SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
LIBERTY BANCORP, INC.
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE PER SHARE
(Title of Class of Securities)
530174 10 1
(CUSIP Number)
John J. Gorman, Esq.
Luse Lehman Gorman Pomerenk & Schick
A Professional Corporation
5335 Wisconsin Avenue
Suite 400
Washington, D.C. 20015
(202) 274-2000
(Name, Address, Telephone number of Person
Authorized to Receive Notices and Communications)
August 2, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule
13D, and if filing this schedule because of Rule 13d-1(b)(3) or
(4), check the following box. [ ]
Check the following box if a fee is being paid with the statement
[X]. (A fee is not required only if the reporting person: (1) has
a previous statement on file reporting beneficial ownership of more
than five percent of the class of securities described in Item 1;
and (2) has filed no amendment subsequent thereto reporting
beneficial ownership of five percent or less of such class.) (See
Rule 13d-7.)
(Continued on following pages)
Page 1 of 8 Pages
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CUSIP NO. 530174 10 1 Page 2 of 8 Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hinsdale Financial Corporation
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC AF BK
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS PURSUANT TO
ITEMS 2(D) OR 2(e) [ ]
Not Applicable
6. CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
7. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH SOLE VOTING POWER
492,927
8. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH SHARED VOTING POWER
0
9. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH SOLE DISPOSITIVE POWER
492,927
10. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
492,927
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.9%
14. TYPE OF REPORTING PERSON
HC CO
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CUSIP NO. 530174 10 1 Page 3 of 8 Pages
Item 1. Security and Issuer
The securities as to which this Schedule 13D ("Schedule")
relates are shares of common stock, $.01 par value per share
("Common Stock"), of Liberty Bancorp, Inc. (the "Issuer" or
"Liberty"). The address of the Issuer's principal executive office
is 5700 N. Lincoln Avenue, Chicago, Illinois 60659. Based upon the
Issuer's Form 10-Q for the quarter ended June 30, 1996, the Issuer
has outstanding 2,477,022 shares of Common Stock and no shares of
Preferred Stock.
Item 2. Identity and Background
(a)-(c) This Schedule is filed on behalf of Hinsdale Financial
Corporation (the "Company" or "Hinsdale"). The Company's principal
business is to be the holding company for Hinsdale Federal Bank for
Savings ("Hinsdale Federal"), a federally-chartered savings bank
offering a variety of loan and deposit products to the communities
it serves in the DuPage and Western Cook Counties in Illinois. The
address of the Company's principal executive office is One Grant
Square, Hinsdale, Illinois 60521.
Pursuant to General Instruction C of Schedule 13D, the
following information is being provided with respect to each
executive officer and director of the Company ("Insiders"):
Principal Occupation or
Name Employment and Address
William R. Rybak Executive Vice President
and Chief Financial Officer
Van Kampen/American Capital, Inc.
c/o One Grant Square
Hinsdale, Illinois 60521
Kenne P. Bristol President and Chief Executive Officer
Hinsdale Financial Corporation
Hinsdale Federal Bank for Savings
One Grant Square
Hinsdale, Illinois 60521
Donald E. Sveen Retired, Former President and
Chief Operating Officer
The John Nuveen Company
c/o One Grant Square
Hinsdale, Illinois 60521
Howard A. Davis President and Chief Executive Officer
Preferred Mortgage Associates, Ltd.
c/o One Grant Square
Hinsdale, Illinois 60521
Howard R. Jones President
Packaging Design Corporation
c/o One Grant Square
Hinsdale, Illinois 60521
Russell F. Stephens, Jr. President
Insurance Concepts & Design, Inc.
c/o One Grant Square
Hinsdale, Illinois 60521
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CUSIP NO. 530174 10 1 Page 4 of 8 Pages
(d) During the past five years, neither the Company nor the
Insiders have been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) During the past five years, neither the Company nor the
Insiders have been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or
state securities laws or a finding of any violation with
respect to such laws.
(f) All of the Insiders are U.S. citizens.
Item 3. Source and Amount of Funds or Other Consideration
The source of funds to be used by Hinsdale in making a
purchase of shares of common stock of Liberty, upon exercise of the
Option (defined in Item 4 hereof) to which this Schedule 13-D
relates, if and to the extent the Option is exercised, will be
either cash on hand at Hinsdale, dividends from Hinsdale Federal
and/or non-bank subsidiaries of Hinsdale, a loan from an
unaffiliated bank or other financial service company, or other
borrowings. Hinsdale has not made, as of the date hereof, any
definitive plans or arrangements regarding the source of such
funds.
Assuming the number of shares of Liberty common stock remains
unchanged from the number issued and outstanding on August 2, 1996
(i.e., 2,477,022 Shares), the exercise price of the Option in full
at an Option Price (defined in Item 4 hereof) of $24.125 per share,
will result in the purchase of 492,927 shares for an aggregate
purchase price of $11,891,864.
Item 4. Purpose of Transaction
On August 2, 1996, Hinsdale and Liberty entered into a Stock
Option Agreement (the "Stock Option Agreement") in which Liberty
granted to Hinsdale the option (the "Option") (under certain
circumstances, described in this Item 4) to purchase up to 492,927
shares of Liberty common stock at an exercise price of $24.125 per
share. The option was granted in connection with the execution by
Hinsdale and Liberty of a definitive Agreement and Plan of Merger
dated as of August 2, 1996 (the "Merger Agreement"), a copy of
which is attached hereto as Exhibit 2 and incorporated by reference
herein. The Merger Agreement provides for the merger of Liberty
with and into Hinsdale (the "Merger"), resulting in a surviving
company to be known as Alliance Bancorp, Inc. ("Alliance"). Upon
consummation of the Merger, the registration of Liberty common
stock under Section 12(g) of the Securities Exchange Act of 1934
will be terminated. At Closing, or as soon thereafter as
practicable, Liberty Federal Savings Bank will merge with and into
Hinsdale Federal, with Hinsdale Federal surviving the merger (the
"Bank Merger") and operating under the name "Liberty Federal Bank."
Hinsdale required Liberty to grant the Option as a condition
to Hinsdale entering into the Merger Agreement for the purpose of
(i) increasing the likelihood that the Merger and the Bank Merger
will be completed and (ii) providing some measure of compensation
to Hinsdale for loss of the benefits expected from the Merger
and/or loss of the opportunity to explore other transactions while
the Merger is pending, in the event that a third party acquires
control of Liberty. The Option is exercisable only upon the
occurrence of certain events that would jeopardize completion of
the Merger, none of which has occurred as of the date hereof. The
Option is exerciseable, in whole or part, 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 defined). An
Initial Triggering Event is defined as follows:
(i) Liberty or any of its Subsidiaries (each an "Liberty
Subsidiary"), without having received Hinsdale'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, and the rules and regulations
thereunder (the "1934 Act")) other than Hinsdale or any of its
Subsidiaries (each a "Hinsdale Subsidiary"). For purposes of the
Option Agreement, "Acquisition Transaction" shall mean (x) a merger
or consolidation, or any similar transaction,
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CUSIP NO. 530174 10 1 Page 5 of 8 Pages
involving Liberty or any Significant Subsidiary (as defined in Rule
1-02 of Regulation S-X promulgated by the SEC) of Liberty, (y) a
purchase, lease or other acquisition of all or substantially all of
the assets of Liberty or any Significant Subsidiary of Liberty, or
(z) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of beneficial ownership
of securities representing 25% or more of the voting power of
Liberty or any Significant Subsidiary of Liberty, provided that the
term "Acquisition Transaction" does not include any internal merger
or consolidation involving only Liberty and/or Liberty
Subsidiaries;
(ii) (A) Any person other than Hinsdale, or any Hinsdale
Subsidiary, or any Liberty Subsidiary acting in a fiduciary
capacity (collectively, "Excluded Persons"), alone or together with
such person's affiliates and associates (as such terms are defined
in Rule 12b-2 under the 1934 Act) shall have acquired beneficial
ownership or the right to acquire beneficial ownership of 25% or
more of the outstanding shares of Common Stock (the term
"beneficial ownership" for purposes of this Option Agreement having
the meaning assigned thereto in Section 13(d) of the 1934 Act, and
the rules and regulations thereunder) or (B) any group (as such
term is defined in Section 13(d)(3) of the 1934 Act), other than a
group of which only Excluded Persons are members, shall have been
formed that beneficially owns 25% or more of the shares of Common
Stock then outstanding;
(iii) Any person other than Hinsdale or any Hinsdale
Subsidiary shall have made a bona fide proposal to Liberty or its
shareholders 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 25% or more of
Liberty's voting power;
(iv) The Board of Directors of Liberty shall have failed to
recommend to its stockholders the adoption of the Merger Agreement
or shall have withdrawn, modified or changed its recommendation in
a manner adverse to Hinsdale;
(v) After a proposal is made by a third party (other than an
Excluded Person) to Liberty to engage in an Acquisition
Transaction, Liberty shall have intentionally and knowingly
breached any representation, warranty, covenant or agreement
contained in the Merger Agreement and such breach (x) would entitle
Hinsdale to terminate the Merger Agreement pursuant to Section
4.4(e) therein (without regard to any grace period provided for
therein) and (y) shall not have been cured prior to the date
Liberty sends to Hinsdale a written notice indicating that it
wishes to exercise the Option (the "Notice Date"); or
(vi) Any person other than Hinsdale or any Hinsdale
Subsidiary, other than in connection with a transaction to which
Hinsdale has given its prior written consent, shall have filed an
application or notice with the Office of Thrift Supervision ("OTS")
or other federal or state bank regulatory authority, for approval
to engage in an Acquisition Transaction.
A "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person other than an Excluded
Person (as defined) of beneficial ownership of 25% or more of the
then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described
in (i) above.
Additionally, at the request of Hinsdale at any time
commencing upon the first occurrence of a Repurchase Event (as
defined) and ending 12 months immediately thereafter, Liberty shall
repurchase from Hinsdale (i) the Option and (ii) all shares of
Liberty Common Stock purchased by Hinsdale pursuant hereto with
respect to which Hinsdale then has beneficial ownership. The date
on which Hinsdale exercises its rights under this section is
referred to as the "Request Date". Such repurchase shall be at an
aggregate price (the "Repurchase Consideration") equal to the sum
of:
(i) the aggregate Option Price paid by Hinsdale for any
shares of Liberty Common Stock acquired pursuant to the Option with
respect to which Hinsdale then has beneficial ownership;
<PAGE>
CUSIP NO. 530174 10 1 Page 6 of 8 Pages
(ii) the excess, if any, of (x) the Applicable Price (as
defined) for each share of Common Stock over (y) the Option Price
(subject to adjustment), multiplied by the number of shares of
Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price over the
Option paid (or, in the case of Option Shares with respect to which
the Option has been exercised but the Closing Date has not
occurred, payable) by Hinsdale for each share of Common Stock with
respect to which the Option has been exercised and with respect to
which Hinsdale then has beneficial ownership, multiplied by the
number of such shares.
If Hinsdale exercises its rights, Liberty shall, within 10
business days after the Request Date, pay the Repurchase
Consideration to Hinsdale in immediately available funds, and
contemporaneously with such payment, Hinsdale shall surrender to
Liberty the Option and the certificates evidencing the shares of
Common Stock purchased thereunder with respect to which Hinsdale
then has beneficial ownership, and Hinsdale shall warrant that it
has sole record and beneficial ownership of such shares and that
the same are then free and clear of all liens. Notwithstanding the
foregoing, to the extent that prior notification to or approval of
any federal or state regulatory authority is required in connection
with the payment of all or any portion of the Repurchase
Consideration, Hinsdale shall have the ongoing option to revoke its
request for repurchase pursuant to this section, in whole or in
part, or to require that Liberty deliver from time to time that
portion of the Repurchase Consideration that it is not then so
prohibited from paying and promptly file the required notice or
application for approval and expeditiously process the same (and
each party shall cooperate with the other in the filing of any such
notice or application and the obtaining of any such approval). If
any federal or state regulatory authority prohibits the repurchase
in part but not in whole, then Hinsdale shall have the right (i) to
revoke the repurchase request or (ii) to the extent permitted by
such regulatory authority, determine whether the repurchase should
apply to the Option and/or Option Shares and to what extent to
each, and Hinsdale shall thereupon have the right to exercise the
Option as to the number of Option Shares for which the Option was
exercisable at the Request Date less the sum of the number of
shares covered by the Option in respect of which payment has been
made pursuant to (ii) above and the number of shares covered by the
portion of the Option (if any) that has been repurchased.
A "Repurchase Event" shall occur if (i) any person (other than
Hinsdale or any Hinsdale subsidiary) shall have acquired beneficial
ownership of (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act), or the right to acquire beneficial
ownership of, or any "group" (as such term is defined under the
Exchange Act) shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, 50% or more of the
then outstanding shares of Liberty Common Stock, or (ii) any of the
transactions described in Section 7(a)(i), 7(a)(ii) or 7(a)(iii) of
the Stock Option Agreement shall be consummated.
The Stock Option Agreement provides that it will terminate
upon completion of the transactions contemplated by the Merger
Agreement.
The foregoing description of the Stock Option Agreement does
not purport to be complete and is qualified in its entirety by the
text of such Stock Option Agreement which is incorporated herein by
reference and attached hereto as Exhibit 2.
Item 5. Interest in Securities of the Issuer
(a) As of August 2, 1996, the Company directly and
beneficially owned 492,927 shares of the Issuer's Common Stock,
which represented 19.9% of the issued and outstanding shares of
Common Stock on such date.
(b) The Company has the sole power to vote and the sole power
to dispose of the 492,927 shares of Common Stock owned by it.
(c) There were no transactions in the common stock of Liberty
effected by Hinsdale or any person identified in Item 2(a)-(c)
above during the sixty days preceding the date of this Schedule 13-D.
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CUSIP NO. 530174 10 1 Page 7 of 8 Pages
(d) No person or entity other than the Company has the right
to receive, or the power to direct the receipt of, dividends from,
or the proceeds from the sale of, the shares of the Issuer's Common
Stock reported in this Schedule.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer
Except for the Merger Agreement and the Stock Option
Agreement, neither Liberty nor any person identified in Item 2(a)-(c)
above is a party to any contract, arrangement, understanding or
relationship (legal or otherwise) among themselves or with any
other person with respect to any securities of the Issuer,
including but not limited to transfer or voting of any of the
Common Stock, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of
profits or loss, the giving or withholding of proxies, or otherwise
subject to a contingency the occurrence of which would give another
person voting or investment power over the Common Stock.
Item 7. Material to be Filed as Exhibits
Exhibit 2, Agreement and Plan of Merger, dated as of August 2,
1996 between Hinsdale Financial Corporation and Liberty
Bancorp, Inc.
Stock Option Agreement, dated August 2, 1996, between Hinsdale
Financial Corporation and Liberty Bancorp, Inc. (attached as
Exhibit A to the Agreement and Plan of Merger, which is
attached hereto as Exhibit 2).
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CUSIP NO. 530174 10 1 Page 8 of 8 Pages
SIGNATURE
After reasonable inquiry and to the best of the knowledge and
belief of the undersigned, the undersigned certifies that the
information set forth in this Statement on Schedule 13D is true,
complete and correct.
LIBERTY BANCORP, INC.
By:(s) Frederic G. Novy
Frederic G. Novy
President and Chief
Executive Officer
Date: August 12, 1996
AGREEMENT AND PLAN OF MERGER
By and Between
HINSDALE FINANCIAL CORPORATION
And
LIBERTY BANCORP, INC.
Dated as of August 2, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE ITHE MERGER AND RELATED MATTERS. . . . . . . . . . . . .2
1.1 Merger, Surviving Corporation and Institution. . . . .2
1.2 Effective Time of the Merger . . . . . . . . . . . . .3
1.3 Conversion of Shares.. . . . . . . . . . . . . . . . .3
1.4 Surviving Corporation in the Company Merger. . . . . .4
1.5 Authorization for Issuance of Alliance Bancorp Common
Stock; Exchange of Certificates. . . . . . . . . . . .5
1.6 No Fractional Shares.. . . . . . . . . . . . . . . . .7
1.7 Stockholders' Meetings.. . . . . . . . . . . . . . . .7
1.8 LBI Stock Options. . . . . . . . . . . . . . . . . . .8
1.9 Registration Statement; Prospectus/Joint Proxy Statement9
1.10 Cooperation; Regulatory Approvals. . . . . . . . . . 10
1.11 Closing. . . . . . . . . . . . . . . . . . . . . . . 11
1.12 Closing of Transfer Books. . . . . . . . . . . . . . 11
1.13 Fiscal Year of Alliance Bancorp. . . . . . . . . . . 11
1.14 Bank Merger. . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IIREPRESENTATIONS AND WARRANTIES . . . . . . . . . . . 12
2.1 Organization, Good Standing, Authority, Insurance, Etc12
2.2 Capitalization . . . . . . . . . . . . . . . . . . . 13
2.3 Ownership of Subsidiaries. . . . . . . . . . . . . . 13
2.4 Financial Statements and Reports . . . . . . . . . . 13
2.5 Absence of Changes . . . . . . . . . . . . . . . . . 15
2.6 Prospectus/Joint Proxy Statement . . . . . . . . . . 15
2.7 No Broker's or Finder's Fees . . . . . . . . . . . . 15
2.8 Litigation and Other Proceedings . . . . . . . . . . 15
2.9 Compliance with Law. . . . . . . . . . . . . . . . . 16
2.10 Corporate Actions. . . . . . . . . . . . . . . . . . 16
2.11 Authority. . . . . . . . . . . . . . . . . . . . . . 17
2.12 Employment Arrangements. . . . . . . . . . . . . . . 18
2.13 Employee Benefits. . . . . . . . . . . . . . . . . . 18
2.14 Information Furnished. . . . . . . . . . . . . . . . 19
2.15 Property and Assets. . . . . . . . . . . . . . . . . 19
2.16 Agreements and Instruments . . . . . . . . . . . . . 20
2.17 Material Contract Defaults . . . . . . . . . . . . . 20
2.18 Tax Matters. . . . . . . . . . . . . . . . . . . . . 20
2.19 Environmental Matters. . . . . . . . . . . . . . . . 21
2.20 Loan Portfolio; Portfolio Management . . . . . . . . 21
2.21 Real Estate Loans and Investments. . . . . . . . . . 22
2.22 Derivatives Contracts. . . . . . . . . . . . . . . . 22
2.23 Exceptions to Representations and Warranties . . . . 22
ARTICLE IIICOVENANTS . . . . . . . . . . . . . . . . . . . . . 23
3.1 Investigations; Access and Copies. . . . . . . . . . 23
3.2 Conduct of Business. . . . . . . . . . . . . . . . . 24
3.3 No Solicitation. . . . . . . . . . . . . . . . . . . 26
3.4 Stockholder Approvals. . . . . . . . . . . . . . . . 27
3.5 Accountants' Letters . . . . . . . . . . . . . . . . 27
3.6 Publicity. . . . . . . . . . . . . . . . . . . . . . 27
3.7 Cooperation Generally. . . . . . . . . . . . . . . . 27
3.8 Additional Financial Statements and Reports. . . . . 28
3.9 Stock Exchange Listing . . . . . . . . . . . . . . . 28
3.10 Employee Benefits and Agreements . . . . . . . . . . 28
3.11 Conforming Adjustments . . . . . . . . . . . . . . . 31
3.12 Fairness Opinion . . . . . . . . . . . . . . . . . . 32
ARTICLE IVCONDITIONS OF THE MERGER;TERMINATION OF AGREEMENT. . 32
4.1 General Conditions . . . . . . . . . . . . . . . . . 32
4.2 Conditions to Obligations of HFC . . . . . . . . . . 34
4.3 Conditions to Obligations of LBI . . . . . . . . . . 34
4.4 Termination of Agreement and Abandonment of Merger . 35
ARTICLE VTERMINATION OF OBLIGATIONS; PAYMENT OF EXPENSES . . . 37
5.1 Termination, Lack of Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . 37
5.2 Payment of Expenses. . . . . . . . . . . . . . . . . 37
ARTICLE VICERTAIN POST-MERGER AGREEMENTS . . . . . . . . . . . 37
6.1 Registration of Stock Underlying Stock Options . . . 37
6.2 Reports to the SEC . . . . . . . . . . . . . . . . . 37
6.3 Indemnification. . . . . . . . . . . . . . . . . . . 38
6.4 Directors, Executive Officers and Committees of Surviving
Corporation. . . . . . . . . . . . . . . . . . . . . 39
6.5 Directors, Executive Officers and Committees of Liberty
Federal Bank . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VIIGENERAL . . . . . . . . . . . . . . . . . . . . . . 41
7.1 Amendments . . . . . . . . . . . . . . . . . . . . . 41
7.2 Confidentiality. . . . . . . . . . . . . . . . . . . 41
7.3 Governing Law. . . . . . . . . . . . . . . . . . . . 41
7.4 Notices. . . . . . . . . . . . . . . . . . . . . . . 41
7.5 No Assignment. . . . . . . . . . . . . . . . . . . . 42
7.6 Headings . . . . . . . . . . . . . . . . . . . . . . 43
7.7 Counterparts . . . . . . . . . . . . . . . . . . . . 43
7.8 Construction and Interpretation. . . . . . . . . . . 43
7.9 Entire Agreement . . . . . . . . . . . . . . . . . . 43
7.10 Severability . . . . . . . . . . . . . . . . . . . . 43
7.11 No Third Party Beneficiaries . . . . . . . . . . . . 43
7.12 No Employment Solicitation . . . . . . . . . . . . . 43
Schedules:
Schedule I Disclosure Schedule for HFC. . . . . . . .N/A
Schedule II Disclosure Schedule for LBI. . . . . . . .N/A
Exhibits:
Exhibit A HFC Stock Option Agreement . . . . . . . .N/A
Exhibit B LBI Stock Option Agreement . . . . . . . .N/A
Exhibit C Form of HFC Voting Agreement . . . . . . .N/A
Exhibit D Form of LBI Voting Agreement . . . . . . .N/A
Exhibit 1.1 Bank Plan of Merger . . . . . . . . .N/A
Exhibit 4.2 Form of Opinion of Counsel for LBI. .N/A
Exhibit 4.3 Form of Opinion of Counsel for HFC. .N/A
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is dated as of
August 2, 1996, by and among Hinsdale Financial Corporation, a
Delaware corporation ("HFC") and Liberty Bancorp, Inc., a Delaware
corporation ("LBI"). Each of HFC and LBI is sometimes individually
referred to herein as a "party," and HFC and LBI are sometimes
collectively referred to herein as the "parties."
