of a majority of the outstanding shares of Premier
Common Stock, no other corporate proceedings on the part of Premier
are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Premier and (assuming due
authorization, execution and delivery by Northern Illinois and GPF)
constitutes a valid and binding obligation of Premier, enforceable
against Premier in accordance with its terms.
(b) Neither the execution and delivery of this Agreement
by Premier nor the consummation by Premier of the transactions
contemplated hereby, nor compliance by Premier with any of the
terms or provisions hereof, will (i) violate any provision of the
Restated Certificate of Incorporation or By-Laws of Premier, or
(ii) assuming that the consents and approvals referred to in
Section 4.5 are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Premier or any of the Premier Subsidiaries
or any of their respective properties or assets, or (y) violate,
conflict with, result in a breach of any provision of or the loss
of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or
cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective
properties or assets of Premier or any of the Premier Subsidiaries
under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which Premier or any of the
Premier Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected, except
(in the case of clause (y) above) for such violations, conflicts,
breaches or defaults which, either individually or in the
aggregate, will not have or be reasonably likely to have a Material
Adverse Effect on Premier or GPF.
4.5 Consents and Approvals. Except as set forth in
Schedule 4.5, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third party
are necessary in connection with the execution and delivery by
Premier of this Agreement and the consummation by Premier of the
Merger and the other transactions contemplated hereby except for
(a) the filing by GPF of applications and notices, as applicable,
with the Federal Reserve Board under the BHC Act and approval of
such applications and notices, (b) the filing of any required
applications or notices with any state or foreign agencies and the
approval of such applications and notices, (c) the filing with the
SEC of the Joint Proxy Statement and the S-4 in which such Joint
Proxy Statement will be included as a prospectus, (d) the filing of
an 8-A registering the GPF Common Stock under Section 12(g) of the
Exchange Act, (e) the filing of a certificate of merger with the
Delaware Secretary pursuant to the DGCL and the filing of articles
of merger with, and the issuance of a certificate of merger by, the
Illinois Secretary under the IBCA, (f) the filing of a consent to
service of process, an appointment of the Illinois Secretary as
agent for service of process, and an agreement with respect to the
Dissenting Shares required to be filed by GPF with the Illinois
Secretary pursuant to Section 11.35 of the IBCA, (g) such filings
and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with
the issuance of the shares of GPF Common Stock and GPF Preferred
Stock pursuant to this Agreement, (h) the approval of an
application to list the GPF Common Stock on The Nasdaq Stock
Market's National Market, subject to official notice of issuance,
and (i) the approval of this Agreement by the requisite vote of the
stockholders of Northern Illinois and Premier.
4.6 Reports. Premier and each of the Premier
Subsidiaries have timely filed all reports, registrations and
statements, together with any amendments required to be made with
respect thereto, that they were required to file since January 1,
1994 with the Regulatory Agencies, and all other reports and
statements required to be filed by them since January 1, 1994,
including, without limitation, any report or statement required to
be filed pursuant to the laws, rules or regulations of the United
States, any state, or any Regulatory Agency, and have paid all fees
and assessments due and payable in connection therewith, except
where the failure to file such report, registration or statement or
to pay such fees and assessments, either individually or in the
aggregate, will not have a Material Adverse Effect on Premier.
Except for normal examinations conducted by a Regulatory Agency in
the regular course of the business of Premier or the Premier
Subsidiaries, no Regulatory Agency has initiated any proceeding or,
to the best knowledge of Premier, investigation into the business
or operations of Premier or any of the Premier Subsidiaries since
January 1, 1994. There is no unresolved written violation, written
criticism, or written exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of
Premier or any of the Premier Subsidiaries, which is likely, either
individually or in the aggregate, to have a Material Adverse Effect
on Premier or GPF.
4.7 Financial Statements. Premier has previously made
available to Northern Illinois copies of (a) the consolidated
balance sheets of Premier and its Subsidiaries as of December 31,
1993 and 1994 and the related consolidated statements of income,
changes in stockholders' equity and cash flows for the fiscal years
ended December 31, 1992, 1993 and 1994, inclusive, as reported in
Premier's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 filed with the SEC under the Exchange Act, in
each case accompanied by the audit report of KPMG Peat Marwick LLP,
independent public accountants with respect to Premier, and (b) the
unaudited consolidated balance sheet of Premier and its
Subsidiaries as of September 30, 1995 and September 30, 1994 and
the related unaudited consolidated statements of income, cash flows
and changes in stockholders' equity for the three- and nine-month
periods then ended as reported in Premier's Quarterly Report on
Form 10-Q for the period ended September 30, 1995 filed with the
SEC under the Exchange Act (the "Premier Third Quarter 10-Q"). The
December 31, 1994 consolidated balance sheet of Premier (including
the related notes, where applicable) fairly presents the
consolidated financial position of Premier and its Subsidiaries as
of the date thereof, and the other financial statements referred to
in this Section 4.7 (including the related notes, where applicable)
fairly present the results of the consolidated operations and
changes in stockholders' equity and consolidated financial position
of Premier and its Subsidiaries for the respective fiscal periods
or as of the respective dates therein set forth, subject, in the
case of the unaudited statements, to recurring audit adjustments
normal in nature and amount; each of such statements (including the
related notes, where applicable) comply in all material respects
with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto; and each of
such statements (including the related notes, where applicable) has
been prepared in all material respects in accordance with GAAP
consistently applied during the periods involved, except, in each
case, as indicated in such statements or in the notes thereto or,
in the case of unaudited statements, as permitted by Form 10-Q.
The books and records of Premier and its Subsidiaries have been,
and are being, maintained in all material respects in accordance
with GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions.
4.8 Broker's Fees. Except as set forth in Schedule 4.8,
neither Premier nor any Premier Subsidiary nor any of their
respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or
finder's fees in connection with the Merger or related transactions
contemplated by this Agreement or the Option Agreements.
4.9 Absence of Certain Changes or Events. (a) Except
as publicly disclosed in Premier Reports (as defined in Section
4.13) filed prior to the date hereof, since September 30, 1995, (i)
Premier and its Subsidiaries taken as a whole have not incurred any
material liability, except in the ordinary course of their
business, and (ii) no event has occurred which has had,
individually or in the aggregate, a Material Adverse Effect on
Premier or will have a Material Adverse Effect on GPF.
(b) Except as publicly disclosed in the Premier Reports
filed prior to the date hereof, since September 30, 1995, Premier
and its Subsidiaries have carried on their respective businesses in
all material respects in the ordinary and usual course.
(c) Since December 31, 1994, neither Premier nor any of
its Subsidiaries has (i) except as set forth in Schedule 4.9 and
except for such actions as are in the ordinary course of business
consistent with past practice or required by applicable law, (A)
increased the wages, salaries, compensation, pension, or other
fringe benefits or perquisites payable to any executive officer,
employee, or director from the amount thereof in effect as of
December 31, 1994, or (B) granted any severance or termination pay,
entered into any contract to make or grant any severance or
termination pay, or paid any bonuses, other than customary year-end
bonuses for the 1994 and 1995 fiscal years which did not exceed, in
the aggregate, 5% of Premier's 1994 salary and employee benefits,
or (ii) suffered any strike, work stoppage, slowdown, or other
labor disturbance.
4.10 Legal Proceedings. (a) Except as set forth in
Schedule 4.10, there are no pending or, to the best of Premier's
knowledge, threatened, legal, administrative, arbitration or other
proceedings, claims, actions or governmental or regulatory
investigations of any nature against Premier or any of the Premier
Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement or the Premier Option
Agreement.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction (other than those that apply to similarly
situated bank holding companies or banks) imposed upon Premier, any
of the Premier Subsidiaries or the assets of Premier or any of the
Premier Subsidiaries.
4.11 Taxes and Tax Returns. (a) Each of Premier and its
Subsidiaries has duly filed all federal, state, county, foreign
and, to the best of Premier's knowledge, local information returns
and tax returns required to be filed by it on or prior to the date
hereof (all such returns being accurate and complete in all
material respects) and has duly paid or made provisions for the
payment of all Taxes and other governmental charges which have been
incurred or are due or claimed to be due from it by federal, state,
county, foreign or local taxing authorities on or prior to the date
of this Agreement (including, without limitation, if and to the
extent applicable, those due in respect of its properties, income,
business, capital stock, deposits, franchises, licenses, sales and
payrolls) other than Taxes or other charges which are not yet
delinquent or are being contested in good faith and have not been
finally determined. The income tax returns of Premier and its
Subsidiaries have been examined by the IRS and any liability with
respect thereto has been satisfied for all years to and including
1987, and either no material deficiencies were asserted as a result
of such examination for which Premier does not have adequate
reserves or all such deficiencies were satisfied. There are no
material disputes pending, or claims asserted for, Taxes or
assessments upon Premier or any of its Subsidiaries for which
Premier does not have adequate reserves, nor has Premier or any of
its Subsidiaries given any currently effective waivers extending
the statutory period of limitation applicable to any federal,
state, county or local income tax return for any period. In
addition, (A) proper and accurate amounts have been withheld by
Premier and its Subsidiaries from their employees for all prior
periods in compliance in all material respects with the tax
withholding provisions of applicable federal, state and local laws,
except where failure to do so would not have a Material Adverse
Effect on Premier, (B) federal, state, county and local returns
which are accurate and complete in all material respects have been
filed by Premier and its Subsidiaries for all periods for which
returns were due with respect to income tax withholding, Social
Security and unemployment taxes, (C) the amounts shown on such
federal, state, local or county returns to be due and payable have
been paid in full or adequate provision therefor has been included
by Premier in its consolidated financial statements as of December
31, 1994, and (D) there are no Tax liens upon any property or
assets of Premier or its Subsidiaries except liens for current
taxes not yet due. Neither Premier nor any of its Subsidiaries has
been required to include in income any adjustment pursuant to
Section 481 of the Code by reason of a voluntary change in
accounting method initiated by Premier or any of its Subsidiaries,
and the IRS has not initiated or proposed any such adjustment or
change in accounting method. Except as set forth in the financial
statements described in Section 4.7, neither Premier nor any of its
Subsidiaries has entered into a transaction which is being
accounted for as an installment obligation under Section 453 of the
Code.
4.12 Employees. (a) Schedule 4.12 in the Premier
Disclosure Schedules sets forth a true and complete list of each
employee benefit plan, arrangement, commitment, agreement or
understanding that is maintained as of the date of this Agreement
(the "Premier Benefit Plans") (i) by Premier or any of its
Subsidiaries or (ii) by any trade or business, whether or not
incorporated, which (A) is under "common control," as described in
Section 414(c) of the Code, with Premier, or (B) is a member of a
"controlled group," as defined in Section 414(c) of the Code, which
includes Premier (a "Premier ERISA Affiliate"), all of which
together with Premier would be deemed a "single employer" within
the meaning of Section 4001 of ERISA.
(b) Premier has heretofore delivered to Northern
Illinois true and complete copies of each of the Premier Benefit
Plans and certain related documents, including, but not limited to,
(i) the actuarial report for such Premier Benefit Plan (if
applicable) for each of the last two years, and (ii) the most
recent determination letter from the IRS (if applicable) for such
Premier Benefit Plan.
(c) (i) Each of the Premier Benefit Plans has been
operated and administered in all material respects with applicable
laws, including, but not limited to, ERISA and the Code, (ii) each
of the Premier Benefit Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified, (iii) with
respect to each Premier Benefit Plan which is subject to Title IV
of ERISA, the present value of accrued benefits under such Premier
Benefit Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such
Premier Benefit Plan's actuary with respect to such Premier Benefit
Plan, did not, as of its latest valuation date, exceed the then
current value of the assets of such Premier Benefit Plan allocable
to such accrued benefits, (iv) except as set forth in Schedule
4.12, no Premier Benefit Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured),
with respect to current or former employees of Premier, its
Subsidiaries or any ERISA Affiliate beyond their retirement or
other termination of service, other than (A) coverage mandated by
applicable law, (B) death benefits or retirement benefits under any
"employee pension plan" (as such term is defined in Section 3(2) of
ERISA), (C) deferred compensation benefits accrued as liabilities
on the books of Premier, its Subsidiaries or the ERISA Affiliates,
or (D) benefits the full cost of which is borne by the current or
former employee (or his beneficiary), (v) no material liability
under Title IV of ERISA has been incurred by Premier, its
Subsidiaries or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to
Premier, its Subsidiaries or any ERISA Affiliate of incurring a
material liability thereunder, (vi) no Premier Benefit Plan is a
"multiemployer pension plan" (as such term is defined in Section
3(37) of ERISA), (vii) all contributions or other amounts payable
by Premier or its Subsidiaries as of the Effective Time with
respect to each Premier Benefit Plan in respect of current or prior
plan years have been paid or accrued in accordance with GAAP and
Section 412 of the Code, (viii) neither Premier, its Subsidiaries
nor any ERISA Affiliate has engaged in a transaction in connection
with which Premier, its Subsidiaries or any ERISA Affiliate
reasonably could be subject to either a material civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a material
tax imposed pursuant to Section 4975 or 4976 of the Code, and (ix)
to the best knowledge of Premier, there are no pending, threatened
or anticipated claims (other than routine claims for benefits) by,
on behalf of or against any of the Premier Benefit Plans or any
trusts related thereto which are, in the reasonable judgment of
Premier, likely, either individually or in the aggregate, to have
a Material Adverse Effect on Premier.
4.13 SEC Reports. Premier has previously made available
to Northern Illinois an accurate and complete copy of each (a)
final registration statement, prospectus, report, schedule and
definitive proxy statement filed since January 1, 1994 by Premier
with the SEC pursuant to the Securities Act or the Exchange Act
(the "Premier Reports") and prior to the date hereof and (b)
communication mailed by Premier to its stockholders since January
1, 1994 and prior to the date hereof. None of the Premier Reports
or such communications to stockholders contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they
were made, not misleading, except that information as of a later
date shall be deemed to modify information as of an earlier date.
Since January 1, 1994, Premier has timely filed all Premier Reports
and other documents required to be filed by it under the Securities
Act and the Exchange Act, and, as of their respective dates, all
Premier Reports complied in all material respects with the
published rules and regulations of the SEC with respect thereto.
4.14 Compliance with Applicable Law. Premier and each of
its Subsidiaries hold all licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and have complied with and
are not in default under any, applicable laws, statutes, orders,
rules, regulations, policies and/or guidelines of any Governmental
Entity relating to Premier or any of its Subsidiaries, except where
the failure to hold such license, franchise, permit or
authorization or such noncompliance or default would not,
individually or in the aggregate, have a Material Adverse Effect on
Premier.
4.15 Certain Contracts. (a) Except as set forth in
Schedule 4.15 of the Premier Disclosure Schedules, neither Premier
nor any of its Subsidiaries is a party to or bound by:
(i) any contract, arrangement, commitment or
understanding (whether written or oral) with respect to the
employment of any directors, officers or employees other than
in the ordinary course of business consistent with past
practice;
(ii) any contract, arrangement, commitment or
understanding (whether written or oral) which, upon the
consummation of the transactions contemplated by this
Agreement will (either alone or upon the occurrence of any
additional acts or events) result in any payment (including,
without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due from Premier,
Northern Illinois, GPF, or any of their respective
Subsidiaries to any officer, director or employee thereof;
(iii) any contract, arrangement, commitment or
understanding (whether written or oral) which is a "material
contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of
this Agreement that has not been filed or incorporated by
reference in the Premier Reports;
(iv) any contract, arrangement, commitment or
understanding (whether written or oral) which materially
restricts the conduct of any line of business by Premier;
(v) any contract, arrangement, commitment or
understanding (whether written or oral) with a labor union or
guild (including any collective bargaining agreement); or
(vi) any contract, arrangement, commitment or
understanding (whether written or oral), including any stock
option plan, stock appreciation rights plan, restricted stock
plan or stock purchase plan, any of the benefits of which will
be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the
benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
Premier has previously made available to Northern Illinois true and
correct copies of all employment and deferred compensation
agreements which are in writing and to which Premier is a party.
