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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
APRIL 25, 1997
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
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FIRST OZAUKEE CAPITAL CORP.
(Exact Name of Registrant as Specified in its Charter)
WISCONSIN
(State or Other Jurisdiction of Incorporation)
0-24664 39-1781744
(Commission File Number) (IRS Employer Identification No.)
W61 N526 Washington Avenue, Cedarburg, Wisconsin 53012
(Address of Principal Executive Offices) (Zip Code)
(414) 377-0750
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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<PAGE> 2
ITEM 5. OTHER EVENTS
On April 25, 1997, the Registrant signed a definitive Agreement and
Plan of Reorganization that provides for the acquisition of the
Registrant, and its wholly-owned banking subsidiary, by Central Illinois
Bancorp, Inc., Sidney, Illinois ("CIB"). Under the terms of the
definitive agreement, CIB will acquire all of the outstanding shares of
the Registrant through an exchange for cash pursuant to a merger. For
information regarding the terms of the proposed transaction, reference is
made to the definitive agreement and the press release dated April 25,
1997, which are attached hereto as Exhibits 2 and 99, respectively, and
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits:
Exhibit 2 Agreement and Plan of Reorganization, dated as
of April 25, 1997
Exhibit 99 April 25, 1997 Press Release
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
FIRST OZAUKEE CAPITAL CORP.
By: /s/ Russell S. Jones
-----------------------------------------
Russell S. Jones, President and
Chief Executive Officer
Dated: May 2, 1997
<PAGE> 4
EXHIBIT INDEX
Number Description
- ------ -----------
2 Agreement and Plan of Reorganization, dated as of
April 25, 1997.
99 April 25, 1997 Press Release.
<PAGE> 5
Exhibit 2
AGREEMENT AND PLAN OF REORGANIZATION
Between
CENTRAL ILLINOIS BANCORP, INC.
an Illinois corporation
and
FIRST OZAUKEE CAPITAL CORP.
a Wisconsin corporation
Dated as of April 25, 1997
<PAGE> 6
TABLE OF CONTENTS
ARTICLE I
THE MERGER ..................................................9
1.1 The Merger .........................................9
1.2 Adjustment to Merger Price ........................11
1.3 Paying Agent ......................................13
1.4 Funding of Paying Agent ...........................13
1.5 Closing; Effective Time ...........................14
1.6 Stock Options .....................................14
ARTICLE II
STATEMENTS OF ESSENTIAL FACTS CONCERNING FIRST OZAUKEE .....14
2.1 Organization, Good Standing and Authority .........14
2.2 Organizational Documents; Minutes and Stock
Records............................................14
2.3 Capitalization of First Ozaukee ...................14
2.4 Financial Statements and Other Reports ............16
2.5 Reports to Regulators..............................17
2.6 SEC Reports........................................18
2.7 Undisclosed Liabilities ...........................18
2.8 Loan Portfolio ....................................18
2.9 No Adverse Change..................................19
2.10 Conduct of Business in Normal Course ..............19
2.11 Properties and Assets .............................19
2.12 Insurance .........................................20
2.13 Litigation and Compliance with Laws ...............20
2.14 Conflict of Interest Transactions .................20
2.15 Material Contracts ................................21
2.16 No Defaults .......................................22
2.17 Additional Schedules ..............................22
2.18 Taxes .............................................23
2.19 Employee Compensation and Benefit Plans ...........24
2.20 Authorization of Transactions .....................24
2.21 Environmental Suits and Proceedings ...............25
2.22 Contaminated Properties ...........................27
2.23 Change in Business Relationships ..................27
2.24 Broker's and Finder's Fees ........................27
<PAGE> 7
ARTICLE III
STATEMENTS OF ESSENTIAL FACTS CONCERNING BUYER .............28
3.1 Corporate Existence ...............................28
3.2 Financial Statements and Other Reports ............28
3.3 Authorization of Transactions .....................29
3.4 Broker's and Finder's Fees ........................29
3.5 Financial Resources ...............................29
3.6 Employee Compensation and Benefit Plans ...........29
ARTICLE IV
ADDITIONAL AGREEMENTS ......................................30
4.1 Conduct of Business of First Ozaukee ..............30
4.2 Conduct of Business of Buyer ......................32
4.3 Access to Information .............................32
4.4 First Ozaukee Shareholders' Meeting ...............33
4.5 Reasonable Efforts ................................33
4.6 Regulatory Approvals ..............................33
4.7 Business Relations and Publicity ..................34
4.8 Loan Review .......................................34
4.9 CIBAC Shareholder Approval ........................34
4.10 No Conduct Inconsistent with this Agreement .......34
4.11 Board of Directors' Notices, Minutes, Etc .........34
4.12 Confidential Information ..........................35
4.13 Maintenance of Capital Levels .....................35
4.14 No Control of First Ozaukee by Buyer ..............35
4.15 Employment Agreements .............................35
4.16 Employees .........................................35
4.17 Indemnification and Directors' and Officers'
Liability Insurance..............................36
4.18 Board of Directors of FOCC and FOSB ...............37
4.19 Officer and Director Loans ........................37
4.20 Employee Benefit Plans ............................37
<PAGE> 8
ARTICLE V
CONDITIONS PRECEDENT .......................................40
5.1. Conditions Precedent to Obligations of Buyer ......40
5.2 Conditions Precedent to Obligations of FOCC .......45
ARTICLE VI
SURVIVAL ...................................................47
ARTICLE VII
GENERAL PROVISIONS .........................................48
7.1 Further Assurances ................................48
7.2 Expenses ..........................................48
7.3 Successors and Assigns ............................48
7.4 Termination .......................................49
7.5 Right of First Refusal ............................50
7.6 Cancellation Fee...................................50
7.7 Notices ...........................................51
7.8 Governing Law .....................................51
7.9 Specific Performance ..............................51
7.10 Counterparts ......................................51
7.11 Severability ......................................51
7.12 Headings ..........................................51
7.13 Entire Agreement; Amendment .......................53
7.14 Third-Party Beneficiary Rights ....................53
Exhibit A Plan of Merger
Exhibit B Form of Consulting Agreement with Russell S. Jones
Exhibit C Form of Employment Agreement with Mary E. Lammers
DISCLOSURE SCHEDULES
<PAGE> 9
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement") is made
and entered into as of the 25th day of April, 1997, by and among Central
Illinois Bancorp, Inc., an Illinois corporation ("Buyer"), and First
Ozaukee Capital Corp., a Wisconsin corporation ("FOCC").
WHEREAS, the respective Boards of Directors of Buyer and FOCC have
approved the merger of CIB Acquisition Corporation ("CIBAC"), a Wisconsin
corporation and wholly-owned subsidiary of Buyer, with and into FOCC (the
"Merger"); and
WHEREAS, each of Buyer and FOCC believes that the proposed Merger,
and the exchange of the shares of FOCC common stock, $1.00 par value
("FOCC Common Stock"), for cash in the manner provided in this Agreement
and the Plan of Merger, a copy of which is attached hereto as Exhibit A
(the "Plan of Merger"), is desirable and in the best interests of its
respective shareholders; and
WHEREAS, Buyer owns 100 percent of the issued and outstanding
capital stock of CIBAC, a Wisconsin corporation, and FOCC owns 100
percent of the issued and outstanding capital stock of First Ozaukee
Savings Bank, a Wisconsin state-chartered savings bank ("FOSB"). (FOCC
and FOSB are collectively referred to herein as First Ozaukee.)
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions herein
contained, the parties hereto covenant and agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this
Agreement and the Plan of Merger, and pursuant to the provisions of the
Wisconsin Business Corporation Law (the "WBCL"), the Bank Holding Company
Act of 1956, as amended (the "BHC Act") and Chapter 214 of the Wisconsin
Statutes Annotated, at the Effective Time (as defined in Section 1.5
hereof), CIBAC shall be merged with and into FOCC pursuant to the terms
and conditions set forth herein and FOCC shall be the surviving
corporation (the "Surviving Corporation").
The parties agree that FOCC and CIBAC will execute a Plan of
Merger substantially in the form attached hereto as EXHIBIT A which
provides for the terms of the Merger and mode of carrying the same into
effect.
<PAGE> 10
Following the Effective Time, FOCC shall be the Surviving
Corporation, shall be considered the same business and corporate entity
as each merging corporation, and shall have the other properties,
liabilities and attributes as provided by the WBCL. As set forth in the
Plan of Merger, pursuant to the Merger:
(a) the Articles of Incorporation of FOCC as in effect
immediately prior the Effective Time, shall be, from and after the
Effective Time, the Articles of Incorporation of FOCC as the Surviving
Corporation;
(b) the By-Laws of FOCC in effect immediately prior to the
Effective Time shall be, from and after the Effective Time, the By-Laws
of FOCC as the Surviving Corporation;
(c) each share of FOCC Common Stock ("FOCC Shares") issued
and outstanding immediately prior to the Effective Time, other than FOCC
Shares, the holders of which have validly demanded appraisal of such
shares pursuant to Subchapter XIII of the WBCL ("Subchapter XIII") and
shall not have voted such shares in favor of the Merger ("Dissenting
Shares"), and FOCC Shares, if any, that are owned by Buyer immediately
prior to the Merger, shall be converted by virtue of the Merger,
automatically and without action on the part of the holder thereof, into
the right to receive $15.10 per share for each FOCC Share (the "Merger
Price"), as adjusted as of the Effective Time pursuant to Section 1.2 of
this Agreement, payable by Buyer, in cash, without any interest thereon
from the Effective Time until the time of payment, at the Effective Time
or such date thereafter as certificates shall be surrendered in
accordance with Section 1.3 of this Agreement.
(d) FOCC Shares that are not voted for adoption of the
Merger and with respect to which the holders thereof have taken all
necessary action as of the Effective Time to perfect their shareholder
appraisal rights in accordance with the applicable provisions of the WBCL
shall not be converted into the right to receive the Merger Price at or
after the Effective Time unless and until the holder of such shares
withdraws the demand for appraisal of their shares or otherwise becomes
ineligible to pursue appraisal rights under the WBCL.
(e) each common share of CIBAC issued and outstanding
immediately prior to the Effective Time shall be converted into one
validly issued, fully-paid and nonassessable share of common stock of
FOCC.
(f) the holders of Dissenting Shares shall have the rights
provided by Subchapter XIII and no others.
(g) the officers and directors of the Surviving Corporation
shall be as set forth in the Plan of Merger, attached hereto as EXHIBIT
A.
<PAGE> 11
1.2 ADJUSTMENT TO MERGER PRICE.
(a) The capital of FOCC shall be calculated in accordance
with generally accepted accounting principles ("GAAP") as of the last
business day of the month prior to the Closing Date and, together with
the adjustments contemplated by Sections 1.2(b) and (c), shall constitute
the base capital ("Base Capital") for purposes of determining any
adjustment to the Merger Price. Five (5) business days prior to Closing
there shall commence an investigatory period during which Buyer shall
conduct a review of the books and records of FOCC and FOSB for the
purposes of making the necessary adjustments to the capital of FOCC, if
any.
(b) Base Capital shall reflect the following adjustments:
(i) A securities dealer unaffiliated with First
Ozaukee or Buyer or their subsidiaries, officers or directors (the
"Independent Dealer") and reasonably acceptable to First Ozaukee shall be
retained by Buyer (at Buyer's expense) to calculate the unrealized gain
or loss (i.e., the aggregate market value less the book value, net of
taxes calculated at 39%) (the "Mark to Market Adjustment") of those
securities of First Ozaukee listed in SCHEDULE 1.2 (which consist of all
securities owned by First Ozaukee and designated by First Ozaukee as
"Held to Maturity") as of the close of business on the business day prior
to the date of this Agreement (the "Signing Adjustment") and then again
on the business day prior to the Closing Date (the "Closing Adjustment").
The same Independent Dealer shall calculate the Signing Adjustment and
Closing Adjustment, and it shall employ the same methodology to calculate
the Mark to Market Adjustment on both dates. If the Closing Adjustment
is more negative than the Signing Adjustment, then the Base Capital shall
be decreased by an amount equal to the difference between (A) the Signing
Adjustment and (B) the Closing Adjustment. If the Closing Adjustment is
equal to the Signing Adjustment, then no adjustment shall be made to Base
Capital under this Section 1.2(b)(i).
(ii) The Base Capital shall be reduced by the amount
of Unreimbursable Expenses incurred and estimated to be incurred by First
Ozaukee before and after the Closing Date, but not yet accrued, relating
to the environmental remediation and the environmental liabilities,
contingent or otherwise, associated with the FOSB office located at W61
N526 Washington Avenue, Cedarburg, Wisconsin ("Cedarburg Facility"). For
purposes of this Agreement, Unreimbursable Expenses shall include all
costs and expenses arising out of, relating to or associated with the
environmental remediation and the environmental liabilities, contingent
or otherwise, associated with the Cedarburg facility that are not
eligible for reimbursement from PECFA pursuant to the laws and
regulations governing PECFA. The estimation of Unreimbursable Expenses
shall be determined in the sole discretion of an environmental consultant
designated by Buyer and reasonably acceptable to First Ozaukee. Buyer
shall be responsible for all costs and expenses associated with retaining
the environmental consultant herein provided.
<PAGE> 12
(c) The following adjustments shall not be deducted from
capital in the calculation of Base Capital (and if previously deducted
from capital shall be added back to Base Capital):
(i) Mr. Russell S. Jones' severance payment to be
paid by First Ozaukee prior to Closing in the maximum amount of $185,968
and all tax benefits associated therewith, as provided in Section 5.1(j)
hereof.
(ii) Amounts payable to Mr. Jones pursuant to his
post merger consulting agreement, as provided in Section 5.1(j) hereof,
including such amounts to be paid to or on behalf of Mr. Jones or his
spouse to obtain post-retirement primary and/or supplemental health
insurance, and all tax benefits associated therewith.
(iii) Professional fees expensed or due and payable to
Robert W. Baird & Co. Incorporated ("Baird") in regard to the Fairness
Opinion fee, transaction fee and related out-of-pocket expenses and any
amounts due or to become due to Schiff Hardin & Waite ("SHW"), all in the
maximum amount of $170,000.
(iv) Accounting and/or tax adjustments which relate
to the termination of the First Ozaukee Capital Corp. Incentive Plan, the
cashing out of the stock options under the First Ozaukee Capital Corp.
Option Plan and reversal of the ESOP contra equity account.
In the event the amounts set forth in clauses (i) and (iii) of
this Section 1.2(c) exceed the stated maximum dollar amounts, Base
Capital shall be reduced on a dollar for dollar basis by such amount
which exceeds the stated maximum.
(d) In the event the Base Capital as calculated pursuant to
Section 1.2(a) is less than $8,113,000, the Merger Price shall be reduced
by an amount equal to the difference between $8,113,000 and Base Capital,
divided by 687,811 shares ("Decreased Adjusted Merger Price"). Provided,
however, if Base Capital as calculated pursuant to Section 1.2(a) is
below $8,113,000 by an amount that results in a Decreased Adjusted Merger
Price of less than $15.05 per share, Buyer in its sole discretion may:
(i) substitute $15.05 in place of the $15.10 Merger
Price in Section 1.1(c); or
(ii) present FOCC with its calculation of a Decreased
Adjusted Merger Price below $15.05 and First Ozaukee shall have the
option, in its sole discretion, of accepting that Decreased Adjusted
Merger Price and completing the Merger or terminating the Agreement.
<PAGE> 13
(e) If the Closing Adjustment is more positive than the
Signing Adjustment by an amount greater than $114,000, then the Merger
Price or the Decreased Adjusted Merger Price, as the case may be, shall
be increased by the amount by which the Closing Adjustment is more
positive than the Signing Adjustment less $114,000, divided by 687,811
shares ("Increased Adjusted Merger Price"). In the event the Closing
Adjustment is not more positive than the Signing Adjustment by an amount
greater than $114,000, then there shall be no increase to the Merger
Price. Provided however, if the Increased Adjusted Merger Price is
greater than $15.15 per share, FOCC in its sole discretion may:
(i) substitute $15.15 in place of the $15.10 Merger
Price in Section 1.1(c); or
(ii) present Buyer with its calculation of an
Increased Adjusted Merger Price greater than $15.15, and Buyer shall have
the option, in its sole discretion, of accepting that Increased Adjusted
Merger Price and completing the Merger or terminating the Agreement.
1.3 PAYING AGENT. Prior to the Effective Time, Buyer shall
designate a paying agent, which shall be a state or national bank
unaffiliated with Buyer and having a place of business in the Central
Business District of Milwaukee ("Paying Agent"), to pay to the
shareholders of FOCC the cash to which they are entitled pursuant to the
Merger. As soon as practicable after Buyer shall have received all
regulatory approvals referred to in Section 5.1(d) hereof (irrespective
of the expiration of any waiting periods) and the shareholders of FOCC
shall have approved the Merger in accordance with the WBCL, the Paying
Agent shall deliver a transmittal form, in form and substance
satisfactory to FOCC, to each holder of FOCC Shares (other than Buyer)
advising such holder of the procedure for surrendering the share
certificates to the Paying Agent for payment. After the Effective Time
and upon the surrender of a certificate evidencing FOCC Shares, the
holder shall be paid by check, without interest thereon, the amount of
cash to which he is then entitled hereunder. Until so surrendered and
exchanged, each certificate shall represent solely the right to receive
the cash, without interest, into which it shall have been converted
pursuant to Section 1.1 hereof, and the Paying Agent shall not be
required to pay the holder thereof the cash into which such certificate
shall have been converted; provided that procedures allowing for payment
with respect to lost or destroyed certificates against receipt of
customary and appropriate certifications and indemnity shall be provided.
Notwithstanding anything in this Section 1.3 or elsewhere in this
Agreement to the contrary, no party hereto shall be liable to a former
holder of FOCC Shares for any cash delivered to a public official
pursuant to applicable escheat or abandoned property laws.
1.4 FUNDING OF PAYING AGENT. Buyer shall irrevocably deposit with
the Paying Agent at the Effective Time, by wire, or other acceptable
means, the total amount of funds required to be paid at the Effective
Time pursuant to Sections 1.1 and 1.2 hereof for exchanges in accordance
with this Agreement.
<PAGE 14>
1.5 CLOSING; EFFECTIVE TIME. The closing of the transactions
contemplated by this Agreement and the Plan of Merger (the "Closing")
shall take place at 10:00 a.m., local time, at a place mutually agreeable
to the parties on the first business day following the last business day
of the preceding month as mutually agreeable to by the parties hereto
(the "Closing Date"), which date shall be (i) not later than thirty-five
(35) days after the later of (a) the approval of the Agreement and Plan
of Merger by the shareholders of FOCC, or (b) the approval of the
transactions contemplated by this Agreement and the Plan of Merger by the
Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") and any other regulatory agencies or regulatory authorities; as
applicable, and all waiting periods after such approvals have expired, or
(ii) such later date as may be agreed to by the parties in writing (the
entities in the foregoing clause (b) being referred to herein
collectively as the "Regulatory Authorities" and individually as a
"Regulatory Authority"). At the Closing the parties shall each deliver
to the other evidence of the satisfaction of the conditions to the Merger
as may reasonably be required (including materials required to be
delivered under Article V) and shall execute, deliver and cause to be
filed with the Wisconsin Secretary of State the Articles of Merger. The
Merger shall be effective on the date and at the time (the "Effective
Time") the Articles of Merger become effective in accordance with the
provisions of the WBCL.
1.6 STOCK OPTIONS. Each holder of an option to acquire FOCC Shares
("Option") awarded under the First Ozaukee Capital Corp. 1995 Stock
Option Plan (the "FOCC Option Plan"), which is outstanding on the date
hereof and remaining outstanding at the Effective Time shall receive from
Buyer, as of the Effective Time, whether or not the Option is then
exercisable under the terms of the FOCC Option Plan, a cash payment in an
amount equal to the product of (i) the number of FOCC Shares subject to
such Option at the Effective Time, and (ii) the amount, if any, by which
the Merger Price EXCEEDS the exercise price per share of such Option, net
of any cash that must be withheld under federal and state income and
employment tax requirements. Such cash payments shall be in
consideration of, and shall result in, the settlement and cancellation of
all such Options. As a condition to the receipt of a cash payment in
cancellation of all such Options, each option holder shall execute a
cancellation agreement in form and substance reasonably satisfactory to
Buyer.