RECITALS
WHEREAS, HFC, a non-diversified, unitary savings and loan
holding company, with principal offices in Hinsdale, Illinois, owns
all of the issued and outstanding capital stock of Hinsdale Federal
Bank for Savings, a federally chartered savings bank ("Hinsdale
Federal Bank"), with principal offices in Hinsdale, Illinois. As
of the date hereof, HFC has 6.0 million authorized shares of common
stock, par value $0.01 per share ("HFC Common Stock"), of which
2,690,155 shares are outstanding, and 1.5 million authorized shares
of preferred stock, none of which is outstanding.
WHEREAS, LBI, a non-diversified, unitary savings and loan
holding company, with principal offices in Chicago, Illinois, owns
all of the issued and outstanding capital stock of Liberty Federal
Savings Bank, a federally chartered savings bank ("Liberty
Federal"), with principal offices in Chicago, Illinois. As of the
date hereof, LBI has 5.0 million authorized shares of common stock,
par value $0.01 per share ("LBI Common Stock"), of which 2,477,022
shares are outstanding, and 1.0 million authorized shares of
preferred stock, none of which is outstanding.
WHEREAS, HFC and LBI desire to combine their respective
holding companies through a tax-free, stock-for-stock merger so
that the respective stockholders of HFC and LBI will have an equity
ownership in the combined holding company.
WHEREAS, neither the Board of Directors of HFC nor the Board
of Directors of LBI seeks to sell its respective holding company at
this time but both Boards desire to merge their respective holding
companies in a transaction structured as a merger of equals.
WHEREAS, it is intended that to accomplish this result, LBI
will be merged with and into HFC, with HFC as the surviving
corporation, which effective upon consummation of the transactions
contemplated hereby, will amend its certificate of incorporation
to, among other things, operate under the name "Alliance Bancorp."
The merger of LBI with and into HFC is referred to herein as the
"Company Merger." The surviving corporation after the Company
Merger is referred to herein as "Alliance Bancorp."
WHEREAS, immediately following consummation of the Company
Merger, Liberty Federal will be merged with and into Hinsdale
Federal Bank, with Hinsdale Federal Bank as the surviving savings
institution, which effective upon consummation of the transactions
contemplated hereby, will operate under the name "Liberty Federal
Bank." Such merger is referred to herein as the "Bank Merger." The
Company Merger and the Bank Merger are sometimes collectively
referred to herein as the "Merger." Upon effectiveness of the Bank
Merger, the charter of Hinsdale Federal Bank shall be amended to,
among other things, change the name of the bank to "Liberty Federal
Bank." The resulting/surviving institution in the Bank Merger is
herein referred to as "Liberty Federal Bank" or the "Surviving
Institution."
WHEREAS, it is intended that for federal income tax purposes
the Merger shall qualify as a reorganization within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code") and this Agreement shall constitute a plan
of reorganization pursuant to Section 368 of the Internal Revenue
Code.
WHEREAS, as an inducement to and condition of HFC's
willingness to enter into this Agreement and the HFC Stock Option
Agreement, LBI will grant to HFC an option pursuant to the LBI
Stock Option Agreement, and as an inducement to and condition of
LBI's willingness to enter into this Agreement and the LBI Stock
Option Agreement, HFC will grant to LBI an option pursuant to the
HFC Stock Option Agreement. The LBI Stock Option Agreement and the
HFC Stock Option Agreement are attached hereto as Exhibits A and B,
respectively. References herein to the "Stock Option Agreement"
shall refer in the case of HFC to the HFC Stock Option Agreement
and in the case of LBI to the LBI Stock Option Agreement.
WHEREAS, concurrently with the execution and delivery of this
Agreement, and as a condition and inducement to the parties'
willingness to enter into this Agreement, HFC and each of the
directors of HFC, and LBI and each of the directors of LBI, have
entered into voting agreements in the forms attached hereto as
Exhibits C and D, respectively (the "Voting Agreements").
WHEREAS, the Boards of Directors of HFC and LBI (at meetings
duly called and held) have determined that this Agreement and the
transactions contemplated hereby are in the best interests of HFC
and LBI, respectively, and their respective stockholders and have
approved this Agreement and the Stock Option Agreement.
Consummation of the Merger is subject to the prior approval of the
Office of Thrift Supervision ("OTS") and the stockholders of HFC
and LBI, among other conditions specified herein.
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter
set forth, the parties hereby agree as follows:
ARTICLE I
THE MERGER AND RELATED MATTERS
1.1 Merger, Surviving Corporation and Institution. Subject
to the terms and conditions of this Agreement, and pursuant to the
provisions of the Delaware General Corporation Law (the "DGCL"),
the Home Owners' Loan Act, as amended ("HOLA"), and the rules and
regulations promulgated thereunder (the "Thrift Regulations"), (a)
at the Company Merger Effective Time (as hereinafter defined), (i)
LBI shall be merged with and into HFC pursuant to the terms and
conditions set forth herein, (ii) the separate corporate existence
of LBI shall cease, and (iii) Alliance Bancorp, as the surviving
corporation, shall continue to be governed by the laws of the State
of Delaware, and (b) thereafter, at the Bank Merger Effective Time
(as hereinafter defined) Liberty Federal shall be merged with and
into Hinsdale Federal Bank pursuant to the terms and conditions set
forth herein and in the Bank Merger Agreement substantially in the
form attached hereto as Exhibit 1.1. The Company Merger shall have
the effects specified in the DGCL, Section 1.4(e) hereof and the
Company Merger Agreement. Upon consummation of the Bank Merger,
the separate existence of Liberty Federal shall cease, and Hinsdale
Federal Bank, operating under the name "Liberty Federal Bank" shall
continue as the surviving institution of the Bank Merger. From and
after the Bank Merger Effective Time, the Surviving Institution in
the Bank Merger shall possess all of the properties and rights and
be subject to all of the liabilities and obligations of Hinsdale
Federal Bank and Liberty Federal, all as more fully set forth in
the Thrift Regulations, Section 1.14 hereof and the Bank Merger
Agreement.
1.2 Effective Time of the Merger. As soon as practicable
after each of the conditions set forth in Article IV hereof has
been satisfied or waived, HFC and LBI will file, or cause to be
filed, certificates of merger with the appropriate authorities of
Delaware for the Company Merger and articles of combination with
the OTS for the Bank Merger, which certificates of merger and
articles of combination shall in each case be in the form required
by and executed in accordance with the applicable provisions of law
and the Thrift Regulations, respectively. The Company Merger shall
become effective at the time and date which is the later of the
time at which (i) the Delaware certificate of merger is filed with
the appropriate authorities of Delaware ("Company Merger Effective
Time"), which shall be immediately following the Closing (as
defined in Section 1.11 hereof) and on the same day as the Closing
if practicable, or (ii) at such other date and time as may be
agreed to by the parties and specified in the certificates of
merger in accordance with applicable law. The Bank Merger shall
become effective at the time the articles of combination for such
merger are endorsed by the OTS pursuant to Section 552.13(k) of the
Thrift Regulations (the "Bank Merger Effective Time"). The parties
shall cause the Company Merger to become effective before the Bank
Merger.
1.3 Conversion of Shares.
(a) At the Company Merger Effective Time, by virtue of the
Company Merger and without any action on the part of HFC or LBI or
the holders of shares of HFC or LBI Common Stock:
(i) Each outstanding share of LBI Common Stock issued
and outstanding at the Company Merger Effective Time, except as
provided in clause (a) (ii) of this Section and Section 1.6 hereof,
shall cease to be outstanding, shall cease to exist and shall be
converted into and represent solely 1.054 shares of Common Stock
of Alliance Bancorp (the "Conversion Ratio"), and shall no longer
be a share of LBI Common Stock.
(ii) Any shares of LBI Common Stock which are owned or
held by either party hereto or any of their respective Subsidiaries
(as defined in Section 2.1 hereof) (other than in a fiduciary
capacity) at the Company Merger Effective Time shall cease to
exist, the certificates for such shares shall as promptly as
practicable be canceled, such shares shall not be converted into or
represent any shares of Alliance Bancorp Common Stock, and no
shares of capital stock of Alliance Bancorp shall be issued or
exchanged therefor.
(iii) Each share of HFC Common Stock issued and
outstanding immediately before the Company Merger Effective Time
shall remain an outstanding share of Common Stock of Alliance
Bancorp as the surviving corporation.
(iv) The holders of certificates representing shares of
LBI Common Stock shall cease to have any rights as stockholders of
LBI, except such rights, if any, as they may have pursuant to
applicable law.
(v) Subject to Section 3.2 herein, if the issued and
outstanding shares of HFC or LBI Common Stock shall, during the
period commencing on the date hereof and ending with the Company
Merger Effective Time, through a reorganization, recapitalization,
stock split, reverse stock split, stock dividend, reclassification,
combination of shares or similar corporate rearrangement in the
capitalization of HFC or LBI, as the case may be, increase or
decrease in number or be changed into or exchanged for a different
kind or number of securities, then an appropriate and proportionate
adjustment shall be made to the Conversion Ratio.
1.4 Surviving Corporation in the Company Merger.
(a) HFC shall be the surviving corporation in the Company
Merger and shall operate under the name "Alliance Bancorp." The
headquarters of the surviving corporation shall be located in
Hinsdale, Illinois.
(b) The Certificate of Incorporation of HFC as in effect
immediately prior to the Company Merger Effective Time, shall, as
of the Company Merger Effective Time, be amended to change the name
of HFC to Alliance Bancorp and otherwise as contemplated in Section
1.7 (a) herein and the Certificate of Incorporation, as so amended,
shall be the Certificate of Incorporation of Alliance Bancorp as
the surviving corporation until subsequently amended; provided,
however, if the HFC stockholders shall fail to approve any of the
amendments to HFC's Certificate of Incorporation as contemplated in
Section 1.7(a) herein, then, the Certificate of Incorporation of
Alliance Bancorp as the surviving corporation shall not include
those amendments not so approved.
(c) At the Company Merger Effective Time, the Bylaws of HFC,
as then in effect, shall be amended to reflect the change of the
name of the HFC to Alliance Bancorp and otherwise to conform to the
agreements of the parties as reflected in Section 6.4 herein, and
such Bylaws, as so amended shall be the Bylaws of Alliance Bancorp
as the surviving corporation, until subsequently amended in
accordance with the DGCL.
(d) The directors and executive officers of Alliance Bancorp
as the surviving corporation following the Company Merger shall be
as provided in Section 6.4 herein until such directors or officers
are replaced or additional directors or officers are elected or
appointed in accordance with the provisions of Section 6.4 of this
Agreement, the Certificate of Incorporation or the Bylaws of
Alliance Bancorp as the surviving corporation.
(e) From and after the Company Merger Effective Time:
(i) Alliance Bancorp as the surviving corporation shall
possess all assets and property of every description, and every
interest in the assets and property, wherever located, and the
rights, privileges, immunities, powers, franchises, and authority,
of a public as well as of a private nature, of each of HFC and LBI,
and all obligations belonging or due to each of HFC and LBI, all of
which shall vest in Alliance Bancorp as the surviving corporation
without further act or deed. Title to any real estate or any
interest in the real estate vested in HFC or LBI shall not revert
or in any way be impaired by reason of the Company Merger.
(ii) Alliance Bancorp as the surviving corporation will
be liable for all the obligations of each of HFC and LBI. Any
claim existing, or action or proceeding pending, by or against HFC
or LBI, may be prosecuted to judgement, with right of appeal, as if
the Company Merger had not taken place, or Alliance Bancorp as the
surviving corporation may be substituted in its place.
(iii) All the rights of creditors of each of HFC and
LBI will be preserved unimpaired, and all liens upon the property
of HFC and LBI will be preserved unimpaired only on the property
affected by such liens immediately before the Company Merger
Effective Time.
1.5 Authorization for Issuance of Alliance Bancorp Common
Stock; Exchange of Certificates.
(a) HFC, and subsequent to the Company Merger Effective Time,
Alliance Bancorp, shall reserve for issuance a sufficient number of
shares of its common stock for the purpose of issuing its shares to
LBI's stockholders in accordance with this Article I.
(b) After the Company Merger Effective Time, holders of
certificates theretofore representing outstanding shares of LBI
Common Stock (other than as provided in Section 1.3 (a) (ii)
hereof), upon surrender of such certificates to an exchange agent
appointed jointly by HFC and LBI (the "Exchange Agent"), shall be
entitled to receive certificates for the number of whole shares of
Common Stock of Alliance Bancorp ("Alliance Bancorp Common Stock")
into which shares of LBI Common Stock theretofore evidenced by the
certificates so surrendered shall have been converted, as provided
in Section 1.3 hereof, and cash payments in lieu of fractional
shares, if any, as provided in Section 1.6 hereof. As soon as
practicable after the Company Merger Effective Time, the Exchange
Agent will send a notice and transmittal form to each LBI
stockholder of record at the Company Merger Effective Time whose
LBI Common Stock shall have been converted into Alliance Bancorp
Common Stock advising such stockholder of the effectiveness of the
Company Merger and the procedure for surrendering to the Exchange
Agent outstanding certificates formerly representing LBI Common
Stock in exchange for new certificates for Alliance Bancorp Common
Stock. Upon surrender, each certificate representing LBI Common
Stock shall be canceled.
(c) Until surrendered as provided in this Section 1.5 hereof,
each outstanding certificate which, before the Company Merger
Effective Time, represented LBI Common Stock (other than shares
canceled at the Company Merger Effective Time pursuant to Section
1.3 (a) (ii) hereof) will be deemed for all corporate purposes to
represent the number of whole shares of Alliance Bancorp Common
Stock into which the shares of LBI Common Stock formerly
represented thereby were converted and the right to receive cash in
lieu of fractional shares. However, until such outstanding
certificates formerly representing LBI Common Stock are so
surrendered, no dividend or distribution payable to holders of
record of Alliance Bancorp Common Stock shall be paid to any holder
of such outstanding certificates, but upon surrender of such
outstanding certificates by such holder there shall be paid to such
holder the amount of any dividends or distributions, without
interest, theretofore paid with respect to such whole shares of
Alliance Bancorp Common Stock, but not paid to such holder, and
which dividends or distribution had a record date occurring on or
after the Company Merger Effective Time and the amount of any cash,
without interest, payable to such holder in lieu of fractional
shares pursuant to Section 1.6 hereof. After the Company Merger
Effective Time, there shall be no further registration of transfers
on the records of LBI of outstanding certificates formerly
representing shares of LBI Common Stock and, if a certificate
formerly representing such shares is presented to Alliance Bancorp,
it shall be forwarded to the Exchange Agent for cancellation and
exchange for a certificate representing shares of Alliance Bancorp
Common Stock and cash for fractional shares (if any), as herein
provided. Following one year after the Company Merger Effective
Time, the Exchange Agent shall return to Alliance Bancorp as the
surviving corporation any certificates for Alliance Bancorp Common
Stock and cash remaining in the possession of the Exchange Agent
(together with any dividends in respect thereof) and thereafter
shareholders of LBI shall look exclusively to Alliance Bancorp for
shares of the Alliance Bancorp Common Stock and cash to which they
are entitled hereunder.
(d) All shares of Alliance Bancorp Common Stock and cash in
lieu of any fractional share issued and paid upon the conversion of
LBI Common Stock in accordance with the above terms and conditions
shall be deemed to have been issued and paid in full satisfaction
of all rights pertaining to such LBI Common Stock.
(e) If any new certificate for Alliance Bancorp Common Stock
is to be issued in a name other than that in which the certificate
surrendered in exchange thereof is registered, it shall be a
condition of the issuance therefor that the certificate surrendered
in exchange shall be properly endorsed and otherwise in proper form
for transfer and that the person requesting such transfer pay to
the Exchange Agent any transfer or other taxes required by reason
of the issuance of a new certificate representing shares of
Alliance Bancorp Common Stock in any name other than that of the
registered holder of the certificate surrendered, or establish to
the satisfaction of the Exchange Agent that such tax has been paid
or is not payable.