Each contract, arrangement, commitment or understanding of the type
described in this Section 4.15(a), whether or not set forth in the
Premier Disclosure Schedules, is referred to herein as a "Premier
Contract", and neither Premier nor any of its Subsidiaries knows
of, or has received notice of, any violation of the above by any of
the other parties thereto which, individually or in the aggregate,
would have a Material Adverse Effect on Premier or GPF.
(b) (i) Each Premier Contract is valid and binding on
Premier or any of its Subsidiaries, as applicable, and is in full
force and effect, (ii) Premier and each of its Subsidiaries has
performed all obligations required to be performed by it to date
under each Premier Contract, except where such noncompliance,
individually or in the aggregate, would not have a Material Adverse
Effect on Premier, and (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, would
constitute, a default on the part of Premier or any of its
Subsidiaries under any such Premier Contract, except where any such
default, individually or in the aggregate, would not have a
Material Adverse Effect on Premier or GPF.
4.16 Agreements with Regulatory Agencies. Neither
Premier nor any of its Subsidiaries is subject to any cease-and-
desist or other order issued by, or is a party to any written
agreement, consent 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 has been since
January 1, 1994, a recipient of any supervisory letter from, or
since January 1, 1994, has adopted any board resolutions at the
request of any Regulatory Agency or other Governmental Entity that
currently restricts the conduct of its business or that relates to
its capital adequacy, its credit policies, its management or its
business (each, whether or not set forth in the Premier Disclosure
Schedules, a "Premier Regulatory Agreement"), nor has Premier or
any of its Subsidiaries been advised since January 1, 1994, by any
Regulatory Agency or other Governmental Entity that it is
considering issuing or requesting any such Premier Regulatory
Agreement.
4.17 Other Activities of Premier and its Subsidiaries.
(a) Neither Premier nor any of its Subsidiaries that is
neither a bank, a bank operating subsidiary or a bank service
corporation directly or indirectly engages in any activity
prohibited by the Federal Reserve Board. Without limiting the
generality of the foregoing, no equity investment of Premier and
each Premier Subsidiary that is not a bank, a bank operating
subsidiary or a bank service corporation is prohibited by the
Federal Reserve Board.
(b) Each Premier Subsidiary that engages in Trust
Activities engages in such Trust Activities with requisite
authority under the applicable law of Governmental Entities and in
accordance in all material respects with the terms of the
agreements and instruments governing such Trust Activities and
applicable law and regulation, including applicable law governing
such Premier Subsidiary's performance of its fiduciary obligations;
there is no investigation or inquiry by any Governmental Entity
pending, or to the best knowledge of Premier, threatened, against
or affecting Premier or any Premier Subsidiary relating to the
compliance by Premier or any Premier Subsidiary with sound
fiduciary principles and applicable regulations; and except where
any such failure would not have a Material Adverse Effect on
Premier, each employee of a Premier Subsidiary had the authority to
act in the capacity in which he or she acted with respect to Trust
Activities, in each case, in which such employee held himself or
herself out as a representative of a Premier Subsidiary; and each
Premier Subsidiary has established policies and procedures for the
purpose of complying with applicable laws of Governmental Entities
relating to Trust Activities, has followed such policies and
procedures in all material respects and has performed appropriate
internal audit reviews of, and has engaged independent accountants
to perform audits of, Trust Activities, which audits since January
1, 1994 have disclosed no material violations of applicable laws of
Governmental Entities or such policies and procedures.
4.18 Investment Securities. Each of Premier and its
Subsidiaries has good and marketable title to all securities held
by it (except securities sold under repurchase agreements or held
in any fiduciary or agency capacity), free and clear of any Lien,
except to the extent such securities are pledged in the ordinary
course of business consistent with prudent banking practices to
secure obligations of Premier or any of the Premier Subsidiaries.
Such securities are valued on the books of Premier and the Premier
Subsidiaries in accordance with GAAP.
4.19 Undisclosed Liabilities. Except for those
liabilities that are fully reflected or reserved against on the
consolidated balance sheet of Premier included in the Premier
Third-Quarter 10-Q and for liabilities incurred in the ordinary
course of business consistent with past practice, since September
30, 1995 neither Premier nor any of the Premier Subsidiaries has
incurred any liability of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether due or to become due)
that, either alone or when combined with all similar liabilities,
has had, or could reasonably be expected to have, a Material
Adverse Effect on Premier.
4.20 Environmental Liability. There are no legal,
administrative, arbitration or other proceedings, claims, actions,
causes of action, private environmental investigations or
remediation activities or governmental investigations of any nature
pending or, to the best of Premier's knowledge, threatened against
Premier seeking to impose, or that could reasonably result in the
imposition, on Premier of any liability or obligation arising under
common law or under any local, state or federal environmental
statute, regulation or ordinance including, without limitation,
CERCLA. To the best of Premier's knowledge, there is no reasonable
basis for any such proceeding, claim, action or governmental
investigation that would impose any such liability or obligation.
Premier is not subject to any agreement, order, judgment, decree,
letter or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any such liability or
obligation.
4.21 Insurance. Schedule 4.21 in the Premier Disclosure
Schedules describes all policies of insurance in which Premier or
any of the Premier Subsidiaries is named as an insured party or
which otherwise relate to or cover any assets or properties of
Premier or any of the Premier Subsidiaries. Each of such policies
is in full force and effect, and the coverage provided under such
properties complies with the requirements of any contracts binding
on Premier or any of the Premier Subsidiaries relating to such
assets or properties.
4.22 Loan Loss Reserves. The reserve for possible loan
losses shown on the September 30, 1995 call reports filed for each
of the Premier Subsidiaries which is a Subsidiary bank is adequate
in all material respects under the requirements of GAAP to provide
for possible losses, net of recoveries relating to loans previously
charged off, on loans outstanding (including accrued interest
receivable) as of September 30, 1995. The aggregate loan balances
at such date in excess of such reserves of each of the Premier
Subsidiaries which is a bank Subsidiary are, to the best knowledge
and belief of Premier, collectible in accordance with their terms.
4.23 Approval Delays. Premier knows of no reason why any
of the Requisite Regulatory Approvals (as defined in Section
7.1(c)) should be denied or unduly delayed.
4.24 State Takeover Laws. The Board of Directors of
Premier has approved the transactions contemplated by this
Agreement and the Option Agreements such that the provisions of
Section 203 of the DGCL will not apply to this Agreement or the
Option Agreements or any of the transactions contemplated hereby or
thereby.
4.25 Pooling of Interests. As of the date of this
Agreement, Premier has no reason to believe that the Merger will
not qualify as a "pooling of interests" for accounting purposes.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time.
During the period from the date of this Agreement to the Effective
Time, except as expressly contemplated or permitted by this
Agreement (including the Premier Disclosure Schedules and the
Northern Illinois Disclosure Schedules) or the Option Agreements,
each of Premier and Northern Illinois shall, and shall cause each
of their respective Subsidiaries to, (a) conduct its business in
the usual, regular and ordinary course consistent with past
practice, (b) use reasonable efforts to maintain and preserve
intact its business organization, employees and advantageous
business relationships and retain the services of its key officers
and key employees, and (c) take no action which would adversely
affect or delay the ability of either Premier or Northern Illinois
to obtain any necessary approvals of any Regulatory Agency or other
governmental authority required for the transactions contemplated
hereby or to perform its covenants and agreements under this
Agreement or the Option Agreements.
5.2 Forbearances. During the period from the date of
this Agreement to the Effective Time, except as set forth in the
Premier Disclosure Schedules or the Northern Illinois Disclosure
Schedules, as the case may be, and, except as expressly
contemplated or permitted by this Agreement or the Option
Agreements, neither Premier nor Northern Illinois shall, or shall
permit any of their respective Subsidiaries to, without the prior
written consent of the other:
(a) other than in the ordinary course of business
consistent with past practice, (i) incur any indebtedness for
borrowed money (other than short-term indebtedness incurred in
the ordinary course of business consistent with past practice,
indebtedness of Premier to any of the Premier Subsidiaries or
of any of the Premier Subsidiaries to Premier, or indebtedness
of Northern Illinois to any of the Northern Illinois
Subsidiaries or of any of the Northern Illinois Subsidiaries
to Northern Illinois, it being understood and agreed that
incurrence of indebtedness in the ordinary course of business
shall include, without limitation, the creation of deposit
liabilities, purchases of Federal funds, sales of certificates
of deposit and entering into repurchase agreements), (ii)
assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other
individual, corporation or other entity, or (iii) make any
loan or advance;
(b) (i) adjust, split, combine or reclassify any capital
stock, (ii) make, declare or pay any dividend or make any
other distribution on, or directly or indirectly redeem,
purchase or otherwise acquire, any shares of its capital stock
or any securities or obligations convertible into or
exchangeable for any shares of its capital stock (except, (A)
in the case of Northern Illinois, for regular quarterly cash
dividends for the first three calendar quarters at a rate not
in excess of $0.17 per share, and for the fourth calendar
quarter at a rate not in excess of $0.29 per share, of
Northern Illinois Common Stock, (B) in the case of Premier
Common Stock, for regular quarterly cash dividends on Premier
Common Stock at a rate not in excess of $0.06 per share of
Premier Common Stock, (C) in the case of Premier Preferred
Stock, for regular quarterly cash dividends thereon at the
rates set forth in the applicable certificate of designation
for such securities, and (D) dividends paid by any of the
Subsidiaries of each of Northern Illinois and Premier to
Northern Illinois or Premier or any of their Subsidiaries,
respectively); provided, however, that in the event that the
Effective Time occurs later than July 16, 1996 (the "Series A
Redemption Date"), Premier shall have the right to redeem all
of the shares of Premier Series A Perpetual Preferred Stock
for a redemption price per share equal to the stated value,
per share, of the Series A Perpetual Preferred Stock, together
with all accrued and unpaid dividends due thereon to and
including the Series A Redemption Date, in accordance with the
terms and conditions of the Certificate of Designation
establishing the Premier Series A Perpetual Preferred Stock,
(iii) grant any stock appreciation rights or grant any
individual, corporation or other entity any right to acquire
any shares of its capital stock (except for options to
purchase stock granted in the ordinary course of business
consistent with past practice pursuant to the Premier Stock
Plans) or (iv) issue any additional shares of capital stock
except pursuant to (A) the exercise of stock options or
warrants outstanding as of the date hereof, (B) the conversion
of shares of Premier Series B Perpetual Preferred Stock in
accordance with its terms, or (C) the Option Agreements;
(c) sell, transfer, mortgage, encumber or otherwise
dispose of any of its properties or assets to any individual,
corporation or other entity other than a Subsidiary, or
cancel, release or assign any indebtedness to any such person
or any claims held by any such person, except in the ordinary
course of business consistent with past practice or pursuant
to contracts or agreements in force at the date of this
Agreement;
(d) except for transactions in the ordinary course of
business consistent with past practice or pursuant to
contracts or agreements in force at the date of this
Agreement, make any material investment either by purchase of
stock or securities, contributions to capital, property
transfers, or purchase of any property or assets of any other
individual, corporation or other entity other than a
Subsidiary thereof;
(e) except for transactions in the ordinary course of
business consistent with past practice, enter into or
terminate any material contract or agreement, or make any
change in any of its material leases or contracts, other than
renewals of contracts and leases without material adverse
changes of terms;
(f) other than in the ordinary course of business
consistent with past practice, increase in any manner the
compensation or fringe benefits of any of its employees or pay
any pension or retirement allowance not required by any
existing plan or agreement to any such employees or become a
party to, amend or commit itself to any pension, retirement,
profit-sharing or welfare benefit plan or agreement or
employment agreement with or for the benefit of any employee;
(g) accelerate the vesting of any stock options or other
stock-based compensation, except in accordance with the terms
of an applicable Premier Stock Plan and in a manner consistent
with past practice;
(h) settle any claim, action or proceeding involving
money damages, except in the ordinary course of business
consistent with past practice;
(i) take any action that would prevent or impede the
Merger from qualifying (i) for "pooling of interests"
accounting treatment or (ii) as a reorganization within the
meaning of Section 368 of the Code; provided, however, that
nothing contained herein shall limit the ability of Premier or
Northern Illinois to exercise its rights under the Northern
Illinois Option Agreement or the Premier Option Agreement, as
the case may be;
(j) amend its certificate of incorporation or articles
of incorporation, as the case may be, or its bylaws, except,
in the case of the Northern Illinois Subsidiaries, in
connection with the Northern Illinois Subsidiary Bank Merger;
(k) other than in prior consultation with the other
party to this Agreement, restructure or materially change its
investment securities portfolio or its gap position, through
purchases, sales or otherwise, or the manner in which the
portfolio is classified or reported;
(l) take any action that is intended or may reasonably
be expected to result in any of its representations and
warranties set forth in this Agreement being or becoming
untrue in any material respect at any time prior to the
Effective Time, or in any of the conditions to the Merger set
forth in Article VII not being satisfied or in a violation of
any provision of this Agreement, except, in every case, as may
be required by applicable law; or
(m) agree to, or make any commitment to, take any of the
actions prohibited by this Section 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters; Cooperation with Respect to
Filing. (a) Premier and Northern Illinois shall promptly prepare
and file with the SEC the Joint Proxy Statement, and shall cause
GPF promptly (i) to prepare and file with the SEC the S-4, in which
the Joint Proxy Statement will be included as a prospectus, and the
8-A, and (ii) to prepare and file an application with the Federal
Reserve Board under the BHC Act for approval to consummate the
transactions contemplated by this Agreement. Each of GPF, Premier
and Northern Illinois shall use all reasonable efforts to have the
S-4 and the 8-A declared effective under the Securities Act and the
Exchange Act as promptly as practicable after such filing and to
have the application filed with the Federal Reserve Board approved,
and Premier and Northern Illinois shall mail or deliver the Joint
Proxy Statement to their respective stockholders. Premier and
Northern Illinois shall also cause GPF to use all reasonable
efforts to obtain all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the transactions
contemplated by this Agreement, and Premier and Northern Illinois
shall furnish all information concerning Premier and the holders of
the Premier Common Stock and Premier Preferred Stock, and Northern
Illinois and the holders of the Northern Illinois Common Stock,
respectively, as may be reasonably requested in connection with any
such action.
(b) The parties hereto shall cooperate with each other
and shall each use reasonable efforts to promptly prepare and file
all necessary documentation, to effect all applications, notices,
petitions and filings, to obtain as promptly as practicable all
permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable
to consummate the transactions contemplated by this Agreement
(including, without limitation, the Merger), and to comply with the
terms and conditions of all such permits, consents, approvals and
authorizations of all such Governmental Entities. Premier and
Northern Illinois shall have the right to review in advance, and,
to the extent practicable, each will consult the other on, in each
case subject to applicable laws relating to the exchange of
information, all the information relating to Premier or Northern
Illinois, as the case may be, and any of their respective
Subsidiaries, which appears in any filing made with, or written
materials submitted to, any third party or any Governmental Entity
in connection with the transactions contemplated by this Agreement.
In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties hereto
agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of
all third parties and Governmental Entities necessary or advisable
to consummate the transactions contemplated by this Agreement, and
each party will keep the other apprised of the status of matters
relating to completion of the transactions contemplated herein.