ARTICLE II
STATEMENTS OF ESSENTIAL FACTS CONCERNING FIRST OZAUKEE
This Agreement is entered into by Buyer upon the understanding, and
First Ozaukee represents and warrants, that the following Statements of
Essential Facts, being the only representations or warranties made to
Buyer by or on behalf of First Ozaukee in connection with the
transactions contemplated by this Agreement and the exhibits and
schedules hereto, are true and correct on the date of this Agreement and
as of the Closing:
<PAGE> 15
2.1 ORGANIZATION, GOOD STANDING AND AUTHORITY.
(a) FOCC is a corporation duly organized, validly existing and
in good standing under the laws of the State of Wisconsin, is duly
licensed or qualified to do business and is in good standing in all
jurisdictions where its ownership of properties and assets or the conduct
of its business requires it to be so qualified or licensed and has the
corporate power and authority to own all of its properties and assets and
to carry on its business as it is now being conducted. FOCC is a duly
registered bank holding company under the BHC Act. Except with regard to
FOSB, FOCC does not own or control any voting stock or equity securities
of any other entity.
(b) FOSB is a Wisconsin state-chartered savings bank duly
organized, validly existing and in good standing under the laws of the
State of Wisconsin, is duly qualified to do business and is in good
standing in all jurisdictions where its ownership or leasing of
properties or the conduct of its business requires it to be so qualified
and has the corporate power and authority to own or lease its properties
and assets and to carry on its business as it is now being conducted.
FOSB is a member in good standing of the Federal Home Loan Bank System.
The deposits of FOSB are insured up to the applicable limits by the FDIC
through the Savings Association Insurance Fund. FOSB does not own or
control any voting stock or equity securities of any other entity.
2.2 ORGANIZATIONAL DOCUMENTS; MINUTES AND STOCK RECORDS. SCHEDULE
2.2 contains a copy of the Articles of Incorporation and By-Laws of FOCC
and the Articles of Incorporation and By-Laws of FOSB, in each case as
amended to the date hereof. First Ozaukee has provided Buyer such other
documents relating to the authority of FOCC and FOSB to conduct their
business as Buyer has requested. All such documents are true, complete
and correct copies of the original documents. The stock register and
minute books of FOCC and FOSB, copies of which have been provided to
Buyer, are complete and correct in all material respects and accurately
reflect all meetings, consents and other actions of the organizers,
incorporators, shareholders and stockholders (as the case may be), Board
of Directors and committees of the Board of Directors of FOCC and FOSB
and all transactions in the capital stock of FOCC and FOSB, occurring
since FOCC's initial organization.
2.3 CAPITALIZATION OF FIRST OZAUKEE.
(a) The authorized capital stock of FOCC consists of 4,000,000
shares of common stock, $1.00 par value per share, of which 627,477
shares are issued and outstanding and 2,000,000 shares of preferred
stock, $1.00 par value per share, of which no shares are issued and
outstanding. These 627,477 shares are the only shares of Common Stock,
debt or equity securities of FOCC issued and outstanding. 60,334 shares
of common stock are reserved for issuance upon the exercise of options
issued under First Ozaukee's Option Plan ("FOCC Stock Options") of which
<PAGE> 16
60,334 are subject to options presently outstanding. Set forth on
SCHEDULE 2.3 is a list of the option holders, the date of the issuance of
each FOCC Stock Option, the number of shares subject to each FOCC Stock
Option, the expiration date of each FOCC Stock Option and the exercise
price for each FOCC Stock Option. The issued and outstanding shares of
FOCC have been duly and validly authorized and issued and are fully paid,
nonassessable and free of preemptive rights. Except for the aforesaid
options to purchase shares of FOCC Common Stock (which shall be canceled
pursuant to Section 1.6 hereof), and except for the rights of Buyer under
this Agreement, there are or will be at the Closing no outstanding
subscriptions, options, warrants, calls, commitments, agreements,
contracts or other rights in existence to purchase, acquire or issue
from FOCC any shares of capital stock, debt or other equity securities of
FOCC, or any other securities representing the right to purchase or
otherwise receive any shares of capital stock or other debt or equity
securities of FOCC, whether now or hereafter authorized or issued. No
capital stock or other security issued by FOCC or FOSB has been issued in
violation of, or without compliance with, preemptive rights of their
respective shareholders.
(b) The authorized capital stock of FOSB consists of 4,000,000
shares of common stock, $1.00 par value per share, of which 1000 shares
are issued and outstanding and 2,000,000 shares of preferred stock, $1.00
par value per share, of which no shares are issued and outstanding.
These 1000 shares are the only shares of common stock, debt or equity
securities of FOSB issued and outstanding. FOCC owns all of the issued
and outstanding shares of capital stock of FOSB, free and clear of any
liens, charges, encumbrances and security interests whatsoever, and all
of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights. Except for the rights of
Buyer under this Agreement, there are and will be at the Closing no
outstanding subscriptions, options, warrants, calls, commitments,
agreements, contracts or other rights in existence to purchase, acquire
or issue from FOSB any shares of capital stock, debt or equity
securities representing the right to purchase or otherwise receive any
shares of capital stock, debt or equity securities of FOSB, whether now
or hereafter authorized or issued.
2.4 FINANCIAL STATEMENTS AND OTHER REPORTS. The financial
condition of FOSB is reflected in the consolidated financial statements
of FOCC. FOCC has furnished, or will furnish prior to the Closing when
such reports become available, Buyer true and complete copies of the
following financial statements and reports of FOCC and FOSB:
(a) Consolidated Statements of Financial Condition,
Statements of Income, Statements of Cash Flows and Statements of
Stockholders' Equity of FOCC at and for the years ended September 30,
1996, 1995, 1994 and 1993;
(b) First Ozaukee's Annual Report on Form 10-KSB filed with
the Securities and Exchange Commission (the "SEC") for the years ended
<PAGE> 17
September 30, 1996, 1995 and 1994 and First Ozaukee's Quarterly Report on
Form 10-QSB filed with the SEC for each quarter following September 30,
1996 and ended through the last quarter prior to the Closing.
(c) Call Reports filed with the Federal Deposit Insurance
Corporation and the Wisconsin Department of Financial Institutions or its
predecessors for the fiscal years ended September 30, 1996 and 1995; and
(d) Consolidated Statements of Financial Condition and
Statements of Income prepared by FOCC for the interim period from October
1, 1996 and ended through the last month prior to the Closing
(subsections 2.4 (a-d) collectively, the "First Ozaukee Financial
Statements").
The First Ozaukee Financial Statements described in clause (a)
above are audited, comply with and have been prepared in accordance with
GAAP applied on a consistent basis, and, together with the notes thereto,
present fairly the financial position of FOCC at the dates shown and the
results of operations for the periods then ended. The interim financial
statements described in clause (d) are unaudited, comply with and have
been prepared in accordance with GAAP applied on a consistent basis, and
present fairly the financial position of FOCC.
To the best of First Ozaukee's knowledge, the books and records
of First Ozaukee are true and correct and accurately reflect the
financial condition of First Ozaukee. The information contained in the
First Ozaukee Financial Statements described in clauses (b), (c) and (d)
above, do 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 made therein not misleading. All costs and expenses
reasonably estimated to be incurred by First Ozaukee shall be paid or
accrued on or prior to the Closing Date.
2.5 REPORTS TO REGULATORS. Since January 1, 1991, First Ozaukee
has timely filed all material reports, registrations and statements,
together with any amendments required to be made with respect thereto
required to be filed with (i) the Federal Reserve Board, (ii) the Office
of Thrift Supervision ("OTS"), (iii) the Wisconsin Department of
Financial Institutions and its predecessor, and (iv) any other financial
institution regulatory authority (collectively the "FOCC Regulatory
Reports"). FOCC and FOSB have paid all fees and assessments due and
payable in connection with the FOCC Regulatory Reports. As of their
respective dates, such FOCC Regulatory Reports complied in all material
respects with the statutes, rules and regulations in force or promulgated
by the applicable regulatory authority with which they were filed and did
not contain any untrue statements 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. First Ozaukee has provided to Buyer copies of all
such reports, registrations and statements. Except for normal
examinations conducted by regulatory agencies in the regular course of
the business of First Ozaukee, no regulatory agency has initiated any
<PAGE> 18
proceeding or, to the best knowledge of First Ozaukee no regulatory
agency has indicated that it is considering initiating an investigation
into the business or operations of First Ozaukee since January 1, 1991.
There is no material unresolved violations of laws or regulations of any
regulatory agency with respect to any report or statement relating to any
examinations of First Ozaukee.
2.6 SEC REPORTS. FOCC has provided to Buyer copies of each (a)
final registration statement, prospectus, report, schedule and definitive
proxy statement filed by FOCC with the SEC pursuant to the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as amended
(collectively the "Securities Acts") since January 1, 1991 (collectively
the "FOCC SEC Filings") and (b) communication mailed by FOCC to its
shareholders since January 1, 1991, and no such registration statement,
prospectus, report, schedule, proxy, statement or communication contained
any untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were
made, not misleading. As of their respective filing and effective dates,
the FOCC SEC filings complied in all material respects with the published
rules and regulations of the SEC with respect thereto since January 1,
1991. FOCC has timely filed all reports, registration statements and
other documents required to be filed by it under the Securities Acts.
2.7 UNDISCLOSED LIABILITIES. First Ozaukee has no liabilities,
whether accrued, absolute, contingent or otherwise, and whether due or to
become due, existing or arising out of any transaction or state of facts
existing on or prior to the date hereof except (a) as fully disclosed,
reflected or reserved against in the First Ozaukee Financial Statements,
(b) as and to the extent arising under contracts, commitments,
transactions or circumstances identified in this Agreement or the
schedules or exhibits provided for herein, and (c) as and to the extent
incurred in the ordinary course of business since September 30, 1996.
2.8 LOAN PORTFOLIO. Except as disclosed on SCHEDULE 2.8, the loans
contained in the loan portfolio of FOSB are evidenced by promissory notes
or other evidences of indebtedness, which, with all ancillary security
documents, constitute, valid and binding obligations of FOSB and each of
the other parties thereto enforceable in accordance with their terms
except as limited by applicable bankruptcy, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights and
remedies generally and by applicable laws or principles of equity which
may affect the availability of equitable remedies. First Ozaukee has
provided Buyer with a true and correct Loan Portfolio Report which sets
forth the current status of each loan, including, but not limited to, the
outstanding principal and interest, payment history, whether any defaults
have occurred, the nature and basis for any renewals, loan modifications
or any other agreements which materially altered or changed the terms of
the loan when it was originated or purchased, and any and all collection
efforts or loan workouts engaged in by First Ozaukee. To the best of
<PAGE 19>
First Ozaukee's knowledge, except as disclosed on SCHEDULE 2.8, none of
such loans is subject to any defense, set-off or counterclaim of any
party liable thereon and all such loans which are secured, as evidenced
by the ancillary security documents, are so secured by valid and
enforceable liens. FOSB's reserve for loan losses has been calculated in
accordance with prudent and customary banking practices and is adequate
to reflect the risk inherent in FOSB's loan portfolio.
2.9 NO ADVERSE CHANGES. Other than as specifically disclosed in
this Agreement, the First Ozaukee Financial Statements, the schedules or
exhibits provided for herein, or any other writing delivered to Buyer,
since September 30, 1996, First Ozaukee has not incurred any liability of
any nature whatsoever (whether absolute, accrued, contingent or otherwise
and whether due or to become due) that, either alone or when combined
with all similar liabilities, had, or could reasonably be expected to
have, a material adverse effect on First Ozaukee, nor occurred any
material adverse change or any condition, event, circumstance, fact or
occurrence (other than changes resulting from or attributable to (i)
changes in laws, regulations and GAAP or interpretations, or (ii) general
economic or competitive conditions) that may reasonably be expected to
result in a material adverse change in First Ozaukee's business, income,
assets, liabilities or financial condition.
2.10 CONDUCT OF BUSINESS IN NORMAL COURSE. The business of First
Ozaukee has, since September 30, 1995, been conducted only in the
ordinary and usual course consistent with past practice.
2.11 PROPERTIES AND ASSETS. The assets reflected in the most recent
of the First Ozaukee Financial Statements or identified in this Agreement
or the schedules or exhibits provided for herein include substantially
all of the assets owned by First Ozaukee, except for those subsequently
disposed of for fair value or otherwise abandoned or disposed of as
worthless in the ordinary course of business. First Ozaukee has a valid
right to use or a valid leasehold interest in, all real property used by
it in the conduct of its business as it is now being conducted, subject
to no mortgage, pledge, lien, option, conditional sale agreement,
encumbrance, security interest, title exceptions or restrictions or claim
or charge of any kind except for (i) liens for taxes not yet due and
payable, (ii) rights of other parties under leases or other arrangements
by which First Ozaukee uses such real property, and (iii) minor
imperfections of title none of which is substantial in amount, materially
detracts from the value or impairs First Ozaukee's present use of the
property. To the best of First Ozaukee's knowledge, all material
certificates, licenses, and permits required for the lawful use and
occupancy of such real property by First Ozaukee, have been obtained and
are in full force and effect. Except as disclosed on SCHEDULE 2.11, all
material tangible personal property owned by First Ozaukee, or used by it
in its business and necessary for the operation of its business, is in
good working condition, normal wear and tear excepted free and clear of
all liens and encumbrances.
<PAGE> 20
2.12 INSURANCE. SCHEDULE 2.12 sets forth a complete and correct
list of all policies of insurance and bonds in which First Ozaukee is
named as an insured party, which otherwise relate to or cover any assets,
properties, premises, operations and personnel of First Ozaukee or which
is owned or carried by First Ozaukee and any claims pending with regard
to such policies and bonds. First Ozaukee has in full force and effect
the policies of insurance and bonds set forth in SCHEDULE 2.12 and same
are commercially reasonable and adequate for the operations of First
Ozaukee. There has been no notice given by any party of interest in or
to any such policies claiming any breach or violation of any provisions
thereof, disclaiming or denying any coverage thereof, or canceling or
threatening cancellation of any such insurance contracts.
2.13 LITIGATION AND COMPLIANCE WITH LAWS. First Ozaukee and FOSB's
institution-affiliated parties (as defined in 12 U.S.C. <section>1813(u))
with respect to participation in the affairs of First Ozaukee, are each
in compliance with all material applicable federal, state, county and
municipal laws and regulations (a) that regulate or are concerned in any
way with the business of banking or acting as a fiduciary, including, but
not limited to those laws and regulations relating to the investment of
funds, the taking of deposits, the extension of credit, the collection of
interest, and the location and operation of banking facilities, or
(b) that otherwise relate to or affect the business or assets of FOSB or
the assets owned, used or occupied by it. Except as disclosed in
SCHEDULE 2.13,
(i) there are no claims, actions, suits, orders, proceedings
or governmental or regulator investigations pending, or, to the knowledge
of First Ozaukee, threatened against First Ozaukee, or FOSB's
institution-affiliated parties (in their capacities as such) with respect
to their participation in the affairs of First Ozaukee, at law or in
equity, or before any federal, state, municipal, administrative or other
governmental authority or court, or before any arbitrator or arbitration
panel, whether by contract or otherwise; and
(ii) except as set forth in SCHEDULE 2.13, there is no
decree, judgment, order, supervisory agreement, extraordinary supervisory
letter, commitment letter, consent agreement or memorandum of
understanding entered into or in existence against or restraining FOCC or
FOSB, or any of FOSB's institution-affiliated parties with respect to
their participation in the affairs of First Ozaukee from taking any
actions of any kind in connection with the business of First Ozaukee or
FOSB, as the case may be. First Ozaukee has not been advised by, nor has
it received from any regulatory authority any notice or, to the knowledge
of First Ozaukee, threat of enforcement actions or that any regulatory
authority is considering or requesting any regulatory agreement, and it
has no basis for believing that any such notice or, to the knowledge of
First Ozaukee, threat not otherwise disclosed to Buyer is contemplated.
2.14 CONFLICT OF INTEREST TRANSACTIONS. Except as reflected in
SCHEDULE 2.14, no executive officer or director of First Ozaukee, or
holder of 10% or more of the common stock of First Ozaukee, or any member
<PAGE> 21
of the immediate family of any such person has, since September 30, 1995,
been involved in any transaction with First Ozaukee (excluding
transactions in deposit accounts) which involves an amount in excess of
$15,000 or has been involved in any other material transaction with First
Ozaukee or has had loans or any commitment to loan outstanding from FOSB
involving in excess of $15,000.
2.15 MATERIAL CONTRACTS. SCHEDULE 2.15 sets forth a Schedule of
Material Contracts, and completely and accurately lists or describes the
following material contracts, commitments or arrangements (whether
written or oral) under which First Ozaukee is obligated:
(a) All consulting arrangements, and contracts for
professional and other services, including those under which First
Ozaukee performs services for others, that are not terminable by First
Ozaukee without damages or penalty with thirty (30) days notice;
(b) All leases of real estate or personal property,
exclusive of leases of personal property whereunder total annual rentals
are, in each instance, less than $5,000 or wherein the aggregate exceeds
$20,000;
(c) All contracts, commitments and agreements for the
purchase, acquisition, development, sale or disposition of real or
personal property, exclusive of conditional sales contracts and security
agreements for the acquisition of personal property whereunder total
future payments are, in each instance, less than $5,000 or wherein the
aggregate exceeds $20,000;
(d) All employee benefit plans (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974 ("ERISA")) under
which First Ozaukee or FOSB has or may have any obligation ("First
Ozaukee ERISA Plans"), and all employment contracts, all other employee
compensation arrangements, all severance agreements and all other bonus,
deferred compensation, pension, retirement, profit sharing, stock option,
stock purchase, stock appreciation and other employee benefit plans,
formal or informal, under which First Ozaukee or FOSB has or may have any
obligation ("First Ozaukee non-ERISA Plans" and, together with the First
Ozaukee ERISA Plans, the "First Ozaukee Benefit Plans");
(e) All outstanding loans, loan commitments, credit
agreements, conditional sales contracts, title retention agreements or
security agreements relating to money borrowed by First Ozaukee, letters
of credit or other financial accommodations, including modification or
amendments thereof, extended by FOSB for the benefit of others wherein
the total loan and/or commitment of FOSB exceeds $100,000;
(f) All union and other labor contracts;
<PAGE> 22
(g) All agreements, contracts, mortgages, loans, deeds of
trust, leases, commitments, indentures, notes, instruments and other
arrangements, which are with officers or directors of the First Ozaukee,
any Affiliates of First Ozaukee within the meaning of Section 23A of the
Federal Reserve Act, or any record or beneficial owner of 10% or more of
the common stock of First Ozaukee, excepting any ordinary and customary
banking relationships that comply with applicable banking regulations;
(h) All loans from FOSB held by officers, directors or
employees of FOCC or FOSB;
(i) All agreements, loans, contracts, leases, guarantees,
letters of credit, lines of credit or commitments of First Ozaukee not
referred to elsewhere in this section which: involve payment by First
Ozaukee of more than $5,000 individually; involve payment based on
profits of First Ozaukee; or relate to the future purchase of goods or
services in excess of the requirements of its business at current levels
or for normal operating purposes, were not made in the ordinary course of
business; and
(j) Each other material contract to which First Ozaukee is a
party or under which it is obligated made other than in the usual or
ordinary course of business and which is not terminable by First Ozaukee
without damages or penalty with thirty (30) days notice.
Except as disclosed on SCHEDULE 2.15, and except with regard to
loans made by FOSB in the ordinary course of its business, to the best of
First Ozaukee's knowledge there are no other material contracts,
commitments or arrangements (whether written or oral) under which First
Ozaukee is obligated wherein the aggregate commitment of First Ozaukee
exceeds $25,000.