(f) In the event any certificate representing LBI Common
Stock shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed
certificate, upon the making of an affidavit of that fact by the
holder thereof, such shares of Alliance Bancorp Common Stock and
cash for fractional shares, if any, as may be required pursuant
hereto; provided, however, that Alliance Bancorp or the Exchange
Agent may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or
destroyed certificate to deliver a bond in such sum as it may
direct as indemnity against any claim that may be made against
Alliance Bancorp, HFC, LBI, the Exchange Agent or any other party
with respect to the certificate alleged to have been lost, stolen
or destroyed.
1.6 No Fractional Shares. Notwithstanding any term or
provision hereof, no fractional shares of Alliance Bancorp Common
Stock, and no certificates or scrip therefor, or other evidence of
ownership thereof, will be issued upon the conversion of or in
exchange for any shares of LBI Common Stock; no dividend or
distribution with respect to Alliance Bancorp Common Stock shall be
payable on or with respect to any fractional share interest; and no
such fractional share interest shall entitle the owner thereof to
vote or to any other rights of a stockholder of Alliance Bancorp as
the Surviving Corporation. In lieu of such fractional share
interest, any holder of LBI Common Stock who would otherwise be
entitled to a fractional share of Alliance Bancorp Common Stock
will, upon surrender of his certificate or certificates
representing LBI Common Stock outstanding immediately before the
Company Merger Effective Time, be paid the applicable cash value of
such fractional share interest, which shall be equal to the product
of the fraction of the share to which such holder would otherwise
have been entitled and the closing price of HFC Common Stock on the
trading day immediately prior to the Company Merger Effective Time.
For the purposes of determining any such fractional share
interests, all shares of LBI Common Stock owned by a LBI
stockholder shall be combined so as to calculate the maximum number
of whole shares of Alliance Bancorp Common Stock issuable to such
LBI stockholder.
1.7 Stockholders' Meetings.
(a) HFC shall, at the earliest practicable date, hold a
meeting of its stockholders (the "HFC Stockholders' Meeting") to
submit for stockholder approval this Agreement and the Merger. The
affirmative vote of a majority of the issued and outstanding shares
of HFC Common Stock entitled to vote shall be required for such
approval. At the HFC Stockholders' Meeting HFC shall also submit
for stockholder approval the following amendments to its
Certificate of Incorporation as follows:
(i) an amendment to Article FOURTH, paragraph A,
increasing (A) the number of authorized shares of all classes of
stock to 12.5 million shares and (B) the number of authorized
shares of common stock to 11 million shares.
(ii) an amendment to the FIRST Article to rename the
corporation "Alliance Bancorp" at the Company Merger Effective
Time.
(b) LBI shall, at the earliest practicable date, hold a
meeting of its stockholders (the "LBI Stockholders' Meeting") to
submit for stockholder approval this Agreement, the Company Merger
Agreement and the Merger. The affirmative vote of a majority of
the issued and outstanding shares of LBI Common Stock entitled to
vote shall be required for such approval.
1.8 LBI Stock Options.
(a) At the Company Merger Effective Time, by virtue of the
Merger and without any action on the part of any holder of an
option, each outstanding option under the stock option plans of LBI
(the "LBI Option Plans") shall continue outstanding as an option to
purchase, in place of the purchase of each share of LBI Common
Stock, the number of shares (rounded up to the nearest whole share)
of Alliance Bancorp Common Stock that would have been received by
the optionee in the Merger had the option been exercised in full
(without regard to any limitations contained therein on exercise)
for shares of LBI Common Stock immediately before the Company
Merger upon the same terms and conditions under the relevant option
as were applicable immediately before the Company Merger Effective
Time, except for appropriate pro rata adjustments as to the
relevant option price for shares of Alliance Bancorp Common Stock
substituted therefor so that the aggregate option exercise price of
shares subject to an option immediately following the assumption
and substitution shall be the same as the aggregate option exercise
price for such shares immediately before such assumption and
substitution. Alliance Bancorp shall take such actions as may be
required to effectuate the foregoing. It is intended that the
foregoing assumption shall be undertaken consistent with and in a
manner that will not constitute a "modification" under Section 424
of the Internal Revenue Code as to any stock option which is an
"incentive stock option".
(b) At all times after the Company Merger Effective Time,
Alliance Bancorp shall reserve for issuance such number of shares
of Alliance Bancorp Common Stock as is necessary so as to permit
the exercise of options granted under the LBI Option Plans in the
manner contemplated by this Agreement and the instruments pursuant
to which such options were granted. Alliance Bancorp shall make
all filings required under federal and state securities laws
promptly following the Company Merger Effective Time so as to
permit the exercise of such options and the sale of the shares
received by the optionee upon such exercise at and after the
Company Merger Effective Time and Alliance Bancorp shall continue
to make such filings thereafter as may be necessary to permit the
continued exercise of options and sale of such shares. Alliance
Bancorp shall adopt a new stock option plan providing for the grant
of options for up to 300,000 shares of Alliance Bancorp Common
Stock and shall undertake to have such plan voted on by
stockholders.
(c) Following the Company Merger Effective Time, in case of
any reclassification, reorganization, recapitalization, stock
dividend or distribution, subdivision, combination or exchange of
the outstanding shares of Alliance Bancorp Common Stock or in case
of any consolidation or merger of Alliance Bancorp with or into any
other corporation, or in the case of any sale or transfer of all or
substantially all of Alliance Bancorp assets, then, the rights of
the optionees who then hold outstanding options under the LBI
Option Plans shall be appropriately adjusted so that the optionees
will be in the same position as if their options had been exercised
immediately before such corporate action or transaction. The
provisions hereof shall similarly apply following the Company
Merger Effective Time to successive reclassifications,
reorganizations, recapitalizations, stock dividends or
distributions, subdivisions, combinations or exchanges,
consolidations, mergers, sales or transfers.
1.9 Registration Statement; Prospectus/Joint Proxy Statement.
(a) For the purposes (i) of holding the HFC Stockholders'
Meeting, (ii) of registering with the Securities and Exchange
Commission ("SEC") and with applicable state securities authorities
the Alliance Bancorp Common Stock to be issued to holders of LBI
Common Stock in connection with the Merger and (iii) of holding the
LBI Stockholders' Meeting, the parties shall cooperate in the
preparation of an appropriate registration statement (such
registration statement, together with all and any amendments and
supplements thereto, is referred to herein as the "Registration
Statement"), including the Prospectus/Joint Proxy Statement
satisfying all applicable requirements of applicable state laws,
and of the Securities Act of 1933 (the "Securities Act") and the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules
and regulations thereunder (such Prospectus/Joint Proxy Statement,
together with any and all amendments or supplements thereto, is
referred to herein as the "Prospectus/Joint Proxy Statement").
(b) HFC shall furnish such information concerning HFC and its
Subsidiaries as is necessary in order to cause the Prospectus/Joint
Proxy Statement, insofar as it relates to such entities, to comply
with Section l.9(a) hereof. HFC agrees promptly to advise LBI if
at any time before the LBI or HFC Stockholders' Meeting any
information provided by HFC in the Prospectus/Joint Proxy Statement
becomes incorrect or incomplete in any material respect and to
provide the information needed to correct such inaccuracy or
omission. HFC shall furnish LBI with such supplemental information
as may be necessary in order to cause such Prospectus/Joint Proxy
Statement, insofar as it relates to HFC and its Subsidiaries, to
comply with Section l.9(a) hereof.
(c) LBI shall furnish HFC with such information concerning
LBI and its Subsidiaries as is necessary in order to cause the
Prospectus/Joint Proxy Statement, insofar as it relates to such
entities, to comply with Section l.9(a) hereof. LBI agrees
promptly to advise HFC if at any time before the HFC or LBI
Stockholders' Meeting any information provided by LBI in the
Prospectus/Joint Proxy Statement becomes incorrect or incomplete in
any material respect and to provide HFC with the information needed
to correct such inaccuracy or omission. LBI shall furnish HFC with
such supplemental information as may be necessary in order to cause
the Prospectus/Joint Proxy Statement, insofar as it relates to LBI
and its Subsidiaries, to comply with Section 1.9(a).
(d) HFC shall promptly file the Registration Statement with
the SEC and applicable state securities agencies. HFC and LBI
shall use all reasonable efforts to cause the Registration
Statement to become effective under the Securities Act and
applicable state securities laws at the earliest practicable date.
LBI authorizes HFC to utilize in the Registration Statement the
information concerning LBI and its Subsidiaries provided to HFC for
the purpose of inclusion in the Prospectus/Joint Proxy Statement.
HFC shall advise LBI promptly when the Registration Statement has
become effective and of any supplements or amendments thereto, and
HFC shall furnish LBI with copies of all such documents. Before
the Company Merger Effective Time or the termination of this
Agreement, each party shall consult with the other with respect to
any material (other than the Prospectus/Joint Proxy Statement) that
might constitute a "prospectus" relating to the Merger within the
meaning of the Securities Act.
(e) HFC and LBI shall consult with each other in order to
identify all persons or entities who are or may be deemed to be
"affiliates" of either HFC or LBI ("Affiliates") within the meaning
of Rule 145 under the Securities Act. Notwithstanding anything
contained in this Agreement to the contrary, all shares of Alliance
Bancorp Common Stock issued to such HFC and LBI Affiliates shall
bear a legend upon the face thereof stating that transfer of the
securities is or may be restricted by the provisions of the
Securities Act and notice shall be given to Alliance Bancorp's
transfer agent of such restriction for all Affiliates; provided
that such legend shall be removed by delivery of a substitute
certificate without such legend if (i) any such shares of Alliance
Bancorp Common Stock shall have been registered under the
Securities Act for sale, transfer or other disposition and are
sold, transferred or otherwise disposed of thereunder, or (ii) any
such shares of stock are sold in accordance with the applicable
provisions of Rule 144 promulgated by the SEC under the Securities
Act, or (iii) such person is not at the time an affiliate of
Alliance Bancorp and has been the beneficial owner of the Alliance
Bancorp Common Stock for at least two years (or such period as may
be prescribed by the Securities Act and the rules and regulations
promulgated thereunder), or (iv) Alliance Bancorp shall have
received a letter from the staff of the SEC, or an opinion of
counsel reasonably acceptable to Alliance Bancorp, to the effect
that the stock transfer restrictions and the legend are not
required for purposes of the Securities Act. So long as shares of
such Alliance Bancorp Common Stock are subject to the restrictions
set forth in this Section 1.9, no transfer of such Alliance Bancorp
Common Stock shall be allowed unless and until the transfer agent
is provided with such information as may reasonably be requested by
counsel for Alliance Bancorp to ensure that such transfer will not
violate applicable provisions of the Securities Act or rules,
regulations or policies of the SEC.
1.10 Cooperation; Regulatory Approvals. The parties shall
cooperate, and shall cause each of their respective affiliates and
Subsidiaries to cooperate, in the preparation and submission by
them, as promptly as reasonably practicable, of such applications,
petitions, and other documents and materials as any of them may
reasonably deem necessary or desirable to the OTS, Federal Trade
Commission ("FTC"), Department of Justice ("DOJ"), SEC, Secretary
of State of Delaware, other regulatory authorities, holders of the
voting shares of common stock of HFC and LBI, and any other persons
for the purpose of obtaining any approvals or consents necessary to
consummate the transactions contemplated hereby. Each party will
have the right to review and comment on such applications,
petitions and other documents and materials in advance and shall
furnish to the other copies thereof promptly after filing or
submission thereof. Any such materials must be reasonably
acceptable to both HFC and LBI prior to filing with any regulatory
authority or transmission to stockholders or other third parties,
except to the extent that HFC or LBI is legally required to proceed
prior to obtaining the acceptance of the other party hereto. The
parties agree to use their best efforts to file applications with
OTS within 30 days of the date of this Agreement. Each party
agrees to consult with the other with respect to obtaining all
necessary consents and approvals, and each will keep the other
apprised of the status of matters relating to such approvals and
consents and the consummation of the transactions contemplated
hereby. At the date hereof, no party is aware of any reason that
the regulatory approvals required to be obtained by it would not be
obtained or would be obtained subject to conditions that would have
or result in a material adverse effect on Alliance Bancorp as the
surviving corporation or the Surviving Institution in the Bank
Merger.
1.11 Closing. If (i) this Agreement has been duly approved by
the stockholders of HFC and LBI, and (ii) all relevant conditions
of this Agreement have been satisfied or waived, a closing (the
"Closing") shall take place as promptly as practicable thereafter
at the principal office of HFC, or at such other place as the
parties agree, at which the parties will exchange certificates,
opinions, letters and other documents as required hereby and will
make the filings described in Section 1.2 hereof. Such Closing
will take place within thirty (30) days after the satisfaction or
waiver of all conditions and/or obligations precedent to Closing
contained in Article IV of this Agreement, or at such other time as
the parties agree. The parties shall use their best efforts to
cause the Closing to occur on or before June 30, 1997.
1.12 Closing of Transfer Books. At the Company Merger
Effective Time, the transfer books for LBI Common Stock shall be
closed, and no transfer of shares of LBI Common Stock shall
thereafter be made on such books.
1.13 Fiscal Year of Alliance Bancorp. At the Company Merger
Effective Time, Alliance Bancorp's fiscal year end shall be
December 31.
1.14 Bank Merger.
(a) At the Bank Merger Effective Time, each share of Liberty
Federal common stock issued and outstanding immediately prior
thereto shall, by virtue of the Bank Merger, be canceled. No new
shares of the capital stock or other securities or obligations of
Liberty Federal shall be issued or be deemed issued with respect to
or in exchange for such canceled shares, and such canceled shares
of common stock of Liberty Federal shall not be converted into any
shares or other securities or obligations of any other entity.
(b) At the Bank Merger Effective Time, the Charter and Bylaws
of Hinsdale Federal Bank, as then in effect, shall be amended to
conform to the agreements of the parties as reflected in this
Section 1.14 and Section 6.5 herein, and such Charter and Bylaws,
as so amended, shall be the Charter and Bylaws of the Surviving
Institution of the Bank Merger, and may thereafter be amended in
accordance with applicable law. At the Bank Merger Effective Time,
Hinsdale Federal Bank's Charter shall be amended so that the
Surviving Bank shall be named "Liberty Federal Bank".
(c) The directors and executive officers of the Surviving
Institution following the Bank Merger shall be as provided in
Section 6.5 hereof until such directors or officers are replaced or
additional directors or officers are elected or appointed in
accordance with the provisions of this Agreement, the Charter or
Bylaws of Liberty Federal Bank.
(d) The liquidation account established by Liberty Federal
pursuant to the plan of conversion adopted in connection with its
conversion from mutual to stock form shall continue to be
maintained by the Surviving Institution after the Bank Merger
Effective Time for the benefit of those persons and entities who
had interests in the Liberty Federal liquidation account as of the
Bank Merger Effective Time and who continue to have rights therein.
If required by the rules and regulations of the OTS, the Surviving
Institution shall amend its Charter specifically to provide for the
continuation of the liquidation account established by Liberty
Federal.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
HFC represents and warrants to LBI, and LBI represents and
warrants to HFC, except as disclosed in the Disclosure Schedules
delivered by each party to the other pursuant to Section 2.23
herein, as follows:
2.1 Organization, Good Standing, Authority, Insurance, Etc.
It is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Section 2.1 of
its Disclosure Schedule lists each "subsidiary" of it within the
meaning of Section 10(a)(1)(G) of HOLA (individually a "Subsidiary"
and collectively the "Subsidiaries"). Each of its Subsidiaries is
duly organized, validly existing and in good standing under the
laws of the respective jurisdiction under which it is organized, as
set forth in Section 2.1 of its Disclosure Schedule. It and each
of its Subsidiaries have all requisite power and authority and to
the extent required by applicable law are licensed to own, lease
and operate its respective properties and conduct its respective
business as it is now being conducted. It has delivered to the
other party a true, complete and correct copy of the articles of
incorporation, certificate of incorporation or other organizing
document and of the bylaws, as in effect on the date of this
Agreement, of it and each of its Subsidiaries. It and each of its
Subsidiaries are qualified to do business as foreign corporations
and are in good standing in each jurisdiction in which
qualification is necessary under applicable law, except to the
extent that any failures to so qualify would not, in the aggregate,
have a material adverse effect on it and its Subsidiaries, taken as
a whole. Each of its Subsidiaries that is a federally insured
savings institution ("Bank Subsidiary") is a member in good
standing of the Federal Home Loan Bank of Chicago, and all eligible
accounts issued by such institution are insured by the Federal
Deposit Insurance Corporation ("FDIC") through the Savings
Association Insurance Fund ("SAIF") to the maximum extent permitted
under applicable law. Each of its Bank Subsidiaries is a "domestic
building and loan association" as defined in Section 7701(a)(19) of
the Internal Revenue Code and is a "qualified thrift lender" as
defined in Section 10(m) of the HOLA and the rules and regulations
thereunder. It is duly registered as a savings and loan holding
company under the HOLA.
Its minute books and those of each of its Subsidiaries contain
complete and accurate records of all meetings and other corporate
actions taken by their respective stockholders and Boards of
Directors (including the committees of such Boards).
2.2 Capitalization. (a) Its authorized capital stock and the
number of issued and outstanding shares of its capital stock are
accurately set forth in the recitals in this Agreement, subject, in
the case of HFC to an increase in the authorized number of shares
of its common stock as contemplated in Section 1.7 (a) herein. All
outstanding shares of its common stock are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights.
Except (i) as set forth in Section 2.2 of its Disclosure Schedule
or (ii) with respect to the Stock Option Agreement, as of the date
of this Agreement, there are no options, convertible securities,
warrants or other rights (preemptive or otherwise) to purchase or
acquire any of its capital stock from it and no oral or written
agreement, contract, arrangement, understanding, plan or instrument
of any kind to which it or any of its Subsidiaries is subject with
respect to the issuance, voting or sale of issued or unissued
shares of its capital stock. A true and complete copy of each plan
or agreement pursuant to which such options, convertible
securities, warrants or other rights have been granted or issued,
as in effect on the date of this Agreement, is included in Section
2.2 of its Disclosure Schedule. Only the holders of its common
stock have the right to vote at meetings of its stockholders on
matters to be voted thereat (including the Company Merger).
(b) With respect to the shares of Alliance Bancorp Common
Stock to be issued in the Company Merger, HFC represents and
warrants that such shares when so issued in accordance with this
Agreement will be duly authorized, validly issued, fully paid and
nonassessable and not subject to any preemptive rights or other
liens.
2.3 Ownership of Subsidiaries. All outstanding shares of
capital stock of its Subsidiaries are validly issued, fully paid,
nonassessable and owned beneficially and of record by it or one of
its Subsidiaries free and clear of any lien, claim, charge,
restriction or encumbrance (collectively, "Encumbrance"), except as
set forth in Section 2.3 of its Disclosure Schedule. There are no
options, convertible securities, warrants or other rights
(preemptive or otherwise) to purchase or acquire any capital stock
of any of its Subsidiaries and no contracts to which it or any of
its Subsidiaries is subject with respect to the issuance, voting or
sale of issued or unissued shares of the capital stock of any of
its Subsidiaries. Neither it nor any of its Subsidiaries owns more
than 2% of the capital stock or other equity securities (including
securities convertible or exchangeable into such securities) of or
more than 2% of the aggregate profit participations, in any
"company" (as defined in Section 10(a)(1)(C) of the HOLA) other
than a Subsidiary or as otherwise set forth in Section 2.3 of its
Disclosure Schedule.