(c) Premier and Northern Illinois shall, upon request,
furnish each other and GPF with all information concerning
themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Joint Proxy Statement, the S-4
or any other statement, filing, notice or application made by or on
behalf of Premier, Northern Illinois or GPF or any of their
respective Subsidiaries to any Governmental Entity in connection
with the Merger and the other transactions contemplated by this
Agreement. Premier covenants and agrees that none of the
information which is furnished by Premier for inclusion, or which
is included, in the S-4, the Joint Proxy Statement or any other
statement, filing, notice or application made by or on behalf of
Premier, Northern Illinois or GPF or any of their respective
Subsidiaries to any Governmental Entity in connection with the
Merger and the other transactions contemplated by this Agreement
will, at the respective times such documents are filed and, in the
case of the S-4, when it becomes effective and, with respect to the
Joint Proxy Statement, when mailed or at the time of the meetings
of the stockholders of Premier and Northern Illinois, be false or
misleading with respect to any material fact or shall omit to state
any material fact necessary in order to make the statements
therein, in light of the circumstances in which they were made, not
misleading. Northern Illinois covenants and agrees that none of
the information which is furnished by Northern Illinois for
inclusion, or which is included, in the S-4, the Joint Proxy
Statement or any other statement, filing, notice or application
made by or on behalf of Premier, Northern Illinois or GPF or any of
their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated
by this Agreement will, at the respective times such documents are
filed and, in the case of the S-4, when it becomes effective and,
with respect to the Joint Proxy Statement, when mailed or at the
time of the meetings of the stockholders of Premier and Northern
Illinois, be false or misleading with respect to any material fact
or shall omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances in which they
were made, not misleading. Notwithstanding the foregoing, Premier
shall have no responsibility for the truth or accuracy of any
information with respect to Northern Illinois or the Northern
Illinois Subsidiaries included in the S-4, the Joint Proxy
Statement, or any other statement, filing, notice or application
filed with any Governmental Entity in connection with the Merger
and the other transactions contemplated by this Agreement, and
Northern Illinois shall have no responsibility for the truth or
accuracy of any information with respect to Premier or the Premier
Subsidiaries included in the S-4, the Joint Proxy Statement, or any
other statement, filing, notice or application filed with any
Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement.
(d) Premier, Northern Illinois and GPF shall promptly
advise one another upon receiving any communication from any
Governmental Entity whose consent or approval is required for
consummation of the transactions contemplated by this Agreement
which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval will not be
obtained or that the receipt of any such approval will be
materially delayed.
6.2 Access to Information. (a) Upon reasonable notice
and subject to applicable laws relating to the exchange of
information, each of Premier and Northern Illinois shall, and shall
cause each of their respective Subsidiaries to, afford to the
officers, employees, accountants, counsel and other representatives
of the other party, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, each of
Premier and Northern Illinois shall, and shall cause their
respective Subsidiaries to, make available to the other party (i)
a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the
requirements of federal securities laws or federal or state banking
laws (other than reports or documents which Premier or Northern
Illinois, as the case may be, is not permitted to disclose under
applicable law) and (ii) all other information concerning its
business, properties and personnel as such party may reasonably
request. Neither Premier nor Northern Illinois nor any of their
respective Subsidiaries shall be required to provide access to or
to disclose information where such access or disclosure would
violate or prejudice the rights of Premier's or Northern Illinois',
as the case may be, customers, jeopardize the attorney-client
privilege of the institution in possession or control of such
information or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into
prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances
in which the restrictions of the preceding sentence apply.
(b) Each of Premier and Northern Illinois shall hold all
information furnished by or on behalf of the other party or any of
such party's Subsidiaries or representatives pursuant to Section
6.2(a) in confidence and shall return all documents containing any
information concerning the properties, business and assets of each
other party that may have been obtained in the course of
negotiations or examination of the affairs of each other party
either prior or subsequent to the execution of this Agreement
(other than such information as shall be in the public domain or
otherwise ascertainable from public or outside sources). Each of
Premier and Northern Illinois shall use such information solely for
the purpose of conducting business, legal and financial reviews of
the other party and for such other purposes as may be related to
this Agreement.
(c) No investigation by either of the parties or their
respective representatives shall affect the representations and
warranties of the other set forth herein. Without limitation of
the foregoing, each party shall promptly notify the other party of
any information obtained by such party during the course of any due
diligence conducted by such party or its representatives in
accordance with Section 8.1(b) or (c) which is materially
inconsistent with any representation or warranty made by the other
party under this Agreement; provided, however, that either party's
failure to provide such notice to the other party shall not, in
turn, be deemed to constitute a material breach of such party's
obligations under this Agreement.
6.3 Stockholders' Approvals. Each of Premier and
Northern Illinois shall call a meeting of its stockholders to be
held as soon as reasonably practicable for the purpose of voting
upon this Agreement, and each shall use reasonable efforts to cause
such meetings to occur on the same date.
6.4 Legal Conditions to Merger. Each of Premier and
Northern Illinois shall, and shall cause its Subsidiaries to, use
reasonable efforts (a) to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal
requirements which may be imposed on such party or its Subsidiaries
with respect to the Merger and, subject to the conditions set forth
in Article VII hereof, to consummate the transactions contemplated
by this Agreement and (b) to obtain (and to cooperate with the
other party to obtain) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity and any
other third party which is required to be obtained by Premier or
Northern Illinois or any of their respective Subsidiaries in
connection with the Merger and the other transactions contemplated
by this Agreement.
6.5 Affiliates; Publication of Combined Financial
Results. (a) Each of Premier and Northern Illinois shall use
reasonable efforts to cause each director, executive officer and
other person who is an "affiliate" (for purposes of Rule 145 under
the Securities Act and for purposes of qualifying the Merger for
"pooling of interests" accounting treatment) of such party to
deliver to the other party hereto, not later than 30 days after the
date of this Agreement, a written agreement, in the form of Exhibit
F, providing that such person will not sell, pledge, transfer or
otherwise dispose of (i) any shares of Premier Common Stock or
Northern Illinois Common Stock held by such "affiliate," except to
the extent and under the conditions permitted therein, during the
period commencing 30 days prior to the Merger and ending at the
time of the publication of financial results covering at least 30
days of combined operations of Premier and Northern Illinois, and
(ii) any shares of GPF Common Stock to be received by such
"affiliate" in the Merger, except in compliance with the applicable
provisions of the Securities Act and the rules and regulations
thereunder.
(b) GPF shall use reasonable efforts to publish as
promptly as reasonably practical but in no event later than 90 days
after the end of the first month after the Effective Time in which
there are at least 30 days of post-Merger combined operations
(which month may be the month in which the Effective Time occurs),
combined sales and net income figures as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 135.
6.6 Listing of GPF Common Stock. GPF shall file an
application with The Nasdaq Stock Market for approval to list the
shares of GPF Common Stock on The Nasdaq Stock Market's National
Market, subject to official notice of issuance, and the parties
shall each use reasonable efforts to have such application approved
prior to the Effective Time.
6.7 Employee Benefit Plans. (a) From and after the
Effective Time, unless otherwise mutually determined, the Premier
Benefit Plans and Northern Illinois Benefit Plans in effect as of
the date of this Agreement shall remain in effect with respect to
employees of Premier or Northern Illinois (or their Subsidiaries)
covered by such plans at the Effective Time until such time as GPF
shall, subject to applicable law, the terms of this Agreement and
the terms of such plans, adopt new benefit plans with respect to
employees of GPF and its Subsidiaries (the "New Benefit Plans").
Prior to the Closing Date, Premier and Northern Illinois shall
cooperate in reviewing, evaluating and analyzing the Premier
Benefit Plans and Northern Illinois Benefit Plans with a view
towards developing appropriate New Benefit Plans for the employees
covered thereby subsequent to the Merger. It is the intention of
Premier and Northern Illinois to develop New Benefit Plans,
effective as of the Effective Time, which, among other things, (i)
treat similarly situated employees on a substantially equivalent
basis, taking into account all relevant factors, including, without
limitation, duties, geographic location, tenure, qualifications and
abilities, and (ii) do not discriminate between employees of GPF
who were covered by Premier Benefit Plans, on the one hand, and
those covered by Northern Illinois Benefit Plans, on the other, at
the Effective Time.
(b) The foregoing notwithstanding, GPF agrees to honor
in accordance with their terms all benefits vested as of the date
hereof under the Premier Benefit Plans or the Northern Illinois
Benefit Plans or under other contracts, arrangements, commitments,
or understandings described in the Premier Disclosure Schedules and
the Northern Illinois Disclosure Schedules.
(c) Nothing in this Section 6.7 shall be interpreted as
preventing GPF from amending, modifying or terminating any Premier
Benefit Plans, Northern Illinois Benefit Plans, or other contracts,
arrangements, commitments or understandings, in accordance with
their terms and applicable law, following the Effective Time.
6.8 Indemnification; Directors' and Officers' Insurance.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim,
action, suit, proceeding or investigation in which any individual
who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director
or officer or employee of Premier, Northern Illinois or any of
their Subsidiaries (the "Indemnified Parties"), is, or is
threatened to be, made a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to (i) the fact
that he or she is or was a director, officer or employee of
Premier, Northern Illinois or any of their Subsidiaries or any of
their respective predecessors, or (ii) this Agreement, the Option
Agreements or any of the transactions contemplated hereby or
thereby, whether in any case asserted or arising before or after
the Effective Time, the parties hereto agree to cooperate and use
reasonable efforts to defend against and respond thereto. It is
understood and agreed that after the Effective Time, GPF shall
indemnify and hold harmless, as and to the fullest extent permitted
by law, each such Indemnified Party against any losses, claims,
damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of
any claim, suit, proceeding or investigation incurred by each
Indemnified Party to the fullest extent permitted by law upon
receipt of any undertaking required by applicable law), judgments,
fines and amounts paid in settlement in connection with any such
threatened or actual claim, action, suit, proceeding or
investigation, and in the event of any such threatened or actual
claim, action, suit, proceeding or investigation (whether asserted
or arising before or after the Effective Time), the Indemnified
Parties may retain counsel reasonably satisfactory to them after
consultation with GPF; provided, however, that (A) GPF shall have
the right to assume the defense thereof and upon such assumption
GPF shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently
incurred by any Indemnified Party in connection with the defense
thereof, except that if GPF elects not to assume such defense or
counsel for the Indemnified Parties reasonably advises the
Indemnified Parties that there are issues which raise conflicts of
interest between GPF and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to them after
consultation with GPF, and GPF shall pay the reasonable fees and
expenses of such counsel for the Indemnified Parties, (B) GPF shall
be obligated pursuant to this paragraph to pay for only one firm of
counsel for all Indemnified Parties, unless an Indemnified Party
shall have reasonably concluded, based on the advice of counsel,
that there is a material conflict of interest between the interests
of such Indemnified Party and the interests of one or more other
Indemnified Parties and that the interests of such Indemnified
Party will not be adequately represented unless separate counsel is
retained, in which case, GPF shall be obligated to pay for such
separate counsel, (C) GPF shall not be liable for any settlement
effected without its prior written consent (which consent shall not
be unreasonably withheld) and (D) GPF shall have no obligation
hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination
shall have become final and nonappealable, that indemnification of
such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law. Any Indemnified Party wishing to
claim Indemnification under this Section 6.8, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify
GPF thereof, provided that the failure to so notify shall not
affect the obligations of GPF under this Section 6.8 except to the
extent such failure to notify materially prejudices GPF. GPF's
obligations under this Section 6.8 continue in full force and
effect for a period of three years from the Effective Time (or the
period of the applicable statute of limitations, if longer);
provided, however, that all rights to indemnification in respect of
any claim (a "Claim") asserted or made within such period shall
continue until the final disposition of such Claim.
(b) Premier and Northern Illinois shall each use
reasonable efforts (i) to obtain, after the Effective Time,
directors' and officers' liability insurance coverage for the
officers and directors of GPF, to the extent that the same is
economically practicable, and (ii) either to cause the individuals
serving as officers and directors of Premier, Northern Illinois or
their Subsidiaries immediately prior to the Effective Time to be
covered for a period of three years from the Effective Time (or the
period of the applicable statute of limitations, if longer) by the
directors' and officers' liability insurance policies maintained by
Premier and Northern Illinois, respectively, or to substitute
therefor policies of at least the same coverage and amounts
containing terms and conditions which are not less advantageous
than the policies previously maintained by Premier and Northern
Illinois, respectively) with respect to acts or omissions occurring
prior to the Effective Time which were committed by such officers
and directors in their capacity as such; provided, however, that in
no event shall GPF be required to expend more than $50,000 per year
(the "Insurance Amount") to maintain or procure insurance coverage
pursuant to clause (ii) of this sentence, and provided further that
if GPF is unable to maintain or obtain the insurance called for by
clause (ii) of this sentence, GPF shall use reasonable efforts to
obtain as much comparable insurance as available for the Insurance
Amount.
(c) In the event GPF or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then,
and in each such case, to the extent necessary, proper provision
shall be made so that the successors and assigns of GPF assume the
obligations set forth in this section.
(d) The provisions of this Section 6.8 are intended to
be for the benefit of, and shall be enforceable by, each
Indemnified Party and his or her heirs and representatives.
6.9 Additional Agreements. In case at any time after
the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement or to vest GPF with full
title to all properties, assets, rights, approvals, immunities and
franchises of any of the parties to the Merger, the proper officers
and directors of each party to this Agreement and their respective
Subsidiaries shall take all such necessary action as may be
reasonably requested by, and at the sole expense of, GPF.
6.10 Advice of Changes. Premier and Northern Illinois
shall promptly advise the other party of any change or event having
a Material Adverse Effect on it or which it believes would or would
be reasonably likely to cause or constitute a material breach of
any of its representations, warranties or covenants contained
herein.
6.11 Dividends. After the date of this Agreement, each
of Premier and Northern Illinois shall coordinate with the other
the declaration of any dividends in respect of Premier Common Stock
and Northern Illinois Common Stock and the record dates and payment
dates relating thereto, it being the intention of the parties
hereto that holders of Premier Common Stock or Northern Illinois
Common Stock shall not receive two dividends, or fail to receive
one dividend, for any quarter with respect to their shares of
Premier Common Stock and/or Northern Illinois Common Stock and any
shares of GPF Common Stock any such holder receives in exchange
therefor in the Merger.
6.12 No Conduct Inconsistent with this Agreement.
Neither Premier nor Northern Illinois shall (a) solicit, encourage
or authorize any individual, corporation or other entity to solicit
from any third party any inquiries or proposals relating to the
disposition of the business or assets, or the acquisition of its
capital stock, or the merger of it or any of its Subsidiaries with
any corporation or other entity other than as provided by this
Agreement, except pursuant to a written direction from a regulatory
authority, or (b) negotiate with or entertain any proposals from
any other person for any such transaction wherein the business,
assets or capital stock of it or any of its Subsidiaries would be
acquired, directly or indirectly, by any party other than GPF,
except pursuant to a written direction from any regulatory
authority or upon the receipt of an unsolicited offer from a third
party where the Board of Directors of the party receiving such
offer reasonably believes, upon the written advice of counsel, that
its fiduciary duties require it to enter into discussions with such
party. Each party shall promptly notify the other of all of the
relevant details relating to all inquiries and proposals which it
may receive relating to any proposed disposition of the business or
assets, or the acquisition of its capital stock, or the merger of
it or any of its Subsidiaries with any corporation or other entity
other than as provided by this Agreement.
<PAGE>
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the
Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the
transactions contemplated hereby shall have been approved and
adopted by the respective requisite affirmative votes of the
holders of Northern Illinois Common Stock and Premier Common
Stock entitled to vote thereon.
(b) Nasdaq-NMS Listing. The shares of GPF Common Stock
which shall be issued to the stockholders of Northern Illinois
and Premier upon consummation of the Merger shall have been
authorized for listing on The Nasdaq Stock Market's National
Market, subject to official notice of issuance.
(c) Other Approvals. All regulatory approvals required
to consummate the transactions contemplated hereby shall have
been obtained, on terms and conditions reasonably satisfactory
to each of Northern Illinois and Premier, and shall remain in
full force and effect and all statutory waiting periods in
respect thereof shall have expired (all such approvals and the
expiration of all such waiting periods being referred to
herein as the "Requisite Regulatory Approvals").
(d) Registration Statements. The S-4 and the 8-A shall
have become effective under the Securities Act and the
Exchange Act, respectively, and no stop order suspending the
effectiveness of the S-4 or the 8-A shall have been issued and
no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition
(an "Injunction") preventing the consummation of the Merger or
any of the other transactions contemplated by this Agreement
shall be in effect. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which
prohibits, materially restricts or makes illegal consummation
of the Merger.