2.16 NO DEFAULTS. To the best of First Ozaukee's knowledge, all
material contracts, commitments or arrangements of First Ozaukee set
forth on SCHEDULE 2.15 are valid and in full force and effect. To the
best of its knowledge, First Ozaukee has fulfilled and taken all action
reasonably necessary to date to enable it to fulfill when due, all
material obligations under all contracts, commitments and arrangements to
which it is a party; and there are no material defaults and no events
have occurred that, with the lapse of time or election of any other
party, will become material defaults by it under any such contracts,
commitments or arrangements.
2.17 ADDITIONAL SCHEDULES. The following additional schedules are
attached hereto:
(a) SCHEDULE 2.17(A) is a Real Estate Schedule describing all
real estate owned by or in which First Ozaukee has any interest, or which
is the subject of pending foreclosure proceedings by First Ozaukee,
<PAGE> 23
indicating in each case whether such real estate is improved and the
nature of any material encumbrances, defects of title or environmental
conditions of which First Ozaukee has knowledge; and
(b) SCHEDULE 2.17(B) is a Securities Schedule of all
investment securities owned by First Ozaukee.
2.18 TAXES.
(a) No application for extension of time for filing any tax
return or consent to any extension of time for filing any tax return or
consent to any extension of the period of limitations applicable to the
assessment or collection of any tax is in effect with respect to First
Ozaukee, and all tax returns and information returns required to be filed
by First Ozaukee with the United States or any state or local government
unit have been, and until the Closing will have been, timely filed.
First Ozaukee has duly paid all taxes due and is not delinquent in the
payment of any taxes claimed to be due by any taxing authority and
adequate provisions for taxes have been made on its books. None of First
Ozaukee's federal or state income tax returns is being examined by the
appropriate federal or state agency. First Ozaukee has not received any
notice of any proposed deficiency for any duty, tax, assessment or
governmental charge, and there are no pending claims with respect
thereto. First Ozaukee is not a member of any consolidated group for
purposes of the Internal Revenue Code of 1986, as amended (the "Code").
(b) Amounts withheld by FOCC and FOSB from their employees
for all prior periods comply in all material respects with the tax
withholding provisions of applicable federal, state and local laws.
Federal, state, county and local returns which are accurate and complete
in all material respects have been filed by First Ozaukee for all periods
for which returns were due with respect to income tax withholding, Social
Security and unemployment taxes, except where failure to do so would not
have a material adverse effect on First Ozaukee. There are no tax liens
upon any property or assets of First Ozaukee except liens for current
taxes not yet due.
(c) First Ozaukee has not been required to include in income
any adjustment pursuant to Section 481 of the Code by reason of a
voluntary change in accounting method initiated by First Ozaukee, and the
Internal Revenue Service has not initiated or proposed any such
adjustment or change in accounting method. Except as set forth in the
First Ozaukee Financial Statements, First Ozaukee has not entered into a
transaction which is being accounted for as an installment obligation
under Section 453 of the Code, which would be reasonably likely to have a
material adverse effect on First Ozaukee.
(d) As used in this Agreement, the term "tax" or "taxes"
means all federal, state, county, local, and foreign income, excise,
gross receipts, ad valorem, profits, gains, property, sales, transfer,
use, payroll, employment, severance, withholding, duties, intangibles,
<PAGE> 24
franchise, and other taxes, charges, levies or like assessments together
with all penalties and additions to tax and interest thereon.
2.19 EMPLOYEE COMPENSATION AND BENEFIT PLANS.
(a) Each of the First Ozaukee Benefit Plans has been
administered, in all material respects, in compliance with its terms and
the requirements of applicable law. First Ozaukee does not maintain any
First Ozaukee Benefit Plan nor has it entered into any document, plan or
agreement, other than the First Ozaukee Option Plan, the First Ozaukee
Capital Corp. Incentive Plan ("First Ozaukee Incentive Plan") and
employment agreements with Russell S. Jones and Mary E. Lammers, which
contains, directly or indirectly, any change in control provisions that
would cause an increase or acceleration of benefits or benefit
entitlements to officers, directors, employees or former officers,
directors or employees of First Ozaukee or their respective
beneficiaries, or other event that would cause an increase in liability
to First Ozaukee as a result of the transactions contemplated by this
Agreement. First Ozaukee does not have and has not had any First Ozaukee
Benefit Plans which are subject to Title IV of ERISA. Neither First
Ozaukee nor any of its affiliates, its employees, directors or agents, or
any fiduciary, has violated Section 406 of ERISA or engaged in any
"Prohibited Transaction" (as defined in Section 4975(c)(1) of the Code)
with respect to any First Ozaukee ERISA Plan. Each First Ozaukee ERISA
Plan that is intended to be qualified under Section 401 and related
provisions of the Code is the subject of a determination letter from the
Internal Revenue Service to the effect that it is so qualified under the
Code and its related funding vehicle is tax-exempt, under Section 501 of
the Code. No matter is pending relating to any First Ozaukee Benefit
Plan before any court or governmental agency. Neither First Ozaukee, nor
any of its affiliates is, or has ever been, obligated to contribute to a
multiemployer plan (as defined in Section 3(37) of ERISA). Except as
required pursuant to the Consolidated Omnibus Budget Reconciliation Act
of 1985 and Section 4980B of the Code or as reflected on SCHEDULE 2.19
delivered pursuant hereto, neither First Ozaukee, nor any other party on
behalf of First Ozaukee, has any obligation or commitment to provide
health, disability, or life insurance or similar welfare benefits to
former employees or members of their families.
(b) Except as otherwise provided herein, as of the Closing,
each of the First Ozaukee Benefit Plans shall be fully funded and
terminated.
2.20 AUTHORIZATION OF TRANSACTIONS.
(a) The execution, delivery and performance of this
Agreement by FOCC have been duly authorized by the Board of Directors of
FOCC. Subject to approval by the shareholders of FOCC as contemplated by
Section 5.1(e) hereof and regulatory approval, FOCC has full corporate
power to execute, deliver and perform this Agreement and the Plan of
<PAGE> 25
Merger and to consummate the transactions herein and therein
contemplated, and such execution, delivery and performance do not violate
any provisions of the Articles of Incorporation or By-Laws of FOCC or
FOSB or any orders, agreements or directives to which FOCC or FOSB is a
party or is otherwise bound. Except for the regulatory approvals
referred to in Section 5.1(d), approval of shareholders referred to in
Section 5.1(e) hereof, or consents, if any, to be obtained pursuant to
Section 5.1(i) hereof, no consent of any regulatory authority or other
person is required to be obtained by FOCC in order to permit FOCC to
perform its obligations hereunder or to permit consummation of the
Merger.
(b) Except as disclosed in SCHEDULE 2.20, neither the
execution and delivery of this Agreement by FOCC, the consummation by
FOCC of the transactions contemplated hereby, nor the compliance by FOCC
with any of the terms or provisions hereof will violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in termination of or a
right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security
interest, charge or other encumbrance upon any of the respective
properties or assets of First Ozaukee under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which
First Ozaukee is a party, or by which FOCC, FOSB or any of their
respective properties or assets may be bound or affected, except for
those events which, either individually or in the aggregate, will not
have or be reasonably likely to have a material adverse affect on First
Ozaukee.
2.21 ENVIRONMENTAL SUITS AND PROCEEDINGS.
(a) Neither FOCC nor FOSB have been or is in violation of or
liable under any Environmental Law, except as set forth on SCHEDULE
2.21(A).
(b) None of the loan portfolio properties and other
properties owned by FOCC or FOSB has been or is in violation of any
Environmental Law and neither FOCC nor FOSB are liable for any such
violations except as set forth on SCHEDULE 2.21(B).
(c) There are no actions, suits, demands, notices, claims,
investigations or proceedings pending or threatened relating to the
liability of the loan portfolio properties and other properties owned by
FOCC or FOSB under any Environmental Law, including without limitation
any notices, demand letters or requests for information from any federal
or state environmental agency relating to any such liabilities under or
violations of Environmental Law, except as set forth on SCHEDULE 2.21(C).
(d) Set forth in SCHEDULE 2.21(D) are copies of all final
and draft studies, reports, updates or results of any investigations
regarding the Cedarburg facility or surrounding properties prepared by or
on behalf of First Ozaukee.
<PAGE> 26
(e) To the best of First Ozaukee's knowledge, identified on
SCHEDULE 2.21(E) are all investigations regarding the Cedarburg facility
or surrounding properties prepared or conducted by any person. First
Ozaukee has provided copies of all final and draft studies, reports,
updates or results of investigations regarding the Cedarburg facility or
surrounding properties prepared or conducted by any person not included
in Schedule 2.21(d) in its possession to Buyer.
(f) For purposes of this Agreement, the following terms
shall have the indicated meaning:
"Environmental Law" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with
any governmental entity relating to (1) the protection, preservation or
restoration of the environment (including, without limitation, air, water
vapor, surface water, ground water, drinking water supply, surface soil,
subsurface soil, plant and animal life or any other natural resource),
and/or (2) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labelling, production, release or
disposal of hazardous substances. The term "Environmental Law" includes
without limitation (1) the Comprehensive Environmental Response,
Compensation and Liability Act, as amended ("CERCLA"), according to 42
U.S.C. <section> 9601, ET SEQ.; the Resource Conservation and Recovery
Act, as amended 42 U.S.C. <section> 6901, ET SEQ.; the Clean Air Act, as
amended, 42 U.S.C. <section> 7401, ET SEQ.; the Federal Water Pollution
Control Act, as amended, 33 U.S.C. <section> 1251, ET SEQ.; the Toxic
Substances Control Act, as amended, 15 U.S.C. <section> 9601, ET SEQ.;
the Emergency Planning and Community Right to Know Act, 42 U.S.C.
<section> 11001, ET SEQ.; the Safe Drinking Water Act, 42 U.S.C.
<section> 300(f), ET SEQ.; and all comparable state and local laws, and
(2) any common law (including without limitation common law that may
impose strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of
or exposure to any hazardous substance.
"Hazardous Substance" means any substance presently listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law, whether by type or
by quantity, including any material containing any such substance as a
component. "Hazardous Substances" shall include without limitation
petroleum or any derivative or byproduct thereof, asbestos, radioactive
material and polychlorinated biphenyls.
The term "loan portfolio properties and other properties owned"
means those properties owned, leased, operated, or held by First Ozaukee
as a fiduciary for the account of others, or which collateralize any
outstanding loan or line of credit, whether or not such loan or line of
credit is or has been in default.
<PAGE> 27
2.22 CONTAMINATED PROPERTIES.
(a) Except as disclosed in SCHEDULE 2.22, none of the
properties owned or leased by First Ozaukee or, to the knowledge of First
Ozaukee, held by First Ozaukee as a fiduciary for the account of others,
or which collateralize any outstanding material loan or line of credit,
whether or not such loan or line of credit is or has been in default, is
contaminated with any Hazardous Substances.
(b) To the knowledge of First Ozaukee, except as disclosed
in SCHEDULE 2.22, First Ozaukee neither is nor may it be deemed to be an
"owner or operator" of a "facility" or "vessel" which owns, possesses,
transports, generates, or disposes of a "hazardous substance" as these
terms are defined in CERCLA.
2.23 CHANGE IN BUSINESS RELATIONSHIPS. Except as described in
SCHEDULE 2.23, First Ozaukee has no knowledge, whether on account of this
Agreement or otherwise, that any customer, agent, representative or
supplier intends to discontinue, diminish, or change its relationships
with First Ozaukee, the effect of which would be materially adverse to
First Ozaukee's business.
2.24 BROKER'S AND FINDER'S FEES. Neither First Ozaukee nor any of
their respective officers or directors has employed any broker or finder,
nor has incurred any obligation or liability, contingent or otherwise,
for any brokerage commission or finder's fee or like compensation in
respect of the transactions contemplated hereunder except for fees and
expenses that may be owed to Baird for investment banking services.
2.25 FIRST OZAUKEE OFFICERS. SCHEDULE 2.25 lists the names and
positions of all officers of FOCC and FOSB and the person to whom such
officers report.
2.26 POST RETIREMENT WELFARE BENEFIT PROGRAM. Set forth in SCHEDULE
2.26 is a copy of The First Ozaukee Post Retirement Welfare Benefit
Program. Mr. Russell S. Jones is the only corporate officer of First
Ozaukee who has at least twenty-five years of service with First Ozaukee
and who has any vested rights under the First Ozaukee Post Retirement
Welfare Benefit Program.
2.27 ENVIRONMENTAL REMEDIATION. Set forth in SCHEDULE 2.27 is a
copy of the acknowledgment letter from the Wisconsin Department of
Commerce (WDCOM) confirming that costs associated with the remediation of
Hazardous Substances at the Cedarburg Facility are eligible for
reimbursement from PECFA pursuant to the laws and regulations governing
PECFA.
<PAGE> 28
ARTICLE III
STATEMENTS OF ESSENTIAL FACTS CONCERNING BUYER
This Agreement is entered into by FOCC upon the understanding, and
Buyer represents and warrants, that the following Statements of Essential
Facts, being the only representations or warranties made to First Ozaukee
by or on behalf of Buyer in connection with the transactions contemplated
by this Agreement and the exhibits and schedules hereto are true and
correct on the date of this Agreement:
3.1 CORPORATE EXISTENCE. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Illinois, has the corporate power and authority to own its property and
assets and to carry on its business as now being conducted. On or prior
to the Closing, Buyer will be duly qualified as a foreign corporation in
the State of Wisconsin, and will be qualified to engage in business as a
foreign corporation in any other state or jurisdiction where the
properties and assets owned, leased or operated or the business conducted
by it requires such qualification and the failure to so qualify would
have a material adverse affect on the business of Buyer.
3.2 FINANCIAL STATEMENTS AND OTHER REPORTS. Buyer has furnished
FOCC true and complete copies of the following financial statements and
reports of Buyer and its financial institution subsidiary or
subsidiaries, as the case may be:
(a) Consolidated Statements of Financial Condition,
Statements of Income, Statements of Cash Flow and Statements of
Stockholders' Equity at and for the years ended December 31, 1996, 1995,
1994 and 1993 (collectively, "Buyer Financial Statements"); and
(b) Consolidated Statement of Financial Condition and
Statements of Income at and for the three months ended March 31, 1997.
(c) Call Reports filed with the FDIC for the fiscal years
ended December 31, 1996, 1995 and 1994.
The Buyer Financial Statements described in clause (a) are
audited and have been prepared in accordance with GAAP applied on a
consistent basis, and, together with the notes thereto, present fairly
the financial position of Buyer at the dates shown and the results of
operations for the periods then ended. The interim financial statements
described in clause (b) are unaudited, comply with and have been prepared
in accordance with GAAP applied on a consistent basis, and present fairly
the financial position of Buyer.
The information contained in the reports described in clauses
(b) and (c) above do not contain any untrue statement of a material fact
<PAGE> 29
or omit to state a material fact required to be stated therein or
necessary to make the statements made therein not misleading.
3.3 AUTHORIZATION OF TRANSACTIONS. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by the
Board of Directors of Buyer, this being the only authorization required
under Buyer's Articles of Incorporation, its By-Laws, or governing
statutes. Buyer has full corporate power to execute, deliver and perform
this Agreement and to consummate the transactions herein contemplated,
and such execution, delivery and performance do not violate any
provisions of the Articles of Incorporation of Buyer, its By-Laws, or any
orders, agreements or directives to which Buyer is a party or is
otherwise bound. Except for the regulatory approvals referred to in
Section 5.2(c) hereof, and the approvals of the Board of Directors of
CIBAC and of the sole shareholder of CIBAC referred to in Section 5.2(g)
hereof, no consent of any regulatory authority or other person is
required to be obtained by Buyer in order to permit Buyer to perform its
obligations hereunder or to permit consummation of the Merger.
3.4 BROKER'S AND FINDER'S FEES. Neither Buyer, nor any of its
respective officers or directors has employed any broker or finder nor
has incurred any obligation or liability, contingent or otherwise, for
any brokerage commission or finder's fee or like compensation in respect
of the transactions contemplated hereunder.
3.5 FINANCIAL RESOURCES. Buyer has the financial wherewithal,
whether by using its internal funds, external financing, or both, to
perform its obligations under this Agreement. Buyer and its subsidiaries
are, and will be following the Merger, in compliance with all applicable
capital, debt and financial and non-financial criteria of state and
federal banking agencies having jurisdiction over them. Buyer has no
knowledge of any facts or conditions applicable to it or its subsidiaries
that would reasonably lead Buyer to believe the Merger will not be
approved by the Federal Reserve Board and other state and federal banking
agencies having jurisdiction.
3.6 EMPLOYEE COMPENSATION AND BENEFIT PLANS. Each of the Buyer's
employee benefit plans (as defined in Section 3(3) of ERISA) under which
Buyer has or may have any obligation ("Buyer ERISA Plans"), and all
employment contracts, all other employee compensation arrangements, all
severance agreements and all other bonus, deferred compensation, pension,
retirement, profit sharing, stock option, stock purchase, stock
appreciation and other employee benefit plans, funded or unfunded, under
which Buyer has or may have any obligation ("non-ERISA Plans," and,
together with Buyer ERISA Plan, the "Buyer Benefit Plans") has been
administered, in all material respects, in compliance with its terms and
the requirements of applicable law. Buyer does not have and has not had
any Buyer Benefit Plans which are subject to Title IV of ERISA. Neither
Buyer nor any of its affiliates, its employees, directors or agents, or
any fiduciary, has violated Section 406 of ERISA or engaged in any
"Prohibited Transaction" (as defined in Section 4975(c)(1) of the Code)
with respect to any Buyer ERISA Plan. Except as set forth on the
SCHEDULE 3.6, the Schedule of Plan Liabilities, each Buyer ERISA Plan
<PAGE> 30
that is intended to be qualified under Section 401 and related provisions
of the Code is the subject of a determination letter from the Internal
Revenue Service to the effect that it is so qualified under the Code and
its related funding vehicle is tax-exempt, under Section 501 of the Code.