2.4 Financial Statements and Reports. (a) No registration
statement, offering circular, proxy statement, schedule or report
filed by it or any of its Subsidiaries with the SEC or the OTS
under the Securities Act or the Securities Exchange Act ("SEC
Reports"), on the date of effectiveness in the case of such
registration statements, or on the date of filing in the case of
such reports or schedules, or on the date of mailing in the case of
such proxy statements, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. For
the past five years, it and its Subsidiaries have timely filed all
reports and documents required to be filed by them with the SEC,
the OTS or the FDIC under various securities and financial
institution laws and regulations except to the extent that all
failures to so file, in the aggregate, would not have a material
adverse effect on the business, financial condition or results of
operations of it and its consolidated Subsidiaries, taken as a
whole; and all such documents, as finally amended, complied in all
material respects with applicable requirements of law and, as of
their respective date or the date as amended, did not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading. Except to the extent stated therein,
all financial statements and schedules included in the documents
referred to in the preceding sentences (or to be included in
similar documents to be filed after the date hereof) (i) are or
will be (with respect to financial statements in respect of periods
ending after March 31, 1996), in accordance with its books and
records and those of any of its consolidated Subsidiaries, and (ii)
present (and in the case of financial statements in respect of
periods ending after March 31, 1996, will present) fairly the
consolidated financial position and the consolidated results of
operations or income, changes in stockholders' equity and cash
flows of it and its Subsidiaries as of the dates and for the period
indicated in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods (except
for the omission of notes to unaudited statements and in the case
of interim financial statements to normal recurring year-end
adjustments normal in nature and amounts). Its audited
consolidated financial statements at September 30, 1995 and for the
year then ended in the case of HFC and at December 31, 1995 and for
the year then ended in the case of LBI and the consolidated
financial statements for all periods thereafter up to the Closing
reflect or will reflect, as the case may be, all liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due and regardless of when asserted) as of
such date of it and its Subsidiaries required to be reflected in
such financial statements according to generally accepted
accounting principles and contain or will contain (as the case may
be) adequate reserves for losses on loans and properties acquired
in settlement of loans, taxes and all other material accrued
liabilities and for all reasonably anticipated material losses, if
any, as of such date in accordance with generally accepted
accounting principles. There exists no set of circumstances that
could reasonably be expected to result in any liability or
obligation material to it or its Subsidiaries, taken as a whole,
except as disclosed in such consolidated financial statements at
March 31, 1996 or for transactions effected or actions occurring or
expected to be taken after March 31, 1996 (i) in the ordinary
course of business, (ii) as permitted by this Agreement or (iii) as
disclosed in the SEC Reports filed with the SEC since January 1,
1993 and before the date of this Agreement. A true and complete
copy of such March 31, 1996 financial statements has been delivered
by it to the other party.
(b) It has delivered to the other party each SEC Report
filed, used or circulated by it with respect to periods since
January 1, 1993 through the date of this Agreement and will
promptly deliver each such SEC Report filed, used or circulated
after the date hereof, each in the form (including exhibits and any
amendments thereto) filed with the SEC or the OTS (or, if not so
filed, in the form used or circulated), including, without
limitation, its Annual Reports on Form 10-K and its Quarterly
Reports on Form 10-Q.
2.5 Absence of Changes.
(a) Since March 31, 1996, there has been no material adverse
change affecting it and its Subsidiaries, taken as a whole. There
is no occurrence, event or development of any nature existing or,
to its best knowledge, threatened which may reasonably be expected
to have a material adverse effect upon it or any of its
Subsidiaries.
(b) Except as set forth in Section 2.5 of its Disclosure
Schedule or in its SEC Reports filed with the SEC since January 1,
1993 and before the date of this Agreement, each of it and its
Subsidiaries has owned and operated its respective assets,
properties and businesses in the ordinary course of business and
consistent with past practice.
2.6 Prospectus/Joint Proxy Statement. At the time the
Prospectus/Joint Proxy Statement is mailed to the stockholders of
HFC and LBI for the solicitation of proxies for the approvals
referred to in Section 1.7 hereof and at all times after such
mailings up to and including the times of such approvals, such
Prospectus/Joint Proxy Statement (including any supplements
thereto), with respect to all information set forth therein
relating to it (including its Subsidiaries) and its stockholders,
its common stock, this Agreement, the Merger and the other
transactions contemplated hereby, will:
(a) Comply in all material respects with applicable
provisions of the Securities Act, the Securities Exchange Act and
the rules and regulations under such Acts; and
(b) Not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements contained therein, in
light of the circumstances under which it is made, not misleading.
2.7 No Broker's or Finder's Fees. No agent, broker,
investment banker, person or firm acting on behalf or under
authority of it or any of its Subsidiaries is or will be entitled
to any broker's or finder's fee or any other commission or similar
fee directly or indirectly in connection with the Merger or any
other transaction contemplated hereby, except as set forth in
Section 2.7 of its Disclosure Schedule.
2.8 Litigation and Other Proceedings. Except for matters
which would not have a material adverse effect on it and its
Subsidiaries taken as a whole, or except as set forth in Section
2.8 of its Disclosure Schedule or its SEC Reports filed with the
SEC, as of the date hereof, neither it nor any of its Subsidiaries
is a defendant in, nor is any of its property subject to, any
pending or, to its best knowledge, threatened claim, action, suit,
investigation or proceeding or subject to any judicial order,
judgment or decree.
2.9 Compliance with Law. Except as set forth in Section 2.9
of its Disclosure Schedule or its SEC Reports filed with the SEC
since January 1, 1993:
(a) It and each of its Subsidiaries are in compliance in all
material respects with all laws, regulations, ordinances, rules,
judgments, orders or decrees applicable to their respective
operations or with respect to which compliance is a condition of
engaging in their respective business, including without limitation
the Equal Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act, the Home Owners' Disclosure Act and all
other applicable fair lending laws or other laws relating to
discrimination. Neither it nor any of its Subsidiaries has
received notice from any federal, state or local government or
governmental agency of any material violation of, and does not know
of any material violations of, any of the above.
(b) It and each of its Subsidiaries have all permits,
licenses, certificates of authority, orders and approvals of, and
have made all filings, applications and registrations with, all
federal, state, local and foreign governmental or regulatory bodies
that are required in order to permit them to carry on their
respective businesses as they are presently conducted.
(c) It and each of its Subsidiaries have received since
January 1, 1993 no notification or communication from any
governmental entity (including, but not limited to, the OTS and any
other regulatory authority) or the staff thereof (A) asserting that
it or any of its Subsidiaries is not in compliance with any of the
statutes, regulations or ordinances that such governmental entity
administers or enforces; (B) threatening to revoke any license,
franchise, permit or governmental authorization; or (c) threatening
or contemplating revocation or limitation of, or which would have
the effect of revoking or limiting, the FDIC deposit insurance of
any Bank Subsidiary (nor, to the best knowledge of its executive
officers, do any grounds for any of the foregoing exist); and
(d) It and each of its Subsidiaries are not required to give
prior notice to any federal banking or savings institution
regulatory agency of the proposed addition of an individual to
their respective board of directors or the employment of an
individual as a senior executive officer.
2.10 Corporate Actions.
(a) Its Board of Directors (or the Board of Directors of its
Bank Subsidiary, as applicable) has (i) duly approved the Merger,
this Agreement, the Bank Merger Agreement, and each Stock Option
Agreement, and authorized its officers to execute and deliver this
Agreement, the Bank Merger Agreement, each Stock Option Agreement
and the Voting Agreements and to take all action necessary to
consummate the Merger and the other transactions contemplated
hereby, (ii) authorized and directed the submission for
stockholders' approval of this Agreement, the Merger and any
related matters requiring such approval including, in the case of
HFC, amendments to the Certificate of Incorporation of HFC as
contemplated in Section 1.7(a) herein and, (iii) approved the
execution of the Stock Option Agreement, and authorized and
approved the Company Merger (before the date of execution of the
Stock Option Agreement), in accordance with Section 203 of the
DGCL.
(b) Its Board of Directors has taken all necessary action to
exempt this Agreement, the Bank Merger Agreement, the Voting
Agreements and the Stock Option Agreement and the transactions
contemplated hereby and thereby from, and this Agreement, the Bank
Merger Agreement and the Stock Option Agreement and the
transactions contemplated hereby and thereby are exempt from, (i)
any applicable state takeover laws, (ii) any state laws limiting or
restricting the voting rights of stockholders, (iii) any state laws
requiring a stockholder approval vote in excess of the vote
normally required in transactions of similar type not involving a
"related person," "interested stockholder" or person or entity of
similar type and (iv) any provision in its or any of its
Subsidiaries' articles of incorporation, certificate of
incorporation, or bylaws, (A) restricting or limiting stock
ownership or the voting rights of stockholders or (B) requiring a
stockholder approval vote in excess of the vote normally required
in transactions of similar type not involving a "related person,"
interested stockholder" or person or entity of similar type.
2.11 Authority. Except as set forth in Section 2.11 of its
Disclosure Schedule, neither the execution and delivery of and
performance of its obligations under this Agreement, the Bank
Merger Agreement and the Stock Option Agreement by it or its
applicable Bank Subsidiary nor consummation of the Merger will
violate any of the provisions of, or constitute a breach or default
under or give any person the right to terminate or accelerate
payment or performance under, (i) its certificate of incorporation
or bylaws, or the articles of incorporation, certificate of
incorporation, bylaws of any of its Subsidiaries, (ii) any
regulatory restraint on the acquisition of it or control thereof,
(iii) any law, rule, ordinance or regulation or judgment, decree,
order, award or governmental or non-governmental permit or license
to which it or any of its Subsidiaries is subject or (iv) any
material agreement, lease, contract, note, mortgage, indenture,
arrangement or other obligation or instrument ("Contract") to which
it or any of its Subsidiaries is a party or is subject or by which
any of its or their properties or assets is bound. The parties
acknowledge that the consummation of the Merger and the other
transactions contemplated hereby is subject to various regulatory
approvals. It or its applicable Bank Subsidiary has all requisite
corporate power and authority to enter into this Agreement, the
Bank Merger Agreement and each Stock Option Agreement and to
perform its obligations hereunder and thereunder, except, with
respect to this Agreement and the Company Merger, the approval of
its stockholders required under applicable law. Other than the
receipt of Governmental Approvals (as defined in Section 4.1(c)),
the approval of its stockholders and except as set forth in Section
2.11 of its Disclosure Schedule with respect to any Contract, no
consents or approvals are required on its behalf or on behalf of
any of its Subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement, the Bank Merger
Agreement and each Stock Option Agreement. This Agreement and each
Stock Option Agreement constitute the valid and binding obligations
of it, and each is enforceable in accordance with its terms, except
as enforceability may be limited by applicable laws relating to
bankruptcy, insolvency or creditors rights generally and general
principles of equity.
2.12 Employment Arrangements. Except as set forth in Section
2.12 of its Disclosure Schedule, there are no agreements, plans or
other arrangements with respect to the employment, severance or
other benefits with any current or former directors, officers or
employees of it or any of its Subsidiaries which may not be
terminated without penalty or expense (including any augmentation
or acceleration of benefits) on 30 days' or less notice to any such
person. Except as set forth in Section 2.12 of its Disclosure
Schedule, no payments and benefits (including any augmentation or
acceleration of benefits) to current or former directors, officers
or employees of it or any of its Subsidiaries resulting from the
transactions contemplated hereby or the termination of such
person's service or employment within two years following
consummation of the Merger will cause the imposition of excise
taxes under Section 4999 of the Internal Revenue Code or the
disallowance of a deduction to it, Alliance Bancorp as the
surviving corporation, or any of their respective Subsidiaries
pursuant to Sections 162, 280G or any other section of the Internal
Revenue Code.
2.13 Employee Benefits. (a) Neither it nor any of its
Subsidiaries maintains any funded deferred compensation plans
(including profit sharing, pension, retirement savings or stock
bonus plans), unfunded deferred compensation arrangements or
employee benefit plans as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), other
than any plans ("Employee Plans") set forth in Section 2.13 of its
Disclosure Schedule (true and correct copies of which it has
delivered to the other party). Neither it nor any of its
Subsidiaries has incurred or reasonably expects to incur any
liability to the Pension Benefit Guaranty Corporation except for
required premium payments which, to the extent due and payable,
have been paid. The Employee Plans intended to be qualified under
Section 401(a) of the Internal Revenue Code are so qualified, and
it is not aware of any fact which would adversely affect the
qualified status of such plans. Except as set forth in Section
2.13 of its Disclosure Schedule, neither it nor any of its
Subsidiaries (a) provides health, medical, disability, death or
survivor benefits to any former employee, director or officer or
beneficiary thereof or (b) maintains any form of current (exclusive
of base salary and base wages) or deferred compensation, bonus,
stock option, stock appreciation right, benefit, severance pay,
retirement, employee stock ownership, incentive, group or
individual health insurance, welfare or similar plan or arrangement
for the benefit of any single or class of directors, officers or
employees, whether active or retired (collectively "Benefit
Arrangements").
(b) Except as disclosed in Section 2.13 of its Disclosure
Schedule, all Employee Plans and Benefit Arrangements which are in
effect were in effect for substantially all of calendar year 1995
and there has been no material amendment thereof (other than
amendments required to comply with applicable law or as
contemplated by Section 3.10 herein) or material increase in the
cost thereof or benefits payable thereunder on or after January 1,
1996 except to the extent provided for in Section 3.10 herein.
(c) To its best knowledge, with respect to all Employee Plans
and Benefit Arrangements, it and each of its Subsidiaries are in
substantial compliance with the requirements prescribed by any and
all statutes, governmental or court orders or rules or regulations
currently in effect, including but not limited to ERISA and the
Internal Revenue Code, applicable to such Employee Plans or Benefit
Arrangements. No condition exists that could constitute grounds
for the termination of any Employee Plan under Section 4042 of
ERISA; no "prohibited transaction," as defined in Section 406 of
ERISA and Section 4975 of the Internal Revenue Code, has occurred
with respect to any Employee Plan, or any other employee benefit
plan maintained by it or any of its Subsidiaries which is covered
by Title I of ERISA, which could subject any person to liability
under Title I of ERISA or to the imposition of any tax under
Section 4975 of the Internal Revenue Code which could have an
adverse effect on the business, assets, financial condition,
results of operations or prospects of it or any of its
Subsidiaries; to its best knowledge, no Employee Plan subject to
Part III of Subtitle B of Title I of ERISA or Section 412 of the
Internal Revenue Code, or both, has incurred any "accumulated
funding deficiency," as defined in Section 412 of the Internal
Revenue Code, whether or not waived; neither it nor any of its
Subsidiaries has failed to make any contribution or pay any amount
due and owing as required by the terms of any Employee Plan or
Benefit Arrangement. Except as disclosed in Schedule 2.13, neither
it nor any of its Subsidiaries has incurred or expects to incur,
directly or indirectly, any liability under Title IV of ERISA
arising in connection with the termination of, or a complete or
partial withdrawal from, any plan covered or previously covered by
Title IV of ERISA which could constitute a liability of Alliance
Bancorp as the surviving corporation or any of its Subsidiaries at
or after the Company Merger Effective Time. Except as disclosed in
Schedule 2.13, the present value of "benefit liabilities" (within
the meaning of 4001(a)(16) of ERISA) under the Defined Benefit Plan
(as defined in Section 3.13(a)), as of its latest valuation date
and based upon the actuarial assumptions currently prescribed for
plan terminations by the Pension Benefit Guaranty Corporation, did
not exceed the then current value of the assets of such plan
allocable to such accrued benefits, and there have been no
reportable events under Section 4043 of ERISA (with respect to
which the 30-day notice requirement has not been waived by
regulation) with respect to the Defined Benefit Plan.
2.14 Information Furnished. No statement contained in any
schedule, certificate or other document furnished (whether before,
on or after the date of this Agreement) or to be furnished in
writing by or on behalf of it to the other party pursuant to this
Agreement contains or will contain any untrue statement of a
material fact or any material omission. To its best knowledge, no
information which is material to the Merger and necessary to make
the representations and warranties herein not misleading has been
withheld from the other party.
2.15 Property and Assets. (i) It and its Subsidiaries have
good and marketable title to all of their real property reflected
in the financial statements at March 31, 1996, referred to in
Section 2.4 hereof (other than property sold or transferred in the
ordinary course of business since the date of such financial
statements) or acquired subsequent thereto, free and clear of all
Encumbrances, except for (a) such items shown in such financial
statements or in the notes thereto, (b) liens for current real
estate taxes not yet delinquent, (c) customary easements,
restrictions of record and title exceptions that have no material
adverse effect upon the value or use of such property, (d) pledges
or liens incurred in the ordinary course of business and (e) as
otherwise specifically indicated in its SEC Reports filed with the
SEC since January 1, 1993 and before the date of this Agreement or
in Section 2.15 of its Disclosure Schedule. (ii) It and its
Subsidiaries enjoy peaceful and undisturbed possession under all
material leases for the use of real property under which they are
the lessee; all of such leases are valid and binding and in full
force and effect, and neither it nor any of its Subsidiaries is in
default in any material respect under any such lease. No default
will arise under any material real property or material personal
property lease by reason of consummation of the Merger without the
lessor's consent except as set forth in Section 2.15 of its
Disclosure Schedule. (iii) There has been no material physical
loss, damage or destruction, whether or not covered by insurance,
affecting the real properties of it and its Subsidiaries since
March 31, 1996. Except as set forth in Section 2.15 of its
Disclosure Schedule, all property and assets material to its or any
of its Subsidiaries' respective business and currently used by it
or any of its Subsidiaries are, in all material respects, in good
operating condition and repair.
2.16 Agreements and Instruments. Except as set forth in its
SEC Reports filed with the SEC since January 1, 1993 and before the
date of this Agreement or in Section 2.16 of its Disclosure
Schedule, neither it nor any of its Subsidiaries is a party to (a)
any material agreement, arrangement or commitment not made in the
ordinary course of business, (b) any agreement, indenture or other
instrument relating to the borrowing of money by it or any of its
Subsidiaries or the guarantee by it or of its Subsidiaries of any
such obligation (other than Federal Home Loan Bank advances with a
maturity of one year or less from the date hereof), (c) any
agreements to make loans or for the provision, purchase or sale of
goods, services or property between it or any of its Subsidiaries
and any director or officer of it or any of its Subsidiaries or any
affiliate or member of the immediate family of any of the
foregoing, (d) any agreements with or concerning any labor or
employee organization to which it or any of its Subsidiaries is a
party, (e) any agreements between it or any of its Subsidiaries and
any five percent or more stockholder of it and (f) any agreements,
directives, orders or similar arrangements between or involving it
or any of its Subsidiaries and any state or federal savings
institution regulatory authority.
2.17 Material Contract Defaults. Neither it or any of its
Subsidiaries nor the other party thereto is in default in any
respect under any contract, agreement, commitment, arrangement,
lease, insurance policy or other instrument to which it or any
Subsidiary of it is a party or by which its respective assets,
business or operations may be bound or affected or under which it
or its respective assets, business or operations receives benefits,
which default is reasonably expected to have either individually or
in the aggregate a material adverse effect on it or any of its
Subsidiaries, and there has not occurred any event that, with the
lapse of time or the giving of notice or both, would constitute
such a default.