(f) Federal Tax Opinion. Northern Illinois and Premier
shall each have received an opinion of their respective
counsel, in form and substance reasonably satisfactory to
each, dated as of the Effective Time, substantially to the
effect that, on the basis of facts, representations and
assumptions set forth in such opinion which are consistent
with the state of facts existing at the Effective Time:
(i) The Merger will constitute a tax free
reorganization under Section 368(a)(i)(A) of the Code,
and Northern Illinois and Premier will each be a party to
the reorganization;
(ii) No gain or loss will be recognized by Northern
Illinois or Premier, as the case may be, as a result of
the Merger;
(iii) No gain or loss will be recognized by the
stockholders of Northern Illinois or Premier, as the case
may be, who exchange their Northern Illinois Common Stock
or Premier Common Stock or Premier Preferred Stock, as
the case may be, solely for GPF Common Stock or GPF
Preferred Stock pursuant to the Merger (except with
respect to cash received in lieu of a fractional share
interest in GPF Common Stock);
(iv) The tax basis of the GPF Common Stock or GPF
Preferred Stock received by stockholders who exchange all
of their Northern Illinois Common Stock or all of their
Premier Common Stock or Premier Preferred Stock, as the
case may be, solely for GPF Common Stock or GPF Preferred
Stock in the Merger will be the same as the tax basis of
the Northern Illinois Common Stock or the Premier Common
Stock or Premier Preferred Stock, as the case may be,
surrendered in exchange therefor (reduced by any amount
allocable to a fractional share interest for which cash
is received); and
(v) The holding period of the GPF Common Stock or
GPF Preferred Stock received by stockholders of Northern
Illinois or Premier, as the case may be, in the Merger
will include the period during which the shares of
Northern Illinois Common Stock or Premier Common Stock or
Premier Preferred Stock, as the case may be, surrendered
in exchange therefor were held; provided, such Northern
Illinois Common Stock or Premier Common Stock or Premier
Preferred Stock, as the case may be, was held as a
capital asset by the holder of such Northern Illinois
Common Stock or Premier Common Stock or Premier Preferred
Stock, as the case may be, at the Effective Time.
In rendering such opinion, counsel may require and rely
upon representations contained in certificates of officers of
Northern Illinois or Premier, as the case may be, and others.
(g) Pooling of Interests. Northern Illinois and Premier
shall each have received a letter from their respective
independent accountants addressed to Northern Illinois or
Premier, as the case may be, to the effect that the Merger
will qualify for "pooling of interests" accounting treatment.
(h) Right of First Refusal. GPF and Howard A. McKee
shall have entered into an agreement, substantially in the
form of Exhibit G, pursuant to which Mr. McKee shall have
granted GPF a right of first refusal to acquire shares of GPF
Common Stock beneficially owned by Mr. McKee, under the
circumstances and subject to the terms and conditions set
forth therein.
7.2 Conditions to Obligations of Northern Illinois. The
obligation of Northern Illinois to effect the Merger is also
subject to the satisfaction, or waiver by Northern Illinois, at or
prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations
and warranties of Premier set forth in this Agreement shall be
true and correct in all material respects as of the date of
this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date. Northern
Illinois shall have received a certificate signed on behalf of
Premier by the Chief Executive Officer and the Chief Financial
Officer of Premier to the foregoing effect.
(b) Performance of Obligations of Premier. Premier
shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or
prior to the Closing Date, and Northern Illinois shall have
received a certificate signed on behalf of Premier by the
Chief Executive Officer and the Chief Financial Officer of
Premier to such effect.
(c) No Material Adverse Change. Since the date of this
Agreement, (i) no event shall have occurred which has had a
Material Adverse Effect on Premier, and (ii) no condition
(other than general economic or competitive conditions
generally affecting bank holding companies and banks of a size
or in locations comparable to those of Premier and the Premier
Subsidiaries), event, circumstances, fact or other occurrence
shall have occurred that may reasonably be expected to have or
result in such a Material Adverse Effect on Premier.
(d) Changes in Ownership of Premier Common Stock;
Acquisition of Northern Illinois Common Stock. Since the date
of this Agreement, no individual, entity or group identified
in Schedule 4.3 of the Premier Disclosure Schedules shall have
acquired beneficial ownership of (i) any additional shares of
Premier Common Stock, other than shares acquired by a Premier
Subsidiary in a fiduciary capacity for the benefit of third
parties or shares acquired pursuant to the terms and
conditions of any Premier Stock Plan, or (ii) any shares of
Northern Illinois Common Stock.
(e) Opinion of Counsel to Premier. Northern Illinois
shall have received from Schiff Hardin & Waite, counsel to
Premier, an opinion, dated the Closing Date, in substantially
the form of Exhibit H.
(f) Comfort Letter. Northern Illinois shall have
received from KPMG Peat Marwick "comfort letters" dated the
date of mailing of the Joint Proxy Statement and the Closing
Date, covering matters customary to transactions such as the
Merger and in form and substance reasonably satisfactory to
Northern Illinois.
(g) Fairness Opinion. Northern Illinois shall have
received from Prairie Capital Services, Inc., a fairness
opinion, dated the date of mailing of the Joint Proxy
Statement and in form and substance reasonably satisfactory to
Northern Illinois, to the effect that the consideration to be
received in the Merger by the stockholders of Northern
Illinois is fair, from a financial point of view, to the
stockholders of Northern Illinois.
7.3 Conditions to Obligations of Premier. The
obligation of Premier to effect the Merger is also subject to the
satisfaction, or waiver by Premier, at or prior to the Effective
Time of the following conditions:
(a) Representations and Warranties. The representations
and warranties of Northern Illinois set forth in this
Agreement shall be true and correct in all material respects
as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the
Closing Date. Premier shall have received a certificate
signed on behalf of Northern Illinois by the Chief Executive
Officer and the Chief Financial Officer of Northern Illinois
to the foregoing effect.
(b) Performance of Obligations of Northern Illinois.
Northern Illinois shall have performed in all material
respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and Premier
shall have received a certificate signed on behalf of Northern
Illinois by the Chief Executive Officer and the Chief
Financial Officer of Northern Illinois to such effect.
(c) No Material Adverse Change. Since the date of this
Agreement, (i) no event shall have occurred which has had a
Material Adverse Effect on Northern Illinois, and (ii) no
condition (other than general economic or competitive
conditions generally affecting bank holding companies and
banks of a size or in locations comparable to those of
Northern Illinois and the Northern Illinois Subsidiaries),
event, circumstances, fact or other occurrence shall have
occurred that may reasonably be expected to have or result in
such a Material Adverse Effect on Northern Illinois.
(d) Changes in Ownership of Northern Illinois Common
Stock; Acquisition of Premier Common Stock. Since the date of
this Agreement, no individual, entity or group identified in
Schedule 3.3 of the Northern Illinois Disclosure Schedules
shall have acquired beneficial ownership of (i) any additional
shares of Northern Illinois Common Stock or (ii) any shares of
Premier Common Stock.
(e) Opinion of Counsel to Northern Illinois. Premier
shall have received from Crowley Barrett & Karaba Ltd.,
counsel to Northern Illinois, an opinion, dated the Closing
Date, in substantially the form of Exhibit I.
(f) Comfort Letter. Premier shall have received from
Hutton, Nelson and McDonald LLP "comfort letters" dated the
date of mailing of the Joint Proxy Statement and the Closing
Date, covering matters customary to transactions such as the
Merger and in form and substance reasonably satisfactory to
Northern Illinois.
(g) Fairness Opinion. Premier shall have received from
The Chicago Corporation a fairness opinion, dated the date of
mailing of the Joint Proxy Statement and in form and substance
reasonably satisfactory to Premier, to the effect that the
consideration to be received in the Merger by the stockholders
of Premier is fair, from a financial point of view, to the
stockholders of Premier.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated prior
to the Effective Time:
(a) at any time, whether before or after approval of the
matters presented in connection with the Merger by the
stockholders of Premier or Northern Illinois, by written
agreement between Premier and Northern Illinois, if the Board
of Directors of each so determines;
(b) by Premier, by written notice to Northern Illinois,
within 35 days of the date of this Agreement, provided that:
(i) such notice is given prior to the occurrence of
an "Initial Triggering Event," as such term is defined in
the Premier Option Agreement, and Premier determines, in
its sole discretion, in the light of information
discovered in the course of its investigation of Northern
Illinois and the Northern Illinois Subsidiaries, that the
transactions contemplated by this Agreement would not be
in the best interests of Premier; or
(ii) such notice is given after a "Third-Party
Initial Triggering Event" (as defined below) and Premier
is able to demonstrate (A) that the occurrence of such
Third-Party Initial Triggering Event was not due, in
whole or in part, to a breach of Premier's obligations
under Section 6.12. of this Agreement, and (B) that the
occurrence of such Third-Party Initial Triggering Event
was not a material factor in its decision to provide such
notice. A "Third-Party Initial Triggering Event" shall
mean any of the events described in Section 2(b)(iii)(A)
or (B) (other than the formation of a group that includes
an "Existing 15% Shareholder"), Section 2(b)(iv), or
Section 2(b)(vi) of the Option Agreements.
(c) by Northern Illinois, by written notice to Premier,
within 35 days of the date of this Agreement, provided that:
(i) such notice is given prior to the occurrence of
an "Initial Triggering Event," as such term is defined in
the Northern Illinois Option Agreement, and Northern
Illinois determines, in its sole discretion, in the light
of information discovered in the course of its
investigation of Premier and the Premier Subsidiaries,
that the transactions contemplated by this Agreement
would not be in the best interests of Northern Illinois;
or
(ii) such notice is given after a Third-Party
Initial Triggering Event and Northern Illinois is able to
demonstrate (A) that the occurrence of such Third-Party
Initial Triggering Event was not due, in whole or in
part, to a breach of Northern Illinois' obligations under
Section 6.12. of this Agreement, and (B) that the
occurrence of such Third-Party Initial Triggering Event
was not a material factor in its decision to provide such
notice.
(d) at any time, whether before or after approval of the
matters presented in connection with the Merger by the
stockholders of Premier or Northern Illinois, by either the
Board of Directors of Premier or the Board of Directors of
Northern Illinois if (i) any Governmental Entity which must
grant a Requisite Regulatory Approval (A) has denied approval
of the Merger and such denial has become final and
nonappealable or (B) has advised the parties of its
unwillingness to grant such a Requisite Regulatory Approval on
terms and conditions reasonably acceptable to the parties,
notwithstanding the parties' fulfillment of their obligations
to take reasonable efforts to obtain such Requisite Regulatory
Approval, or (ii) any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order
permanently enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this
Agreement;
(e) by either the Board of Directors of Premier or the
Board of Directors of Northern Illinois if the Merger shall
not have been consummated on or before the first anniversary
of the date of this Agreement, unless the failure of the
Closing to occur by such date shall be due to the failure of
the party seeking to terminate this Agreement to perform or
observe the covenants and agreements of such party set forth
herein;
(f) by either the Board of Directors of Premier or the
Board of Directors of Northern Illinois (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement
contained herein) if there shall have been a material breach
of any of the covenants or agreements or any of the
representations or warranties set forth in this Agreement on
the part of the other party, which breach is not cured within
45 days following written notice to the party committing such
breach, or which breach, by its nature or timing, cannot be
cured prior to the Closing Date; or
(g) by either Premier or Northern Illinois if any
approval of the stockholders of Premier or Northern Illinois
required for the consummation of the Merger shall not have
been obtained by reason of the failure to obtain the required
vote at a duly held meeting of stockholders or at any
adjournment or postponement thereof.
8.2 Effect of Termination. In the event of termination
of this Agreement by either Premier or Northern Illinois as
provided in Section 8.1, this Agreement shall forthwith become void
and have no effect, and none of Premier, Northern Illinois, any of
their respective Subsidiaries or any of the officers or directors
of any of them shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated
hereby, except that (i) Sections 6.2(b), 8.2, 9.2 and 9.3, shall
survive any termination of this Agreement, and (ii) notwithstanding
anything to the contrary contained in this Agreement, neither
Premier nor Northern Illinois shall be relieved or released from
any liabilities or damages arising out of its willful breach of any
provision of this Agreement.
8.3 Amendment. Subject to compliance with applicable
law, this Agreement may be amended by the parties hereto, by action
taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in
connection with the Merger by the stockholders of Premier or
Northern Illinois; provided, however, that after any approval of
the transactions contemplated by this Agreement by the respective
stockholders of Premier or Northern Illinois there may not be,
without further approval of such stockholders, any amendment of
this Agreement which changes the amount or the form of the
consideration to be delivered to the holders of Premier Common
Stock or Northern Illinois Common Stock hereunder other than as
contemplated by this Agreement. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the
parties hereto.
8.4 Extension; Waiver. At any time prior to the
Effective Time, the parties hereto, by action taken or authorized
by their respective Board of Directors, may, to the extent legally
allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive
any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, and (c) waive
compliance with any of the agreements or conditions contained
herein; provided, however, that after any approval of the
transactions contemplated by this Agreement by the respective
stockholders of Premier or Northern Illinois, there may not be,
without further approval of such stockholders, any extension or
waiver of this Agreement or any portion thereof which reduces the
amount or changes the form of the consideration to be delivered to
the holders of Premier Common Stock or Northern Illinois Common
Stock hereunder other than as contemplated by this Agreement. Any
agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument
signed on behalf of such party, but such extension or waiver or
failure to insist on strict compliance with an obligation,
covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Non-survival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and
agreements in this Agreement or in any instrument delivered
pursuant to this Agreement (other than pursuant to the Option
Agreements, which shall terminate in accordance with their terms)
shall survive the Effective Time, except for those covenants and
agreements contained herein and therein which by their terms apply
in whole or in part after the Effective Time.
9.2 Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expense, provided,
however, that (i) all attorneys' fees incurred by the parties in
connection with the preparation and negotiation of this Agreement,
the related agreements and documents contemplated hereby and the
transactions contemplated herein, including any attorneys' fees
incurred in connection with the preparation and filing of the Joint
Proxy Statement, the S-4, the 8-A, or any other notice, filing, or
application with any Governmental Entity, Regulatory Agency or SRO
to be made by GPF or jointly by Northern Illinois and Premier, (ii)
the costs and expenses of printing and mailing the Joint Proxy
Statement, (iii) all filing and other fees paid to the SEC, the
Federal Reserve Board, or any State Regulatory Agency in connection
with the Merger and the transactions contemplated by this
Agreement, and (iv) all filing and other fees relating to the
listing of the GPF Common Stock on The Nasdaq Stock Market's
National Market, shall constitute expenses of GPF and shall be
borne equally by Northern Illinois and Premier in the event that
this Agreement is terminated prior to the Effective Time.
9.3 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (with confirmation), mailed by
registered or certified mail (return receipt requested) or
delivered by an express courier (with confirmation) to the parties
at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Northern Illinois, to:
Northern Illinois Financial Corporation
486 West Liberty Street
Wauconda, Illinois 60084-2489
Attention: Robert W. Hinman
President and Chief Executive Officer
Telephone: 708-487-1818
Telecopier: 708-487-1896
with a copy to:
Crowley Barrett & Karaba, Ltd.
20 South Clark Street
Suite 2310
Chicago, Illinois 60603
Attention: Thomas F. Karaba
Telephone: 312-726-2468
Telecopier: 312-726-2741
and
(b) if to Premier, to:
Premier Financial Services, Inc.
27 West Main Street
Suite 101
Freeport, Illinois 61032
Attention: Richard L. Geach
President and Chief Executive Officer
Telephone: 815-233-3770
Telecopier: 815-233-3697
with a copy to:
Schiff Hardin & Waite
7200 Sears Tower
Chicago, Illinois 60606
Attention: Gary L. Mowder
Telephone: 312-258-5514
Telecopier: 312-258-5600
9.4 Interpretation. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall
be to a section of or exhibit or schedule to this Agreement unless
otherwise indicated. The table of contents and headings contained
in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words
"without limitation". No provision of this Agreement shall be
construed to require Northern Illinois, Premier or any of their
respective Subsidiaries or affiliates to take any action which
would violate any applicable law, rule or regulation.
9.5 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each of the parties and delivered to the other parties,
it being understood that all parties need not sign the same
counterpart.