No matter is pending relating to any Buyer Benefit Plan before any court
or governmental agency. Neither Buyer, nor any of its affiliates is, or
has ever been, obligated to contribute to a multiemployer plan (as
defined in Section 3(37) of ERISA). Except as required pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985 and Section 4980B
of the Code or as reflected on SCHEDULE 3.6 delivered pursuant hereto,
neither Buyer, nor any other party on behalf of Buyer, has any obligation
or commitment to provide health, disability, or life insurance or similar
welfare benefits to former employees or members of their families.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 CONDUCT OF BUSINESS OF FIRST OZAUKEE. Between the date hereof
and the Closing Date, the business of First Ozaukee shall be conducted in
the usual, regular and ordinary course consistent in all material
respects with prudent banking practices and First Ozaukee shall use
reasonable efforts to preserve intact its reputation and business
relationships with suppliers, customers, employees and others having
business relationships with First Ozaukee. Without limiting the
foregoing, without the prior written consent of Buyer;
(a) no change shall be made in the Articles of Incorporation or
By-Laws of FOCC or FOSB or in the number of issued and outstanding FOCC
Shares or Stock Options except for changes resulting from exercise of
existing Stock Options in accordance with their terms;
(b) no bonuses shall be awarded or paid to any officer or
employee of First Ozaukee and the compensation of officers and employees
of First Ozaukee shall not be increased;
(c) no loans, or renewals or restructurings of loans for
$200,000 or more (including aggregation of loans to any one customer or
related entities) shall be made by FOSB except in the ordinary course of
business and consistent in all material respects with prudent banking
practices and policies and applicable rules and regulations or regulatory
authorities with respect to amount, terms, security and quality of the
borrower's credit;
(d) no dividends or other distributions shall be declared or
paid by First Ozaukee nor shall First Ozaukee adjust, split, combine or
reclassify any capital stock; nor directly or indirectly redeem, purchase
or otherwise acquire any of its shares of capital stock or grant any
<PAGE> 31
appreciation rights, if any, or grant any individual or corporation or
other entity any right to acquire any shares of its capital stock, or
issue any additional shares of capital stock, preferred stock, debt or
other equity securities except pursuant to the exercise of the stock
options identified on SCHEDULE 2.3;
(e) First Ozaukee shall use its best efforts to maintain its
present insurance and bond coverage in respect of its properties, assets
and business;
(f) First Ozaukee shall make no investment either by purchase
of stock or securities (other than investment securities allowed pursuant
to clause (h) of this Section 4.1), contributions to capital, property
transfers, or purchase any property or assets of any other individual,
corporation or other entity in excess of $10,000;
(g) except for transactions in the ordinary course of business
consistent with past practice, First Ozaukee shall not enter into,
terminate or extend any material contract or agreement, or make any
change in any of its material leases or contracts, other than renewals of
contracts and leases, and then only if such changes do not materially
alter the terms of the agreement;
(h) First Ozaukee shall neither purchase nor designate any
existing or additional securities as "Held to Maturity", purchase any
security with a maturity in excess of six months, nor restructure or
materially change its investment securities portfolio through purchases,
sales or otherwise, or the manner in which the portfolio is classified or
reported unless otherwise required by GAAP;
(i) no significant changes outside the ordinary course of
business shall be made in the general nature of the business conducted by
First Ozaukee, including but not limited to the investment or use of its
assets, the liabilities it incurs, or the facilities it operates;
(j) no employment, consulting or other similar agreements shall
be entered into by First Ozaukee;
(k) except as provided herein, First Ozaukee shall not fail to
terminate all First Ozaukee Benefit Plans prior to the Closing;
(l) First Ozaukee shall not fail to timely file all required
tax returns with, and make or accrue all payments to all applicable
taxing authorities and will not make any application for or consent to
any extension of time for filing any tax return or any extension of the
period of limitations applicable thereto;
(m) First Ozaukee shall not incur any expense outside the
ordinary course of its business, nor make or incur any expenditure for
<PAGE> 32
fixed assets, in excess of $15,000 for any single item, or $30,000 in the
aggregate, or enter into any leases of fixed assets having an aggregate
annual rental in excess of $30,000;
(n) First Ozaukee shall not sell, transfer, mortgage, encumber
or otherwise dispose of any of its properties or assets to any
individual, corporation, or other entity, or cancel, release or assign
any indebtedness to any such person or any claims held by such person,
nor incur any liabilities or obligations, make any commitments or
disbursements or acquire any property or asset, make any contract or
agreement, or engage in any transaction, except in the ordinary course
consistent in all material respects with prudent banking practices;
(o) First Ozaukee shall not engage or agree to engage in any
"covered transaction" within the meaning of Sections 23A or 23B of the
Federal Reserve Act (without regard to applicability of any exemptions
contained in said Section 23A);
(p) no changes of a material nature shall be made in First
Ozaukee's accounting procedures, methods, policies or practices or the
manner in which they conduct their respective businesses and maintain
their records;
(q) First Ozaukee shall not accept, renew or purchase any
brokered deposits, nor accept, renew or purchase public funds in excess
of 5% of the total deposits of FOSB.
4.2 CONDUCT OF BUSINESS OF BUYER. Between the date hereof and the
Closing Date, the business of Buyer shall be conducted (and Buyer shall
cause the business of its subsidiaries to be conducted) in the usual and
ordinary course consistent in all material respects with prudent banking
practices and in a manner that will not materially adversely affect
Buyer's ability to obtain all necessary regulatory approvals for the
transactions contemplated hereby or Buyer's ability to perform its
obligations under this Agreement.
4.3 ACCESS TO INFORMATION. To the extent permissible under law,
First Ozaukee will (a) give Buyer and its officers, employees,
accountants, counsel and other representatives full access to further
information (including, but not limited to, books, records, contracts,
commitments, files, correspondence, tax work papers and audit work
papers) with respect to First Ozaukee (other than records, files,
correspondence and findings of the Board of Directors related to the
possible sale of First Ozaukee); (b) supply to Buyer and its officers,
employees, accountants, counsel and other representatives, as soon as
they become available, all reports on loans and investments of First
Ozaukee, month-end prepared balance sheets and profit and loss
statements, internal and external audit reports and such other reports of
First Ozaukee that Buyer may reasonably request; and (c) supply to Buyer
a copy of each final registration statement, prospectus, report, schedule
and definitive proxy statement and other document filed or received by it
pursuant to the requirements of the Securities Acts and regulatory
authorities. Buyer will use such information solely for the purpose of
<PAGE> 33
conducting business, legal and financial reviews of First Ozaukee and for
such other purposes as may be related to this Agreement, and Buyer will,
and will direct all of its agents, employees and advisors to, maintain
the confidentiality of all such information. Pending the Closing,
representatives of Buyer shall, during normal business hours and on
reasonable advance notice to First Ozaukee, be given full access to First
Ozaukee's properties, records and business activities and afforded the
opportunity to observe its business activities and consult with its
directors and officers regarding the same on an ongoing basis (without
limiting the foregoing, to verify compliance by First Ozaukee with all
terms of this Agreement), provided that the foregoing do not interfere
with the business operations of First Ozaukee.
4.4 FIRST OZAUKEE SHAREHOLDERS' MEETING. As soon as practicable
after Buyer's application to the Board of Governor's of the Federal
Reserve System for approval to acquire control of First Ozaukee has been
accepted as informationally complete, FOCC shall call and hold a special
meeting of its shareholders to act upon and consider this Agreement and
the Plan of Merger and the transactions therein contemplated in
accordance with its Articles of Incorporation, its By-Laws, and the
applicable statutes of the State of Wisconsin. FOCC, acting through its
Board of Directors, shall recommend to its shareholders that they vote
their shares in favor of the Merger and the transactions herein
contemplated, and FOCC shall reflect such recommendations in any proxy
statement mailed to its shareholders, unless FOCC shall have received an
unsolicited offer from a third party where the Board of Directors of FOCC
reasonably believes its fiduciary duties require a different
recommendation.
4.5 REASONABLE EFFORTS. The parties to this Agreement agree to use
their reasonable efforts in good faith to satisfy the various conditions
to the Closing and to consummate the Merger as soon as practicable.
Neither of the parties hereto shall take any action that is intended or
may reasonably be expected to result in a breach of the terms of this
Agreement; any of its representations or warranties contained herein or
in the schedules or exhibits provided for herein to be or become untrue;
in any of the conditions set forth in Article V not being satisfied; or
which would adversely effect the ability of Buyer to obtain any necessary
regulatory approvals .
4.6 REGULATORY APPROVALS. Buyer, as soon as is reasonably
practical, will take all appropriate actions necessary to obtain the
regulatory approvals referred to in Section 5.1(d) hereof, and First
Ozaukee will cooperate fully in the process of obtaining all such
approvals. Without limiting the foregoing, within 30 days after the date
of this Agreement, Buyer will submit initial applications necessary to
obtain the regulatory approvals referred to in Section 5.1(d) hereof. In
the event First Ozaukee fails to provide necessary information required
by Buyer to complete the initial applications in a timely fashion, the 30
day time period provided herein shall be extended by a reasonable period
of time. Buyer will provide First Ozaukee on a timely basis with copies
of all applications or notices submitted to any regulatory authority, and
all comments and correspondence sent or received with respect thereto.
<PAGE> 34
4.7 BUSINESS RELATIONS AND PUBLICITY. First Ozaukee will use
reasonable efforts to preserve its reputation and relationships with
suppliers, clients, depositors, customers, employees and others having
business relations with First Ozaukee. No press release or other
communication in connection with or relating to this Agreement or the
transactions contemplated hereby (other than communications with
appropriate regulatory authorities) shall be issued or made without the
prior mutual consent of the parties hereto; provided, however, that
either party may release information in connection with or relating to
this Agreement or the transactions contemplated hereby if, in the opinion
of counsel, the release of such information is required, or as otherwise
may be required by law; provided, further, that prior to the release of
any such information, the releasing party shall first notify the other
party of the reason for the release of the information and the
information to be released.
4.8 LOAN REVIEW. Prior to the Closing, Buyer shall be entitled to
review First Ozaukee's loan portfolio, and shall be furnished with full
information regarding the status of each loan contained therein
(including, but not limited to, the payment history, whether any defaults
have occurred, the nature and basis for any renewals, loan modifications
or any agreements which materially altered or changed the terms of the
loan when it was originated or purchased, and any and all collection
efforts or loan workouts engaged in by First Ozaukee), as of a date not
more than thirty (30) days prior to the Closing Date.
4.9 CIBAC SHAREHOLDER APPROVAL. Buyer, as the entity that will be
the owner of all of the outstanding shares of capital stock of CIBAC,
shall cause this Agreement and the Plan of Merger to be approved in
accordance with the WCBL.
4.10 NO CONDUCT INCONSISTENT WITH THIS AGREEMENT. After the date of
this Agreement, First Ozaukee shall not permit or authorize any of its
officers, directors, shareholders or employees, or any investment banker,
attorney, accountant, agent or other representative of First Ozaukee to
directly or indirectly solicit, invite, entertain, encourage, facilitate,
participate in or undertake any discussions for the purpose of merging or
consolidating First Ozaukee with any other person, entity or group or
causing First Ozaukee to sell any of its assets or any shares of its
capital stock to any other person, entity or group or to issue or grant
any options or rights to purchase shares of any class of its stock to any
other person, entity or group or causing the liquidation of First
Ozaukee, nor shall First Ozaukee enter into any agreement to accomplish
any of the foregoing, except (i) upon the termination of this Agreement
pursuant to Section 7.4(g) hereof; (ii) with the prior written consent of
Buyer; (iii) pursuant to a written direction from any regulatory
authority; or (iv) upon First Ozaukee receiving an unsolicited bonafide
offer from a third party where the Board of Directors of FOCC reasonably
believes that its fiduciary duties require it to enter into discussions
with such party.
4.11 BOARD OF DIRECTORS' NOTICES, MINUTES, ETC. First Ozaukee shall
transmit to Buyer on a prompt and timely basis copies of all notices,
<PAGE> 35
minutes, consents and other materials that First Ozaukee provides its
directors to the extent permissible under law other than materials
relating to this Agreement, the Plan of Merger, or the transactions
contemplated thereby; provided, however, that Buyer agrees to hold in
confidence and trust and to act in a fiduciary manner with respect to all
information so provided.
4.12 CONFIDENTIAL INFORMATION. First Ozaukee and Buyer each
covenants that, in the event the transactions contemplated in this
Agreement are not consummated, each will keep in strict confidence,
except as required by law, and return all documents containing any
information concerning the properties, business and assets of the other
party that may have been obtained in the course of negotiations or
examination of the affairs of the other party either prior or subsequent
to the execution of this Agreement (other than such information as shall
be in the public domain or otherwise ascertainable from public or sources
that are not bound by confidentiality obligations in favor of First
Ozaukee).
4.13 MAINTENANCE OF CAPITAL LEVELS. Buyer, its financial
institution subsidiary or subsidiaries and First Ozaukee shall maintain
at least the minimum capital levels as required by Regulatory
Authorities. Buyer shall use its best efforts to take no action to cause
(i) the Regulatory Authorities to disapprove the transactions
contemplated by this Agreement and the Plan of Merger, or (ii) the
transactions contemplated by this Agreement and the Plan of Merger to
fail to satisfy the standards of the Regulatory
Authorities.
4.14 NO CONTROL OF FIRST OZAUKEE BY BUYER. Other then as set forth
herein, until the Effective Time, the management of First Ozaukee and the
authority to establish and implement its business policies shall reside
solely in First Ozaukee's officers and Board of Directors.
4.15 EMPLOYMENT AGREEMENTS. First Ozaukee shall not take any action
to amend or extend the current employment agreements of Mr. Russell S.
Jones and Ms. Mary E. Lammers without the prior written consent of Buyer.
4.16 EMPLOYEES.
(a) In the event Buyer terminates any employee of First
Ozaukee (other than Mr. Russell S. Jones and Ms. Mary E. Lammers, whose
severance benefits will be provided for in written employment and/or
consulting agreements), within twelve (12) months after the Effective
Time, and for a reason other than "Cause" (as defined below), Buyer shall
provide lump sum cash severance payments to such employee at the time of
termination in the following amounts: (i) non-officer -- 1/2 month per
full year of service, maximum 3 months current monthly salary; and (ii)
officer --1 month per full year of service, maximum 6 months current
<PAGE> 36
monthly salary. In computing such severance payments for regular part-
time employees, their per month compensation shall be based on one-
twelfth of the actual number of hours worked by any such employee during
the fiscal year ended September 30, 1996.
For purposes of this Agreement, "Cause" shall mean termination
based upon: (i) an employee's willful or continued failure to perform
substantially his or her duties with Buyer (other than as a result of
incapacity due to physical or mental condition), or (ii) an employee's
willful commission of misconduct that is or such that it may be
materially injurious to Buyer, monetarily or otherwise, or (iii) an
employee's conviction for a felony offense. For purposes of this
paragraph, no act, or failure to act, on the employee's part, shall be
considered "willful" unless done, or omitted to be done, without good
faith and without reasonable belief that the act or omission was in the
best interest of Buyer.
(b) Except as otherwise provided herein, Buyer and the
Surviving Corporation shall not be responsible for the payment of any
other obligations of First Ozaukee to its employees.
(c) All employees of First Ozaukee shall be paid prior to
the Effective Time for all wages, accrued but unpaid bonuses, accrued
vacation time and all accrued and vested benefits.
(d) First Ozaukee agrees to cooperate with Buyer regarding
the manner in which the existing employees of First Ozaukee are notified
of the execution of this Agreement. First Ozaukee shall announce the
transactions contemplated by this Agreement at a meeting of its employees
at which representatives of Buyer shall be allowed to be present and
answer questions. First Ozaukee shall render reasonable assistance to
Buyer in regard to employment of any of the First Ozaukee employees.
4.17 INDEMNIFICATION AND DIRECTORS' AND OFFICERS' LIABILITY
INSURANCE. Buyer agrees that from and after the Effective Time it shall
indemnify and hold harmless each present and former director and officer
of FOCC and FOSB (the "Indemnified Parties"), to the extent as provided
in the Articles of Incorporation of FOCC as in effect at the time of
Closing but in no event greater than those prescribed by law or any bank
regulatory authority, against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil,
administrative or investigative, arising out of matters existing or
occurring at or prior to the Effective Time that are related in whole or
in part to his or her capacity as a director or officer of First Ozaukee,
whether asserted or claimed prior to, at or after the Effective Time, to
the full extent permitted under applicable law (and First Ozaukee shall
advance expenses as incurred to the full extent permitted under
applicable law, provided the person to whom expenses are advanced
provides, an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification). Prior
to the Closing Date, First Ozaukee shall purchase at its own expense by
single (one-time) premium tail directors' and officers' liability
<PAGE> 37
insurance coverage (of at least the same coverage and amounts, and
containing terms which are not materially less advantageous than the
policy in force on the date of this Agreement and more fully described on
SCHEDULE 2.12) for three (3) years from the Effective Time for present
and former directors and officers for matters existing or occurring prior
to, at or after the Effective Time.
4.18 BOARD OF DIRECTORS OF FOCC AND FOSB. At the Effective Time,
all Directors of FOCC and FOSB shall resign by submitting letters of
resignation to Buyer, and shall be replaced by Directors selected by
Buyer.
4.19 OFFICER AND DIRECTOR LOANS. Subject to restrictions of
applicable regulations and law, the loans from FOSB currently held by
officers and directors and employees of FOSB will not be affected by the
transactions contemplated hereby.
4.20 EMPLOYEE BENEFIT PLANS.
(a) Buyer agrees to continue to provide employees of First
Ozaukee employed by the Surviving Corporation on or after the Effective
Time (the "First Ozaukee Employees") with compensation that is no less
favorable to that in effect as of the Effective Time, and terms of
employment which are substantially comparable to those provided to other
similarly situated employees of Buyer. Buyer shall allow such employees
to participate in, and obtain those benefits afforded to other similarly
situated employees of Buyer pursuant to the terms and conditions of such
benefit programs.
(b) Prior to the Effective Time, First Ozaukee and its
representatives shall take all necessary action to terminate the First
Ozaukee Savings Bank Employee Stock Ownership Plan (the "First Ozaukee
ESOP"); including, but not limited to, amending the First Ozaukee ESOP to
provide that no more contributions shall be made thereto and that any new
employees as of the Effective Time shall not become participants. Within
thirty (30) days of the date of this Agreement in anticipation of such
termination, First Ozaukee and its representatives shall apply for and
use their best efforts to obtain a favorable Final Determination Letter
from the Internal Revenue Service (IRS) for a determination that the
termination of the ESOP does not effect its prior qualified status.
The loan between FOCC and the First Ozaukee ESOP (the "ESOP
Loan") shall be repaid in full with cash received by the First Ozaukee
ESOP from the Paying Agent for the FOCC Shares in the amount equal to the
Merger Price multiplied by the number of unallocated shares held by the
First Ozaukee ESOP, and any unallocated portion of the consideration
remaining after such repayment shall be allocated to the accounts of
those First Ozaukee Employees who are participants and beneficiaries and
such other participants and beneficiaries, if any (such individuals
hereafter, the "ESOP Participants"), in accordance with the terms of the
First Ozaukee ESOP as amended with respect to such termination. All ESOP
Participants shall fully vest and have a nonforfeitable interest in their
accrued benefits under the First Ozaukee ESOP.
<PAGE> 38
As soon as practicable after the receipt of a letter from the
IRS as to the tax qualified status of the First Ozaukee ESOP upon its
termination under Section 401(a) and 4975(e) of the Code (the "Final
Determination Letter"), distributions of the benefits under the First
Ozaukee ESOP shall be made to the ESOP Participants. The remaining
proceeds related to the unallocated shares after the payment of the ESOP
loan shall be allocated to the ESOP Participants to the extent permitted
by the Internal Revenue Code (IRC). Any amounts not allocated shall be
held unallocated in a suspense account. The Surviving Corporation may
continue the ESOP for a period of time not to exceed the transition
period allowed by IRC Section 410(b)(6)(C). Also, if assets must be held
in suspense, the Plan will be continued until such assets can be
allocated, for a period not to exceed the allowed transition period. At
the end of this period, if any unallocated assets must still be held in
suspense, the ESOP may be merged into another qualified plan sponsored by
Buyer or the surviving company. During the transition period, the ESOP
may not be amended, except to make such changes as are required to
maintain its tax qualified status, or to terminate or merge the Plan.
Employees of the Buyer or surviving company who were not Participants as
of the Effective Date, shall not be allowed to become Participants on or
after the Effective Date.
In the event that First Ozaukee and its respective representatives,
prior to the Effective Time, and Buyer and its representatives after the
Effective Time, reasonably determine that the First Ozaukee ESOP cannot
obtain a favorable final determination letter, or that the amounts held
therein cannot be so applied, allocated or distributed without causing
the First Ozaukee ESOP to lose its qualified status, First Ozaukee prior
to the Effective Time and Buyer after the Effective Time shall take such
action as they may reasonably determine with respect to the distribution
of benefits to the ESOP participants, provided that the assets of the
First Ozaukee ESOP shall be held or paid for the benefit of the ESOP
participants and further that in no event shall any portion of the
amounts held in the First Ozaukee ESOP revert directly or indirectly to
First Ozaukee or any affiliate thereof, or to Buyer or any affiliate
thereof.
(c) Prior to the Effective Time, First Ozaukee shall take
all necessary action to terminate the First Ozaukee Savings Bank Money
Purchase Pension Plan (the "First Ozaukee Pension Plan"); including, but
not limited to, amending the First Ozaukee Pension Plan to provide that
for periods beginning on and after May 1, 1997, no further contributions
shall be made thereto, no new employees shall become Participants and
that all Participants thereto shall fully vest and have a nonforfeitable
interest in their accrued benefits under the First Ozaukee Pension Plan.
Within thirty (30) days of this Agreement, in anticipation of
such termination and distribution, First Ozaukee and its representatives
shall apply for and use their best efforts to obtain a favorable Final
Determination Letter from the IRS. Prior to Closing, the First Ozaukee
<PAGE> 39
Pension Plan shall be fully funded and no further contribution thereto
shall be required by the successor corporation or Buyer.