2.18 Tax Matters. (a) It and each of its Subsidiaries have
duly and properly filed all federal, state, local and other tax
returns and reports required to be filed by them and have made
timely payments of all taxes due and payable, whether disputed or
not; the current status of audits of such returns or reports by the
Internal Revenue Service ("IRS") and other applicable tax
authorities is as set forth in Section 2.18 of its Disclosure
Schedule; and, except as set forth in Section 2.18 of its
Disclosure Schedule, there is no agreement by it or any of its
Subsidiaries for the extension of time or for the assessment or
payment of any taxes payable. Except as set forth in Section 2.18
of its Disclosure Schedule, neither the IRS nor any other taxing
authority is now asserting or, to its best knowledge, threatening
to assert any deficiency or claim for additional taxes (or interest
thereon or penalties in connection therewith), nor is it aware of
any basis for any such assertion or claim. It and each of its
Subsidiaries have complied in all material respects with applicable
IRS backup withholding requirements. It and each of its
Subsidiaries have complied with all applicable state law tax
collection and reporting requirements.
(b) Adequate provision for any unpaid federal, state, local
or foreign taxes due or to become due from it or any of its
Subsidiaries for all periods through and including March 31, 1996
has been made and is reflected in its March 31,1996 consolidated
financial statements referred to in Section 2.4 and has been or
will be made with respect to periods ending after March 31, 1996.
2.19 Environmental Matters. To its best knowledge, except as
set forth in Section 2.19 of its Disclosure Schedule neither it nor
any of its Subsidiaries owns, leases or otherwise controls any
property affected by toxic waste, radon gas or other hazardous
conditions or constructed in part with the use of asbestos.
Neither it nor any of its Subsidiaries is aware of, nor has it or
any of its Subsidiaries received written notice from any
governmental or regulatory body of, any past, present or future
conditions, activities, practices or incidents which may interfere
with or prevent compliance or continued compliance with hazardous
substance laws or any regulation, order, decree, judgment or
injunction, issued, entered, promulgated or approved thereunder or
which may give rise to any common law or legal liability or
otherwise form the basis of any claim, action, suit, proceeding,
hearing or investigation based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutant,
contaminant, chemical or industrial, toxic or hazardous substance
or waste. There is no civil, criminal or administrative claim,
action, suit, proceeding, hearing or investigation pending or, to
its knowledge, threatened against it or any of its Subsidiaries
relating in any way to such hazardous substance laws or any
regulation, order, decree, judgment or injunction issued, entered,
promulgated or approved thereunder.
2.20 Loan Portfolio; Portfolio Management. (a) All evidences
of indebtedness reflected as assets in its financial statements at
March 31, 1996, referred to in Section 2.4 herein, or originated or
acquired since such date, are (except with respect to those assets
which are no longer assets of it or any of its Subsidiaries)
binding obligations of the respective obligors named therein except
as enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors rights
generally and except as to the availability of equitable remedies,
including specific performance, which are subject to the discretion
of the court before which a proceeding may be brought, and the
payment of no material amount thereof (either individually or in
the aggregate with other evidences of indebtedness) is subject to
any defenses or offsets which have been threatened or asserted
against it or any Subsidiary. All such indebtedness which is
secured by an interest in real property is secured by a valid and
perfected mortgage lien having the priority specified in the loan
documents. All loans originated or purchased by it or any of its
Subsidiaries were at the time entered into and at all times owned
by it or its Subsidiaries in compliance in all material respects
with all applicable laws and regulations (including, without
limitation, all consumer protection laws and regulations). It and
its Subsidiaries (as applicable) administer their loan and
investment portfolios (including, but not limited to, adjustments
to the interest rate and payment on adjustable mortgage loans) in
accordance with all applicable laws and regulations and the terms
of applicable instruments. The records of it and any of its
Subsidiaries (as applicable) regarding all loans outstanding on its
books are accurate in all material respects. The risk
classification system utilized by its Bank Subsidiaries has been
established in accordance with the requirements of the OTS.
(b) Section 2.20 of its Disclosure Schedule sets forth a
list, accurate and complete in all material respects, of the
aggregate amounts of loans, extensions of credit and other assets
of it and its Subsidiaries that have been adversely designated,
criticized or classified by it as of March 31, 1996, separated by
category of classification or criticism (the "Asset
Classification"); and no amounts of loans, extensions of credit or
other assets that have been adversely designated, classified or
criticized as of the date hereof by any representative of any
government entity as "Special Mention," "Substandard," "Doubtful,"
"Loss," or words of similar import, are excluded from the amounts
disclosed in the Asset Classification, other than amounts of loans,
extensions of credit or other assets that were charged off by it or
any of its Subsidiaries on or before March 31, 1996, as reflected
in the financial statements referenced in Section 2.4.
2.21 Real Estate Loans and Investments. Except for properties
acquired in settlement of loans, there are no facts, circumstances
or contingencies known to it or any of its Subsidiaries which exist
and would require a material reduction under generally accepted
accounting principles in the present carrying value of any of the
real estate investments, joint ventures, construction loans, other
investments or other loans of it or any of its Subsidiaries (either
individually or in the aggregate with other loans and investments).
2.22 Derivatives Contracts. Neither it nor any of its
Subsidiaries is a party to or has agreed to enter into swap,
forward, future, option, cap, floor or collar financial contract or
any other contract not included in its financial statement as of
March 31, 1996 filed as part of its SEC Reports or disclosed in its
Form 10-Q as filed with the SEC for the quarter ended March 31,
1996 (or in its financial statement included therein) which is a
derivatives contract (including various combinations thereof)
(each, a "Derivatives Contract") or owns securities that are
identified in Thrift Bulletin No. 65 or otherwise referred to as
structured notes (each, a "Structured Note"), except for those
Derivatives Contracts and Structured Notes set forth in Section
2.22 of its Disclosure Schedule, including a list, as applicable,
of any of its or any of its Subsidiaries' assets pledged as
security for a Derivatives Contract.
2.23 Exceptions to Representations and Warranties. (a) On or
before the date hereof, HFC has delivered to LBI and LBI has
delivered to HFC its respective Disclosure Schedule setting forth,
among other things, exceptions to any and all of its
representations and warranties in Article II, provided that each
exception set forth in a Disclosure Schedule shall be deemed
disclosed for purposes of all representations and warranties if
such exception is contained in a section of the Disclosure Schedule
corresponding to a Section in Article II and provided further that
(i) no such exception is required to be set forth in a Disclosure
Schedule if its absence would not result in the related
representation or warranty being deemed untrue or incorrect under
the standard established by Section 2.23(b) and (ii) the mere
inclusion of an exception in a Disclosure Schedule shall not be
deemed an admission by a party that such exception represents a
material fact, event or circumstance or would result in a material
adverse effect or material adverse change.
(b) Except as to the representations contained in Section
2.11, no representation or warranty of HFC or LBI contained in
Article II shall be deemed untrue or incorrect, and no party shall
be deemed to have breached a representation or warranty contained
herein, as a consequence of the existence of any fact, circumstance
or event if such fact, circumstance or event, individually or taken
together with all similar facts, circumstances or events, would
not, or in the case of Section 2.8 is not reasonably likely to,
have a material adverse effect or material adverse change.
As used in this Agreement, the term "material adverse effect"
or "material adverse change" means an effect or change which (i) is
materially adverse to the business, financial condition, results of
operations or prospects of HFC or LBI and its respective
Subsidiaries taken as a whole or (ii) enables any person to prevent
the consummation of the transactions contemplated hereby; provided
however that any effect or change resulting from (A) actions or
omissions of HFC or LBI taken with the prior consent of the other
or as provided for herein or (B) circumstances affecting the
savings institution industry generally (including changes in laws
or regulations, accounting principles or general levels of interest
rates including, without limitation, the effects of changes in
interest rates on earnings, portfolio market value and interest
rate risk exposure) shall be deemed not to be or have a material
adverse effect or material adverse change.
ARTICLE III
COVENANTS
3.1 Investigations; Access and Copies. Between the date of
this Agreement and the Company Merger Effective Time, each party
agrees to give to the other party and its respective
representatives and agents full access (to the extent lawful) to
all of the premises, books, records and employees of it and its
Subsidiaries at all reasonable times and to furnish and cause its
Subsidiaries to furnish to the other party and its respective
agents or representatives access to and true and complete copies of
such financial and operating data, all documents with respect to
matters to which reference is made in Article II of this Agreement
or on any list, schedule or certificate delivered or to be
delivered in connection herewith and such other documents, records,
or information with respect to the business and properties of it
and its subsidiaries as the other party or its respective agents or
representatives shall from time to time reasonably request;
provided however, that any such inspection (a) shall be conducted
in such manner as not to interfere unreasonably with the operation
of the business of the entity inspected and (b) shall not affect
any of the representations and warranties hereunder. Each party
will also give prompt written notice to the other party of any
event or development which, (x) had it existed or been known on the
date of this Agreement, would have been required to be disclosed
under this Agreement, (y) would cause any of its representations
and warranties contained herein to be inaccurate or otherwise
materially misleading or (z) materially relates to the satisfaction
of the conditions set forth in Article IV of this Agreement.
Notwithstanding anything to the contrary herein, neither party
hereto nor any of its Subsidiaries shall be required to provide
access to or to disclose information where such access or
disclosure would 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 or, in the event of any litigation or threatened
litigation between the parties over the terms of this Agreement,
where access to information may be adverse to the interests of such
party. Each party shall inform the other when it is unable to
provide access, or disclose information, to the other party as a
result of the preceding sentence. To the extent reasonably
practicable, the parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
3.2 Conduct of Business. Between the date of this Agreement
and the Company Merger Effective Time or the termination of this
Agreement (whichever occurs first), each party agrees, on behalf of
itself and each of its respective Subsidiaries, except as
contemplated herein or insofar as the Chief Executive Officer of
HFC or the Chief Executive Officer of LBI shall otherwise consent
in writing (which consent shall not be unreasonably withheld):
(a) That it and its Subsidiaries shall (i) except as
contemplated in this Agreement, conduct their business only in the
ordinary course consistent with past practices, (ii) maintain their
books and records in accordance with past practices and (iii) use
all reasonable efforts to preserve intact their business
organizations and assets, to maintain their rights, franchises and
existing relations with customers, suppliers, employees and
business associates and to take no action that would (A) adversely
affect the ability of any of them to obtain the Governmental
Approvals (as defined in Section 4.1(c) herein) or which would
reasonably be expected to hinder or delay receipt of the
Governmental Approvals or (B) adversely affect its ability to
perform its obligations under this Agreement, the Bank Merger
Agreement or the applicable Stock Option Agreement;
(b) That it and its Subsidiaries shall not: (i) declare, set
aside or pay any dividend or make any other distribution with
respect to its capital stock, except for (A) the declaration and
payment of regular quarterly cash dividends by LBI in an amount not
in excess of $.60 (annualized) for each outstanding share of LBI
Common Stock, in each case with usual record and payment dates for
such dividends consistent with such parties' past dividend
practices, or (B) dividends or distributions by a wholly-owned
Subsidiary of such party to such party; (ii) reacquire or buy any
of its outstanding shares; (iii) issue or sell or buy any shares of
capital stock of it or any of its Subsidiaries, except shares of
its common stock issued pursuant to the Stock Option Agreement and
shares issued pursuant to exercise of stock options previously
issued and identified in Section 2.2 of its Disclosure Schedule;
(iv) effect any stock split, stock dividend, reverse stock split
other reclassification or recapitalization of its common stock; or
(v) except with respect to the Stock Option Agreement, grant any
options or issue any warrants exercisable for or securities
convertible or exchangeable into capital stock of it or any of its
Subsidiaries or grant any stock appreciation or other rights with
respect to shares of capital stock of it or of any of its
Subsidiaries; or (vi) purchase or acquire any of the outstanding
shares of capital stock of the other party hereto or any Subsidiary
thereof other than as contemplated by the Stock Option Agreement or
in connection with the Merger as contemplated herein;
(c) That, except where the provisions herein are limited to
a specific party and/or its Subsidiaries, it and its Subsidiaries
shall not: (i) sell, dispose of or pledge any significant assets of
it or of any of its Subsidiaries other than in the ordinary course
of business consistent with past practices or in connection with
the borrowing of funds consistent with the provisions hereinafter
contained; (ii) merge or consolidate it or any of its Subsidiaries
with or into any other entity or otherwise acquire any other entity
or acquire any significant assets; (iii) sell or pledge or agree to
sell or pledge or permit any lien to exist on any stock of any of
its Subsidiaries owned by it; (iv) change the certificate of
incorporation, bylaws or other governing instruments of it or any
of its Subsidiaries, except as contemplated in this Agreement; (v)
engage in any lending activities other than in the ordinary course
of business consistent with past practices but subject to the
restrictions contained in Section 3.2(e) hereof and provided HFC
and LBI and their respective Subsidiaries collectively shall limit
their new loans to a Relationship (as defined herein) to $3.0
million; for purposes of this Agreement, a "Relationship" means
common borrowers, guarantors or partners or other relationships
considered related or affiliated by management of the lending
entity; (vi) form any new subsidiary or cause or permit a material
change in the activities presently conducted by any Subsidiary or
make additional investments in subsidiaries in excess of $1.0
million; (vii) engage in any off balance sheet interest rate swap,
cap or floor agreement; (viii) engage in any activity not
contemplated by its written business plan in effect on the date
hereof; (ix) purchase any equity securities other than Federal Home
Loan Bank stock; (x) make any investment which would cause any
Banking Subsidiary not to be a qualified thrift lender under
Section 10(m) of the HOLA or a "domestic building and loan
association" as defined in Section 7701 (a) (19) of the Internal
Revenue Code; (xi) authorize capital expenditures other than in the
ordinary and usual course of business; (xii) implement or adopt any
change in its accounting principles, practices or methods other
than as may be required by generally accepted accounting
principles; or (xiii) engage any independent auditors other than
such auditors engaged as of the date hereof. The limitations
contained in this Section 3.2(c) shall also be deemed to constitute
limitations as to the making of any commitment with respect to any
of the matters set forth in this Section 3.2(c).
(d) That, except where the provisions herein are limited to
a specific party and/or its Subsidiaries, it and its Subsidiaries
shall not: (i) incur any debt obligation (excluding deposits) or
other obligation for borrowed money with terms in excess of one
year other than FHLB advances consistent with past practices; (ii)
grant any general increase in compensation or benefits, or pay any
bonuses (except normal year-end bonuses consistent with past
practices) to its employees or officers; (iii) except as
contemplated by this Agreement, extend, renew, modify, amend or
otherwise change any employment or severance agreements with any of
its directors, officers or employees; (iv) grant any increase in
fees or other increases in compensation or other benefits to any of
its present or former directors in such capacity; or (v) except as
contemplated by Section 3.10 hereof, establish or sponsor any new
Employee Plan or Benefit Arrangement or effect any change in its
Employee Plans or Benefit Arrangements (unless such change is
required by applicable law or, in the opinion of its counsel, is
necessary to maintain continued qualification of any tax-qualified
plan that provides for retirement benefits).
(e) That, except where the provisions herein are limited to
a specific party and/or its Subsidiaries, it and its Subsidiaries
shall not without the prior consultation with the other party: (i)
extend, restructure, modify or otherwise amend or alter any of the
following types of commercial real estate loans or commitments: (A)
any loan secured by real estate (or to be secured) located in the
State of Illinois with a loan balance (or commitment amount) of
$1.0 million or greater (B) any loan or commitment to a
Relationship that has or would have (if the commitment was fully
implemented) loans exceeding $3,000,000; (C) any loan secured by
(or commitment to be secured by) real estate located outside the
State of Illinois with a loan balance of or a commitment amount of
$500,000 greater; (D) any loan exceeding $500,000 as of the date of
this Agreement which is more than 90 days delinquent as to payment,
in bankruptcy or foreclosure, or carried as a restructured troubled
debt; or (E) any loan with a balance of $250,000 or greater and
internally classified as Special Mention, Sub-Standard, Doubtful,
or Loss as of the date of this Agreement; for purposes of the
dollar amounts set forth in subparts (A) - (E) above any specific
reserves or allocated general reserves shall be reversed; (ii) take
any individual commercial mortgage or multi-family loan application
in an amount greater than $1,000,000 or acquisition and development
loan application in an amount greater than $1,000,000; (iii) make
any residential loan in an amount greater than $600,000; (iv) enter
into or renew any contract for the purchase of consumer loans (as
defined by the rules and regulations of OTS), on a whole loan and
participation basis; or (v) originate mobil home loans (including
pipeline loans in process) in an aggregate amount exceeding
$100,000.
3.3 No Solicitation. Each party agrees, on behalf of itself
and each of its Subsidiaries, that it will not authorize or permit
any officer, director, employee, investment banker, financial
consultant, attorney, accountant or other representative of it or
any of its Subsidiaries, directly or indirectly, to initiate
contact with any person or entity in an effort to solicit, initiate
or encourage any "Takeover Proposal" (as such term is defined
below). Except as the fiduciary duties of its Board of Directors
may otherwise require (as determined in good faith after
consultation with legal counsel), each party agrees that it will
not authorize or permit any officer, director, employee, investment
banker, financial consultant, attorney, accountant or other
representative of it or any of its Subsidiaries, directly or
indirectly, (A) to cooperate with, or furnish or cause to be
furnished any non-public information concerning its business,
properties or assets to, any person or entity in connection with
any Takeover Proposal; (B) to negotiate any Takeover Proposal with
any person or entity; or (C) to enter into any agreement, letter of
intent or agreement in principle as to any Takeover Proposal. Each
party agrees that it shall promptly give written notice to the
other upon becoming aware of any Takeover Proposal, such notice to
contain, at a minimum, the identity of the persons submitting the
Takeover Proposal, a copy of any written inquiry or other
communication, the terms of any Takeover Proposal, any information
requested or discussions sought to be initiated and the status of
any requests, negotiations or expressions of interest. As used in
this Agreement, "Takeover Proposal" shall mean any proposal, other
than as contemplated by this Agreement, for a merger or other
business combination involving either party or any of their
respective Bank Subsidiaries or for the acquisition of a twenty-
five percent (25%) or greater equity interest in either party or
any of their respective Bank Subsidiaries, or for the acquisition
of a substantial portion of the assets of either party or any of
their respective Bank Subsidiaries.
3.4 Stockholder Approvals. The parties shall call the
meetings of their respective stockholders to be held for the
purpose of voting upon the Merger and related matters, as referred
to in Section 1.7 hereof, as soon as practicable. In connection
with the HFC and LBI Stockholders' Meetings, the respective Boards
of Directors shall recommend approval of this Agreement, the Merger
and any other matters requiring stockholder action (including, in
the case of HFC, the amendments to its Certificate of Incorporation
as contemplated in Section 1.7(a) herein) relating to the
transactions contemplated herein (and such recommendation shall be
contained in the Prospectus/Joint Proxy Statement) unless as a
result of an unsolicited Takeover Proposal received by a party
after the date hereof, the Board of Directors of such party
determines in good faith after consultation with legal counsel and
an investment banking firm of recognized standing that to do so
would constitute a breach of the fiduciary duties of such Board of
Directors to the stockholders of such party. Each of the parties
shall use its best efforts to solicit from its stockholders proxies
in favor of approval and to take all other action necessary or
helpful to secure a vote of the holders of the outstanding shares
of its common stock in favor of the Merger and, in the case of HFC,
the amendments to its Certificate of Incorporation as contemplated
in Section 1.7(a) herein, except as the fiduciary duties of its
Board of Directors may otherwise require.