9.6 Entire Agreement. This Agreement (including the
documents and the instruments referred to herein) constitutes the
entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof other than the Option
Agreements.
9.7 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Illinois,
without regard to any applicable conflicts of law, except to the
extent that the law of the state of Delaware shall apply to certain
matters of corporate law relating to Premier, GPF and the Merger
and except to the extent superseded by federal law.
9.8 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement
or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is
enforceable.
9.9 Publicity. Except as otherwise required by
applicable law or the rules of The Nasdaq Stock Market, neither
Northern Illinois nor Premier shall, or shall permit any of its
Subsidiaries to, issue or cause the publication of any press
release or other public announcement with respect to, or otherwise
make any public statement concerning, the transactions contemplated
by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld.
9.10 Assignment; Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations of the
parties under this Agreement shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their
respective successors and assigns. Except as otherwise
specifically provided in Section 6.8, this Agreement (including the
documents and instruments referred to herein) is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
<PAGE>
IN WITNESS WHEREOF, Premier, Northern Illinois and GPF
have caused this Agreement to be executed by their respective
officers thereunto duly authorized as of the date first above
written.
PREMIER FINANCIAL SERVICES, INC. NORTHERN ILLINOIS FINANCIAL
CORPORATION
By:/s/ Richard L. Geach By:/s/ Robert W. Hinman
Richard L. Geach Robert W. Hinman
President and Chief Executive Officer President and
Chief Executive Officer
GRAND PREMIER FINANCIAL, INC.
By:/s/ Richard L. Geach
Richard L. Geach
Chief Executive Officer
By:/s/ Robert W. Hinman
Robert W. Hinman
President
STOCK OPTION AGREEMENT, dated January 22, 1996, between
Northern Illinois Financial Corporation, an Illinois corporation
("Issuer"), and Premier Financial Services, Inc., a Delaware
corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee, Issuer and Grand Premier Financial,
Inc., a Delaware corporation ("GPF"), have entered into an
Agreement and Plan of Reorganization of even date herewith (the
"Merger Agreement"), which agreement has been executed by the
parties hereto immediately prior to this Stock Option Agreement
(the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the
Merger Agreement and in consideration therefor, Issuer has agreed
to grant Grantee the Option (as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Merger
Agreement, the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase,
subject to the terms hereof, up to 588,400 fully paid and
nonassessable shares of Issuer's Common Stock, without par value
("Common Stock"), at a price of $30 per share (the "Option Price");
provided, however, that in no event shall the number of shares of
Common Stock for which this Option is exercisable exceed 19.9% of
the Issuer's issued and outstanding shares of Common Stock without
giving effect to any shares subject to or issued pursuant to the
Option. The number of shares of Common Stock that may be received
upon the exercise of the Option and the Option Price are subject to
adjustment as herein set forth.
(b) In the event that any additional shares of
Common Stock are either (i) issued or otherwise become outstanding
after the date of this Agreement (other than pursuant to this
Agreement) or (ii) redeemed, repurchased, retired or otherwise
cease to be outstanding after the date of the Agreement (such event
a "Change in Shares Outstanding Event"), the number of shares of
Common Stock subject to the Option shall be increased or decreased,
as appropriate, so that, after such Change in Shares Outstanding
Event, such number equals 19.9% of the number of shares of Common
Stock then issued and outstanding without giving effect to any
shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed
to authorize Issuer to issue or redeem, repurchase, or retire
shares of Common Stock or to authorize either the Issuer or the
Grantee otherwise to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may
exercise the Option, in whole or part, and from time to time, if,
but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined)
shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the
Holder shall have sent written notice of such exercise (as provided
in subsection (e) of this Section 2) prior to the date that is 90
days after the date that Holder is notified of such Subsequent
Triggering Event pursuant to section 2(d) herein. Each of the
following shall be an Exercise Termination Event: (i) the
Effective Time (as defined in the Merger Agreement); (ii)
termination of the Merger Agreement in accordance with its terms if
such termination occurs pursuant to Section 8.1(c) or prior to the
occurrence of an Initial Triggering Event, other than a termination
by Grantee pursuant to Section 8.1(f) of the Merger Agreement, or
(iii) the passage of 12 months after termination of the Merger
Agreement (other than pursuant to Section 8.1(c)) if such
termination follows, or occurs at the same time as, the occurrence
of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(f) of the Merger Agreement; provided,
however, that if an Initial Triggering Event (or an additional
Initial Triggering Event) shall occur following termination of the
Merger Agreement in accordance with this clause (iii), the Exercise
Termination Event shall be the passage of 12 months from the
occurrence of the Last Initial Triggering Event, but in no event
the passage of more than 18 months from the date of termination of
the Merger Agreement. The "Last Initial Triggering Event" shall
mean the last Initial Triggering Event to occur. The term "Holder"
shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean
any of the following events or transactions occurring after the
date hereof:
(i) Issuer or any of its Subsidiaries (each an
"Issuer Subsidiary"), without having received Grantee's prior
written consent, shall have entered into an agreement to engage in
an Acquisition Transaction (as hereinafter defined) with any person
(the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and
the rules and regulations thereunder) other than GPF, Grantee or
any of its Subsidiaries (each a "Grantee Subsidiary") or the Board
of Directors of Issuer shall have recommended that the stockholders
of Issuer approve or accept any Acquisition Transaction. For
purposes of this Agreement, "Acquisition Transaction" shall mean
(w) a merger or consolidation, or any similar transaction,
involving Issuer or any Significant Subsidiary (as defined in Rule
1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Issuer, (x) a purchase, lease or other
acquisition or assumption of all or a substantial portion of the
assets or deposits of Issuer or any Significant Subsidiary of
Issuer, (y) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of securities
representing 15% or more of the voting power of Issuer or any
Significant Subsidiary of Issuer, or (z) any substantially similar
transaction; provided, however, that any transaction described in
this sentence that is expressly permitted by the Merger Agreement
shall not be deemed to be an Acquisition Transaction;
(ii) Issuer or any Issuer Subsidiary, without
having received Grantee's prior written consent, shall have
authorized, recommended, proposed or publicly announced its
intention to authorize, recommend or propose, to engage in an
Acquisition Transaction with any person other than GPF, Grantee or
a Grantee Subsidiary, or the Board of Directors of Issuer shall
have publicly withdrawn or modified, or publicly announced its
intent to withdraw or modify, in any manner adverse to Grantee, its
recommendation that the stockholders of Issuer approve the
transactions contemplated by the Merger Agreement;
(iii) (A) Any person, other than an Excluded
Person (as hereinafter defined) or an Existing 15% Shareholder (as
hereinafter defined), alone or together with such person's
affiliates and associates (such terms for purposes of this
Agreement having the meanings assigned thereto in Rule 12b-2 under
the 1934 Act) shall have acquired beneficial ownership or the right
to acquire beneficial ownership of 15% or more of the shares of
Common Stock then outstanding (the term "beneficial ownership" for
purposes of this Agreement having the meaning assigned thereto in
Section 13(d) of the 1934 Act and the rules and regulations
thereunder); (B) any group (such term for purposes of this
Agreement having the meaning assigned thereto in Section 13(d)(3)
of the 1934 Act), other than a group of which any Excluded Person
is a member, shall have acquired beneficial ownership or the right
to acquire beneficial ownership of 15% or more of the shares of
Common Stock then outstanding; (C) any Existing 15% Shareholder,
alone or together with such person's affiliates and associates,
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of shares of Common Stock in addition to the
shares of Common Stock beneficially owned by such Existing 15%
Shareholder as of the date hereof; provided, however, that in the
event that an Existing 15% Shareholder or any associate or
affiliate thereof inadvertently acquires beneficial ownership of
shares of Common Stock in addition to the shares of Common Stock
beneficially owned by such Existing 15% Shareholder as of the date
hereof and such Existing 15% Shareholder or associate or affiliate
thereof divests such additional shares as promptly as practicable
upon written notice by the Grantee, such inadvertent acquisition
shall not be deemed to constitute an Initial Triggering Event
pursuant to this Section 2(b)(iii)(C). For purposes of this
Agreement, "Excluded Person" shall mean GPF, Grantee, any Grantee
Subsidiary, any employee benefit plan maintained by the Issuer or
an Issuer Subsidiary as of the date of this Agreement, or any
Issuer Subsidiary acting in a fiduciary capacity in the ordinary
course of its business. "Existing 15% Shareholder" shall mean any
person, other than an Excluded Person, who as of the date hereof
beneficially owns 15% or more of the outstanding Common Stock.
(iv) Any person other than GPF, Grantee or any
Grantee Subsidiary shall have made a bona fide proposal to Issuer
or its stockholders by public announcement or written communication
that is or becomes the subject of public disclosure to (A) engage
in an Acquisition Transaction or (B) commence a tender or exchange
offer the consummation of which would result in such person
acquiring beneficial ownership of securities representing 15% or
more of Issuer's voting power;
(v) After an overture is made by a third party
(other than an Excluded Person) to Issuer or its stockholders to
engage in an Acquisition Transaction, Issuer shall have breached
any covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger
Agreement and (y) shall not have been cured prior to the Notice
Date (as defined below); or
(vi) Any person other than GPF, Grantee or any
Grantee Subsidiary, other than in connection with a transaction to
which Grantee has given its prior written consent, shall have filed
an application or notice with the Federal Reserve Board, or other
federal or state bank regulatory authority, which application or
notice has been accepted for processing, for approval to engage in
an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall
mean either of the following events or transactions occurring after
the date hereof:
(i) The acquisition (A) by an person (other
than an Excluded Person or Existing 15% Shareholder) or group
(other than a group of which an Excluded Person is a member) of
beneficial ownership of 20% or more of the then outstanding Common
Stock or (B) by an Existing 15% Shareholder of any shares of Common
Stock in addition to the shares of Common Stock beneficially owned
by such Existing 15% Shareholder on the date hereof; provided,
however, that in the event that an Existing 15% Shareholder or any
associate or affiliate thereof inadvertently acquires beneficial
ownership of shares of Common Stock in addition to the shares of
Common Stock beneficially owned by such Existing 15% Shareholder as
of the date hereof and such Existing 15% Shareholder or associate
or affiliate thereof divests such additional shares as promptly as
practicable upon written notice by the Grantee, such inadvertent
acquisition shall not be deemed to constitute a Subsequent
Triggering Event pursuant to this Section 2(c)(i)(B);
(ii) The occurrence of the Initial Triggering
Event described in paragraph (i) of subsection (b) of this Section
2, except that the percentage referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing
of the occurrence of any Initial Triggering Event or Subsequent
Triggering Event of which it has notice (together, a "Triggering
Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and
wishes to exercise the Option, it shall send to Issuer a written
notice (the date of which being herein referred to as the "Notice
Date") specifying (i) the total number of shares it will purchase
pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date");
provided that if prior notification to or approval of the Federal
Reserve Board or any other regulatory agency is required in
connection with such purchase, the Holder shall promptly file the
required notice or application for approval and shall expeditiously
process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which
any required notification periods have expired or been terminated
or such approvals have been obtained and any requisite waiting
period or periods shall have passed. Any exercise of the Option
shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of
this Section 2, the Holder shall pay to Issuer the aggregate
purchase price for the shares of Common Stock purchased pursuant to
the exercise of the Option in immediately available funds by wire
transfer to a bank account designated by Issuer, provided that
failure or refusal of Issuer to designate such a bank account shall
not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the
delivery of immediately available funds as provided in subsection
(f) of this Section 2, Issuer shall deliver to the Holder a
certificate or certificates representing the number of shares of
Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable
hereunder, and the Holder shall deliver to Issuer a copy of this
Agreement and a letter agreeing that the Holder will not offer to
sell or otherwise dispose of such shares in violation of applicable
law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a
closing hereunder may be endorsed with a restrictive legend that
shall read substantially as follows:
"The transfer of the shares represented by this
certificate is subject to certain provisions of an
agreement between the registered holder hereof and Issuer
and to resale restrictions arising under the Securities
Act of 1933, as amended. A copy of such agreement is on
file at the principal office of Issuer and will be
provided to the holder hereof without charge upon receipt
by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933
Act"), in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the Holder
shall have delivered to Issuer a copy of a letter from the staff of
the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not
required for purposes of the 1933 Act; (ii) the reference to the
provisions to this Agreement in the above legend shall be removed
by delivery of substitute certificate(s) without such reference if
the shares have been sold or transferred in compliance with the
provisions of this Agreement and under circumstances that do not
require the retention of such reference; and (iii) the legend shall
be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the
written notice of exercise of the Option provided for under
subsection (e) of this Section 2 and the tender of the applicable
purchase price in immediately available funds, the Holder shall be
deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock
transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually
delivered to the Holder. Issuer shall pay all expenses, and any
and all United States federal, state and local taxes and other
charges that may be payable in connection with the preparation,
issue and delivery of stock certificates under this Section 2 in
the name of the Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but
unissued or treasury shares of Common Stock so that the Option may
be exercised without additional authorization of Common Stock after
giving effect to all other options, warrants, convertible
securities and other rights to purchase Common Stock; (ii) that it
will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to
be observed or performed hereunder by Issuer; (iii) promptly to
take all action as may from time to time be required (including (x)
complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. ()18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), or the Change in Bank
Control Act of 1978, as amended, or any state banking law, prior
approval of or notice to the Federal Reserve Board or to any state
regulatory authority is necessary before the Option may be
exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the
Federal Reserve Board or such state regulatory authority as they
may require) in order to permit the Holder to exercise the Option
and Issuer duly and effectively to issue shares of Common Stock
pursuant hereto; and (iv) promptly to take all action provided
herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal
office of Issuer, for other Agreements providing for Options of
different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set
forth herein, in the aggregate the same number of shares of Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any Stock Option Agreements and related Options
for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will execute
and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional
contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
5. In addition to the adjustment in the number of
shares of Common Stock that are purchasable upon exercise of the
Option pursuant to Section 1 of this Agreement, the number of
shares of Common Stock purchasable upon the exercise of the Option
and the Option Price shall be subject to adjustment from time to
time as provided in this Section 5. In the event of any change in,
or distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions on or
in respect of the Common Stock that would be prohibited under the
terms of the Merger Agreement, or the like, the type and number of
shares of Common Stock purchasable upon exercise hereof and the
Option Price shall be appropriately adjusted in such manner as
shall fully preserve the economic benefits provided hereunder and
proper provision shall be made in any agreement governing any such
transaction to provide for such proper adjustment and the full
satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event
that occurs prior to an Exercise Termination Event, Issuer shall,
at the request of Grantee delivered within 90 days of such
Subsequent Triggering Event (whether on its own behalf or on behalf
of any subsequent holder of this Option (or part thereof) or any of
the shares of Common Stock issued pursuant hereto), promptly
prepare and file a registration statement under the 1933 Act
covering this Option and any shares issued and issuable pursuant to
this Option and shall use reasonable efforts to cause such
registration statement to become effective in order to permit the
sale or other disposition of this Option and any shares of Common
Stock issued upon total or partial exercise of this Option ("Option
Shares") in accordance with any plan of disposition requested by
Grantee. Issuer will use reasonable efforts to cause such
registration statement to become effective. Grantee shall have the
right to demand two such registrations. The foregoing
notwithstanding, if, at the time of any request by Grantee for
registration of the Option or Option Shares as provided above,
Issuer is in registration with respect to an underwritten public
offering of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or,
if none, the sole underwriter or underwriters, of such offering,
the inclusion of the Holder's Option or Option Shares would
interfere with the successful marketing of the shares of Common
Stock offered by Issuer, the number of Option Shares otherwise to
be covered in the registration statement contemplated hereby may be
reduced; and provided, however, that after any such required
reduction the number of Option Shares to be included in such
offering for the account of the Holder shall constitute at least
25% of the total number of shares to be sold by the Holder and
Issuer in the aggregate; and provided further, however, that if
such reduction occurs, then the Issuer shall file a registration
statement for the balance as promptly as practical and no reduction
shall thereafter occur. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If requested by any
such Holder in connection with such registration, Issuer shall
become a party to any underwriting agreement relating to the sale
of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other
agreements customarily included in secondary offering underwriting
agreements for the Issuer. Upon receiving any request under this
Section 6 from any Holder, Issuer agrees to send a copy thereof to
any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the
same, postage prepaid, to the address of record of the persons
entitled to receive such copies. Notwithstanding anything to the
contrary contained herein, in no event shall Issuer be obligated to
effect more than two registrations pursuant to this Section 6 by
reason of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a
Repurchase Event (as defined below), (i) following a request of the
Holder, delivered prior to an Exercise Termination Event, Issuer
(or any successor thereto) shall repurchase the Option from the
Holder at a price (the "Option Repurchase Price") equal to the
amount by which (A) the Market/Offer price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares
for which this Option may then be exercised and (ii) at the request
of the owner of Option Shares from time to time (the "Owner"),
delivered within 90 days of such occurrence (or such later period
as provided in Section 10), Issuer shall repurchase such number of
the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the
Market/Offer Price multiplied by the number of Option Shares so
designated. The term "Market/Offer Price" shall mean the highest of
(i) the price per share of Common Stock at which a tender offer or
exchange offer therefor has been made, (ii) the price per share of
Common Stock to be paid by any third party pursuant to an agreement
with Issuer, (iii) the highest known sale price for shares of
Common Stock within the six-month period immediately preceding the
date the Holder gives notice of the required repurchase of this
Option or the Owner gives notice of the required repurchase of
Option Shares, taking into account the sale prices, if any, for
shares of Common Stock reported in the National Association of
Securities Dealers' Electronic Bulletin Board Service or the
National Quotation Bureau's "pink sheets" during such six-month
period, or (iv) in the event of a sale of all or a substantial
portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining
assets of Issuer as determined by a nationally recognized
investment banking firm mutually selected by the Holder or the
Owner, as the case may be, on the one hand, and the Issuer, on the
other, divided by the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the
Market/Offer Price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking
firm mutually selected by the Holder or Owner, as the case may be,
on the one hand, and the Issuer, on the other.