In the event that First Ozaukee and its representatives prior
to the Effective Time, and Buyer and its representatives after the
Effective Time, reasonably determine that the First Ozaukee Pension Plan
cannot obtain a favorable Final Determination Letter, or that the amounts
held therein cannot be so applied, allocated or distributed without
causing the First Ozaukee Pension Plan to lose its qualified status,
First Ozaukee prior to the Effective Time and Buyer after the Effective
Time shall take such action as they may reasonably determine with respect
to the distribution of benefits to the First Ozaukee Pension Plan
Participants ("Pension Plan Participants"), provided that the assets of
the First Ozaukee Pension Plan shall be held or paid for the benefit of
the Pension Plan Participants and further that in no event shall any
portion of the amounts held in the First Ozaukee Pension Plan revert
directly or indirectly to First Ozaukee or any affiliate thereof, or to
Buyer or any affiliate thereof.
(d) Prior to Closing, First Ozaukee shall terminate the
First Ozaukee Post-Retirement Welfare Benefit Program and terminate all
of its obligations to provide death benefits to employees, officers and
directors, and no payments of any kind shall be made on account of such
termination. Buyer shall be under no obligation to continue any life
insurance plans, programs or health insurance benefits to officers of
First Ozaukee. Buyer will pay Mr. Russell S. Jones $315.00 ($240.00
allocated to Mrs. Maija Jones and $75.00 allocated to Mr. Jones) per
month for 48 consecutive months following the Closing Date and $150.00
per month ($75.00 allocated to Mrs. Jones and $75 allocated to Mr. Jones)
thereafter until Mr. Jones attains age 80 as reimbursement for the
purchase of primary and/or supplemental health insurance coverage. In
the event that Mr. Jones becomes deceased prior to attaining age 80, or
Mrs. Jones become deceased prior to Mr. Jones attaining age 80, the
allocated portion of the payments provided herein shall cease with
respect to the deceased.
(e) To the extent allowable by Buyer's Plan, certain
expenses incurred by each First Ozaukee employee for health benefits
shall be counted during Buyer's Plan year for purposes of such employees
deductible and co-payment limitations under Buyer's plan.
(f) Buyer acknowledges and agrees that First Ozaukee and
FOSB shall be permitted to take whatever action they deem to be
reasonably necessary to provide that all Options or awards granted under
the FOCC Option Plan and the First Ozaukee Incentive Plan, and all
account balances under the First Ozaukee ESOP and First Ozaukee Pension
Plan, shall be fully vested, nonforfeitable, paid and satisfied in full
and terminated as of the Effective Time. All awards under the First
Ozaukee Incentive Plan that have been granted prior to the Effective Time
shall be considered outstanding First Ozaukee Shares as of the Effective
Time.
<PAGE> 40
4.21 OBLIGATIONS TO BAIRD AND SHW. All professional fees, costs and
expenses payable to Baird and SHW shall be paid in full or accrued by
First Ozaukee prior to Closing.
4.22 CEDARBURG FACILITY. First Ozaukee shall immediately
undertake, and conclude as diligently as possible, a full and complete
soil and groundwater environmental assessment of the Cedarburg facility
and forthwith commence soil and groundwater remediation necessary to
obtain a site closure letter satisfactory to Buyer in its sole
discretion. In the event that First Ozaukee has not received a site
closure letter satisfactory to Buyer in its sole discretion prior to the
Closing Date then, pursuant to Section 1.2 of this Agreement, the Base
Capital shall be adjusted pursuant to Section 1.2(b)(ii).
4.23 PROXY STATEMENT. Buyer acknowledges that it will be required
to provide certain information to First Ozaukee and cooperate with First
Ozaukee in the preparation of a proxy statement relating to the approval
of this Agreement and Plan of Merger by the FOCC shareholders. First
Ozaukee shall provide for Buyer's review those portions of any such proxy
statement incorporating information provided to First Ozaukee by Buyer.
Except as to the accuracy of the information provided by Buyer to First
Ozaukee, if any, First Ozaukee shall have the sole and exclusive
responsibility for the preparation and content of the proxy statement.
4.24 FINANCING. Buyer will have available at the Effective Time, or
such date thereafter as certificates shall be surrendered in accordance
with Section 1.3 of this Agreement, cash to provide all funds necessary
to pay the Merger Price.
ARTICLE V
CONDITIONS PRECEDENT
5.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. Unless the
conditions are waived by Buyer, all obligations of Buyer under this
Agreement are subject to the fulfillment, prior to or at the Closing, of
each of the following conditions:
(a) STATEMENTS OF ESSENTIAL FACTS; PERFORMANCE OF
AGREEMENTS. The Statements of Essential Facts contained in Article II of
this Agreement and all representations and warranties of First Ozaukee
contained herein or in the First Ozaukee Financial Statements or in any
schedules or exhibits delivered by First Ozaukee or on its behalf to
Buyer pursuant to this Agreement shall have been true and correct in all
material respects as of this date and shall be true and correct in all
material respects at the Closing as though made on the Closing Date, in
each case to the reasonable satisfaction of Buyer, and First Ozaukee
shall have performed all covenants and agreements herein required to be
performed by it on or prior to the Closing.
<PAGE> 41
(b) DUE DILIGENCE. Commencing five (5) business days prior
to the Closing, Buyer shall commence a three (3) business day
investigatory due diligence examination of First Ozaukee. First Ozaukee
shall provide Buyer full and complete access to all aspects of the
business of First Ozaukee, including, but not limited to all books,
records, contracts, commitments, correspondence, reports, properties and
assets of First Ozaukee and with the full and complete cooperation of
First Ozaukee, their officers, directors, agents and representatives at
the facilities of First Ozaukee. No investigation by Buyer shall affect
the representations and warranties of First Ozaukee set forth herein.
(c) CLOSING CERTIFICATE. Buyer shall have received a
certificate signed by the President and another duly authorized officer
of First Ozaukee and dated as of the Closing Date, certifying in such
detail as Buyer may reasonably request as to the fulfillment of the
conditions to the obligations of Buyer as set forth in this Agreement.
(d) REGULATORY AND OTHER APPROVALS. Buyer shall have
obtained all consents and approvals of all regulatory agencies and other
authorities having jurisdiction over this transaction necessary to
complete the transactions contemplated by this Agreement and the Plan of
Merger upon such terms and conditions, if any, as are satisfactory to
Buyer in its reasonable judgment, all required waiting periods shall have
expired, and there shall have been no motion for rehearing or appeal from
such approval or commencement of any suit or action by any governmental
authority seeking to enjoin the transaction provided for herein or to
obtain other relief with respect thereto.
(e) APPROVAL OF MERGER AND DELIVERY OF MERGER AGREEMENT.
The Merger Agreement and the transactions contemplated therein shall have
been approved by the shareholders of FOCC in accordance with the WBCL and
the Articles of Incorporation and By-Laws of First Ozaukee and the proper
officers of First Ozaukee shall have executed and delivered to Buyer and
CIBAC copies of the Plan of Merger in form suitable for filing with the
Wisconsin Department of Financial Institutions as part of the Articles of
Merger.
(f) NO LITIGATION. No suit or other action shall have been
instituted or threatened seeking to enjoin the consummation of the
transactions contemplated hereby, or by the Plan of Merger, or to obtain
other relief in connection with this Agreement or the transactions
contemplated hereby or thereby (including, but not limited to,
substantial damages) which reasonably could be expected to result in the
issuance of an order enjoining such transactions or result in a
determination that First Ozaukee has failed to comply with applicable
legal requirements of a material nature in connection with the
transactions contemplated herein or in the Plan of Merger or actions
preparatory thereto. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any
governmental entity which prohibits, restricts or makes illegal
consummation of the transactions contemplated hereby, or of the Merger.
<PAGE> 42
(g) OPINION OF COUNSEL. Buyer shall have received the
opinion of Schiff Hardin & Waite, special counsel for First Ozaukee,
dated as of the Closing Date, and in form and substance satisfactory to
Buyer and its counsel to the effect that:
(i) FOCC is a corporation validly existing under the
laws of the State of Wisconsin. FOCC is registered as a bank holding
company under the BHC Act.
(ii) FOSB is a validly existing Wisconsin state-
chartered savings bank.
(iii) The authorized capital stock of FOCC is (i)
4,000,000 shares of common stock, $1.00 par value per share, of which
627,477 shares are issued and outstanding as of the Closing Date, and
(ii) 2,000,000 shares of preferred stock, $1.00 par value per share, of
which, as of the Closing Date, no shares were issued and outstanding. To
the best knowledge of counsel, FOCC owns all of the issued and
outstanding stock of FOSB.
(iv) The execution, delivery, and performance of this
Agreement and the Plan of Merger, and the transactions contemplated
herein and therein have been duly authorized by the Board of Directors
and the shareholders of FOCC, these being the only authorizations
required under its Articles of Incorporation, its By-Laws, and the
statutes of the State of Wisconsin. This Agreement constitutes the
legal, valid and binding obligations of First Ozaukee enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors generally
and to general principles of equity.
(v) The execution, delivery and performance of this
Agreement do not violate any provisions of the Articles of Incorporation
or By-Laws of FOCC or FOSB or, to the best knowledge of counsel, any
material contract or agreement by which First Ozaukee is bound or any
law, rule, regulation or, to the best knowledge of counsel, any written
order to which First Ozaukee is subject.
(vi) To the best knowledge of counsel, there are no
material claims, actions, suits, or proceedings pending or threatened
against First Ozaukee which depart from the ordinary, routine litigation
incident to the kind of business carried on by First Ozaukee which might
reasonably be expected to have a material adverse effect on First
Ozaukee.
(vii) To the best knowledge of counsel, there are no
actions, suits or proceedings pending or threatened against First Ozaukee
to enjoin consummation of the Merger or to obtain other relief (other
than payment to dissenting shareholders) in connection with this
Agreement, the Plan of Merger, or the transactions contemplated hereby or
thereby.
<PAGE> 43
In rendering the foregoing opinion, such counsel may rely on
certificates of corporate officers or governmental officials as to
factual matters.
(h) NO ADVERSE CHANGES. Between the date of this Agreement
and the Closing Date, the business of First Ozaukee shall have been
conducted in the ordinary course consistent in all material respects with
prudent banking practices, and there shall not have occurred any material
adverse change or any condition, event, circumstance, fact or occurrence
(other than general economic or competitive conditions) that may be
expected to result in a material adverse change in First Ozaukee's
business, income, assets, liabilities or financial condition. FOCC and
FOSB shall not have been made a party to, or threatened with any actions,
suits, proceedings or litigation which, in the opinion of Buyer will have
or is likely to have a material adverse affect on the financial
condition, assets or business of First Ozaukee.
(i) CONSENTS. To the extent required by law or contractual
terms, First Ozaukee shall have obtained the written consent to the
Merger of other parties to leases or other contracts, commitments or
arrangements to which First Ozaukee is a party.
(j) EMPLOYMENT AGREEMENTS AND SEVERANCE PAYMENT. First
Ozaukee, Buyer, CIBAC and Mr. Russell S. Jones, President and Chief
Executive Officer of First Ozaukee and FOSB, and Ms. Mary E. Lammers,
Secretary of First Ozaukee and Vice President of FOSB, shall have entered
into new consulting and/or employment agreements in the form of EXHIBITS
B and C hereto, and Mr. Jones and Ms. Lammers and First Ozaukee shall
have mutually cancelled all existing employment, compensation and/or
severance agreements between Mr. Jones and Ms. Lammers and FOSB and/or
FOCC. Furthermore, First Ozaukee shall have paid on or before Closing
the $185,968 severance payment to Mr. Jones.
(k) DISSENTING SHARES. Shareholders holding no more than
twelve percent (12%) of the FOCC Shares (i) shall not have validly
demanded appraisal of such shares pursuant to Subchapter XIII prior to or
at the meeting of shareholders of FOCC at which the Merger was submitted
to a vote, and (ii) shall not have voted such shares in favor of the
Merger at such meeting.
(l) FAIRNESS OPINION. Baird shall have delivered to Buyer,
as of the date of any proxy statement used to solicit shareholder
approval of the Merger Agreement, its opinion to the effect that the
Merger is fair, from a financial point of view, to the shareholders of
FOCC, and such opinion shall not have been withdrawn, amended or modified
in any material respect at or prior to the Closing.
(m) BENEFIT PLAN TERMINATION. Notwithstanding anything to
the contrary herein, First Ozaukee shall have fully funded and terminated
the First Ozaukee Post-Retirement and Welfare Benefit Plan, the FOCC
Option Plan and the First Ozaukee Incentive Plan, and First Ozaukee shall
<PAGE> 44
have provided evidence to the satisfaction of Buyer's counsel concerning
same. First Ozaukee shall have fully funded the First Ozaukee Pension
Plan and First Ozaukee and its representatives shall have used their best
efforts to obtain a favorable Final Determination Letter from the IRS
with regard to the termination of the First Ozaukee Pension Plan and
First Ozaukee ESOP Plan. First Ozaukee shall have terminated any of its
obligations to provide death benefits to employees, officers and/or
directors, and no payments of any kind will be made on account of such
termination, and each such covered employee, officer and/or director
shall deliver a letter agreement acceptable to Buyer agreeing to the
termination of any right to death benefits.
(n) SALE OF VEHICLE. First Ozaukee shall have sold the 1997
Cadillac DeVille (the "Vehicle") for no less than its fair market value.
The fair market value shall be the average of the trade in value and the
retail value of the Vehicle as printed in the most recent issue of the
N.A.D.A. Official Used Car Guide prior to sale, including all additions
and deductions applicable to the vehicle.
(o) ENVIRONMENTAL. First Ozaukee (1) shall have delivered
to Buyer a site closure letter satisfactory to Buyer in its sole
discretion with regard to the Cedarburg facility and First Ozaukee shall
have expensed or accrued all Unreimbursable Expenses associated with the
environmental remediation of the Cedarburg facility; or, as the case may
be, (2) Buyer shall have obtained from its environmental consultant hired
pursuant to Section 1.2(b)(ii) an opinion satisfactory to Buyer that, as
of the Closing Date, the total of the Unreimbursable Expenses incurred
and estimated to be incurred by First Ozaukee, excluding amounts
previously accrued or expensed, relating to the environmental remediation
and the environmental liabilities, contingent or otherwise, relating to
the Cedarburg facility shall not exceed Fifty Thousand Dollars ($50,000)
and the adjustments shall have been made to Base Capital and the Merger
Price as provided in Section 1.2(b)(ii) and 1.2(d) of this Agreement.
First Ozaukee shall have also delivered to Buyer, in a form satisfactory
to Buyer, the letter from WDCOM as referenced in Section 2.27 hereof.
(p) REQUIRED FILINGS. First Ozaukee shall have made all
filings with the SEC and the regulatory agencies required or necessitated
by the consummation of the transactions contemplated by this Agreement.
(q) REGULATORY VIOLATIONS. First Ozaukee shall have
provided documentation to the satisfaction of Buyer's counsel evidencing
resolution of any and all violations of all applicable Regulations,
including the payment of all sums due and owing as a result of such
violations and any penalties, fines and assessments related thereto.
(r) MERGER PRICE AND BASE CAPITAL ADJUSTMENTS. The
adjustments to the Base Capital and the Merger Price, if any are
required, pursuant to Section 1.2 of this Agreement shall have been
made.
<PAGE> 45
(s) OTHER DOCUMENTS. Buyer shall receive at the Closing all
such other documents, certificates or instruments as it may have
reasonably requested evidencing compliance by First Ozaukee with the
terms of this Agreement.
(t) TAXES. First Ozaukee shall not have taken any action
which impedes, impairs or prevents Buyer's ability to obtain the maximum
tax benefits resulting from the adjustments not included in Base Capital
pursuant to Section 1.2(c)(i-iv), but excluding actions in the normal
course of business consistent with past conduct, actions required by laws
and actions required by this Agreement.
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF FOCC. Unless the
conditions are waived by FOCC, all obligations of FOCC under this
Agreement and under the Plan of Merger, are subject to the fulfillment,
prior to or at Closing, of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES OF BUYER; PERFORMANCE OF
AGREEMENTS. The Statements of Essential Facts contained in Article III
of this Agreement and the representations and warranties of Buyer
contained herein and in any schedules or exhibits delivered by Buyer or
on its behalf to FOCC pursuant to this Agreement shall have been true and
correct in all material respects as of this date and shall be true and
correct in all material respects at the Closing as though made on the
Closing Date, in each case to the reasonable satisfaction of FOCC, and
Buyer shall have performed all agreements herein required to be performed
by it on or prior to the Closing.
(b) CLOSING CERTIFICATE. FOCC shall have received a
certificate signed by a duly authorized officer of Buyer and dated as of
the Closing Date, certifying in such detail as FOCC may reasonably
request, as to the fulfillment of the conditions to the obligations of
FOCC as set forth in this Agreement.
(c) REGULATORY AND OTHER APPROVALS. Buyer shall have duly
obtained all regulatory approvals necessary to complete the transactions
contemplated by this Agreement and the Plan of Merger upon such terms and
conditions, if any, as are satisfactory to FOCC in its reasonable
judgment, all required waiting periods shall have expired, and there
shall have been no motion for rehearing or appeal from such approval or
commencement of any suit or action by any governmental authority seeking
to enjoin the transaction provided for herein or to obtain other relief
with respect thereto.
(d) FAIRNESS OPINION. Baird shall have delivered to the
Board of Directors of FOCC, as of the date of the Proxy Statement used to
solicit shareholder approval of the Merger Agreement, its opinion to the
effect that the Merger is fair, from a financial point of view, to the
shareholders of FOCC, and such opinion shall not have been withdrawn,
amended or modified in any material respect at or prior to the Closing.
<PAGE> 46
(e) NO LITIGATION. No suit or other action shall have been
instituted or threatened seeking to enjoin the consummation of the
transactions contemplated hereby or by the Plan of Merger, or to obtain
other relief in connection with this Agreement or the transactions
contemplated hereby or thereby (including, but not limited to,
substantial damages) which reasonably could be expected to result in the
issuance of an order enjoining such transactions; or result in a
determination that Buyer has failed to comply with applicable legal
requirements of a material nature in connection with the transactions
contemplated herein or in the Plan of Merger or actions preparatory
thereto.
(f) OPINION OF COUNSEL. FOCC shall have received the
opinion of Brashear & Ginn, counsel for Buyer and CIBAC, dated as of the
Closing Date, in form satisfactory to FOCC and its counsel to the effect
that:
(i) Buyer is a corporation validly existing under
the laws of the State of Illinois, and is duly qualified to do business
and is in good standing in the State of Wisconsin. Buyer is registered
as a bank holding company under the BHC Act.
(ii) CIBAC is a validly existing Wisconsin
corporation.
(iii) The execution, delivery, and performance of this
Agreement and the Plan of Merger, and the transactions contemplated
herein and therein have been duly authorized by the Board of Directors of
Buyer and the sole shareholder of CIBAC, these being the only
authorizations required under its Articles of Incorporation, its By-Laws,
and the statutes of the State of Illinois. This Agreement and the Plan
of Merger constitute the legal, valid and binding obligations of Buyer
enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors generally and to general principles of equity.
(iv) The execution, delivery and performance of this
Agreement and the Plan of Merger do not violate any provisions of the
Articles of Incorporation or By-Laws of Buyer or any contract or
agreement known to counsel by which Buyer is bound or any law, rule,
regulation or, or to counsel's knowledge, order to which Buyer is
subject.
(v) The execution, delivery and performance of the
Plan of Merger do not violate any provisions of the Articles of
Incorporation or By-Laws of CIBAC or any contract or agreement known to
counsel by which CIBAC is bound or any law, rule, regulation or, to
counsel's knowledge, order of which CIBAC is subject.
(vi) To the best of counsel's knowledge, there are no
material claims, actions, suits or proceedings pending or threatened
against Buyer or CIBAC which depart from the ordinary, routine litigation
incident to the kind of business carried on by Buyer or CIBAC which might
reasonably be expected to have a material adverse effect on Buyer or
CIBAC.