3.5 Accountants' Letters. Each party agrees to use all
reasonable efforts to cause to be delivered to the other, and such
other party's directors and officers who sign the Registration
Statement, a letter of its independent auditors, dated (i) the date
on which the Registration Statement shall become effective and (ii)
a date on or shortly prior to the date of the Closing, and
addressed to such other party, and such directors and officers, in
form and substance customary for "comfort" letters delivered by
independent accountants in connection with registration statements
similar to the Registration Statement.
3.6 Publicity. Between the date of this Agreement and the
Company Merger Effective Time, neither party nor any of its
Subsidiaries shall, without the prior approval of the other party,
issue or make, or permit any of its directors, employees, officers
or agents to issue or make, any press release, disclosure or
statement to the press or any third party with respect to the
Merger or the other transactions contemplated hereby, except as
required by law. The parties shall cooperate when issuing or
making any press release, disclosure or statement with respect to
the Merger or the other transactions contemplated hereby.
3.7 Cooperation Generally. Between the date of this
Agreement and the Company Merger Effective Time, the parties and
their respective Subsidiaries shall in conformance with the
provisions of this Agreement use their best efforts, and take all
actions necessary or appropriate, to consummate the Merger and the
other transactions contemplated hereby at the earliest practicable
date.
3.8 Additional Financial Statements and Reports. As soon as
reasonably practicable after they become publicly available, each
party shall furnish to the other its statements of financial
condition, statements of operations or statements of income,
statements of cash flows and statements of changes in stockholders'
equity at all dates and for all periods normally prepared before
the Closing. Such financial statements will be prepared in
conformity with generally accepted accounting principles applied on
a consistent basis and will fairly present the financial condition,
results of operations and cash flows of the respective parties
(subject, in the case of unaudited financial statements, to (a)
normal year-end audit adjustments, (b) any other adjustments
described therein and (c) the absence of notes which, if presented,
would not differ materially from those included with its most
recent audited consolidated financial statements), and all of such
financial statements will be prepared in conformity with the
requirements of Form 10-Q or Form 10-K, as applicable, under the
Exchange Act.
3.9 Stock Exchange Listing. HFC agrees to use all reasonable
efforts to cause to be listed on the NASDAQ National Market,
subject to official notice of issuance, the shares of Alliance
Bancorp Common Stock to be issued in the Merger.
3.10 Employee Benefits and Agreements. For purposes of this
Section 3.10, references to HFC shall include Hinsdale Federal
Bank, references to LBI shall include Liberty Federal, and
references to Alliance Bancorp shall include Liberty Federal Bank.
(a) Employees of HFC or LBI, who are enrolled in a group
health plan made available by HFC, LBI or Alliance Bancorp, whose
employment is terminated in connection with the Company Merger or
Bank Merger, shall be eligible for group health coverage,
consistent with the requirements of the Consolidated Omnibus Budget
Reconciliation Act ("COBRA") requirements of the Internal Revenue
Code and ERISA, as in effect on the date of such termination, for
the applicable period set forth in the Internal Revenue Code.
(b) The executives and officers of HFC and LBI who have
entered into employment agreements, severance agreements, or
special termination agreements (collectively, "Contract Severance
Agreements") with HFC and its Subsidiaries and LBI and its
Subsidiaries shall enter into a supplemental agreement or waiver
with HFC or LBI, as applicable, wherein it is stipulated by said
executive or officer that the Company Merger and/or the Bank Merger
shall not constitute a change in control for purposes of, nor
result in the obligation of HFC or LBI to pay severance or other
benefits under, said Contract Severance Agreement.
(c) Alliance Bancorp agrees to continue to employ Messrs.
Edward J. Burns, Fredric G. Novy, Joseph W. Stachnik, and Kenne P.
Bristol as of the Company Merger Effective Time pursuant to their
existing employment agreements, subject to such adjustments or
amendments as are necessary to reflect the provisions of this
Agreement.
(d) Immediately prior to or, upon mutual consent of the
parties, after the Merger Effective Time, the pension plan
maintained by LBI or its Subsidiary (the "LBI pension plan") shall
be terminated. In connection with the termination of the LBI
pension plan, the parties hereto have agreed that the LBI pension
plan shall be amended in order to maximize the benefit accruals to
participants and beneficiaries in a manner consistent with the
requirements of the Internal Revenue Code and ERISA, in order to
fully utilize the assets of the plan for the payment of benefits to
participants and beneficiaries of the LBI pension plan. In
connection with the amendment and termination of the LBI pension
plan, the LBI pension plan shall seek a favorable determination
letter from the Internal Revenue Service with respect to the
continued qualification of the LBI pension plan under Internal
Revenue Code Section 401(a) upon amendment and termination. At the
time of termination of the LBI pension plan, the supplemental
executive retirement plan ("SERP") maintained by LBI for the
benefit of certain executives shall be frozen and shall accrue no
additional benefits. The present value of the accrued benefit
payable to a participant under the SERP at the time the SERP is
frozen shall be payable, in accordance with the SERP, in the form
of a monthly single life annuity with a ten (10) year certain for
the duration of the participant's life, commencing within thirty
(30) days of the participant's termination of employment with LBI
or Alliance Bancorp.
(e) Immediately prior to or after the Merger Effective Time,
the pension plan maintained by HFC (the "HFC pension plan") shall
be terminated. The timing of the termination of the HFC pension
plan shall be determined after taking into consideration (i) the
necessity of making additional contributions to said plan in order
that the HFC pension plan shall have assets sufficient to satisfy
its liabilities in connection with the termination and (ii) the
annual limitations on contributions established under Internal
Revenue Code Section 404, provided, however, that such termination
shall occur no later than the last day of the transition period set
forth under Internal Revenue Code Section 410(b)(6)(C)(ii).
(f) In connection with the Merger, the employee stock
ownership plans ("ESOPs") maintained by HFC and LBI shall be
terminated. In connection with said ESOP terminations, a number of
the unallocated shares held by each ESOP shall be sold by each
ESOP, in a manner which is intended to comply with the Internal
Revenue Code and ERISA, in order to provide sufficient proceeds to
repay the outstanding ESOP loans (which are exempt loans under
Internal Revenue Code Section 4975) and such outstanding ESOP loans
shall be repaid in full as soon as reasonably practicable. Also in
connection with the termination of each ESOP, each ESOP shall be
amended in order to maximize the allocation of unallocated shares
to the existing participants in the ESOPs in a manner consistent
with the Internal Revenue Code and ERISA. It is contemplated that
such amendments shall, among other things, set forth that the
assets remaining in the suspense account on termination of the ESOP
and repayment of the outstanding ESOP loan shall be allocated among
the accounts of participants as earnings of the ESOP based on the
ratio of the participant's account balance to that of all
participants in the ESOP. Upon repayment of the outstanding loans
and amendment and termination of the ESOPs, the HFC ESOP and the
LBI ESOP shall seek from the Internal Revenue Service a favorable
determination letter with respect to the continued qualification of
the ESOP under Internal Revenue Code Section 401(a) on amendment
and termination. In the event that the Internal Revenue Service
disagrees with the characterization of the assets remaining in the
suspense account as earnings of the ESOP, the Board of Directors of
Alliance Bancorp may determine to continue with the termination of
the ESOPs, or to reinstate the ESOPs and revoke the terminations in
order to maximize the allocations to the participants and
beneficiaries of each ESOP through continuing contributions to the
accounts of participants and beneficiaries consistent with the
requirements of the Internal Revenue Code and ERISA, provided,
however, that, if necessary to comply with the Internal Revenue
Code, the ESOPs' separate existence shall continue no later than
the last day of the transition period set forth under Internal
Revenue Code Section 410(b)(6)(C)(ii). If all allocations cannot
be made under the separate ESOPs to participants and beneficiaries
prior to the end of said transition period, Alliance Bancorp shall
determine whether to merge the ESOPs and continue the single ESOP
in existence until any remaining assets in the ESOP suspense
account have been fully allocated, or to merge both ESOPs into the
401(k) Plan of Alliance Bancorp.
(g) LBI presently maintains a post-employment medical program
for the benefit of certain of its employees who have attained age
55 and have 10 years of service with LBI or an LBI Subsidiary.
LBI agrees to discontinue the availability of said post-retirement
medical program for all employees or former employees who are not
currently eligible for or receiving benefits under said program,
except for the following: any employee who would satisfy the
eligibility requirements if 5 years are added to his age or service
or a combination of the two (i.e., 2 years to age and 3 years to
service) will continue to be eligible for the post-retirement
medical program upon termination of employment with LBI or Alliance
Bancorp.
(h) Notwithstanding anything to the contrary herein, to the
extent there remains any shares reserved for issuance under any
existing management recognition plans of HFC and LBI, said shares
may at the discretion of the Board of Directors of the respective
parties, be awarded to employees of the respective parties.
(i) Subject to the provisions set forth in Section 3.10(a),
(b), (c), (d), (e), (f), (g) and (h) above, HFC and LBI and its
Subsidiaries shall, prior to the Company merger Effective Time,
each continue to maintain their employee benefit and welfare plans
and programs. From and after the Company Merger Effective Time,
Alliance Bancorp and its Subsidiaries shall have the right to
continue, amend, terminate or merge any of the employee benefit and
welfare plans and programs of LBI and its Subsidiaries. To the
extent permitted by applicable law, from and after the Company
Merger Effective Time the former employees of LBI and its
Subsidiaries who are continuing employees of Alliance Bancorp or
its Subsidiaries (the "Continuing Employees") shall be entitled to
participate in the Alliance Bancorp employee benefit and welfare
plans and programs (except to the extent that coverage is provided
under a continuing LBI plan or program, it being agreed and
understood that there shall be no duplication of benefits) on the
same basis that similarly-situated employees of Alliance Bancorp
(formerly, HFC) and its Subsidiaries are entitled to participate in
such plans and programs including, but not limited to tax-qualified
retirement plans. For purposes of eligibility, participation and
vesting in such Alliance Bancorp plans and programs, but not for
purposes of benefit accrual, the Continuing Employees shall receive
past service credit for their full-time employment with LBI and its
Subsidiaries (including service with any entity acquired by LBI or
Liberty Federal). The Continuing Employees will not be subject to
any exclusion or penalty for pre-existing conditions that were
covered under the LBI medical plan immediately prior to the Company
Merger Effective Time or any waiting period relating to coverage
under the HFC medical plan and they will receive full credit for
prior service and payment of current and past premiums, co-payments
and deductibles. If, on or after the date hereof, HFC or its
Subsidiaries adopts a new "employee benefit plan" within the
meaning of ERISA for the benefit of its employees generally, then
to the extent participants receive a credit for past service with
HFC or its Subsidiaries, equivalent credit shall be given to
Continuing Employees for past service with LBI or its Subsidiaries.
(j) Notwithstanding any other provision of this Agreement,
HFC agrees that LBI and its Subsidiaries may take such actions on
or before the Company Merger Effective Time as are necessary or
appropriate to effectuate the purposes of this Section 3.10,
including but not limited to (i) the adoption and execution of
agreements and amendments relating to the plans and programs
referenced herein, and (ii) the adoption and execution of any
amendment required by applicable law.
(k) Immediately prior to or, upon mutual consent of the
parties, after the Merger Effective Time, the executive deferred
compensation plan and deferred compensation plan for directors
(collectively, the "Deferred Compensation Plans") maintained by LBI
shall be frozen and no further contributions shall be made to such
Deferred Compensation Plans. The assets of the Deferred
Compensation Plans shall continue to earn interest, at the interest
rate set forth in the Deferred Compensation Plans, until paid to
participants. All employer discretionary contributions under the
executive deferred compensation plan shall be and become
immediately 100% vested at the time that said plan is frozen. The
account balances attributable to the participants in the Deferred
Compensation Plans shall be amortized over a period of one hundred
twenty (120) months and shall be paid in equal monthly installments
over such period, commencing not later than sixty (60) days after
the Merger Effective Time.
3.11 Conforming Adjustments. The parties and their respective
Subsidiaries shall cooperate in the establishment of additional
accruals and reserves ("Conforming Adjustments"). These Conforming
Adjustments enable both parties to conform accounting policies and
practices as well as to conform their interest rate risk position.
The Conforming Adjustments shall, to the extent determined by the
parties, be made immediately prior to the Closing but after the
satisfaction or waiver of all conditions and/or obligations
precedent to Closing contained in Article IV of this Agreement as
confirmed by the parties at such time. Notwithstanding anything to
the contrary contained in this Agreement, (a) no Conforming
Adjustment shall be taken into account for purposes of determining
contributions to qualified or non-qualified employee benefit plans
and (b) no Conforming Adjustment, or any litigation or regulatory
proceeding relating thereto, or any other effect on any party
resulting from its compliance with this Section 3.11, shall
constitute or be deemed to be a breach, violation of or failure to
satisfy any representation, warranty, covenant, condition or other
provision of this Agreement or otherwise be considered in
determining whether any such breach, violation or failure to
satisfy shall have occurred or be deemed to constitute or cause a
material adverse effect or material adverse change on either party
hereto or their Subsidiaries, taken as a whole.
3.12 Fairness Opinion. Each of HFC and LBI has received the
oral opinion of its financial advisor that the Merger is fair to
its stockholders from a financial point of view, and HFC and LBI
will request such financial advisor to deliver a written fairness
opinion for inclusion in the Prospectus/Joint Proxy Statement.
ARTICLE IV
CONDITIONS OF THE MERGER;
TERMINATION OF AGREEMENT
4.1 General Conditions. The obligations of each party to
effect the Company Merger shall be subject to the satisfaction (or
written waiver by such party, to the extent such condition is
waivable) of the following conditions before the Company Merger
Effective Time:
(a) Stockholder Approval. The holders of a majority of the
outstanding shares of HFC and LBI Common Stock shall have approved
this Agreement and the Company Merger as specified in Section 1.7
hereof or as otherwise required by applicable law.
(b) No Proceedings. No order shall have been entered and
remain in force restraining or prohibiting the Merger in any legal,
administrative, arbitration, investigatory or other proceedings
(collectively, "Proceedings") by any governmental or judicial or
other authority.
(c) Governmental Approvals. To the extent required by
applicable law or regulation, all approvals of or filings with any
governmental authority (collectively, "Governmental Approvals"),
including without limitation those of the OTS, the FDIC, the FTC,
the DOJ, the SEC and any state securities authorities, shall have
been obtained or made, and any waiting periods shall have expired
in connection with the consummation of the Merger, provided however
that none of the preceding shall be deemed obtained or made if it
shall be conditioned or restricted in a manner that would have or
result in a material adverse effect on Alliance Bancorp as the
Surviving Corporation as contemplated by the parties. All other
statutory or regulatory requirements for the valid consummation of
the Merger and related transactions shall have been satisfied.
(d) Registration Statement. The Registration Statement shall
have been declared effective and shall not be subject to a stop
order of the SEC (and no proceedings for that purpose shall have
been initiated or threatened by the SEC) and, if the offer and sale
of the Surviving Corporation Common Stock in the Merger pursuant to
this Agreement is subject to the securities laws of any state,
shall not be subject to a stop order of any state securities
authority.
(e) Federal Tax Opinion. Each party shall have received an
opinion of Luse Lehman Gorman Pomerenk & Schick, P.C. ("LLGP&S"),
dated as of the Company Merger Effective Time, to the effect that
for federal income tax purposes:
(i) The Company Merger and the Bank Merger will each
qualify as a "reorganization" under Section 368(a) of the Internal
Revenue Code.
(ii) No gain or loss will be recognized by HFC, Hinsdale
Federal Bank, LBI or Liberty Federal by reason of the Company
Merger or the Bank Merger.
(iii) No gain or loss will be recognized by any
stockholder of LBI upon the exchange of LBI Common Stock solely for
Alliance Bancorp Common Stock in the Company Merger.
(iv) The basis of the Alliance Bancorp Common Stock
received by each stockholder of LBI who exchanges LBI Common Stock
for Alliance Bancorp Common Stock in the Company Merger will be the
same as the basis of the LBI Common Stock surrendered in exchange
therefor (subject to any adjustments required as the result of
receipt of cash in lieu of a fractional share of Surviving
Corporation Common Stock).
(v) The holding period of the Alliance Bancorp Common
Stock received by a stockholder of LBI in the Company Merger will
include the holding period of the LBI Common Stock surrendered in
exchange therefore, provided that such shares of LBI Common Stock
were held as a capital asset by such stockholders at the Company
Merger Effective Time.
(vi) Cash received by a LBI shareholder in lieu of a
fractional share interest of Alliance Bancorp Common Stock as part
of the Company Merger will be treated as having been received as a
distribution in full payment in exchange for the fractional share
interest of Alliance Bancorp Common Stock which such stockholder
would otherwise be entitled to receive and will qualify as capital
gain or loss (assuming the LBI stock was a capital asset in such
stockholder's hands at the Company Merger Effective Time).
(f) Third Party Consents. All consents or approvals of all
persons (other than the Governmental Approvals referenced in
Section 4.1 (c) herein) required for or in connection with the
execution, delivery and performance of this Agreement and the
consummation of the Merger shall have been obtained and shall be in
full force and effect, unless the failure to obtain any such
consent or approval is not reasonably likely to have, individually
or in the aggregate, a material adverse effect on Alliance Bancorp
as the Surviving Corporation as the parties hereto shall reasonably
and in good faith agree.
(g) Listing. The shares of Alliance Bancorp Common Stock to
be issued in the Company Merger shall have been approved for
listing on the National Association of Securities Dealers Automated
Quotation National Market ("Nasdaq National Market"), subject to
official notice of issuance.
(h) Employment Arrangements. There shall exist no impediment
or restriction upon the ability of Alliance Bancorp and Liberty
Federal Bank to implement the arrangements and agreements as to
employee benefit matters that are contemplated by Section 3.10
hereof.
4.2 Conditions to Obligations of HFC. The obligations of HFC
to effect the Merger and the other transactions contemplated hereby
shall be subject to the satisfaction or written waiver by HFC of
the following additional conditions before the Company Merger
Effective Time:
(a) Opinion of Counsel for LBI. HFC shall have received the
opinions of Rock, Fusco, Reynolds, Crowe & Garvey, Ltd., counsel to
LBI, dated the date of the Closing, substantially in the form set
forth in Exhibit 4.2 hereof.
(b) Accountants' Letter. HFC shall have received from LBI's
independent auditors the letters referred to in Section 3.5 hereof.
(c) No Material Adverse Effect. Between the date of this
Agreement and the Closing, LBI shall not have been affected by any
event or change which has had or caused a material adverse effect
or material adverse change on LBI and its Subsidiaries, taken as a
whole.