(b) The Holder and the Owner, as the case may be,
may exercise its right to require Issuer to repurchase the Option
and any Option Shares pursuant to this Section 7 by surrendering
for such purpose to Issuer, at its principal office, a copy of this
Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to
repurchase this Option and/or the Option Shares in accordance with
the provisions of this Section 7. Within the later to occur of (x)
five business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of such
notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer
shall deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase
Price therefor or the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under
applicable law or regulation from repurchasing the Option and/or
the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be
delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the
Option Share Repurchase price, respectively, that it is no longer
prohibited from delivering, within five business days after the
date on which Issuer is no longer so prohibited; provided, however,
that if Issuer at any time after delivery of a notice of repurchase
pursuant to paragraph (b) of this Section 7 is prohibited under
applicable law or regulation from delivering to the Holder and/or
the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer
hereby undertakes to use its best efforts to obtain all required
regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish such repurchase),
the Holder or Owner may revoke its notice of repurchase of the
Option or the Option Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall promptly
(i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Holder, a new Stock
Option Agreement evidencing the right of the Holder to purchase
that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock
Option Agreement was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the
Option Repurchase Price less the portion thereof theretofore
delivered to the Holder and the denominator of which is the Option
Repurchase Price, or (B) to the Owner, a certificate for the Option
Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a Repurchase
Event shall be deemed to have occurred (i) upon the consummation of
any merger, consolidation or similar transaction involving Issuer
or any purchase, lease or other acquisition of all or a substantial
portion of the assets of Issuer, other than any such transaction
which would not constitute an Acquisition Transaction pursuant to
the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition
by any person of beneficial ownership of 50% or more of the then
outstanding shares of Common Stock, provided that no such event
shall constitute a Repurchase Event unless a Subsequent Triggering
Event shall have occurred prior to an Exercise Termination Event.
The parties hereto agree that Issuer's obligations to repurchase
the Option or Option Shares under this Section 7 shall not
terminate upon the occurrence of an Exercise Termination Event
unless no Subsequent Triggering Event shall have occurred prior to
the occurrence of an Exercise Termination Event.
8. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or
one of its Subsidiaries, and shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its Subsidiaries,
to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the
then outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash
or any other property or the then outstanding shares of Common
Stock shall after such merger represent less than 50% of the
outstanding voting shares and voting share equivalents of the
merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee
or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person
that controls the Acquiring Corporation.
(b) The following terms have the meanings
indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or
merger with Issuer (if other than Issuer), (ii) Issuer in a
merger in which Issuer is the continuing or surviving person,
and (iii) the transferee of all or substantially all of
Issuer's assets.
(2) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon
exercise of the Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer
Price, as defined in Section 7.
(4) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one
year immediately preceding the consolidation, merger or sale
in question, but in no event higher than the closing price of
the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is
the issuer of the Substitute Option, the Average Price shall
be computed with respect to a share of common stock issued by
the person merging into Issuer or by any company which
controls or is controlled by such person, as the Holder may
elect; provided, further, that in the event that the
Substitute Common Stock is not listed on a national securities
exchange or the Nasdaq Stock Market, the term "Average Price"
shall mean the weighted average of the known sale prices per
share for shares of Substitute Common Stock within the one-
year period immediately preceding the consolidation, merger or
sale in question, taking into account the sale prices, if any,
for shares of Substitute Common Stock reported in the National
Association of Securities Dealers' Electronic Bulletin Board
Service or the National Quotation Bureau's "pink sheets"
during such one-year period.
(c) The Substitute Option shall have the same terms
as the Option, provided, that if the terms of the Substitute Option
cannot, for legal reasons, be the same as the Option, such terms
shall be as similar as possible and in no event less advantageous
to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this Agreement,
which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for
such number of shares of Substitute Common Stock as is equal to the
Assigned Value multiplied by the number of shares of Common Stock
for which the Option is then exercisable, divided by the Average
Price. The exercise price of the Substitute Option per share of
Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock for which the Option is then
exercisable and the denominator of which shall be the number of
shares of Substitute Common Stock for which the Substitute Option
is exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more
than 19.9% of the shares of common stock of the issuer of the
Substitute Option (the "Substitute Option Issuer") outstanding
prior to exercise of the Substitute Option. In the event that the
Substitute Option would be exercisable for more than 19.9% of the
shares of common stock of the Substitute Option Issuer outstanding
prior to exercise but for this clause (e), the Substitute Option
Issuer shall make a cash payment to Holder equal to the excess of
(i) the value of the Substitute Option without giving effect to the
limitation in this clause (e) over (ii) the value of the Substitute
Option after giving effect to the limitation in this clause (e).
This difference in value shall be determined by a nationally
recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the
Acquiring Corporation.
(f) Issuer shall not enter into any transaction
described in subsection (a) of this Section 8 unless the Acquiring
Corporation and any person that controls the Acquiring Corporation
assume in writing all the obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute
Option (the "Substitute Option Holder"), the Substitute Option
Issuer shall repurchase the Substitute Option from the Substitute
Option Holder at a price (the "Substitute Option Repurchase Price")
equal to (x) the amount by which (i) the Highest Closing Price (as
hereinafter defined) exceeds (ii) the exercise price of the
Substitute Option, multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be exercised
plus (y) Grantee's reasonable out-of-pocket expenses (to the extent
not previously reimbursed), and at the request of the owner (the
"Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase
the Substitute Shares at a price (the "Substitute Share Repurchase
Price") equal to (x) the Highest Closing Price multiplied by the
number of Substitute Shares so designated plus (y) Grantee's
reasonable Out-of-Pocket Expenses (to the extent not previously
reimbursed). The term "Highest Closing Price" shall mean the
highest closing price for shares of Substitute Common Stock within
the six-month period immediately preceding the date the Substitute
Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the
required repurchase of the Substitute Shares, as applicable;
provided, however, that in the event that the Substitute Common
Stock is not listed on a national securities exchange or the Nasdaq
Stock Market, the term "Highest Closing Price" shall mean the
highest known sale price for shares of Substitute Common Stock
within the six-month period immediately preceding the date that the
Substitute Option Holder gives notice of the required repurchase of
the Substitute Option or the Substitute Share Owner gives notice of
the required repurchase of the Substitute Shares, as applicable,
taking into account the sale prices, if any, for shares of
Substitute Common Stock reported in the National Association of
Securities Dealers' Electronic Bulletin Board Service or the
National Quotation Bureau's "pink sheets" during such six-month
period.
(b) The Substitute Option Holder and the Substitute
Share Owner, as the case may be, may exercise its respective right
to require the Substitute Option Issuer to repurchase the
Substitute Option and the Substitute Shares pursuant to this
Section 9 by surrendering for such purpose to the Substitute Option
Issuer, at its principal office, the agreement for such Substitute
Option (or, in the absence of such an agreement, a copy of this
Agreement) and certificates for Substitute Shares accompanied by a
written notice or notices stating that the Substitute Option Holder
or the Substitute Share Owner, as the case may be, elects to
require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable, and in
any event within five business days after the surrender of the
Substitute Option and/or certificates representing Substitute
Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be delivered
to the Substitute Option Holder the Substitute Option Repurchase
Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or, in either case, the portion thereof
which the Substitute Option Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer
is prohibited under applicable law or regulation from repurchasing
the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer following a request for
repurchase pursuant to this Section 9 shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner and
thereafter deliver or cause to be delivered, from time to time, to
the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the portion of the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering,
within five business days after the date on which the Substitute
Option Issuer is no longer so prohibited; provided, however, that
if the Substitute Option Issuer is at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation from delivering to
the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its best efforts to receive all
required regulatory and legal approvals as promptly as practicable
in order to accomplish such repurchase), the Substitute Option
Holder or Substitute Share Owner may revoke its notice of
repurchase of the Substitute Option or the Substitute Shares either
in whole or to the extent of the prohibition, whereupon, in the
latter case, the Substitute Option Issuer shall promptly (i)
deliver to the Substitute Option Holder or Substitute Share Owner,
as appropriate, that portion of the Substitute Option Repurchase
Price or the Substitute Share Repurchase Price that the Substitute
Option Issuer is not prohibited from delivering; and (ii) deliver,
as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option
Holder to purchase that number of shares of the Substitute Common
Stock obtained by multiplying the number of shares of the
Substitute Common Stock for which the surrendered Substitute Option
was exercisable at the time of delivery of the notice of repurchase
by a fraction, the numerator of which is the Substitute Option
Repurchase Price less the portion thereof theretofore delivered to
the Substitute Option Holder and the denominator of which is the
Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so
prohibited from repurchasing.
10. The 90-day period for exercise of certain rights
under Sections 2, 6, 7 and 13 shall be extended: (i) to the extent
necessary to obtain all regulatory approvals for the exercise of
such rights, and for the expiration of all statutory waiting
periods; and (ii) to the extent necessary to avoid liability under
Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has full corporate power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on
the part of Issuer are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action
to authorize and reserve and to permit it to issue, and at all
times from the date hereof through the termination of this
Agreement in accordance with its terms will have reserved for
issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock
at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized,
validly issued, fully paid, nonassessable, and will be delivered
free and clear of all claims, liens, encumbrance and security
interests and not subject to any preemptive rights.
(c) Neither the execution and delivery of this
Agreement by Issuer nor the consummation by Issuer of the
transactions contemplated hereby, nor compliance by Issuer with any
of the terms or provisions hereof, will (i) violate any provision
of the Articles of Incorporation or By-Laws of Issuer or (ii)
assuming that the consents and approvals referred to in Section 3.5
of the Merger Agreement are duly obtained, (x) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Issuer or any of the Issuer Subsidiaries
or any of their respective properties or assets, or (y) violate,
conflict with, result in a breach of any provision of or the loss
of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or
cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective
properties or assets of Issuer or any of the Issuer Subsidiaries
under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which Issuer or any of the
Issuer Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected.
12. Grantee hereby represents and warrants to Issuer
that:
(a) Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any
approvals or consents referred to herein, to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been
duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of
Common Stock or other securities acquired by Grantee upon exercise
of the Option will not be, acquired with a view to the public
distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from
registration under the Securities Act.
13. Neither of the parties hereto may assign any of its
rights or obligations under this Option Agreement or the Option
created hereunder to any other person, without the express written
consent of the other party, except that in the event a Subsequent
Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions
hereof, may assign in whole or in part its rights and obligations
hereunder within 90 days following such Subsequent Triggering Event
(or such later period as provided in Section 10); provided,
however, that until the date 15 days following the date on which
the Federal Reserve Board approves an application by Grantee under
the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except
in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in
excess of 2% of the voting shares of Issuer, (iii) an assignment to
a single party (e.g., a broker or investment banker) for the
purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal
Reserve Board.
14. Each of Grantee and Issuer will use its best efforts
to make all filings with, and to obtain consents of, all third
parties and governmental authorities necessary to the consummation
of the transactions contemplated by this Agreement, including
without limitation making application to list or quote the shares
of Common Stock issuable hereunder on any stock exchange or
interdealer quotation system on which the Common Stock is listed or
quoted and applying to the Federal Reserve Board under the BHCA for
approval to acquire the shares issuable hereunder, but Grantee
shall not be obligated to apply to state banking authorities for
approval to acquire the shares of Common Stock issuable hereunder
until such time, if ever, as it deems appropriate to do so.
15. The parties hereto acknowledge that damages would be
an inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be
enforceable by either party hereto through injunctive or other
equitable relief.
16. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or
state regulatory agency of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions and
covenants and restrictions contained in this Agreement shall remain
in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency
determines that the Holder is not permitted to acquire, or Issuer
is not permitted to repurchase pursuant to Section 7, the full
number of shares of Common Stock provided in Section 1(a) hereof
(as adjusted pursuant to Section 1(b) or 5 hereof), it is the
express intention of Issuer to allow the Holder to acquire or to
require Issuer to repurchase the greatest lesser number of shares
as may be permissible, without any amendment or modification
hereof.
17. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by registered or certified
mail (return receipt requested) or delivered by an express courier
(with confirmation) at the respective addresses of the parties set
forth in the Merger Agreement (or at such other address for a party
as shall be specified by like notice).
18. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, regardless of
the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
19. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
20. Except as otherwise expressly provided herein, each
of the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
21. Except as otherwise expressly provided herein or in
the Merger Agreement, this Agreement contains the entire agreement
between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings
with respect thereof, written or oral. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto,
and their respective successors except as assigns, any rights,
remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned thereto in the
Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto
duly authorized, all as of the date first above written.
PREMIER FINANCIAL SERVICES,
INC.
By:/s/ Richard L. Geach
Richard L. Geach
President and Chief
Executive Officer
NORTHERN ILLINOIS FINANCIAL
CORPORATION
By:/s/ Robert W. Hinman
Robert W. Hinman
President and Chief
Executive Officer
STOCK OPTION AGREEMENT, dated January 22, 1996, between
Premier Financial Services, Inc., a Delaware corporation
("Issuer"), and Northern Illinois Financial Corporation, an
Illinois corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee, Issuer and Grand Premier Financial,
Inc., a Delaware corporation ("GPF"), have entered into an
Agreement and Plan of Reorganization of even date herewith (the
"Merger Agreement"), which agreement has been executed by the
parties hereto immediately prior to this Stock Option Agreement
(the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the
Merger Agreement and in consideration therefor, Issuer has agreed
to grant Grantee the Option (as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Merger
Agreement, the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase,
subject to the terms hereof, up to 1,302,325 fully paid and
nonassessable shares of Issuer's Common Stock, par value $5.00 per
share ("Common Stock"), at a price of $9 per share (the "Option
Price"); provided, however, that in no event shall the number of
shares of Common Stock for which this Option is exercisable exceed
19.9% of the Issuer's issued and outstanding shares of Common Stock
without giving effect to any shares subject to or issued pursuant
to the Option. The number of shares of Common Stock that may be
received upon the exercise of the Option and the Option Price are
subject to adjustment as herein set forth.