<PAGE> 47
(vii) To the best knowledge of counsel, there are no
actions, suits or proceedings known to such counsel, after reasonable
inquiry, pending or threatened against Buyer or CIBAC to enjoin
consummation of the Merger or to obtain other relief (other than payment
to dissenting shareholders) in connection with this Agreement, the Plan
of Merger, or the transaction contemplated hereby or thereby. In
rendering the foregoing opinion, such counsel may rely on certificates of
corporate officers or governmental officials as to factual matters.
(g) APPROVAL OF MERGER AND DELIVERY OF MERGER AGREEMENT.
The Merger Agreement and the transactions contemplated therein shall have
been approved by the Board of Directors and sole shareholder of CIBAC in
accordance with governing statutes and the respective Articles of
Incorporation and By-Laws of each of Buyer and CIBAC. The proper
officers of each of Buyer and CIBAC shall have executed copies of Plan of
Merger in form suitable for filing with the Wisconsin Department of
Financial Institutions as part of the Articles of Merger.
(h) EMPLOYMENT AGREEMENTS AND SEVERANCE PAYMENT. First
Ozaukee, Buyer, CIBAC and Mr. Russell S. Jones and Ms. Mary E. Lammers
shall have entered into new employment and/or consulting agreements in
the form of EXHIBITS B and C hereto, and Mr. Jones, Ms. Lammers and First
Ozaukee shall have mutually cancelled all existing employment,
compensation and/or severance agreements between Mr. Jones and Ms.
Lammers and FOSB.
(i) OTHER DOCUMENTS. First Ozaukee shall have received at
the Closing all such other documents, certificates or instruments as it
may have reasonably requested evidencing compliance by Buyer with the
terms of this Agreement.
ARTICLE VI
SURVIVAL
6.1 Except for agreements of the parties that are specifically
provided by this Agreement or the Plan of Merger to be performed after
the Closing Date (including agreements contained in Article I and in
Sections 7.1 and 7.2 hereof), all statements, representations and
warranties made herein, in the Plan of Merger, or in connection therewith
or with the transactions contemplated thereby, by either party or any of
its respective agents, employees, representatives, officers, directors or
shareholders shall not survive the Closing. Except as provided in
Section 7.2 and 7.5 hereof, the sole remedy available to any party in
connection with any breach, inaccuracy or failure of any such statement,
representation, warranty, condition or agreement shall be to terminate
this Agreement in accordance with Section 7.4 hereof (unless this
Agreement specifically provides a different remedy) without further
liability or obligation, and without limiting the foregoing, no party
<PAGE> 48
shall have any cause of action of any nature against the other party, or
any of its agents, employees, representatives, officers, directors or
shareholders in respect of such breach, inaccuracy or failure.
ARTICLE VII
GENERAL PROVISIONS
7.1 FURTHER ASSURANCES. Each of the parties hereto agrees that at
any time and from time to time after the Closing it will cause to be
executed and delivered to any party such further instruments or documents
as such other party may reasonably require to give effect to the
transactions contemplated hereby.
7.2 EXPENSES. Each of the parties to this Agreement shall bear the
costs and expenses incurred by it in connection with this Agreement and
the transactions contemplated hereby; provided, however, that:
(i) in the event this Agreement is terminated by
Buyer pursuant to Section 7.4(c) or (d) excepting for nonfulfillment or
waiver of Section 5.1(d) or by FOCC pursuant to Section 7.4(g) hereof,
then FOCC shall reimburse Buyer in an amount not to exceed $100,000 for
the out-of-pocket expenses, subject to verification thereof, it has
incurred in furtherance of this Agreement and the transactions
contemplated herein, including, but not limited to, reasonable fees of
professionals engaged for such purpose by or on behalf of Buyer;
provided, however, that in the event such third party acquisition is not
consummated and Buyer subsequently enters into an acquisition agreement
with First Ozaukee, Buyer shall refund to First Ozaukee any and all
expenses First Ozaukee shall have paid to Buyer pursuant to this Section
7.2.
(ii) in the event this Agreement is terminated by
FOCC pursuant to Section 7.4(c) or (d), excepting for nonfulfillment or
waiver of Section 5.2(c, d and h), Buyer shall reimburse First Ozaukee in
an amount not to exceed $100,000 for out-of-pocket expenses, subject to
verification thereof, it has incurred in furtherance of this Agreement
and the transactions contemplated herein, including, but not limited to,
reasonable fees of professionals engaged for such purposes by or on
behalf of FOCC;
(iii) nothing herein contained shall require one party
to pay the other reimbursement of expenses in connection with the Merger
as a result of termination of this Agreement pursuant to Section 7.4(e)
or (f); and
(iv) all costs and expenses reasonably estimated to be
incurred by First Ozaukee shall be either paid or accrued for on or prior
to the Closing Date.
7.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the respective heirs, successors, assigns and
personal representations of the parties hereto; provided, however, that
no party may assign this Agreement without the written consent of the
<PAGE> 49
other parties, and except that Buyer may assign this Agreement to any
wholly-owned subsidiary of Buyer if Buyer remains fully responsible for
the performance of its obligations hereunder and such assignment shall
not, in the reasonable judgment of FOCC, adversely affect regulatory
approval of the transactions contemplated by this Agreement.
7.4 TERMINATION. This Agreement may be terminated (a) at any time
by agreement of Buyer and FOCC, (b) by either Buyer or FOCC if the
Closing has not occurred by December 1, 1997, or such later date agreed
to by Buyer and FOCC; provided that in the event Buyer shall have applied
for all of the regulatory approvals referred to in Section 5.1(d) hereof
prior to such date but the required waiting periods therefor shall not
have expired, this Agreement will not terminate pursuant to this Section
7.4(b) until ten (10) days after all required waiting periods shall have
expired without any motion for rehearing or appeal, (c) by either Buyer
or FOCC at the Closing if any of the conditions precedent to the
obligations of such terminating party contained in Article V hereof shall
not have been fulfilled or waived, (d) by either Buyer or FOCC if a
material breach or default shall be made by the other party in the
observance or in the due and timely performance of any of its covenants
or agreements herein contained and such default shall not have been fully
cured within a reasonable time, but in no event more than twenty days,
after written notice specifying the alleged default shall have been
given, (e) by FOCC if it refuses to accept the Decreased Adjusted Merger
Price presented by Buyer pursuant to Section 1.2(d)(ii), (f) by Buyer if
it refuses to accept the Increased Adjusted Merger Price presented by
FOCC pursuant to Section 1.2(e)(ii), (g) by FOCC if the Board of
Directors determines that its fiduciary duties require it to accept an
unsolicited offer from a third party and the Buyer shall have elected not
to exercise its right of first refusal pursuant to Section 7.5 hereof, or
(h) by FOCC upon the first to occur of:
(i) thirty days after the application or notice
required to be filed by Buyer for approval of the transactions
contemplated by this Agreement has been denied and is not subject to
further appeal or an appeal is not then being diligently pursued in good
faith, or
(ii) July 31, 1997, if on such date all applications
or notices required to be filed with any governmental authority are not
then pending (and have not been pending for a period of more than 30
days) before such authority, other than any such applications or notices
approved on or prior to July 31, 1997. For purposes of the preceding
sentence "pending" shall mean an application or notice procedure or
process with a governmental authority which Buyer is diligently pursuing
in good faith. In the event of termination of this Agreement as provided
in the preceding sentence and except as otherwise provided in Sections
7.2, 7.4, 7.5 or Article VI, there shall be no liability hereunder on the
part of Buyer or First Ozaukee or their respective agents, employees,
representatives, officers, directors or shareholders.
<PAGE> 50
7.5 RIGHT OF FIRST REFUSAL. In the event that prior to the
consummation of the transactions contemplated by this Agreement FOCC
Board of Directors receives an unsolicited third party offer to
(a) acquire beneficial or record ownership of at least a majority of the
outstanding FOCC Shares, (b) acquire all or substantially all of First
Ozaukee's assets, or (c) engage in a merger, consolidation,
recapitalization or other business combination with such third party,
First Ozaukee shall deliver to Buyer written notice of such proposed
acquisition which shall contain a description of the principal terms of
the proposed acquisition (the "Proposal"), including the purchase price
(payment of which shall be subject only to satisfaction of customary
closing conditions and the receipt of all necessary regulatory
approvals), the time and place of closing of such acquisition, and all
other material terms of the proposed acquisition. Within 21 days after
delivery of the Proposal, Buyer shall notify First Ozaukee as to whether
or not it intends to exercise its right of first refusal hereunder. In
the event a Proposal contains purchase price consideration other than
cash and First Ozaukee and Buyer cannot agree upon the appropriate cash
equivalent, First Ozaukee and Buyer shall select an investment banker
mutually agreeable to each of them for purposes of valuing any non-cash
consideration contained in the Proposal. First Ozaukee and Buyer shall
each pay one-half of the fees and expenses of any such investment banker.
For a period of 30 days after delivery of the Proposal (or such
longer time period as may be required to obtain all necessary regulatory
approvals or, with respect to any financial commitments Buyer requires to
consummate the acquisition, such longer period as shall be reasonably
necessary and negotiated by the parties), Buyer shall have the sole and
exclusive right to acquire First Ozaukee for the consideration and on
such other terms and conditions stated in the Proposal (or in the case of
non-cash consideration, as determined in the manner heretofore
described). In the event Buyer determines not to exercise its right of
first refusal hereunder, Buyer shall remain entitled to the remedies set
forth in Section 7.2 hereof in accordance with the terms thereof.
7.6 CANCELLATION FEE.
(a) In the event Buyer breaches sections 4.24 of this
Agreement and First Ozaukee elects to terminate this Agreement pursuant
to Section 7.4(d), Buyer shall make a cash payment to First Ozaukee in an
amount equal to $300,000.
(b) In the event Buyer is unable to obtain the necessary
regulatory approvals in order to complete the Merger, due to a
determination by the Federal Reserve Board or other regulatory authority
that Buyer (or its financial institution subsidiary or subsidiaries)
would have inadequate capital upon consummation of the proposed Merger,
Buyer shall make a cash payment to First Ozaukee in an amount equal to
$300,000.
<PAGE> 51
(c) In the event First Ozaukee terminates the Agreement
pursuant to Section 7.4(g), First Ozaukee shall make a cash payment to
Buyer in an amount equal to $300,000.
The cancellation fee set forth in this Section 7.6 shall be in
addition to any expenses one party is obligated to pay to the other under
Section 7.2 of this Agreement.
7.7 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given (a) when delivered personally;
(b) the second business day after being deposited in the United States
mail registered or certified (return receipt requested); (c) the first
business day after being deposited with Federal Express or any other
recognized national overnight courier service; or (d) on the business day
on which it is sent and received by facsimile, in each case to the
parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) If to Buyer or CIBAC addressed to:
J. Michael Straka
CENTRAL ILLINOIS BANCORP, INC.
2913 West Kirby Avenue
Champaign, IL 61821
Tel. No. (217) 355-0900
with a copy to:
Donald J. Straka, Esq.
BRASHEAR & GINN
800 Farnam Plaza
1623 Farnam Street
Omaha, Nebraska 68102-2106
Tel. No. (402) 348-1000
<PAGE> 52
(b) If to First Ozaukee, addressed to:
Russell S. Jones
President and Chief Executive Officer
First Ozaukee Capital Corp.
W61 N526 Washington Avenue
Cedarburg, Wisconsin 53012
Tel. No. (414) 377-0750
with a copy to:
Christopher J. Zinski, Esq.
Schiff Hardin & Waite
7200 Sears Tower
Chicago, Illinois 60606
Tel. No. (312) 258-5548
7.8 GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State
of Wisconsin, without giving effect to the conflict of laws principles
thereof.
7.9 SPECIFIC PERFORMANCE. The parties agree that there is no
adequate remedy at law for breach of the obligations contained in this
Agreement and the Plan of Merger, and agree that such obligations shall
be enforceable by specific performance and injunctive relief, without the
need to post bond, in the event of such breach.
7.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such executed counterpart will be an original
instrument.
7.11 SEVERABILITY. In the event that any provisions of this
Agreement or any portion thereof shall be finally determined to be
unlawful or unenforceable, such provision or portion thereof shall be
deemed to be severed from this Agreement, and every other provision, and
any portion of a provision, that is not invalidated by such
determination, shall remain in full force and effect. To the extent that
a provision is deemed unenforceable by virtue of its scope but may be
made enforceable by limitation thereof, such provision shall be
enforceable to the fullest extent permitted under the laws and public
policies of the State whose laws are deemed to cover enforceability. It
is declared to be the intention of the parties that they would have
executed the remaining provisions without including any that may be
declared unenforceable.
7.12 HEADINGS. Descriptive headings appearing in this Agreement are
for convenience only and will not be deemed to explain, limit or amplify
any of the provisions hereof.
<PAGE> 53
7.13 ENTIRE AGREEMENT; AMENDMENT. This Agreement, with its exhibits
and the schedules delivered pursuant to it, sets forth the entire
understanding of the parties and supersedes all prior agreements,
arrangements and communications, whether oral or written. This Agreement
may only be modified or amended by an agreement in writing signed by
Buyer and First Ozaukee.
7.14 THIRD-PARTY BENEFICIARY RIGHTS. This Agreement shall not
confer upon any party not a party hereto any rights or remedies
hereunder, except as provided in Sections 1.6, 4.16(a), 4.17 and 4.20.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year hereinabove first written.
FIRST OZAUKEE CAPITAL CORP.
By: /s/ Russell S. Jones
--------------------------------
Title: President and CEO
CENTRAL ILLINOIS BANCORP, INC.
By: /s/ J. Michael Straka
--------------------------------
Title: President and CEO
<PAGE> 54
Exhibit A
PLAN OF MERGER
BETWEEN
CIB ACQUISITION CORP.
AND
FIRST OZAUKEE CAPITAL CORP.
UNDER THE ARTICLES OF INCORPORATION OF
FIRST OZAUKEE CAPITAL CORP.
This Plan of Merger (this "Plan") is made and entered into this
_____ day of __________, 1997, by and between CIB ACQUISITION CORP.
(hereinafter called "CIBAC") and First Ozaukee CAPITAL CORP. (hereinafter
called "First Ozaukee" or, where appropriate, the "Resulting
Corporation").
RECITALS
A. CIBAC is a corporation duly organized and existing under the
laws of the State of Wisconsin. As of the date of consummation of the
merger, CIBAC will have capital stock outstanding of $______________,
consisting of _______ shares of common stock with a par value of $___ per
share, surplus of $___________, and a minimum reserve for operating
expenses of $_____________.
B. First Ozaukee is a corporation duly organized and existing
under the laws of the State of Wisconsin. The authorized capital stock
of First Ozaukee consists of 4,000,000 shares of common stock, $1.00 par
value per share, of which 627,477 shares are issued and outstanding and
2,000,000 shares of preferred stock, $1.00 par value per share, of which
no shares are issued and outstanding.
C. Pursuant to an Agreement and Plan of Reorganization, dated as
of April 25, 1997 (the "Agreement and Plan of Reorganization"), between
First Ozaukee and Central Illinois Bancorp., Inc., an Illinois
corporation (the "Buyer"), Buyer has agreed to acquire through CIBAC, its
wholly-owned subsidiary, all of the issued and outstanding shares of
common stock of First Ozaukee in accordance with the terms and conditions
set forth therein and herein.
D. The Resulting Corporation will have capital stock outstanding
of $________, divided into _______ shares of issued and outstanding
common stock, $___ par value per share, surplus of $____, and undivided
profits and reserves (based upon the _______________, 1997, reports of
condition and income of the merging corporations) of approximately
$________. Attached as SCHEDULE I and made a part hereof is a detailed
pro forma financial statement, based upon ______________, 1997, reports
of condition and income of the merging corporations, showing the assets
and liabilities of the Resulting Corporation after the proposed merger.
<PAGE> 55
E. The board of directors of each of CIBAC and First Ozaukee (the
"Merging Corporations") deem it advisable to merge the Merging
Corporations under the Articles of Incorporation of First Ozaukee and the
name of "First Ozaukee Capital Corp.," subject to the terms and
conditions set forth in this Agreement and in accordance with applicable
laws of the United States and the State of Wisconsin. A majority of the
board of directors of each of the Merging Corporations has approved such
merger (the "Merger") and authorized the execution and adoption of this
Plan.
NOW THEREFORE, in consideration of the premises and of the
agreements, covenants and conditions hereinafter contained, the Merging
Corporations agree as follows:
ARTICLE I
THE MERGER
1.1 RESULTING CORPORATION. Subject to the terms and conditions set
forth herein, CIBAC shall be merged into, and under the Articles of
Incorporation of, First Ozaukee pursuant to the provisions of, and with
the effect provided in, the Wisconsin Business Corporation Law, and First
Ozaukee shall be the corporation resulting from such merger (the
"Resulting Corporation"). The name of the Resulting Corporation shall be
"First Ozaukee Capital Corp." and the present designated corporate
headquarters of First Ozaukee at W61 N526 Washington Avenue, Cedarburg,
Wisconsin shall be the designated headquarters of the Resulting
Corporation.
1.2 EFFECTIVE TIME. As soon as is reasonably practicable after the
date hereof, this Plan shall be submitted to the Wisconsin Department of
Financial Institutions as part of the Articles of Merger, pursuant to
Section 180.1105 of the WBCL. This Plan (or an unexecuted form of this
Plan) also shall be submitted to the shareholders of each of the Merging
Corporations for approval and adoption of the Merger as provided for by
Section 180.1103 of the WBCL. The Merger shall become effective on the
date on which the Articles of Merger become effective (the "Effective
Time") pursuant to Section 180.1105(2) of the WBCL.
1.3 ARTICLES OF INCORPORATION. The Articles of Incorporation of
First Ozaukee as in effect immediately prior to the Effective Time, shall
be the Articles of Incorporation of the Resulting Corporation.
1.4 BY-LAWS. The By-Laws of First Ozaukee, as in effect as of the
Effective Time, shall be the By-Laws of the Resulting Corporation until
the same shall be thereafter altered, amended or repealed in accordance
with said By-Laws, the Articles of Incorporation of the Resulting
Corporation, and applicable law.
<PAGE 56>
1.5 DIRECTORS AND OFFICERS. As of the Effective Time, the
directors of the Resulting Corporation shall consist of the following
persons:
[LIST DIRECTORS OF RESULTING CORPORATION]
As of the Effective Time, the officers of the Resulting Corporation shall
consist of the following persons:
[LIST OFFICERS OF RESULTING CORPORATION]
ARTICLE II
EFFECT OF MERGER
2.1 CORPORATE EXISTENCE. As of the Effective Time, the corporate
existences of each of the Merging Corporations shall, with the full
effect provided for in the WBCL, be merged into and continued in the
Resulting Corporation under the Articles of Incorporation of First
Ozaukee. The Resulting Corporation shall be considered the same business
and corporate entity as each of the Merging Corporations, with all the
property, rights, powers, duties and obligations of each of the Merging
Corporations except as affected by the laws of the State of Wisconsin and
by the Articles of Incorporation and By-Laws of the Resulting
Corporation. The separate existence of CIBAC shall cease except to the
extent provided by applicable law.
2.2 RIGHTS AND LIABILITIES OF THE RESULTING CORPORATION. The
Resulting Corporation shall be liable for all liabilities of each of the
Merging Corporations, and all rights, franchises and interests of each of
the Merging Corporations in and to every species of property, real,
personal and mixed, and chooses in action thereunto belonging, shall be
deemed to be transferred to and vested in the Resulting Corporation
without any deed or other transfer, and the Resulting Corporation,
without any order or other action on the part of any court or otherwise,
shall hold and enjoy the same and all rights of property, franchises, and
interests, including appointments, designations and nominations and all
other rights and interests as trustee, executor, administrator, registrar
or transfer agent of stocks and bonds, guardian, assignee, receiver, and
in every other fiduciary capacity, in the same manner and to the same
extent as such rights of property, franchises and interests were held and
enjoyed by each of the Merging Corporations. Any reference to any of the
Merging Corporations in any writing, whether executed or taking effect
before or after the Merger, shall be deemed a reference to the Resulting
Corporation if not inconsistent with the other provisions of such
writing.