(d) Representations and Warranties to be True, Fulfillment of
Covenants and Conditions. (i) The representations and warranties
of LBI and its subsidiaries shall be true and correct (subject to
Section 2.23 hereof) as of the date hereof and at the Company
Merger Effective Time with the same effect as though made at the
Company Merger Effective Time (or on the date when made in the case
of any representation or warranty which specifically relates to an
earlier date); (ii) LBI and its Subsidiaries shall have performed
all obligations and complied with each covenant, in all material
respects, and satisfied all conditions under this Agreement on its
part to be satisfied at or before the Company Merger Effective
Time; and (iii) LBI shall have delivered to HFC a certificate,
dated the Company Merger Effective Time and signed by its chief
executive officer and chief financial officer, certifying as to the
satisfaction of clauses (i) and (ii) hereof.
(e) No Litigation. Neither LBI nor any LBI Subsidiary shall
be subject to any pending litigation which, if determined adversely
to LBI or any LBI Subsidiary, would have a material adverse effect
on LBI and its Subsidiaries, taken as a whole.
4.3 Conditions to Obligations of LBI. The obligations of LBI
to effect the Merger and the other transactions contemplated hereby
shall be subject to the satisfaction or written waiver by LBI of
the following additional conditions before the Company Merger
Effective Time:
(a) Opinion of Counsel for HFC. LBI shall have received the
opinions of counsel of Gomberg, Sharfman, Gold & Ostler, P.C.,
counsel to HFC, dated the date of the Closing, substantially in the
form set forth in Exhibit 4.3 hereto.
(b) Accountant's Letter. LBI shall have received from HFC's
independent auditors the letters referred to in Section 3.5 hereof.
(c) No Material Adverse Effect. Between the date of this
Agreement and Closing, HFC shall not have been affected by any
event or change which has had or caused a material adverse effect
or material adverse change on HFC and its Subsidiaries, taken as a
whole.
(d) Representations and Warranties to be True, Fulfilment of
Covenants and Conditions. (i) The representations and warranties
of HFC and its Subsidiaries shall be true and correct (subject to
Section 2.23 hereof) as of the date hereof and at the Company
Merger Effective Time with the same effect as though made at the
Company Merger Effective Time (or on the date when made in the case
of any representation or warranty which specifically relates to an
earlier date); (ii) HFC and its Subsidiaries shall have performed
all obligations and complied with each covenant, in all material
respects, and satisfied all conditions under this Agreement on its
part to be satisfied at or before the Company Merger Effective
Time; and (iii) HFC shall have delivered to LBI a certificate,
dated the Company Merger Effective Time and signed by its chief
executive officer and chief financial officer, certifying as to the
satisfaction of clauses (i) and (ii) hereof.
(e) Surviving Corporation Common Stock. A certificate for
the required number of whole shares of Alliance Bancorp Common
Stock, as determined pursuant to Section 1.3 herein, and cash for
fractional share interests, as so determined, shall have been
delivered to the Exchange Agent.
(f) No Litigation. Neither HFC nor any HFC Subsidiary shall
be subject to any pending litigation which, if determined adversely
to HFC or any HFC Subsidiary, would have a material adverse effect
on HFC and its HFC Subsidiaries, taken as a whole.
4.4 Termination of Agreement and Abandonment of Merger. This
Agreement, the Company Merger Agreement and the Bank Merger
Agreement may be terminated at any time before the Company Merger
Effective Time, whether before or after approval thereof by the
stockholders of HFC or LBI, as provided below:
(a) Mutual Consent. By mutual consent of the parties,
evidenced by their written agreement.
(b) Closing Delay. At the election of either party,
evidenced by written notice, if (i) the Closing shall not have
occurred on or before June 30, 1997, or such later date as shall
have been agreed to in writing by the parties, provided however
that the right to terminate under this Section 4.4(b) shall not be
available to any party whose failure to perform an obligation
hereunder has been the cause of, or has resulted in, the failure of
the Closing to occur on or before such date; (ii) any approval or
authorization of any governmental entity, the lack of which would
result in the failure to satisfy the closing condition set forth in
Section 4.1(c) hereof, shall have been denied by such governmental
entity, or such governmental entity shall have requested the
withdrawal of any application therefor or indicated an intention to
deny, or impose a condition or a restriction of a type referred to
in the proviso to Section 4.1(c) with respect to, such approval or
authorization, or (iii) the approval of the stockholders of HFC or
LBI referred to in Section 4.1(a) shall not have been obtained at
the meeting of stockholders held to approve the Merger, provided
that the electing party is not then in breach of its obligations
under Section 3.4 hereof.
(c) Conditions to HFC Performance Not Met. By HFC upon
delivery of written notice of termination to LBI if any event
occurs which renders impossible of satisfaction in any material
respect one or more of the conditions to the obligations of HFC to
effect the Merger set forth in Sections 4.1 and 4.2 and
noncompliance is not waived in writing by HFC.
(d) Conditions to LBI Performance Not Met. By LBI upon
delivery of written notice of termination to HFC if any event
occurs which renders impossible of satisfaction in any material
respect one or more of the conditions to the obligations of LBI to
effect the Merger set forth in Sections 4.1 and 4.3 and
noncompliance is not waived in writing by LBI.
(e) Breach. By either HFC or LBI if there has been a
material breach of the other party's representations and warranties
(as contemplated in this Agreement), covenants or agreements set
forth in this Agreement of which written notice has been given to
such breaching party and which has not been fully cured or cannot
be fully cured within the earlier of (i) 30 days of receipt of such
notice or (ii) 5 days prior to the Closing and which breach would,
in the reasonable opinion of the non-breaching party, individually
or in the aggregate, have, or be reasonably likely to have, a
material adverse effect on the breaching party and its
Subsidiaries, taken as a whole, or upon consummation of the
transactions contemplated by this Agreement.
(f) HFC Election. By HFC if (i) the Board of Directors of
LBI shall not have publicly recommended in the Prospectus/Joint
Proxy Statement that its stockholders approve and adopt this
Agreement or shall have withdrawn, modified or changed in a manner
adverse to HFC its approval or recommendation of this Agreement,
(ii) the Board of Directors of LBI shall have authorized LBI to
enter into any agreement, letter of intent or agreement in
principle with the intent to pursue or effect a Takeover Proposal
or (iii) the Board of Directors of HFC shall have failed to
recommend to its stockholders the adoption of this Agreement or
shall have withdrawn, modified or changed such recommendation
pursuant to the exercise of its fiduciary obligations under Section
3.4 herein.
(g) LBI Election. By LBI if (i) the Board of Directors of
HFC shall not have publicly recommended in the Prospectus/Joint
Proxy Statement that its stockholders approve and adopt this
Agreement or withdrawn, modified or changed in a manner adverse to
LBI its approval or recommendation of this Agreement, (ii) the
Board of Directors of HFC shall have authorized HFC to enter into
any agreement, letter of intent or agreement in principle with the
intent to pursue or effect a Takeover Proposal or (iii) the Board
of Directors of LBI shall have failed to recommend to its
stockholders the adoption of this Agreement or shall have
withdrawn, modified or changed such recommendation pursuant to the
exercise of its fiduciary obligations under Section 3.4 herein.
ARTICLE V
TERMINATION OF OBLIGATIONS; PAYMENT OF EXPENSES
5.1 Termination, Lack of Survival of Representations and
Warranties. In the event of the termination and abandonment of
this Agreement pursuant to Section 4.4 hereof, this Agreement shall
become void and have no effect, except (i) the provisions of
Sections 2.7 (No Broker's or Finder's Fees), 3.6 (Publicity), 5.2
(Payment of Expenses) and 7.2 (Confidentiality) hereof shall
survive any such termination and abandonment, and (ii) a
termination pursuant to Section 4.4(c), 4.4(d) or 4.4(e) of this
Agreement shall not relieve the breaching party from liability for
any uncured intentional and willful breach of a representation,
warranty, covenant or agreement giving rise to such termination.
The representations, warranties and agreements set forth in
this Agreement shall not survive the Company Merger Effective Time
and shall be terminated and extinguished at the Company Merger
Effective Time, and from and after the Company Merger Effective
Time no party shall have any liability to the other on account of
any breach or failure of any of those representations, warranties
and agreements, provided however that the foregoing clause (i)
shall not apply to agreements of the parties which by their terms
are intended to be performed after the Company Merger Effective
Time by Alliance Bancorp or the Surviving Institution in the Bank
Merger or otherwise and (ii) shall not relieve any party or person
for liability for fraud, deception or intentional
misrepresentation.
5.2 Payment of Expenses. Each party shall bear and pay all
costs and expenses incurred by it or on its behalf in connection
with the transactions contemplated hereby, except that the costs of
printing and mailing the Prospectus/Joint Proxy Statement shall be
shared equally by the parties.
ARTICLE VI
CERTAIN POST-MERGER AGREEMENTS
6.1 Registration of Stock Underlying Stock Options. In order
to permit the exercise of options to purchase Alliance Bancorp
Common Stock which were originally granted under the LBI Option
Plans and are to be substituted and assumed by Alliance Bancorp as
the surviving corporation under the provisions of Section 1.8
hereof, at and after the Company Merger Effective Time Alliance
Bancorp shall take all such actions as may be necessary or
appropriate in order to carry out fully the provisions of Section
1.8 hereof.
6.2 Reports to the SEC. Alliance Bancorp as the Surviving
Corporation shall continue to file all reports and data with the
SEC necessary to permit stockholders of HFC and LBI who may be
deemed affiliates of HFC or LBI within the meaning of Rule 145
under the Securities Act to sell the Surviving Corporation Common
Stock held or received by them in connection with the Merger
pursuant to Rules 144 and 145 under such Act if they would
otherwise be so entitled. After the Company Merger Effective Time,
Alliance Bancorp will file with the SEC all reports, statements and
other materials required by the federal securities laws on a timely
basis.
6.3 Indemnification. (a) From and after the Company Merger
Effective Time, Alliance Bancorp as the Surviving Corporation shall
indemnify, defend and hold harmless each person who is now, or who
has been at any time before the date hereof or who becomes before
the Company Merger Effective Time, an officer, director or employee
of either HFC or LBI or any of their respective Subsidiaries (the
"Indemnified Parties") against all losses, claims, damages, costs,
expenses (including attorney's fees), liabilities or judgments or
amounts that are paid in settlement (which settlement shall require
the prior written consent of Alliance Bancorp as the surviving
corporation, which consent shall not be unreasonably withheld) of
or in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, or administrative (each a
"Claim"), in which an Indemnified Party is, or is threatened to be
made, a party or a witness based in whole or in part on or arising
in whole or in part out of the fact that such person is or was a
director, officer or employee of either HFC or LBI or any of their
respective Subsidiaries if such Claim pertains to any matter or
fact arising, existing or occurring on or before the Company Merger
Effective Time (including, without limitation, the Merger and the
other transactions contemplated hereby), regardless of whether such
Claim is asserted or claimed before, or at or after, the Company
Merger Effective Time (the "Indemnified Liabilities"), to the
fullest extent permitted under applicable Delaware or federal law
in effect as of the date hereof or as amended applicable to a time
before the Company Merger Effective Time and under HFC's or LBI's
governing corporation documents (as the case may be)(including the
right to an advancement of expenses), and Alliance Bancorp shall
pay expenses in advance of the final disposition of any such action
or proceeding to each Indemnified Party to the full extent
permitted by applicable Delaware or federal law in effect as of the
date hereof or as amended applicable to a time before the Company
Merger Effective Time or as set forth in HFC's and LBI's corporate
documents upon receipt of any undertaking required by applicable
law. Any Indemnified Party wishing to claim indemnification under
this Section 6.3(a), upon learning of any Claim, shall notify
Alliance Bancorp as the Surviving Corporation (but the failure so
to notify Alliance Bancorp as the Surviving Corporation shall not
relieve it from any liability which it may have under this Section
6.3(a) except to the extent such failure materially prejudices
Alliance Bancorp) and shall deliver to Alliance Bancorp as the
Surviving Corporation the undertaking, if any, required by
applicable law. Alliance Bancorp as the Surviving Corporation
shall insure, to the extent permitted under applicable law, that
all limitations of liability existing in favor of the Indemnified
Parties as provided in HFC's or LBI's governing corporation
documents (as the case may be), as in effect as of the date hereof,
or allowed under applicable state or federal law as in effect as of
the date hereof or as amended applicable to a time before the
Company Merger Effective Time, with respect to claims or
liabilities arising from facts or events existing or occurring
before the Company Merger Effective Time (including, without
limitation, the transactions contemplated hereby), shall survive
the Company Merger.
(b) From and after the Company Merger Effective Time, the
directors, officers and employees of HFC and LBI hereto or any of
their respective Subsidiaries who become directors, officers or
employees of Alliance Bancorp as the Surviving Corporation or any
of its Subsidiaries, as set forth in paragraph (a) of this Section
6.3, shall have indemnification rights having prospective
application only. The prospective indemnification rights shall
consist of such rights to which directors, officers and employees
of Alliance Bancorp as the surviving corporation and its
Subsidiaries are entitled under the provisions of the governing
corporation documents of Alliance Bancorp as the surviving
corporation and its Subsidiaries, as in effect from time to time
after the Company Merger Effective Time, as applicable, and
provisions of applicable Delaware and federal law as in effect from
time to time after the Company Merger Effective Time.
(c) For a period of three years from and after the Company
Merger Effective Time, Alliance Bancorp shall cause to be
maintained in effect the current policies of directors' and
officers' liability insurance maintained by LBI and the LBI
Subsidiaries (provided that Alliance Bancorp may substitute
therefor policies from financially capable insurers of at least the
same coverage and amounts containing terms and conditions which are
substantially no less advantageous or in the event such coverage is
provided through Alliance Bancorp's insurer it may be on terms and
conditions (other than coverage and amounts) consistent with
Alliance Bancorp's coverage) with respect to claims arising from
facts or events which occurred before the Company Merger Effective
Time. Following consummation of the Merger, the directors and
officers of the Surviving Corporation shall be covered by the
directors' and officers' liability insurance maintained by Alliance
Bancorp as the surviving corporation.
(d) The obligations of Alliance Bancorp provided under
paragraphs (a) (b) and (c) of this Section 6.3 are intended to be
enforceable against Alliance Bancorp directly by the Indemnified
Parties and shall be binding on all respective successors and
permitted assigns of Alliance Bancorp as the surviving corporation.
6.4 Directors, Executive Officers and Committees of Surviving
Corporation.
(a) At the Company Merger Effective Time, the Board of
Directors of Alliance Bancorp as the surviving corporation shall be
fixed at 14 directors (the "Initial Directors"), seven of whom
shall be selected by the Board of Directors of HFC and seven of
whom shall be selected by the Board of Directors of LBI, in each
case prior to the Company Merger Effective Time. The persons who
shall be the initial directors of the Surviving Corporation are as
follows: Messrs. Fredric G. Novy (Chairman of the Board), Kenne
P. Bristol, Edward J. Burns, H. Verne Loeppert, William C.
O'Donnell, Whit G. Hughes, Dr. David D. Mill, Vernon B. Thomas,
Jr., Howard R. Jones, William R. Rybak, Donald E. Sveen, Russell
F. Stephens, Jr., Howard A. Davis, and one additional person to be
appointed by HFC. As soon as practicable, HFC and LBI shall agree
as to the class and term for each of the persons so selected as a
director (it being the intention that to the greatest extent
practicable, the HFC and LBI directors shall serve in equal number
in each of the three classes of directors). HFC and its Board of
Directors shall take all necessary corporate action prior to the
Company Merger Effective Time to effectuate this agreement of the
parties including the election of the designated persons as
directors of Alliance Bancorp as the surviving corporation,
effective at the Company Merger Effective Time, for the agreed upon
classes and terms.
(b) It is the intention of the parties that the fees and
benefits to be received by the directors of Alliance Bancorp as the
surviving corporation shall be as set forth in Schedule 6.4.
(c) The Executive Officers of Alliance Bancorp following the
Company Merger Effective Time shall be: Fredric G. Novy -- Chairman
of the Board: Kenne P. Bristol -- President and Chief Executive
Officer, and such other officers as determined by the Board of
Directors.
(d) Initially the Board of Directors of Alliance Bancorp
shall have a nine person Executive Committee and such other
committees as the Board shall establish in accordance with Section
141 of the DGCL, Alliance Bancorp's Certificate of Incorporation
and the Bylaws. The nine members of the Executive Committee shall
be Messrs. William R. Rybak (who shall be the Chairman of the
Executive Committee), Edward J. Burns (who shall be Vice Chairman
of the Executive Committee), Kenne P. Bristol, Donald E. Sveen,
Fredric G. Novy, H. Verne Loeppert, William C. O'Donnell, Russell
F. Stephens, Jr. and one additional person as determined by HFC.
The Executive Committee shall not have such power or authority as
is specifically excluded to it pursuant to Section 141 of the DGCL.
The Executive Committee shall act by majority vote to carry out the
policies, plans, practices and directions previously approved by
the Board of Directors (or those approved by the members of the
Executive Committee) and to otherwise enable Alliance Bancorp, as
the surviving corporation, to conduct its business in the normal
and regular course consistent with Alliance Bancorp's then current
policies, plans, practices and directions. Prior to the Company
Merger Effective Time, HFC and LBI shall reasonably agree as to the
initial members of each other committee of the Board of Directors
of Alliance Bancorp as the Surviving Corporation.
(e) Those provisions of this Section 6.4 intended to survive
the Company Merger Effective Time shall survive the Company Merger
Effective Time and remain in effect until the third anniversary
thereof, terminating thereafter.
6.5 Directors and Executive Officers of Liberty Federal Bank.
(a) Subject to OTS approval if necessary, at the Bank Merger
Effective Time, the Board of Directors of Liberty Federal Bank
shall be fixed at nine persons, consisting of nine members who
shall initially be Messrs. Fredric G. Novy (Chairman of the Board),
Kenne P. Bristol, Edward J. Burns, Joseph W. Stachnik, William R.
Rybak, Donald E. Sveen, Vernon B. Thomas, Jr., Dr. David D. Mill
and one additional person designated by Hinsdale Federal Bank.
Each such Initial Director shall serve as a director of Liberty
Federal Bank subsequent to the Bank Merger Effective Time during
the same period each serves as a director of Alliance Bancorp.
Hinsdale Federal Bank and its Board of Directors shall take all
necessary corporate action prior to the Bank Merger Effective Time
to effectuate the election of the designated persons as directors
of the Surviving Institution in the Bank Merger, effective at the
Bank Merger Effective Time, for the agreed upon classes and terms.
(b) The fees and benefits to be received by the directors of
the Surviving Institution following the Bank Merger Effective Time
shall be as set forth in Disclosure Schedule 6.4.
(c) The Executive Officers of the Surviving Institution
following the Bank Merger Effective Time shall be: Fredric G. Novy
- -- Chairman of the Board; Kenne P. Bristol -- President and Chief
Executive Officer and such other officers as determined by the
Board of Directors of Liberty Federal Bank.
(d) Those provisions of this Section 6.5 intended to survive
the Company Merger Effective Time shall survive the Bank Merger
Effective Time and remain in effect until the third anniversary
thereof.
ARTICLE VII
GENERAL
7.1 Amendments. Subject to applicable law, this Agreement
may be amended, whether before or after any stockholder approval
hereof, by an agreement in writing executed in the same manner as
this Agreement and authorized or ratified by the Boards of
Directors of the parties hereto, provided that after the approval
of this Agreement by the stockholders of either party hereto, no
such amendment may change the amount or form of the consideration
to be delivered hereunder pursuant to Section 1.3 herein without
their approval.