(b) In the event that any additional shares of
Common Stock are either (i) issued or otherwise become outstanding
after the date of this Agreement (other than pursuant to this
Agreement) or (ii) redeemed, repurchased, retired or otherwise
cease to be outstanding after the date of the Agreement (such event
a "Change in Shares Outstanding Event"), the number of shares of
Common Stock subject to the Option shall be increased or decreased,
as appropriate, so that, after such Change in Shares Outstanding
Event, such number equals 19.9% of the number of shares of Common
Stock then issued and outstanding without giving effect to any
shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed
to authorize Issuer to issue or redeem, repurchase, or retire
shares of Common Stock or to authorize either the Issuer or the
Grantee otherwise to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may
exercise the Option, in whole or part, and from time to time, if,
but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined)
shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the
Holder shall have sent written notice of such exercise (as provided
in subsection (e) of this Section 2) prior to the date that is 90
days after the date that Holder is notified of such Subsequent
Triggering Event pursuant to section 2(d) herein. Each of the
following shall be an Exercise Termination Event: (i) the
Effective Time (as defined in the Merger Agreement); (ii)
termination of the Merger Agreement in accordance with its terms if
such termination occurs pursuant to Section 8.1(b) or prior to the
occurrence of an Initial Triggering Event, other than a termination
by Grantee pursuant to Section 8.1(f) of the Merger Agreement, or
(iii) the passage of 12 months after termination of the Merger
Agreement (other than pursuant to Section 8.1(b)) if such
termination follows, or occurs at the same time as, the occurrence
of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(f) of the Merger Agreement; provided,
however, that if an Initial Triggering Event (or an additional
Initial Triggering Event) shall occur following termination of the
Merger Agreement in accordance with this clause (iii), the Exercise
Termination Event shall be the passage of 12 months from the
occurrence of the Last Initial Triggering Event, but in no event
the passage of more than 18 months from the date of termination of
the Merger Agreement. The "Last Initial Triggering Event" shall
mean the last Initial Triggering Event to occur. The term "Holder"
shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean
any of the following events or transactions occurring after the
date hereof:
(i) Issuer or any of its Subsidiaries (each an
"Issuer Subsidiary"), without having received Grantee's prior
written consent, shall have entered into an agreement to engage in
an Acquisition Transaction (as hereinafter defined) with any person
(the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and
the rules and regulations thereunder) other than GPF, Grantee or
any of its Subsidiaries (each a "Grantee Subsidiary") or the Board
of Directors of Issuer shall have recommended that the stockholders
of Issuer approve or accept any Acquisition Transaction. For
purposes of this Agreement, "Acquisition Transaction" shall mean
(w) a merger or consolidation, or any similar transaction,
involving Issuer or any Significant Subsidiary (as defined in Rule
1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Issuer, (x) a purchase, lease or other
acquisition or assumption of all or a substantial portion of the
assets or deposits of Issuer or any Significant Subsidiary of
Issuer, (y) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of securities
representing 15% or more of the voting power of Issuer or any
Significant Subsidiary of Issuer, or (z) any substantially similar
transaction; provided, however, that any transaction described in
this sentence that is expressly permitted by the Merger Agreement
shall not be deemed to be an Acquisition Transaction;
(ii) Issuer or any Issuer Subsidiary, without
having received Grantee's prior written consent, shall have
authorized, recommended, proposed or publicly announced its
intention to authorize, recommend or propose, to engage in an
Acquisition Transaction with any person other than GPF, Grantee or
a Grantee Subsidiary, or the Board of Directors of Issuer shall
have publicly withdrawn or modified, or publicly announced its
intent to withdraw or modify, in any manner adverse to Grantee, its
recommendation that the stockholders of Issuer approve the
transactions contemplated by the Merger Agreement;
(iii) (A) Any person, other than an Excluded
Person (as hereinafter defined) or an Existing 15% Shareholder (as
hereinafter defined), alone or together with such person's
affiliates and associates (such terms for purposes of this
Agreement having the meanings assigned thereto in Rule 12b-2 under
the 1934 Act) shall have acquired beneficial ownership or the right
to acquire beneficial ownership of 15% or more of the shares of
Common Stock then outstanding (the term "beneficial ownership" for
purposes of this Agreement having the meaning assigned thereto in
Section 13(d) of the 1934 Act and the rules and regulations
thereunder); (B) any group (such term for purposes of this
Agreement having the meaning assigned thereto in Section 13(d)(3)
of the 1934 Act), other than a group of which any Excluded Person
is a member, shall have been formed that acquires beneficial
ownership or the right to acquire beneficial ownership of 15% or
more of the shares of Common Stock then outstanding; (C) any
Existing 15% Shareholder, alone or together with such person's
affiliates and associates, shall have acquired beneficial ownership
or the right to acquire beneficial ownership of shares of Common
Stock in addition to the shares of Common Stock beneficially owned
by such Existing 15% Shareholder as of the date hereof. For
purposes of this Agreement, "Excluded Person" shall mean GPF,
Grantee, any Grantee Subsidiary, any employee benefit plan
maintained by the Issuer or an Issuer Subsidiary as of the date of
this Agreement, any Issuer Subsidiary acting in a fiduciary
capacity in the ordinary course of its business, or the trustee and
beneficiaries of any blind voting trust under which certain shares
of Common Stock and preferred stock of the Issuer that are
convertible into Common Stock are held in accordance with the June
15, 1993 order (the "Order") of the Federal Reserve Bank of Chicago
(the "Federal Reserve Bank") approving the transaction in which
such shares were issued. "Existing 15% Shareholder" shall mean any
person, other than an Excluded Person, who as of the date hereof
beneficially owns 15% or more of the outstanding Common Stock.
(iv) Any person other than GPF, Grantee or any
Grantee Subsidiary shall have made a bona fide proposal to Issuer
or its stockholders by public announcement or written communication
that is or becomes the subject of public disclosure to (A) engage
in an Acquisition Transaction or (B) commence a tender or exchange
offer the consummation of which would result in such person
acquiring beneficial ownership of securities representing 15% or
more of Issuer's voting power;
(v) After an overture is made by a third party
(other than an Excluded Person) to Issuer or its stockholders to
engage in an Acquisition Transaction, Issuer shall have breached
any covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger
Agreement and (y) shall not have been cured prior to the Notice
Date (as defined below); or
(vi) Any person other than GPF, Grantee or any
Grantee Subsidiary, other than in connection with a transaction to
which Grantee has given its prior written consent, shall have filed
an application or notice with the Federal Reserve Board, or other
federal or state bank regulatory authority, which application or
notice has been accepted for processing, for approval to engage in
an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall
mean either of the following events or transactions occurring after
the date hereof:
(i) The acquisition (A) by any person (other
than an Excluded Person or Existing 15% Shareholder) or group
(other than a group of which an Excluded Person is a member) of
beneficial ownership of 20% or more of the then outstanding Common
Stock or (B) by an Existing 15% Shareholder of any shares of Common
Stock in addition to the shares of Common Stock beneficially owned
by such Existing 15% Shareholder on the date hereof;
(ii) The occurrence of the Initial Triggering
Event described in paragraph (i) of subsection (b) of this Section
2, except that the percentage referred to in clause (y) shall be
20%.
(d) Issuer shall notify Grantee promptly in writing
of the occurrence of any Initial Triggering Event or Subsequent
Triggering Event of which it has notice (together, a "Triggering
Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and
wishes to exercise the Option, it shall send to Issuer a written
notice (the date of which being herein referred to as the "Notice
Date") specifying (i) the total number of shares it will purchase
pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date");
provided that if prior notification to or approval of the Federal
Reserve Board or any other regulatory agency is required in
connection with such purchase, the Holder shall promptly file the
required notice or application for approval and shall expeditiously
process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which
any required notification periods have expired or been terminated
or such approvals have been obtained and any requisite waiting
period or periods shall have passed. Any exercise of the Option
shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of
this Section 2, the Holder shall pay to Issuer the aggregate
purchase price for the shares of Common Stock purchased pursuant to
the exercise of the Option in immediately available funds by wire
transfer to a bank account designated by Issuer, provided that
failure or refusal of Issuer to designate such a bank account shall
not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the
delivery of immediately available funds as provided in subsection
(f) of this Section 2, Issuer shall deliver to the Holder a
certificate or certificates representing the number of shares of
Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable
hereunder, and the Holder shall deliver to Issuer a copy of this
Agreement and a letter agreeing that the Holder will not offer to
sell or otherwise dispose of such shares in violation of applicable
law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a
closing hereunder may be endorsed with a restrictive legend that
shall read substantially as follows:
"The transfer of the shares represented by this
certificate is subject to certain provisions of an
agreement between the registered holder hereof and Issuer
and to resale restrictions arising under the Securities
Act of 1933, as amended. A copy of such agreement is on
file at the principal office of Issuer and will be
provided to the holder hereof without charge upon receipt
by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933
Act"), in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the Holder
shall have delivered to Issuer a copy of a letter from the staff of
the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not
required for purposes of the 1933 Act; (ii) the reference to the
provisions to this Agreement in the above legend shall be removed
by delivery of substitute certificate(s) without such reference if
the shares have been sold or transferred in compliance with the
provisions of this Agreement and under circumstances that do not
require the retention of such reference; and (iii) the legend shall
be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the
written notice of exercise of the Option provided for under
subsection (e) of this Section 2 and the tender of the applicable
purchase price in immediately available funds, the Holder shall be
deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock
transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually
delivered to the Holder. Issuer shall pay all expenses, and any
and all United States federal, state and local taxes and other
charges that may be payable in connection with the preparation,
issue and delivery of stock certificates under this Section 2 in
the name of the Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but
unissued or treasury shares of Common Stock so that the Option may
be exercised without additional authorization of Common Stock after
giving effect to all other options, warrants, convertible
securities and other rights to purchase Common Stock; (ii) that it
will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to
be observed or performed hereunder by Issuer; (iii) promptly to
take all action as may from time to time be required (including (x)
complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. ()18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), or the Change in Bank
Control Act of 1978, as amended, or any state banking law, prior
approval of or notice to the Federal Reserve Board or to any state
regulatory authority is necessary before the Option may be
exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the
Federal Reserve Board or such state regulatory authority as they
may require) in order to permit the Holder to exercise the Option
and Issuer duly and effectively to issue shares of Common Stock
pursuant hereto; and (iv) promptly to take all action provided
herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal
office of Issuer, for other Agreements providing for Options of
different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set
forth herein, in the aggregate the same number of shares of Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any Stock Option Agreements and related Options
for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will execute
and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional
contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
5. In addition to the adjustment in the number of
shares of Common Stock that are purchasable upon exercise of the
Option pursuant to Section 1 of this Agreement, the number of
shares of Common Stock purchasable upon the exercise of the Option
and the Option Price shall be subject to adjustment from time to
time as provided in this Section 5. In the event of any change in,
or distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions on or
in respect of the Common Stock that would be prohibited under the
terms of the Merger Agreement, or the like, the type and number of
shares of Common Stock purchasable upon exercise hereof and the
Option Price shall be appropriately adjusted in such manner as
shall fully preserve the economic benefits provided hereunder and
proper provision shall be made in any agreement governing any such
transaction to provide for such proper adjustment and the full
satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event
that occurs prior to an Exercise Termination Event, Issuer shall,
at the request of Grantee delivered within 90 days of such
Subsequent Triggering Event (whether on its own behalf or on behalf
of any subsequent holder of this Option (or part thereof) or any of
the shares of Common Stock issued pursuant hereto), promptly
prepare and file a registration statement under the 1933 Act
covering this Option and any shares issued and issuable pursuant to
this Option and shall use reasonable efforts to cause such
registration statement to become effective in order to permit the
sale or other disposition of this Option and any shares of Common
Stock issued upon total or partial exercise of this Option ("Option
Shares") in accordance with any plan of disposition requested by
Grantee. Issuer will use reasonable efforts to cause such
registration statement to become effective. Grantee shall have the
right to demand two such registrations. The foregoing
notwithstanding, if, at the time of any request by Grantee for
registration of the Option or Option Shares as provided above,
Issuer is in registration with respect to an underwritten public
offering of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or,
if none, the sole underwriter or underwriters, of such offering,
the inclusion of the Holder's Option or Option Shares would
interfere with the successful marketing of the shares of Common
Stock offered by Issuer, the number of Option Shares otherwise to
be covered in the registration statement contemplated hereby may be
reduced; and provided, however, that after any such required
reduction the number of Option Shares to be included in such
offering for the account of the Holder shall constitute at least
25% of the total number of shares to be sold by the Holder and
Issuer in the aggregate; and provided further, however, that if
such reduction occurs, then the Issuer shall file a registration
statement for the balance as promptly as practical and no reduction
shall thereafter occur. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If requested by any
such Holder in connection with such registration, Issuer shall
become a party to any underwriting agreement relating to the sale
of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other
agreements customarily included in secondary offering underwriting
agreements for the Issuer. Upon receiving any request under this
Section 6 from any Holder, Issuer agrees to send a copy thereof to
any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the
same, postage prepaid, to the address of record of the persons
entitled to receive such copies. Notwithstanding anything to the
contrary contained herein, in no event shall Issuer be obligated to
effect more than two registrations pursuant to this Section 6 by
reason of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a
Repurchase Event (as defined below), (i) following a request of the
Holder, delivered prior to an Exercise Termination Event, Issuer
(or any successor thereto) shall repurchase the Option from the
Holder at a price (the "Option Repurchase Price") equal to the
amount by which (A) the Market/Offer price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares
for which this Option may then be exercised and (ii) at the request
of the owner of Option Shares from time to time (the "Owner"),
delivered within 90 days of such occurrence (or such later period
as provided in Section 10), Issuer shall repurchase such number of
the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the
Market/Offer Price multiplied by the number of Option Shares so
designated. The term "Market/Offer Price" shall mean the highest of
(i) the price per share of Common Stock at which a tender offer or
exchange offer therefor has been made, (ii) the price per share of
Common Stock to be paid by any third party pursuant to an agreement
with Issuer, (iii) the highest closing price for shares of Common
Stock reported on the Nasdaq Stock Market's National Market within
the six-month period immediately preceding the date the Holder
gives notice of the required repurchase of this Option or the Owner
gives notice of the required repurchase of Option Shares, as the
case may be, or (iv) in the event of a sale of all or a substantial
portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining
assets of Issuer as determined by a nationally recognized
investment banking firm mutually selected by the Holder or the
Owner, as the case may be, on the one hand, and the Issuer, on the
other, divided by the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the
Market/Offer Price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking
firm mutually selected by the Holder or Owner, as the case may be,
on the one hand, and the Issuer, on the other.
(b) The Holder and the Owner, as the case may be,
may exercise its right to require Issuer to repurchase the Option
and any Option Shares pursuant to this Section 7 by surrendering
for such purpose to Issuer, at its principal office, a copy of this
Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to
repurchase this Option and/or the Option Shares in accordance with
the provisions of this Section 7. Within the later to occur of (x)
five business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of such
notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer
shall deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase
Price therefor or the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under
applicable law or regulation from repurchasing the Option and/or
the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be
delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the
Option Share Repurchase price, respectively, that it is no longer
prohibited from delivering, within five business days after the
date on which Issuer is no longer so prohibited; provided, however,
that if Issuer at any time after delivery of a notice of repurchase
pursuant to paragraph (b) of this Section 7 is prohibited under
applicable law or regulation from delivering to the Holder and/or
the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer
hereby undertakes to use its best efforts to obtain all required
regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish such repurchase),
the Holder or Owner may revoke its notice of repurchase of the
Option or the Option Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall promptly
(i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Holder, a new Stock
Option Agreement evidencing the right of the Holder to purchase
that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock
Option Agreement was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the
Option Repurchase Price less the portion thereof theretofore
delivered to the Holder and the denominator of which is the Option
Repurchase Price, or (B) to the Owner, a certificate for the Option
Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a Repurchase
Event shall be deemed to have occurred (i) upon the consummation of
any merger, consolidation or similar transaction involving Issuer
or any purchase, lease or other acquisition of all or a substantial
portion of the assets of Issuer, other than any such transaction
which would not constitute an Acquisition Transaction pursuant to
the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition
by any person of beneficial ownership of 50% or more of the then
outstanding shares of Common Stock, provided that no such event
shall constitute a Repurchase Event unless a Subsequent Triggering
Event shall have occurred prior to an Exercise Termination Event.