2.3 EFFECTIVENESS OF PRIOR CORPORATE ACTS AND AUTHORIZATIONS. All
corporate acts, plans, policies, contracts, approvals and
<PAGE> 57
authorizations of each of the Merging Corporations, their respective
shareholders, boards of directors, committees elected or appointed by
their boards of directors, officers and agents, which were valid and
effective immediately prior to the Effective Time, shall be taken for all
purposes as the acts, plans, policies, contracts, approvals and
authorizations of the Resulting Corporation and shall be as effective and
binding thereon as the same were with respect to any of the Merging
Corporations.
ARTICLE III
TREATMENT OF AND PAYMENT FOR STOCK
3.1 TREATMENT OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of the holders of such shares
of stock,
(a) each share of common stock, $____ par value per share, of
CIBAC issued and outstanding immediately prior to the Effective Time
shall be converted into one validly issued, fully-paid and nonassessable
share of the common stock of First Ozaukee.
(b) each share of common stock, $1.00 par value per share, of
First Ozaukee ("First Ozaukee Share") issued and outstanding immediately
prior to the Effective Time, other than First Ozaukee Shares, the holders
of which have validly demanded appraisal of such shares pursuant to
Subchapter XIII of the WBCL and shall not have voted such shares in favor
of the Merger, and First Ozaukee Shares that are owned by Buyer
immediately prior to the Merger, shall be converted into the right to
receive $15.10 in cash as may be adjusted as of the Effective Time
pursuant to Section 1.2 of the Agreement and Plan of Reorganization (the
"Merger Price").
(c) Each holder of an option pursuant to the First Ozaukee
Capital Corp. 1995 Stock Option Plan (the "First Ozaukee Option Plan")
outstanding on the date hereof and remaining outstanding at the Effective
Time shall receive from Buyer, as of the Effective Time, whether or not
the option is then exercisable, a cash payment in an amount equal to the
product of (i) the number of First Ozaukee Shares subject to such option
at the Effective Time, and (ii) the excess, if any, of the Merger Price
MINUS the exercise price per share of such option, net of any cash which
must be withheld under federal and state income and employment tax
requirements. Such cash payments shall be in consideration of, and shall
result in, the settlement and cancellation of all such options. As a
condition to the receipt of a cash payment in cancellation of all such
options, each option holder shall execute a cancellation agreement in
form and substance reasonably satisfactory to Buyer.
<PAGE> 58
(d) Until surrendered, certificates representing First Ozaukee
Shares will represent only the right to receive payment of the Merger
Price hereunder, without interest, and no holder of any such certificates
shall have any further rights as a shareholder of First Ozaukee.
3.2 MANNER OF EXCHANGE. Upon surrender to the paying agent as
designated by Buyer of certificates representing shares of capital stock
of First Ozaukee, the holder of such option or shares shall be paid by
check the amount to which such holder is entitled pursuant to Section 3.1
hereof.
3.3 DISSENTERS' RIGHTS. Any shareholder of First Ozaukee who
(i) files written objection to the Merger prior to or at the meeting of
shareholders of First Ozaukee at which this Plan is submitted to a vote,
(ii) does not vote in favor of the Merger at such meeting, and
(iii) makes written payment demand on the Resulting Corporation not fewer
than thirty (30) nor more than sixty (60) days after the date on which
the Resulting Corporation delivered a written dissenters' notice to the
dissenting shareholder, shall be entitled to receive from the Resulting
Corporation the fair value of the shares held by such shareholder,
subject to and in accordance with the provisions of the WBCL, provided
such shareholder shall have complied with all applicable provisions of
law.
3.4 CONDITIONS PRECEDENT. Effectuation of the Merger herein
provided for is conditioned upon:
(a) approval of this Plan and the Merger by all governmental
and regulatory authorities and agencies with jurisdiction over this
transaction; and
(b) approval of this Plan by vote of the shareholders of CIBAC
and First Ozaukee as required by law; and
(c) procurement of all other consents and approvals, and
satisfaction of all other requirements prescribed by law, which are
necessary for consummation of the Merger.
ARTICLE IV
GENERAL PROVISIONS
4.1 POST-MERGER AGREEMENTS. Each of the Merging Corporations
hereby appoints the Resulting Corporation to be its true and lawful
attorney for the purpose of taking, in its name, place and stead, any and
all actions that the Resulting Corporation deems necessary or advisable
to vest in the Resulting Corporation title to all property or rights of
each of the Merging Corporations or otherwise to effect the purposes of
this Agreement, and each of the Merging Corporations
<PAGE> 59
hereby grants to said attorney full power and authority to take all
actions necessary to effect those purposes, including the power to
execute, in its name, place and stead, such further assignments or
assurances in law necessary or advisable to vest in the Resulting
Corporation title to all property and rights of each of the Merging
Corporations.
4.2 TERMINATION. Anything herein to the contrary notwithstanding,
in the event the Agreement and Plan of Reorganization shall have been
terminated pursuant to Section 7.4 thereof, this Plan shall automatically
terminate.
4.3 AMENDMENT. This Plan may not be amended except by an
instrument in writing signed on behalf of each of the Merging
Corporations; provided, however that after this Plan has been approved by
the shareholders of the Merging Corporations, no such amendment shall
affect the rights of such shareholders in a manner which is materially
adverse to the interests of such shareholders.
4.4 CAPTIONS. The captions in this Plan have been inserted for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Plan.
4.5 COUNTERPARTS. This Plan may be executed in any number of
counterparts, each of which when so executed shall constitute an
original, but all of which together shall constitute one and the same
instrument.
<PAGE 60>
IN WITNESS WHEREOF, each of the Merging Corporations has caused this
Plan to be executed by its duly authorized officers and its corporate
seal to be affixed hereto as of the date first above written.
CIB ACQUISITION CORP.
By:
-------------------------------------
Its
-------------------------------------
Attest:
By:----------------------
FIRST OZAUKEE CAPITAL CORP.
By:
-------------------------------------
Its
-------------------------------------
Attest:
By:----------------------
<PAGE> 61
Exhibit B
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is effective as of ___________, 1997 (the
"Commencement Date") among Central Illinois Bancorp, Inc., an Illinois
corporation ("Buyer"), CIB Acquisition Corp., a Wisconsin corporation
(CIBAC), First Ozaukee Capital Corp., a Wisconsin corporation ("First
Ozaukee"), and First Ozaukee Savings Bank, a Wisconsin state-chartered
savings bank ("FOSB") and their successors and assigns (collectively, the
"Successor Corporation"), and Russell S. Jones (the "Consultant").
RECITALS
WHEREAS, pursuant to that certain Agreement and Plan of
Reorganization (the "Plan") between Buyer and First Ozaukee dated as of
April 25, 1997, Buyer is acquiring, through merger, First Ozaukee
effective ________________, 1997 (the "Merger Date"); and
WHEREAS, the Plan provides that, as a condition precedent to the
obligations of the parties to carry out the transactions referred to
therein, the Successor Corporation and the Consultant shall enter into
this Agreement; and
WHEREAS, Consultant's extensive background, knowledge and experience
in the financial services industry will substantially benefit Buyer; and
WHEREAS, the parties are mutually desirous of entering into this
Agreement setting forth the terms and conditions for the independent
contractor relationship between Successor Corporation and Consultant; and
WHEREAS, the Boards of Directors of Buyer, First Ozaukee and FOSB
have approved and authorized this Agreement with Consultant;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth below:
1. CONSULTING SERVICES. For a term of twenty-four (24) months,
commencing on the Merger Date and ending on the second annual anniversary
thereof ("Consulting Term"), the Consultant agrees to consult with and
advise Successor Corporation, from time to time, subject to the
Consultant's other duties and commitments.
2. POSITION AND DUTIES. Consultant's responsibilities shall be
limited to performing consulting services for Successor Corporation for
the Consulting Term, consisting of assisting with the integration of
First Ozaukee and FOSB with Buyer's business and operations, management,
corporate and financial consulting and such related projects as may from
time to time be assigned by Buyer, and which are consistent with the
<PAGE> 62
Consultant's skills and duties. It is understood that Consultant will not
be an employee of Successor Corporation, but only an independent contractor
following the Merger Date.
Consulting services required by Successor Corporation under this
Section shall not exceed 80 hours in any month. Consultant shall not be
entitled to participate in, and specifically waives any right to
participate in, any retirement and welfare benefit plans and programs
maintained by the Successor Corporation or Buyer. The Successor
Corporation shall provide Consultant with adequate equipment, supplies,
office space or secretarial assistance required to perform the consulting
services requested by Successor Corporation under this Section.
4. COMPENSATION. As compensation for consulting services provided
pursuant to this Agreement, Consultant shall receive from FOSB the
compensation and benefits set forth below:
(i) COMPENSATION. During the Consulting Term, FOSB shall pay
Consultant compensation ("Compensation") in the amount of $168,000 for
the term of this Agreement. Consultant's Compensation shall be paid in
equal monthly installments, with the first payment due 30 days after the
Merger Date. All subsequent payments shall be due on the same day of
each successive month.
(ii) OTHER BENEFITS. FOSB shall pay Consultant Three Hundred
Fifteen Dollars ($315.00) ($240.00 allocated to Mrs. Jones and $75.00
allocated to Consultant) per month for 48 consecutive months following
the Closing Date and One Hundred Fifty Dollars ($150.00) ($75.00
allocated to Mrs. Jones and $75.00 allocated to Consultant) per month
thereafter until Consultant attains age 80, as reimbursement for the
purchase of primary and/or supplemental health insurance coverage. In
the event that Consultant becomes deceased prior to attaining age 80, or
Mrs. Jones becomes deceased prior to Consultant attaining age 80, the
allocated portion of the payments provided herein shall cease with
respect to the deceased. FOSB shall have no further obligation to make
any payments as provided herein to Consultant or Mrs. Jones for the
purchase of primary and/or supplemental health insurance coverage after
Mr. Jones attains age 80.
Nothing contained herein shall be construed as granting
Consultant the right to continue or participate in any benefit plan or
program, or to receive any other perquisite of employment provided under
Consultant's employment with First Ozaukee or FOSB (except to the extent
Consultant had previously earned or accumulated vested rights therein)
following termination or discontinuance of such plan, program or
perquisite by the Board. Notwithstanding anything to the contrary
herein, Successor Corporation shall have no obligation to
<PAGE> 63
Consultant or Mrs. Jones under the First Ozaukee post-retirement welfare
benefit program.
5. TERMINATION. This Agreement may be terminated, subject to
payment of the Compensation and other benefits described above, upon
occurrence of any of the events described herein. In case of such
termination, the date on which Consultant ceases to provide services
under this Agreement, after giving effect to any prior notice requirement
is referred to as the "Termination Date".
(i) DEATH; DISABILITY. This Agreement shall terminate upon the
death or disability of Consultant. As used in this Agreement,
"disability" shall mean Consultant's inability, as the result of physical
or mental incapacity, to substantially perform his duties with the
Successor Corporation for a period of 180 consecutive days. Any question
as to the existence of Consultant's disability upon which Consultant and
the Successor Corporation cannot agree shall be determined by a qualified
independent physician mutually agreeable to Consultant and the Successor
Corporation or, if the parties are unable to agree upon a physician
within ten (10) days after notice from either to the other suggesting a
physician, by a physician designated by the then president of the medical
society for the county in which Consultant maintains his principal
residence. The costs of any such medical examination shall be borne by
the Successor Corporation.
If Consultant is terminated due to disability, he shall be paid
75% of his Compensation at the rate in effect at the time notice of
termination is given for any remaining portion of the Consulting Term,
such amounts to be paid in substantially equal monthly installments and
offset by any monthly payments actually received by Consultant during
such payment period from (i) any disability plans and/or (ii) any
governmental social security or workers compensation program.
(ii) TERMINATION BY SUCCESSOR CORPORATION. The Successor
Corporation may terminate Consultant's consulting services under this
Agreement without cause at any time, and thereafter FOSB's obligations
under this Agreement shall cease and terminate, except that Consultant
shall receive all Compensation and other benefits which he would have
otherwise received under Section 4 hereof. Successor Corporation may
terminate Consultant at any time for cause. For purposes of this
Agreement, "Cause" shall mean:
(A) The willful failure by Employee to substantially perform
her duties with FOSB (other than any such failure resulting from the
Employee's incapacity due to physical or mental illness) after a written
demand for substantial performance is delivered to Employee by the Board,
which demand specifically identifies the manner in which the Board believes
Employee has not substantially performed her duties;
<PAGE> 64
(B) Any willful act of misconduct by Employee which is
materially injurious to FOSB monetarily or otherwise;
(C) A criminal conviction of Employee for any act involving
dishonesty, breach of trust or a violation of the banking or savings and
loan laws of the United States;
(D) A criminal conviction of Employee for the commission of any
felony;
(E) A breach of fiduciary duty involving personal profit;
(F) A willful violation of any law, rule or regulation or final
cease and desist order;
(G) Incompetence, personal dishonesty or material breach of any
provision of this Agreement which would have a material adverse effect on
FOSB; or
(H) Suspension, removal, and/or prohibition (whether temporary
or permanent) from participating in the conduct of FOSB's affairs by a
notice served under Sections 8(e)(3), 8(e)(4) or Section 8(g)(1), of the
Federal Deposit Insurance Act [12 U.S.C. <section> 1818(e)(3),(4) and
(g)(1) or, if FOSB is in default as defined in section 3(x)(1) of the
Federal Deposit Insurance Act [12 U.S.C. <section> 1813(x)(1)], except to
the extent determined that continuation of the contract is necessary for
the continued operation of FOSB (i) by the commissioner, at the time the
FDIC enters into an agreement to provide assistance to or on behalf of
FOSB under 13(c) of the Federal Deposit Insurance Act; or (ii) by the
commissioner at the time the office approves a supervisory merger to
resolve problems related to the operation of FOSB or when FOSB is
determined by the commissioner to be in an unsafe or unsound condition.
In the event Consultant is terminated for cause, Successor
Corporation's obligations under this Agreement shall cease and terminate
except for the benefits set forth in Section 4(ii) hereof.
(iii) VOLUNTARY TERMINATION BY CONSULTANT. Consultant may
voluntarily terminate his consulting services under this Agreement at any
time by giving at least ninety (90) days prior written notice to the
Successor Corporation. In such event, no additional compensation shall
be payable to Consultant under this Agreement. Notwithstanding anything
to the contrary contained in this Section 5(iii), Consultant shall
receive all other benefits to which he was otherwise entitled under
Section 4(ii).
<PAGE> 65
6. RELEASE AND INDEMNIFICATION. In consideration for this
Consulting Agreement, Consultant and Mrs. Jones, their heirs, legal
representatives, estates and assigns, and anyone claiming through or
under them or any of them, hereby release and forever discharge Buyer,
CIBAC, FOSB, First Ozaukee and Successor Corporation, and their officers,
directors, employees, agents, legal representatives, affiliates,
subsidiaries, divisions, shareholders, successor and assigns (Released
Parties), of and from all manner of actions, causes of actions, debts,
dues, liabilities, controversies, claims or demands of every kind and
nature whatsoever, including but not limited to all claims or actions
relating to: the non-hiring of Consultant by Successor Corporation; any
breach of an actual or implied contract of employment between Consultant
and Successor Corporation; or any claim to a property or other interest
in employment with Successor Corporation; or any claim of unjust or
tortious discharge (including a claim of fraud, negligence or intentional
or negligent infliction of emotional distress); or any claim or violation
of any constitutional right; or any claim in violation of any statutory
or common law right to privacy; or any claim of defamation, liable or
slander; any violation of Wisconsin statutory law relating to employment
situations; or the Age Discrimination and Employment Act, 29 U.S.C.
<section> 621 ET. SEQ.; or the Rehabilitation Act of 1973, as amended (29
U.S.C. <section> 701 ET. SEQ.; or 42 U.S.C. <section> 1981; or of the
Civil Rights Act of 1964, as amended, 42 U.S.C. <section> 2000(e) ET.
SEQ.; or <section> 301 of the Labor-Management Relations Act, 29 U.S.C.
<section> 185; or Employment Retirement Income Security Act of 1974; or
Family and Medical Leave Act of 1993; or pay, back pay, insurance or
welfare benefits, or any other benefits of employment by FOSB, First
Ozaukee, CIBAC or Successor Corporation, and whether known or unknown,
which Consultant and/or Mrs. Jones ever had or may now have against such
parties for or by reason of or in respect to any act, cause, matter, or
thing which may have arisen at any time. Consultant and Mrs. Jones
understand and agree that they may not bring any grievance, charge,
complaint or lawsuit against the Released Parties for any reason whether
or not specifically stated in the preceding sentence. The foregoing
Release and Indemnity shall be of no force and effect with regard to the
terms of this Agreement. Consultant and Mrs. Jones state that they have
read this Section of this Agreement, that they have had the opportunity
to confer with counsel of their choice with regard to the meaning of this
Section and that they understand the meaning of this Section.
7. CANCELLATION OF PRIOR AGREEMENTS. Any and all commitments,
agreements and contracts between FOSB and Consultant, whether express,
implied, oral or in writing, specifically including but not limited to
that certain agreement between FOSB and Consultant effective October 15,
1996 relating in any way to the terms and conditions of Consultant's
employment including, but not limited to, the right to any compensation
(whether severance or otherwise) and other benefits to which Consultant
<PAGE> 66
may be entitled are hereby cancelled. This Agreement supersedes any
and all prior agreements relating to the terms and conditions of
Consultant's employment except that nothing herein shall affect
Consultant's right to receive the vested benefits he is entitled
pursuant to the termination of the First Ozaukee ESOP Plan, First Ozaukee
Option Plan, First Ozaukee Management Incentive Plan and First Ozaukee
Money Purchase Plan pursuant to the Plan.
8. GENERAL PROVISIONS.
(i) SUCCESSORS; BINDING AGREEMENT.
(A) Successor Corporation will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of Successor
Corporation ("successor organization") to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Successor Corporation would have been required to perform if no such
succession had taken place.
(B) No right or interest to or in any payments or benefits
under this agreement shall be assignable or transferable in any respect
by the Consultant.
(C) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by Consultant and his heirs, beneficiaries
and personal representatives and the Successor Corporation and any
successor organization.
(ii) NONCOMPETITION PROVISION. Consultant acknowledges that
the development of personal contacts and relationships is an essential
element of the savings and loan business, that FOSB has invested
considerable time and money in his development of such contacts and
relationships, that FOSB and Successor Corporation could suffer
irreparable harm if he were to solicit the business of FOSB customers,
and that it is reasonable to protect FOSB against competitive activities
by Consultant. Consultant covenants and agrees, in recognition of the
foregoing and in consideration of the mutual promises contained herein,
that in the event of the termination of this Agreement for any reason,
Consultant will not accept employment with or provide consulting services
to any Significant Competitor of FOSB and Successor Corporation for a
period of thirty-six (36) months following such termination. For
purposes of this Agreement, the term Significant Competitor means any
financial institution including, but not limited to, any commercial bank,
savings bank, savings and loan association, credit union, or mortgage
banking corporation which at the time of termination of Consultant's
relationship with FOSB, or during the period of this covenant not to
compete, has a home, branch or other office in any county in which FOSB has
an office or which has, during the twelve (12) months preceding Consultant's
<PAGE> 67
termination, originated, or which during the period of this covenant not
to compete originates, more than $500,000 in commercial or mortgage loans
secured by real property in any such county.
Consultant agrees that the non-competition provisions set forth
herein are necessary for the protection of FOSB and Successor Corporation
and are reasonably limited as to (i) the scope of activities affected,
(ii) their duration and geographic scope, and (iii) their effect on
Consultant and the public. In the event Consultant violates the non-
competition provisions set forth herein, Successor Corporation shall be
entitled, in addition to its other legal remedies, to enjoin the
employment or consulting relationship of Consultant with any Significant
Competitor for the period set forth herein. If Consultant violates this
covenant and FOSB brings legal action for injunctive or other relief,
FOSB shall not, as a result of the time involved in obtaining such
relief, be deprived of the benefit of the full period of the restrictive
covenant. Accordingly, the covenant shall be deemed to have the duration
specified herein, computed from the date such relief is granted, but
reduced by any period between commencement of the period and the date of
the first violation. In addition to such other relief as may be awarded,
if FOSB is the prevailing party it shall be entitled to reimbursement for
all reasonable costs, including attorneys' fees, incurred in enforcing
its rights hereunder.