7.2 Confidentiality. All information disclosed by any party
to any other party, whether prior or subsequent to the date of this
Agreement including, without limitation, any information obtained
pursuant to Section 3.1 hereof, shall be kept confidential by such
other party and shall not be used by such other party otherwise
than as herein contemplated, all in accordance with the terms of
the existing confidentiality agreement between the parties (the
"Confidentiality Agreement"). In the event of the termination of
this Agreement, each party shall use all reasonable efforts to
return upon request to the other party all documents (and
reproductions thereof) received from such other party (and, in the
case of reproductions, all such reproductions) that include
information subject to the confidentiality requirement set forth
above.
7.3 Governing Law. This Agreement and the legal relations
between the parties shall be governed by and construed in
accordance with the laws of the State of Delaware without taking
into account any provision regarding choice of law, except to the
extent certain matters may be governed by federal law by reason of
preemption.
7.4 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if sent by
registered mail or certified mail, postage prepaid, addressed, as
follows:
If to Hinsdale Financial Corporation, to
One Grant Square
Hinsdale, Illinois 60522
Attention: Mr. Kenne P. Bristol
President and Chief Executive Officer
with a copy to: Luse Lehman Gorman Pomerenk & Schick, PC
5335 Wisconsin Avenue, NW
Washington, D.C. 20015
Attention: John J. Gorman, Esq.
Alan Schick, Esq.
And
Gomberg, Sharfman, Gold & Ostler, P.C.
208 S. LaSalle
Suite 1200
Chicago, Illinois 60604
Attention: Robert J. Sharfman, Esq.
If to Liberty Bancorp, Inc., to
Liberty Bancorp, Inc.
5700 N. Lincoln Avenue
Chicago, Illinois 60659
Attention: Mr. Fredric G. Novy
President and Chief Executive Officer
with a copy to: Rock, Fusco, Reynolds, Crowe
& Garvey, Ltd.
350 North LaSalle
Suite 9900
Chicago, Illinois 60610
Attention: Daniel R. Fusco, Esq.
or such other address as shall be furnished in writing by either
party to the other, and any such notice or communication shall be
deemed to have been given three business days after the date of
such mailing (except that the notice of change of address shall not
be deemed to have been given until received by the addressee).
Notices may also be sent by telegram, telex, facsimile transmission
or hand delivery and in such event shall be deemed to have been
given as of the date received by the addressee.
7.5 No Assignment. This Agreement may not be assigned by any
party hereto, by operation of law or otherwise, except as
contemplated hereby.
7.6 Headings. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
7.7 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the
same agreement and shall become effective when one or more
counterparts have been signed by each party and delivered to each
other party.
7.8 Construction and Interpretation. Except as the context
otherwise requires, all references herein to any state or federal
regulatory agency shall also be deemed to refer to any predecessor
or successor agency, and all references to state and federal
statutes or regulations shall also be deemed to refer to any
successor statute or regulation.
7.9 Entire Agreement. This Agreement, together with the
schedules, lists, exhibits and certificates required to be
delivered hereunder, and any amendment hereafter executed and
delivered in accordance with Section 7.1, constitutes the entire
agreement of the parties and supersedes any prior written or oral
agreement or understanding among any parties pertaining to the
Merger, except that the Confidentiality Agreement shall remain in
full force and effect as contemplated in Section 7.2 herein and
except with respect to the applicable Stock Option Agreement.
7.10 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable
law then such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of the Agreement.
7.11 No Third Party Beneficiaries. Nothing in this Agreement
shall entitle any person (other than the parties hereto and their
respective successors and assigns permitted hereby) to any claim,
cause of action, remedy or right of any kind, except for Sections
1.8, 3.10, 6.1, 6.3, 6.4, 6.5 and 6.7.
7.12 No Employment Solicitation. If this Agreement is
terminated, the parties hereto agree that, for a period of two
years subsequent to such termination (i) none of the parties shall,
without first obtaining the prior written consent of the other,
directly or indirectly, actively solicit the employment of any
current director, officer or employee of the other party and (ii)
none of the parties will actively solicit business relationships
with clients of the other party solely as a result of review of the
information contemplated in Section 7.2 herein.<PAGE>
IN WITNESS WHEREOF, each party has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the
date set forth above.
HINSDALE FINANCIAL CORPORATION LIBERTY BANCORP, INC.
By: (s) Kenne P. Bristol By: (s) Fredric G. Novy
Kenne P. Bristol Fredric G. Novy
President and Chief President and Chief
Executive Officer Executive Officer
<PAGE>
<PAGE>
EXHIBIT A STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated August 2, 1996, between Liberty
Bancorp, Inc., a Delaware corporation ("Issuer") and Hinsdale
Financial Corporation, a Delaware corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and
Plan of Merger dated August 2, 1996 (the "Merger Agreement"), which
agreement has been executed by the parties hereto prior to this
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 492,927 fully paid and nonassessable shares of its
common stock, par value $0.01 per share ("Common Stock"), at a
price of $24.125 per share (such price, as adjusted if applicable,
the "Option Price"); provided, however, that in the event Issuer
issues or agrees to issue any shares of Common Stock (other than as
permitted under the Merger Agreement) at a price less than $24.125
per share, such Option Price shall be equal to such lesser price.
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 issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement), the number of
shares of Common Stock subject to the Option shall be increased so
that, after such issuance, it 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 or Grantee to breach any provision of
the Merger Agreement.
2. (a) The holder or holders of the Option (including
Grantee or any subsequent transferee(s)) (the "Holder") may
exercise the Option, in whole or part, 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 the written
notice of such exercise (as provided in subsection (e) of this
Section 2) within 180 days following the first such Subsequent
Triggering Event. Each of the following shall be an Exercise
Termination Event: (i) the Company Merger Effective Time (as
defined in the Merger Agreement); (ii) termination of the Merger
Agreement in accordance with the provisions thereof if such
termination occurs prior to the occurrence of an Initial Triggering
Event; or (iii) the passage of twelve months after termination of
the Merger Agreement if such termination follows or occurs at the
same time as the occurrence of an Initial Triggering Event.
(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, and the rules
and regulations thereunder (the "1934 Act")) other than
Grantee or any of its Subsidiaries (each a "Grantee
Subsidiary"). For purposes of this Agreement, "Acquisition
Transaction" shall mean (x) 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 SEC) of Issuer, (y) a purchase, lease or
other acquisition of all or substantially all of the assets of
Issuer or any Significant Subsidiary of Issuer, or (z) a
purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of beneficial
ownership of securities representing 25% or more of the voting
power of Issuer or any Significant Subsidiary of Issuer,
provided that the term "Acquisition Transaction" does not
include any internal merger or consolidation involving only
Issuer and/or Issuer Subsidiaries;
(ii) (A) Any person other than Grantee, or any Grantee
Subsidiary, or any Issuer Subsidiary acting in a fiduciary
capacity (collectively, "Excluded Persons"), alone or together
with such person's affiliates and associates (as such terms
are defined in Rule 12b-2 under the 1934 Act) shall have
acquired beneficial ownership or the right to acquire
beneficial ownership of 25% or more of the outstanding shares
of Common Stock (the term "beneficial ownership" for purposes
of this Option Agreement having the meaning assigned thereto
in Section 13(d) of the 1934 Act, and the rules and
regulations thereunder) or (B) any group (as such term is
defined in Section 13(d)(3) of the 1934 Act), other than a
group of which only Excluded Persons are members, shall have
been formed that beneficially owns 25% or more of the shares
of Common Stock then outstanding;
(iii) Any person other than Grantee or any Grantee
Subsidiary shall have made a bona fide proposal to Issuer or
its shareholders 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 25% or more of Issuer's voting power;
(iv) The Board of Directors of Issuer shall have failed
to recommend to its stockholders the adoption of the Merger
Agreement or shall have withdrawn, modified or changed its
recommendation in a manner adverse to Grantee;
(v) After a proposal is made by a third party (other
than an Excluded Person) to Issuer to engage in an Acquisition
Transaction, Issuer shall have intentionally and knowingly
breached any representation, warranty, covenant or agreement
contained in the Merger Agreement and such breach (x) would
entitle Grantee to terminate the Merger Agreement pursuant to
Section 4.4(e) therein (without regard to any grace period
provided for therein) and (y) shall not have been cured prior
to the Notice Date (as defined below); or
(vi) Any person other than 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 Office of Thrift
Supervision ("OTS") or other federal or state bank regulatory
authority, 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 by any person other than an Excluded
Person of beneficial ownership of 25% or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event
described in subparagraph (i) of subsection (b) of this
Section 2.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering
Event (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 is 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 OTS 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 each 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.
(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 ("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 satisfactory to
Issuer, to the effect that such legend is not required for purposes
of the 1933 Act; (ii) the reference to the provisions of 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. Section 18a and regulations promulgated
thereunder and (y) in the event, under the Home Owners' Loan Act,
as amended ("HOLA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to
the OTS, 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 OTS 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, in the event of any change
in Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions,
exchanges of shares, distributions, or the like, the type and
number, and/or the price, of shares of Common Stock purchasable
upon exercise hereof shall be appropriately adjusted, and proper
provision shall be made in the agreements governing such
transaction so that the Holder shall receive, upon exercise of the
Option, the number and class of shares or other securities or
property that Holder would have received in respect of the Common
Stock if the Option had been exercised immediately prior to such
event, or the record date therefor, as applicable.
6. Upon the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Event, Issuer (including
any successor thereto) shall, at the request of the Holder
delivered at the time of and together with a written notice of
exercise in accordance with Section 2(e) hereof (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, file and keep current a shelf
registration statement under the 1933 Act covering any shares
issued or issuable pursuant to this Option and shall use its best
efforts to cause such registration statement to become effective
and remain current in order to permit the sale or other disposition
of 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 the Holder. Issuer will use its best
efforts to cause such registration statement first to become
effective and then to remain effective for such period not in
excess of 180 days from the day such registration statement first
becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. The Holder
shall have the right to demand not more than two such registrations
under this Agreement and all other agreements, for which this
agreement may be exchanged pursuant to Section 4 hereof; provided,
however, that Issuer shall be required to bear the expenses related
only to the first such registration, and the Holder shall bear such
expenses to the extent related to the second. The foregoing
notwithstanding, if, at the time of any request by the Holder for
registration of 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 issued 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 such 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.
7. (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 shares and 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 shares of
capital stock (or similar equity interest) with the greatest
voting power with respect of the election of directors (or
other persons similarly responsible for direction of the
business and affairs) of the issuer of the Substitute Option.
(3) "Assigned Value" 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, or (iii) in the event of a sale
of all or substantially all 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 selected by the
Holder, 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 selected by the Holder.
(4) "Average Price" shall mean the average closing price
of a share of the Substitute Common Stock for the six months
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.
(c) The Substitute Option shall have the same terms and
conditions as the Option, provided, that if any term or condition
of the Substitute Option cannot, for legal reasons, be the same as
the Option, such term or condition 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 (i) the
product of (A) the Assigned Value and (B) the number of shares of
Common Stock for which the Option is then exercisable, divided by
(ii) 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 Substitute Common Stock outstanding prior to exercise
of the Substitute Option.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 7 unless the Acquiring Corporation
and any person that controls the Acquiring Corporation assume in
writing all the obligations of Issuer hereunder.
8. The 180-day period for exercise of certain rights under
Sections 2 and 6 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.
9. Repurchase at the Option of Holder. (a) At the
request of Holder at any time commencing upon the first occurrence
of a Repurchase Event (as defined in Section 9(d)) and ending 12
months immediately thereafter, Issuer shall repurchase from Holder
(i) the Option and (ii) all shares of Issuer Common Stock purchased
by Holder pursuant hereto with respect to which Holder then has
beneficial ownership. The date on which Holder exercises its
rights under this Section 9 is referred to as the "Request Date".
Such repurchase shall be at an aggregate price (the "Section 9
Repurchase Consideration") equal to the sum of:
(i) the aggregate Option Price paid by Holder
for any shares of Issuer Common Stock acquired pursuant to the
Option with respect to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the
Applicable Price (as defined below) for each share of Common Stock
over (y) the Option Price (subject to adjustment pursuant to
Sections 1 and 5), multiplied by the number of shares of Common
Stock with respect to which the Option has not been exercised; and
(iii) the excess, if any, of the Applicable
Price over the Option Price (subject to adjustment pursuant to
Sections 1 and 5) paid (or, in the case of Option Shares with
respect to which the Option has been exercised but the Closing Date
has not occurred, payable) by Holder for each share of Common Stock
with respect to which the Option has been exercised and with
respect to which Holder then has beneficial ownership, multiplied
by the number of such shares.
(b) If Holder exercises its rights under
this Section 8, Issuer shall, within 10 business days after the
Request Date, pay the Section 9 Repurchase Consideration to Holder
in immediately available funds, and contemporaneously with such
payment, Holder shall surrender to Issuer the Option and the
certificates evidencing the shares of Common Stock purchased
thereunder with respect to which Holder then has beneficial
ownership, and Holder shall warrant that it has sole record and
beneficial ownership of such shares and that the same are then free
and clear of all liens. Notwithstanding the foregoing, to the
extent that prior notification to or approval of any federal or
state regulatory authority is required in connection with the
payment of all or any portion of the Section 9 Repurchase
Consideration, Holder shall have the ongoing option to revoke its
request for repurchase pursuant to Section 9, in whole or in part,
or to require that Issuer deliver from time to time that portion of
the Section 9 Repurchase Consideration that it is not then so
prohibited from paying and promptly file the required notice or
application for approval and expeditiously process the same (and
each party shall cooperate with the other in the filing of any such
notice or application and the obtaining of any such approval). If
any federal or state regulatory authority disapproves of any part
of Issuer's proposed repurchase pursuant to this Section 9, Issuer
shall promptly give notice of such fact to Holder. If any federal
or state regulatory authority prohibits the repurchase in part but
not in whole, then Holder shall have the right (i) to revoke the
repurchase request or (ii) to the extent permitted by such
regulatory authority, determine whether the repurchase should apply
to the Option and/or Option Shares and to what extent to each, and
Holder shall thereupon have the right to exercise the Option as to
the number of Option Shares for which the Option was exercisable at
the Request Date less the sum of the number of shares covered by
the Option in respect of which payment has been made pursuant to
Section 9(a)(ii) and the number of shares covered by the portion of
the Option (if any) that has been repurchased. Holder shall notify
Issuer of its determination under the preceding sentence within
five (5) business days of receipt of notice of disapproval of the
repurchase.
Notwithstanding anything herein to the contrary, all of
Holder's rights under this Section 9 shall terminate on the date of
termination of this Option pursuant to Section 2(a).
(c) For purposes of this Agreement, the "Applicable
Price" means the highest of (i) the highest price per share of
Common Stock paid for any such share by the person or groups
described in Section 9(d)(i), (ii) the price per share of Common
Stock received by holders of Common Stock in connection with any
merger or other business combination transaction described in
Section 7(a)(i), 7(a)(ii) or 7(a)(iii), or (iii) the highest
closing sales price per share of Issuer Common Stock quoted on the
Nasdaq National Market System (or if Issuer Common Stock is not
quoted on the Nasdaq National Market System, the highest bid price
per share as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a
recognized source chosen by Holder) during the 40 business days
preceding the Request Date; provided, however, that in the event of
a sale of less than all of Issuer's assets, the Applicable Price
shall be 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
selected by Holder, divided by the number of shares of Common Stock
outstanding at the time of such sale. If the consideration to be
offered, paid or received pursuant to either of the foregoing
clauses (i) or (ii) shall be other than in cash, the value of such
consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by Holder
and reasonably acceptable to Issuer, which determination shall be
conclusive for all purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur
if (i) any person (other than Grantee or any subsidiary of Grantee)
shall have acquired beneficial ownership of (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act), or the
right to acquire beneficial ownership of, or any "group" (as such
term is defined under the Exchange Act) shall have been formed
which beneficially owns or has the right to acquire beneficial
ownership of, 50% or more of the then outstanding shares of Issuer
Common Stock, or (ii) any of the transactions described in Section
7(a)(i), 7(a)(ii) or 7(a)(iii) shall be consummated.
10. 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. This Agreement is the
valid and legally binding obligation of 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) Issuer has taken all necessary action to exempt this
Agreement, and the transactions contemplated hereby and thereby
from, and this Agreement and the transactions contemplated hereby
and thereby are exempt from, (i) any applicable state takeover
laws, (ii) any state laws limiting or restricting the voting rights
of stockholders and (iii) any provision in its or any of its
subsidiaries' articles of incorporation, certificate of
incorporation, charter or bylaws restricting or limiting stock
ownership or the voting rights of stockholders.
(d) The execution, delivery and performance of this Agreement
does not or will not, and the consummation by Issuer of any of the
transactions contemplated hereby will not, constitute or result in
(i) a breach or violation of, or a default under, its certificate
of incorporation or bylaws, or the comparable governing instruments
of any of its subsidiaries, or (ii) a breach or violation of, or a
default under, any agreement, lease, contract, note, mortgage,
indenture, arrangement or other obligation of it or any of its
subsidiaries (with or without the giving of notice, the lapse of
time or both) or under any law, rule, ordinance or regulation or
judgment, decree, order, award or governmental or nongovernmental
permit or license to which it or any of its subsidiaries is
subject, that would, in any case referred to in this clause (ii),
give any other person the ability to prevent or enjoin Issuer's
performance under this Agreement in any material respect.
11. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has full 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) This Option is not being acquired with a view to the
public distribution thereof and neither this Option nor any Option
Shares will be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under applicable
federal and state securities laws and regulations.
12. 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 (i) to any wholly-owned
Subsidiary or (ii) 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 to one or
more transferees.
13. 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.
14. Notwithstanding anything to the contrary herein, in the
event that the Holder or any Related Person thereof is a person
making an offer or proposal to engage in an Acquisition Transaction
(other than the transactions contemplated by the Merger Agreement),
then in the case of a Holder or any Related Person thereof, the
Option held by it shall immediately terminate and be of no further
force or effect. A Related Person of a Holder means any Affiliate
(as defined in Rule 12b-2 of the rules and regulations under the
1934 Act) of the Holder and any person that is the beneficial owner
of 20% or more of the voting power of the Holder.
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 the full
number of shares of Common Stock provided in Section 1(a) hereof
(as adjusted pursuant to Section 1(b) or Section 5 hereof), it is
the express intention of Issuer to allow the Holder to acquire such
lesser number of shares as may be permissible, without any
amendment or modification hereof.
17. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given
when delivered in person, by cable, telegram, telecopy or telex, or
by registered or certified mail (postage prepaid, return receipt
requested) at the respective addresses of the parties set forth in
the Merger Agreement.
18. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, 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.
Notwithstanding anything to the contrary contained herein or in the
Merger Agreement, in the event a Subsequent Triggering Event shall
occur prior to an Exercise Termination Event, Issuer shall pay to
Grantee upon demand the amount of the expenses incurred by Grantee
in connection with this Agreement and the Merger Agreement and the
transactions contemplated hereby and thereby.
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 and, as permitted herein,
assignees, 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.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers, all as of
the date first above written.
LIBERTY BANCORP, INC.
BY: (s) Fredric G. Novy
Fredric G. Novy
President and Chief Executive
Officer
HINSDALE FINANCIAL CORPORATION
BY: (s) Kenne P. Bristol
Kenne P. Bristol
President and Chief Executive
Officer