The parties hereto agree that Issuer's obligations to repurchase
the Option or Option Shares under this Section 7 shall not
terminate upon the occurrence of an Exercise Termination Event
unless no Subsequent Triggering Event shall have occurred prior to
the occurrence of an Exercise Termination Event.
8. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or
one of its Subsidiaries, and shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its Subsidiaries,
to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the
then outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash
or any other property or the then outstanding shares of Common
Stock shall after such merger represent less than 50% of the
outstanding voting shares and voting share equivalents of the
merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee
or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person
that controls the Acquiring Corporation.
(b) The following terms have the meanings
indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or
merger with Issuer (if other than Issuer), (ii) Issuer in a
merger in which Issuer is the continuing or surviving person,
and (iii) the transferee of all or substantially all of
Issuer's assets.
(2) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon
exercise of the Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer
Price, as defined in Section 7.
(4) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one
year immediately preceding the consolidation, merger or sale
in question, but in no event higher than the closing price of
the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is
the issuer of the Substitute Option, the Average Price shall
be computed with respect to a share of common stock issued by
the person merging into Issuer or by any company which
controls or is controlled by such person, as the Holder may
elect; provided, further, that in the event that the
Substitute Common Stock is not listed on a national securities
exchange or the Nasdaq Stock Market, the term "Average Price"
shall mean the weighted average of the known sale prices per
share for shares of Substitute Common Stock within the one-
year period immediately preceding the consolidation, merger or
sale in question, taking into account the sale prices, if any,
for shares of Substitute Common Stock reported in the National
Association of Securities Dealers' Electronic Bulletin Board
Service or the National Quotation Bureau's "pink sheets"
during such one-year period.
(c) The Substitute Option shall have the same terms
as the Option, provided, that if the terms of the Substitute Option
cannot, for legal reasons, be the same as the Option, such terms
shall be as similar as possible and in no event less advantageous
to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this Agreement,
which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for
such number of shares of Substitute Common Stock as is equal to the
Assigned Value multiplied by the number of shares of Common Stock
for which the Option is then exercisable, divided by the Average
Price. The exercise price of the Substitute Option per share of
Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock for which the Option is then
exercisable and the denominator of which shall be the number of
shares of Substitute Common Stock for which the Substitute Option
is exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more
than 19.9% of the shares of common stock of the issuer of the
Substitute Option (the "Substitute Option Issuer") outstanding
prior to exercise of the Substitute Option. In the event that the
Substitute Option would be exercisable for more than 19.9% of the
shares of common stock of the Substitute Option Issuer outstanding
prior to exercise but for this clause (e), the Substitute Option
Issuer shall make a cash payment to Holder equal to the excess of
(i) the value of the Substitute Option without giving effect to the
limitation in this clause (e) over (ii) the value of the Substitute
Option after giving effect to the limitation in this clause (e).
This difference in value shall be determined by a nationally
recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the
Acquiring Corporation.
(f) Issuer shall not enter into any transaction
described in subsection (a) of this Section 8 unless the Acquiring
Corporation and any person that controls the Acquiring Corporation
assume in writing all the obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute
Option (the "Substitute Option Holder"), the Substitute Option
Issuer shall repurchase the Substitute Option from the Substitute
Option Holder at a price (the "Substitute Option Repurchase Price")
equal to (x) the amount by which (i) the Highest Closing Price (as
hereinafter defined) exceeds (ii) the exercise price of the
Substitute Option, multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be exercised
plus (y) Grantee's reasonable out-of-pocket expenses (to the extent
not previously reimbursed), and at the request of the owner (the
"Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase
the Substitute Shares at a price (the "Substitute Share Repurchase
Price") equal to (x) the Highest Closing Price multiplied by the
number of Substitute Shares so designated plus (y) Grantee's
reasonable Out-of-Pocket Expenses (to the extent not previously
reimbursed). The term "Highest Closing Price" shall mean the
highest closing price for shares of Substitute Common Stock within
the six-month period immediately preceding the date the Substitute
Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the
required repurchase of the Substitute Shares, as applicable;
provided, however, that in the event that the Substitute Common
Stock is not listed on a national securities exchange or the Nasdaq
Stock Market, the term "Highest Closing Price" shall mean the
highest known sale price for shares of Substitute Common Stock
within the six-month period immediately preceding the date that the
Substitute Option Holder gives notice of the required repurchase of
the Substitute Option or the Substitute Share Owner gives notice of
the required repurchase of the Substitute Shares, as applicable,
taking into account the sale prices, if any, for shares of
Substitute Common Stock reported in the National Association of
Securities Dealers' Electronic Bulletin Board Service or the
National Quotation Bureau's "pink sheets" during such six-month
period.
(b) The Substitute Option Holder and the Substitute
Share Owner, as the case may be, may exercise its respective right
to require the Substitute Option Issuer to repurchase the
Substitute Option and the Substitute Shares pursuant to this
Section 9 by surrendering for such purpose to the Substitute Option
Issuer, at its principal office, the agreement for such Substitute
Option (or, in the absence of such an agreement, a copy of this
Agreement) and certificates for Substitute Shares accompanied by a
written notice or notices stating that the Substitute Option Holder
or the Substitute Share Owner, as the case may be, elects to
require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable, and in
any event within five business days after the surrender of the
Substitute Option and/or certificates representing Substitute
Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be delivered
to the Substitute Option Holder the Substitute Option Repurchase
Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or, in either case, the portion thereof
which the Substitute Option Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer
is prohibited under applicable law or regulation from repurchasing
the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer following a request for
repurchase pursuant to this Section 9 shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner and
thereafter deliver or cause to be delivered, from time to time, to
the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the portion of the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering,
within five business days after the date on which the Substitute
Option Issuer is no longer so prohibited; provided, however, that
if the Substitute Option Issuer is at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation from delivering to
the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its best efforts to receive all
required regulatory and legal approvals as promptly as practicable
in order to accomplish such repurchase), the Substitute Option
Holder or Substitute Share Owner may revoke its notice of
repurchase of the Substitute Option or the Substitute Shares either
in whole or to the extent of the prohibition, whereupon, in the
latter case, the Substitute Option Issuer shall promptly (i)
deliver to the Substitute Option Holder or Substitute Share Owner,
as appropriate, that portion of the Substitute Option Repurchase
Price or the Substitute Share Repurchase Price that the Substitute
Option Issuer is not prohibited from delivering; and (ii) deliver,
as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option
Holder to purchase that number of shares of the Substitute Common
Stock obtained by multiplying the number of shares of the
Substitute Common Stock for which the surrendered Substitute Option
was exercisable at the time of delivery of the notice of repurchase
by a fraction, the numerator of which is the Substitute Option
Repurchase Price less the portion thereof theretofore delivered to
the Substitute Option Holder and the denominator of which is the
Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so
prohibited from repurchasing.
10. The 90-day period for exercise of certain rights
under Sections 2, 6, 7 and 13 shall be extended: (i) to the extent
necessary to obtain all regulatory approvals for the exercise of
such rights, and for the expiration of all statutory waiting
periods; and (ii) to the extent necessary to avoid liability under
Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has full corporate power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on
the part of Issuer are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action
to authorize and reserve and to permit it to issue, and at all
times from the date hereof through the termination of this
Agreement in accordance with its terms will have reserved for
issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock
at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized,
validly issued, fully paid, nonassessable, and will be delivered
free and clear of all claims, liens, encumbrance and security
interests and not subject to any preemptive rights.
(c) Neither the execution and delivery of this
Agreement by Issuer nor the consummation by Issuer of the
transactions contemplated hereby, nor compliance by Issuer with any
of the terms or provisions hereof, will (i) violate any provision
of the Restated Certificate of Incorporation or By-Laws of Issuer
or (ii) assuming that the consents and approvals referred to in
Section 4.5 of the Merger Agreement are duly obtained, (x) violate
any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to Issuer or any of the
Issuer Subsidiaries or any of their respective properties or
assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default
(or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a
right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any Lien upon
any of the respective properties or assets of Issuer or any of the
Issuer Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to
which Issuer or any of the Issuer Subsidiaries is a party, or by
which they or any of their respective properties or assets may be
bound or affected.
12. Grantee hereby represents and warrants to Issuer
that:
(a) Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any
approvals or consents referred to herein, to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been
duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of
Common Stock or other securities acquired by Grantee upon exercise
of the Option will not be, acquired with a view to the public
distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from
registration under the Securities Act.
13. Neither of the parties hereto may assign any of its
rights or obligations under this Option Agreement or the Option
created hereunder to any other person, without the express written
consent of the other party, except that in the event a Subsequent
Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions
hereof, may assign in whole or in part its rights and obligations
hereunder within 90 days following such Subsequent Triggering Event
(or such later period as provided in Section 10); provided,
however, that until the date 15 days following the date on which
the Federal Reserve Board approves an application by Grantee under
the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except
in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in
excess of 2% of the voting shares of Issuer, (iii) an assignment to
a single party (e.g., a broker or investment banker) for the
purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal
Reserve Board.
14. Each of Grantee and Issuer will use its best efforts
to make all filings with, and to obtain consents of, all third
parties and governmental authorities necessary to the consummation
of the transactions contemplated by this Agreement, including
without limitation making application to list or quote the shares
of Common Stock issuable hereunder on any stock exchange or
interdealer quotation system on which the Common Stock is listed or
quoted and applying to the Federal Reserve Board under the BHCA for
approval to acquire the shares issuable hereunder, but Grantee
shall not be obligated to apply to state banking authorities for
approval to acquire the shares of Common Stock issuable hereunder
until such time, if ever, as it deems appropriate to do so.
15. The parties hereto acknowledge that damages would be
an inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be
enforceable by either party hereto through injunctive or other
equitable relief.
16. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or
state regulatory agency of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions and
covenants and restrictions contained in this Agreement shall remain
in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency
determines that the Holder is not permitted to acquire, or Issuer
is not permitted to repurchase pursuant to Section 7, the full
number of shares of Common Stock provided in Section 1(a) hereof
(as adjusted pursuant to Section 1(b) or 5 hereof), it is the
express intention of Issuer to allow the Holder to acquire or to
require Issuer to repurchase the greatest lesser number of shares
as may be permissible, without any amendment or modification
hereof.
17. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by registered or certified
mail (return receipt requested) or delivered by an express courier
(with confirmation) at the respective addresses of the parties set
forth in the Merger Agreement (or at such other address for a party
as shall be specified by like notice).
18. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, regardless of
the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
19. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
20. Except as otherwise expressly provided herein, each
of the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
21. Except as otherwise expressly provided herein or in
the Merger Agreement, this Agreement contains the entire agreement
between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings
with respect thereof, written or oral. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto,
and their respective successors except as assigns, any rights,
remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned thereto in the
Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto
duly authorized, all as of the date first above written.
PREMIER FINANCIAL SERVICES,
INC.
By:/s/ Richard L. Geach
Richard L. Geach
President and Chief
Executive Officer
NORTHERN ILLINOIS FINANCIAL
CORPORATION
By:/s/ Robert W. Hinman
Robert W. Hinman
President and Chief
Executive Officer
NEWS RELEASE FOR:
NORTHERN ILLINOIS FINANCIAL CORPORATION AND
PREMIER FINANCIAL SERVICES, INC.
For more information, contact:
In Northeastern Illinois In Northwestern Illinois
Robert Hinman Richard Geach/David Murray
(708) 487-1818 (815) 233-3770/(815) 233-3773
GRAND PREMIER FINANCIAL, INC. TO BE FORMED BY PROPOSED MERGER
BETWEEN NORTHERN ILLINOIS FINANCIAL CORPORATION AND
PREMIER FINANCIAL SERVICES, INC.
Proposed Merger of Equals Will Result in New Financial Services Firm
with Assets of $1.6 Billion
January 18, 1996 - Northern Illinois Financial Corporation and
Premier Financial Services, Inc. today announced that they have reached
an understanding on substantially all material terms to merge their
assets and operations into a new financial services organization to be
named Grand Premier Financial, Inc.
The new company will be headquartered in Wauconda, Illinois. The
Grand Premier Financial, Inc. network will include Grand National Banks,
Premier's First Banks, which will be renamed Grand National Banks,
Premier Trust Services and Premier Insurance Services.
Grand Premier Financial, Inc. will have assets of $1.6 billion,
with facilities ranging in location from Lake Michigan to the
Mississippi River.
Northern Illinois Financial Corporation, based in Wauconda, Ill.,
is the parent company of four community banking organizations: Grand
National Bank of Crystal Lake, Grand National Bank of Niles, Grand
National Bank of South Chicago Heights and Grand National Bank of
Waukegan. It maintains a diversified network of 17 banking offices,
which include loan facilities and supermarket branches throughout
northeastern Illinois.
Premier Financial Services, Inc. (NASDAQ-PREM), based in Freeport,
Ill., is a multiline financial services company with interests in
banking, trust, insurance and investments. It has locations in Cook,
Lake, McHenry and DeKalb counties as well as seven northwestern Illinois
counties - Jo Daviess, Stephenson, Carroll, Whiteside, Lee, Ogle and
Winnebago.
Grand Premier Financial, Inc.
Page 2
Customer, Employee, Shareholder Benefits
Richard L. Geach, president and CEO of Premier Financial Services,
Inc., will become chief executive officer of Grand Premier Financial,
Inc.; Robert W. Hinman, president and CEO of Northern Illinois Financial
Corporation, will be the chief operating officer; and David L. Murray,
executive vice president/CFO of Premier Financial Services, Inc., will
become chief financial officer of the new company.
In the proposed merger, which is subject to director, shareholder
and regulatory approval, Northern Illinois Financial Corporation
shareholders will receive 4.25 shares of Grand Premier Financial, Inc.
for each share held. Premier Financial Services, Inc. shareholders will
receive 1.116 shares of Grand Premier Financial, Inc. for each share
held. The transaction will be accounted for as a pooling of interests
and will qualify as a tax-free exchange of shares.
On a pro forma basis the new company will have $875 million in
total loans outstanding. Its deposits under management will be $1.35
billion and total assets will be $1.65 billion. As of December 31, 1995,
the new company had capital in excess of 9 percent of its assets, a
ratio that will place Grand Premier Financial, Inc. in the ranks of
well-capitalized financial organizations nationwide, according to Geach.
"We came to this understanding because the obvious synergies
between our two companies will provide significant new opportunities for
our customers, employees and shareholders.
"We estimate that within three years the pre-tax cost savings could
be as much as $4 million annually.
"Customers will almost immediately benefit from access to more
products and financial services. With our combines higher lending limit,
for example, we're able to serve larger customers locally -- customers
who, in the past, might have turned to large money-center banks," Geach
said.
"Employees will have access to more business resources with which
to work, as well as expanded opportunities for professional growth,"
Hinman explained.
"We anticipate our shareholders will benefit from enhanced value
derived from higher future earnings growth and the significant cost
savings we project over the next Grand Premier Financial, Inc.
Page 3
three years. Shareholders will also benefit from the financial strength
of the combined company. Our credit portfolio quality and capital ratios
are superior to most competitive institutions. This strength gives us
the resources needed to expand our customer base throughout northern
Illinois," Geach said.
Tailored Quality Service Focus
"At a time when so many banks and financial services organizations
are joining forces mainly for the sake of becoming larger, the merger
that will create Grand Premier Financial, Inc. is grounded in different
motives," Hinman said.
"Not only do our products and people fit together well, both of our
organizations have established reputations for localized, focused
customer service. Together, we will continue to tailor services and
products to the needs of our customers," Geach said.
Hinman added: "Put simply, we are talking about persistent emphasis
on service and product quality, more choices. Whether it's a matter of
meeting with customers outside of normal banking hours or upgrading our
technology to offer customers faster, more efficient access to accounts
on a 24-hour basis, our dedication to service quality will be a defining
factor at all 35 locations of the Grand Premier Financial, Inc. network"
# # #