(iii) NOTICE. For purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered or
mailed by United States registered mail, return receipt requested,
postage prepaid, addressed as follows:
If to Successor Corporation:
J. Michael Straka
Central Illinois Bancorp, Inc.
2913 West Kirby Avenue
Champaign, Illinois 61821
Tel. No. (217) 355-0900
or if to Consultant, at the address set forth below:
Mr. Russell S. Jones
4900 Blueberry Road
Fredonia, Wisconsin 53021
Tel. No. (414) 692-9861
<PAGE> 68
or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
(iv) EXPENSES. If any legal proceeding is necessary to
enforce or interpret the terms of this Agreement, or to recover damages for
breach of it, the prevailing party shall be entitled to recover from the
other party reasonable attorneys' fees and necessary costs and
disbursements incurred in such litigation, in addition to any other
relief to which such prevailing party may be entitled.
(v) WITHHOLDING. Successor Corporation shall be entitled
to withhold from amounts to be paid to Consultant under this Agreement any
federal, state, or local withholding or other taxes or charges which it
is from time to time required to withhold. The Successor Corporation
shall be entitled to rely on an opinion of counsel if any question as to
the amount or requirement of any such withholding shall arise.
(vi) MISCELLANEOUS. No provision of this Agreement may be
amended, waived or discharged unless such amendment, waiver of discharge
is agreed to in writing and signed by Consultant and such officers of
Buyer or Successor Corporation as may be specifically designated by the
Boards thereof. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by either party which are not
expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the
laws of the State of Wisconsin.
(vii) VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
(viii) COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which together will constitute one and the
same instrument.
(ix) HEADINGS. Headings contained in this Agreement are for
reference only and shall not affect the meaning or interpretation of any
provision of this Agreement.
<PAGE> 69
(x) EFFECTIVE DATE. The effective date of this Agreement shall
be the date indicated in the first section of this Agreement,
notwithstanding the actual date of execution by any party.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the date first above written.
CONSULTANT
-----------------------------------------
Russell S. Jones
4900 Blueberry Road
Fredonia, Wisconsin 53021
-----------------------------------------
Maija Jones
4900 Blueberry Road
Fredonia, Wisconsin 53021
<PAGE> 70
CENTRAL ILLINOIS BANCORP, INC.
By:
--------------------------------------
Its:
-------------------------------------
CIB ACQUISITION CORP.
By:
--------------------------------------
Its:
-------------------------------------
FIRST OZAUKEE CAPITAL CORP.
By:
--------------------------------------
Its:
-------------------------------------
FIRST OZAUKEE SAVINGS BANK
By:
--------------------------------------
Its:
-------------------------------------
<PAGE> 71
ACKNOWLEDGMENT
I, Maija Jones, have executed this Consulting Agreement as of the
date first above written and hereby acknowledge consent and agree to the
releases provided pursuant to section 6 hereof, which provision shall be
liberally construed to include any and all claims that I have or may have
under the marital and community property laws of the State of Wisconsin.
-----------------------------------------
Maija Jones
4900 Blueberry Road
Fredonia, Wisconsin 53021
<PAGE> 72
Exhibit C
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is effective as of ____________, 1997 (the
"Commencement Date") among Central Illinois Bancorp., Inc., an Illinois
corporation ("Buyer"), CIB Acquisition Corp., a Wisconsin corporation
(CIBAC), First Ozaukee Capital Corp., a Wisconsin corporation ("First
Ozaukee"), First Ozaukee Savings Bank, a Wisconsin state-chartered
savings bank ("FOSB"), and their successors and assigns (collectively,
the "Successor Corporation") and Mary E. Lammers (the "Employee").
RECITALS
WHEREAS, Employee served as Secretary of First Ozaukee and Vice
President of FOSB prior to the acquisition through merger of First
Ozaukee by Buyer effective _________, 1997; and
WHEREAS, Employee is a key employee, whose extensive background,
knowledge and experience in the financial services industry have
substantially benefitted FOSB and whose continued employment as a member
of its management team in the position of Vice President ("Corporate
Position") will continue to benefit FOSB in the future; and
WHEREAS, pursuant to that certain Agreement and Plan of
Reorganization (the "Plan") between Buyer and First Ozaukee dated as of
April 25, 1997, Buyer is acquiring through merger, First Ozaukee
effective , 1997 (the "Merger Date") and Buyer is desirous of
Employee continuing her employment with FOSB after the Merger Date; and
WHEREAS, Employee is desirous of continuing her employment with FOSB
after the Merger Date; and
WHEREAS, the Plan provides that, as a condition precedent to the
obligations of the parties to carry out the transactions referred to
therein, the Successor Corporation and the Employee shall enter into this
Agreement; and
WHEREAS, the parties are mutually desirous of entering into this
Agreement setting forth the terms and conditions for the employment
relationship between Successor Corporation and Employee; and
WHEREAS, the Boards of Directors of Buyer and FOSB have approved and
authorized this Agreement with Employee.
<PAGE> 73
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth below:
1. EMPLOYMENT. FOSB shall continue to employ Employee, and
Employee shall continue to serve FOSB, on the terms and conditions set
forth in this Agreement, for the period set forth in section 2 of this
Agreement.
2. TERM OF EMPLOYMENT. The period of Employee's employment under
this Agreement shall begin as of the Commencement Date and expire on the
first anniversary of the first day of the month following such date,
unless sooner terminated as provided herein. The term of employment as
in effect from time to time hereunder shall be referred to as the
"Employment Term".
3. POSITION AND DUTIES. Subject to Section 5 (iv) (B), Employee
shall serve FOSB as its Vice President and shall render executive,
policy-making and other management services of the type customarily
performed by persons serving in similar capacities at other affiliates of
Buyer, together with such other duties and responsibilities as may be
from time to time determined by FOSB's or Buyer's Board of Directors.
4. COMPENSATION. As compensation for services provided pursuant to
this Agreement, Employee shall receive from FOSB the compensation and
benefits set forth below:
(i) BASE SALARY. During the Employment Term, Employee shall
receive a base salary ("Base Salary") in such amount as may from time to
time be approved by the Board. The Base Salary shall at no time be less
than $45,250 per annum. Employee's Base Salary under this Agreement for
the employment term shall not thereafter be reduced except as part of a
general pro-rata reduction in compensation applicable to all FOSB
Executive Officers. Employee's Base Salary and other compensation shall
be paid in accordance with Successor Corporation's regular payroll
practices, as then in effect and as may be changed from time to time by
Buyer. Buyer may, at its sole discretion, increase the Base Salary of
Employee.
(ii) OTHER BENEFITS. During the Employment Term, FOSB shall
provide or make available to Employee all other benefits of employment
generally made available to other Officers of similar stature of Buyer.
Such benefits shall include participation by Employee in any bonus
programs, group health, other benefit programs, Employee Stock Ownership
Plan ("ESOP"), 401(k) or other similar retirement programs consistent
with the terms, provisions and eligibility requirements thereof.
<PAGE> 74
Employee shall be entitled to vacation, sick time and personal
days in the same manner and to the same extent as provided under Buyer's
policies as in effect from time to time for its other Officers of similar
stature.
Nothing contained herein shall be construed as granting
Employee the right to continue in any benefit plan or program, or to
receive any other perquisite of employment provided under this paragraph
4 (ii) (except to the extent Employee had previously earned or
accumulated vested rights therein) following termination or
discontinuance of such plan, program or perquisite by the Board.
5. TERMINATION. This Agreement may be terminated, subject to
payment of the compensation and other benefits described below, upon
occurrence of any of the events described herein. In case of such
termination, the date on which Employee ceases to be employed under this
Agreement, after giving effect to any prior notice requirement set forth
below, is referred to as the "Termination Date".
(i) DEATH; DISABILITY. This Agreement shall terminate upon the
death or disability of Employee and no additional compensation shall be
payable to Employee under this Agreement except as to any other benefit
in which she was vested or to which she was otherwise entitled under
Section 4. As used in this Agreement, "disability" shall mean Employee's
inability, as the result of physical or mental incapacity, to
substantially perform her duties with FOSB for a period of 180
consecutive days. Any question as to the existence of Employee's
disability upon which Employee and FOSB cannot agree shall be determined
by a qualified independent physician mutually agreeable to Employee and
FOSB or, if the parties are unable to agree upon a physician within ten
(10) days after notice from either to the other suggesting a physician,
by a physician designated by the then president of the medical society
for the county in which Employee maintains her principal residence. The
costs of any such medical examination shall be borne by FOSB. If
Employee is terminated due to disability, she shall be paid 75% of her
Base Salary at the rate in effect at the time notice of termination is
given for any remaining portion of the Employment Term, such amounts to
be paid in substantially equal monthly installments and offset by any
monthly payments actually received by Employee during such payment period
from (i) any disability plans and/or (ii) any governmental social
security or workers' compensation program.
(ii) CAUSE. Successor Corporation may terminate Employee's
employment under this Agreement for cause at any time, and thereafter
FOSB's obligations under this Agreement shall cease and terminate, except
as to any other benefits in which she was vested or to which she was
otherwise entitled under Section 4, and the plans and programs
<PAGE> 75
provided therein, by reason of employment through the Termination Date.
For purposes of this Agreement, "Cause" shall mean:
(A) The willful failure by Employee to substantially perform
her duties with FOSB (other than any such failure resulting from the
Employee's incapacity due to physical or mental illness) after a written
demand for substantial performance is delivered to Employee by the Board,
which demand specifically identifies the manner in which the Board
believes Employee has not substantially performed her duties;
(B) Any willful act of misconduct by Employee which is
materially injurious to FOSB monetarily or otherwise;
(C) A criminal conviction of Employee for any act involving
dishonesty, breach of trust or a violation of the banking or savings and
loan laws of the United States;
(D) A criminal conviction of Employee for the commission of
any felony;
(E) A breach of fiduciary duty involving personal profit;
(F) A willful violation of any law, rule or regulation or
final cease and desist order;
(G) Incompetence, personal dishonesty or material breach of
any provision of this Agreement which would have a material adverse
effect on FOSB; or
(H) Suspension, removal, and/or prohibition (whether temporary
or permanent) from participating in the conduct of FOSB's affairs by a
notice served under Sections 8(e)(3), 8(e)(4) or Section 8(g)(1), of the
Federal Deposit Insurance Act [12 U.S.C. <section> 1818(e)(3),(4) and
(g)(1) or, if FOSB is in default as defined in section 3(x)(1) of the
Federal Deposit Insurance Act [12 U.S.C. <section> 1813(x)(1)], except to
the extent determined that continuation of the contract is necessary for
the continued operation of FOSB (i) by the commissioner, at the time the
FDIC enters into an agreement to provide assistance to or on behalf of
FOSB under 13(c) of the Federal Deposit Insurance Act; or (ii) by the
commissioner at the time the office approves a supervisory merger to
resolve problems related to the operation of FOSB or when FOSB is
determined by the commissioner to be in an unsafe or unsound condition.
For purposes of this Subsection (5) (ii), no act, or failure to
act, on Employee's part shall be deemed "willful" unless done, or
<PAGE> 76
omitted to be done, by Employee not in good faith and without reasonable
belief that the action or omission was in the best interest of Successor
Corporation.
(iii) VOLUNTARY TERMINATION BY EMPLOYEE. Employee may
voluntarily terminate her employment under this Agreement at any time by
giving at least ninety (90) days prior written notice to Successor
Corporation. In such event, Employee shall receive all compensation and
other benefits in which she was vested or to which she was otherwise
entitled under Section 4 through the date specified in such notice (the
"Termination Date"), in addition to all other benefits available to her,
if any, and to which she was vested under Successor Corporation's benefit
plans in effect on the Termination Date. Retirement by Employee shall
constitute a voluntary termination.
(iv) TERMINATION BY FOSB OTHER THAN DUE TO DEATH, DISABILITY,
FOR CAUSE, OR VOLUNTARY TERMINATION BY EMPLOYEE. If this Agreement is
terminated by FOSB for any reason other than death, disability, for cause
as set forth in Section 5(i) or (ii), or voluntary termination by
Employee then following the Termination Date:
(A) In lieu of any further salary payments to Employee for a
period subsequent to the Termination Date, Employee shall receive
Severance Pay in the amount of one (1) year's Base Salary (based on her
highest Base Salary within the three (3) years preceding her Date of
Termination) payable in accordance with Successor Corporation's normal
payroll practice and beginning with the first normal pay date following
her Date of Termination.
(B) In addition to such Base Salary payments, Employee shall
receive all other benefits in which she was vested or to which she was
otherwise entitled under Section 4 hereof and the plans and programs
provided therein by reason of employment through the Termination Date.
6. CANCELLATION OF PRIOR AGREEMENTS. Any and all commitments,
agreements and contracts, between FOSB and Employee, whether express,
implied, oral or in writing, specifically including but not limited to
that certain agreement between FOSB and Employee effective October 15,
1996, relating in any way to Employee's employment, including, but not
limited to, the right to any compensation (whether severance or
otherwise) and other benefits to which Employee may be entitled are
hereby cancelled. This Agreement supersedes any and all prior agreements
relating to the terms and conditions of Employee's employment except that
nothing herein shall effect Employee's right to receive any vested
benefits that she is entitled to receive pursuant to the Plan upon the
termination of the First Ozaukee ESOP Plan, First Ozaukee Option Plan,
First Ozaukee Management Incentive Plan and First Ozaukee Money Purchase
Plan.
<PAGE> 77
7. GENERAL PROVISIONS.
(i) SUCCESSORS; BINDING AGREEMENT.
(A) No right or interest to or in any payments or benefits
under this agreement shall be assignable or transferable in any respect
by the Employee.
(B) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by Employee and her heirs, beneficiaries
and personal representatives and Successor Corporation and any successor
organization.
(ii) NONCOMPETITION PROVISION. Employee acknowledges that the
development of personal contacts and relationships is an essential
element of the savings and loan business, that FOSB has invested
considerable time and money in her development of such contacts and
relationships, that FOSB and surviving corporation could suffer
irreparable harm il she were to leave employment and solicit the business
of FOSB customers, and that it is reasonable to protect FOSB against
competitive activities by Employee. Employee covenants and agrees, in
recognition of the foregoing and in consideration of the mutual promises
contained herein, that in the event of a voluntary termination of
employment by Employee pursuant to Section 5 (iii), or upon expiration of
this Agreement as a result of Employee's election (but not as the result
of an election by FOSB) not to continue automatic annual renewals,
Employee shall not accept employment with any Significant Competitor of
FOSB for a period of six (6) months following such termination. For
purposes of this Agreement, the term Significant Competitor means any
financial institution including, but not limited to, any commercial bank,
savings bank, savings and loan association, credit union, or mortgage
banking corporation which, at the time of termination of Employee's
employment with FOSB, or during the period of this covenant not to
compete, has a home, branch or other office in any county in which FOSB
has an office or which has, during the twelve (12) months preceding
Employee's termination, originated, or which during the period of this
covenant not to compete originates, more than $500,000 in commercial or
mortgage loans secured by real property in any such county.
Employee agrees that the non-competition provisions set forth
herein are necessary for the protection of FOSB and are reasonably
limited as to (i) the scope of activities affected, (ii) their duration
and geographic scope, and (iii) their effect on Employee and the public.
In the event Employee violates the non-competition provisions set forth
herein, FOSB shall be entitled, in addition to its other legal remedies,
to enjoin the employment of Employee with any Significant Competitor for
the period set forth
<PAGE> 78
herein. If Employee violates this covenant and FOSB brings legal action
for injunctive or other relief, FOSB shall not, as
a result of the time involved in obtaining such relief, be deprived of
the benefit of the full period of the restrictive covenant. Accordingly,
the covenant shall be deemed to have the duration specified herein,
computed from the date such relief is granted, but reduced by any period
between commencement of the period and the date of the first violation.
In addition to such other relief as may be awarded, if FOSB is the
prevailing party it shall be entitled to reimbursement for all reasonable
costs, including attorneys' fees, incurred in enforcing its rights
hereunder.
(iii) NOTICE. For purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered or
mailed by United States registered mail, return receipt requested,
postage prepaid, addressed as follows:
If to Employer:
J. Michael Straka
Central Illinois Bancorp, Inc.
2913 West Kirby Avenue
Champaign, Illinois 61821
Tel. No. (217) 355-0900
or if to Employee, at the address set forth below:
Ms. Mary E. Lammers
N28W6284 Alyce St #134
Cedarburg, Wisconsin 53012
Tel. No. (414) 377-9814
or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
(iv) WITHHOLDING. FOSB shall be entitled to withhold from
amounts to be paid to Employee under this Agreement any federal, state,
or local withholding or other taxes of charges which it is from time to
time required to withhold. FOSB shall be entitled to rely on an opinion
of counsel if any question as to the amount or requirement of any such
withholding shall arise.
(v) MISCELLANEOUS. No provision of this Agreement may be
amended, waived or discharged unless such amendment, waiver or discharge
is agreed to in writing and signed by Employee and such officers of
Successor Corporation as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach
<PAGE> 79
by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by either party which are not
expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the
laws of the State of Wisconsin.
(vi) VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
(vii) COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which together will constitute one and the
same instrument.
(viii) HEADINGS. Headings contained in this Agreement are
for reference only and shall not affect the meaning or interpretation of
any provision of this Agreement.
(ix) EFFECTIVE DATE. The effective date of this Agreement
shall be the date indicated in the first section of this Agreement,
notwithstanding the actual date of execution by any party.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as of the date first above written.
Employee:
-----------------------------------
Mary E. Lammers
N28W6284 Alyce St #134
Cedarburg, Wisconsin 53012
CENTRAL ILLINOIS
BANCORP, INC.
By:
--------------------------------
Its:
-------------------------------
<PAGE> 80
CIB ACQUISITION CORP.
By:
--------------------------------
Its:
-------------------------------
FIRST OZAUKEE CAPITAL CORP.
By:
--------------------------------
Its:
-------------------------------
FIRST OZAUKEE SAVINGS BANK
By:
--------------------------------
Its:
-------------------------------
Exhibit 99
FOR IMMEDIATE RELEASE
FOR ADDITIONAL INFORMATION CONTACT:
J. Michael Straka
President and Chief Executive Officer
Central Illinois Bancorp, Inc.
(217) 355-0900
Russell S. Jones
President and Chief Executive Officer
First Ozaukee Capital Corp.
(414) 377-0750
CENTRAL ILLINOIS BANCORP, INC. AND FIRST OZAUKEE CAPITAL CORP.
ANNOUNCE MERGER AGREEMENT
Sidney, Illinois and Cedarburg, Wisconsin (April 25, 1997) -
Central Illinois Bancorp, Inc., Sidney, Illinois and First Ozaukee
Capital Corp., Cedarburg, Wisconsin, announced today that they had
executed a definitive merger agreement under which Central Illinois
Bancorp, Inc. would acquire First Ozaukee Capital Corp. in a transaction
valued at approximately $9.6 million.
First Ozaukee shareholders will receive $15.10 in cash, subject
to upward or downward adjustment under certain conditions, for each share
of First Ozaukee common stock, they said.
The merger is subject to approval of the shareholders of First
Ozaukee Capital Corp., regulatory approval and various other conditions.
Central Illinois Bancorp, Inc. is the bank holding company for
Central Illinois Bank, Champaign, Illinois, Central Illinois Bank, MC,
Normal, Illinois and CIB Bank, Hillside, Illinois. At March 31, 1997,
Central Illinois Bancorp, Inc. had total assets of $607 million. First
Ozaukee Capital Corp. is the bank holding company for First Ozaukee
Savings Bank, Cedarburg, Wisconsin. At March 31, 1997, First Ozaukee
Capital Corp. had total assets of $35 million.
The merger is expected to be completed in the fourth quarter of
1997.
