SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report AUGUST 17, 1999 (AUGUST 12, 1999)
(Date of earliest event reported)
BANKILLINOIS FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
33-90342 37-1338484
(Commission File Number) (I.R.S. Employer
Identification Number)
100 W. University Ave., Champaign, Illinois 61820-4028
(Address of principal executive offices) (Zip Code)
(217) 351-6500
(Registrant's telephone number, including area code)
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ITEM 5. OTHER INFORMATION
On August 12, 1999, BankIllinois Financial Corporation, a Delaware
corporation ("BankIllinois"), entered into an Agreement and Plan of Merger
(the "Merger Agreement") with First Decatur Bancshares, Inc., a Delaware
corporation ("First Decatur"), which provides for the merger of the two
companies into a newly-organized bank holding company to be known as Main
Street Trust, Inc. ("Main Street"). The Merger is conditioned upon, among
other things, approval by holders of a majority of BankIllinois common stock
and of First Decatur common stock, and the receipt of certain regulatory
approvals. It is intended that the merger will be treated as a tax-free
reorganization and as a pooling-of-interests for accounting and financial
reporting purposes. The Merger Agreement is attached as Exhibit 2.1 and its
terms are incorporated herein by reference.
Pursuant to the Merger Agreement, stockholders of BankIllinois will receive
one share of Main Street for each share of BankIllinois, and stockholders of
First Decatur will receive 1.638 shares of Main Street for each share of
First Decatur.
A copy of a Press Release, dated August 13, 1999, issued by BankIllinois and
First Decatur relating to the merger is attached as Exhibit 99.1 and is
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of August 12, 1999, by
and among BankIllinois Financial Corporation, First Decatur Bancshares, Inc.
and Main Street Trust, Inc.
99.1 BankIllinois and First Decatur Press Release dated August 13, 1999.
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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.
BANKILLINOIS FINANCIAL CORPORATION
Dated: August 17, 1999 By: /s/ David B. White
David B. White
Executive Vice President and
Chief Financial Officer
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FIRST DECATUR BANCSHARES, INC.,
BANKILLINOIS FINANCIAL CORPORATION
AND
MAIN STREET TRUST, INC.
August 12, 1999
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ARTICLE 1
DEFINITIONS 1
Section 1.1 Definitions 1
Section 1.2 Principles of Construction 5
ARTICLE 2
THE MERGER 6
Section 2.1 Manner of Merger 6
Section 2.2 Effect of Merger 6
Section 2.3 Amended and Restated Articles of Incorporation 7
Section 2.4 Bylaws 7
Section 2.5 Directors and Officers 7
Section 2.6 FDB's Deliveries at Closing 7
Section 2.7 BIF's Deliveries at Closing 8
Section 2.8 Newco's Deliveries at Closing 9
Section 2.9 Closing; Effective Time 10
Section 2.10 Confirming Due Diligence 10
ARTICLE 3
TREATMENT OF SHARES 11
Section 3.1 Treatment of Newco, FDB and BIF Common Stock 11
Section 3.2 Exchange Ratios 11
Section 3.3 Steps of Transaction 12
Section 3.4 Tax Free Reorganization 14
Section 3.5 Dissenting Shares 14
Section 3.6 Options 14
ARTICLE 4
REPRESENTATIONS AND WARRANTIES BY BIF 15
Section 4.1 BIF Organization 15
Section 4.2 BIF Capitalization 16
Section 4.3 Subsidiary Organization 16
Section 4.4 Subsidiary Capitalization 17
Section 4.5 Authorization 17
Section 4.6 Litigation and Regulatory Matters 17
Section 4.7 Insurance 18
Section 4.8 Defaults Under Agreements 18
Section 4.9 Financial Statements and Reports 18
Section 4.10 Properties, Contracts, Benefit Plans and Other Agreements 19
Section 4.11 Disclosures 20
Section 4.12 Effect of Agreement 20
Section 4.13 Books and Records 21
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Section 4.14 Taxes 21
Section 4.15 Title to Properties 21
Section 4.16 Brokerage Commissions 22
Section 4.17 Certificate of Incorporation, Charter and Bylaws 22
Section 4.18 Interim Events 22
Section 4.19 Regulatory Filings 23
Section 4.20 Compliance with Applicable Law 24
Section 4.21 Compliance With ERISA 24
Section 4.22 Compliance With Environmental Laws 24
Section 4.23 Trust Administration 25
Section 4.24 Loan Loss Reserve 25
Section 4.25 Year 2000 25
Section 4.26 Approval Delays 26
ARTICLE 5
REPRESENTATIONS AND WARRANTIES BY FDB 26
Section 5.1 FDB Organization 26
Section 5.2 FDB Capitalization 26
Section 5.3 Subsidiary Organization 27
Section 5.4 Subsidiary Capitalization 27
Section 5.5 Authorization 28
Section 5.6 Litigation and Regulatory Matters 28
Section 5.7 Insurance 29
Section 5.8 Defaults Under Agreements 29
Section 5.9 Financial Statements and Reports 29
Section 5.10 Properties, Contracts, Benefit Plans and Other Agreements 30
Section 5.11 Disclosures 31
Section 5.12 Effect of Agreement 31
Section 5.13 Books and Records 32
Section 5.14 Taxes 32
Section 5.15 Title to Properties 32
Section 5.16 Brokerage Commissions 33
Section 5.17 Certificate of Incorporation and Bylaws 33
Section 5.18 Interim Events 33
Section 5.19 Regulatory Filings 34
Section 5.20 Compliance with Applicable Law 35
Section 5.21 Compliance With ERISA 35
Section 5.22 Compliance With Environmental Laws 35
Section 5.23 Trust Administration 36
Section 5.24 Loan Loss Reserve 36
Section 5.25 Year 2000 36
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Section 5.26 Approval Delays 36
ARTICLE 6
COVENANTS OF BIF 36
Section 6.1 Information, Access Thereto, Confidentiality 36
Section 6.2 Carry on in Regular Course 37
Section 6.3 Subsequent BIF Financial Statements 39
Section 6.4 Stockholders' Meeting 39
Section 6.5 BIF Affiliate Undertaking 40
Section 6.6 Dividends 40
Section 6.7 Environmental Matters 40
Section 6.8 Advice of Changes 41
Section 6.9 Exclusivity 41
Section 6.10 Information Provided to FDB 42
Section 6.11 Reasonable Efforts 42
Section 6.12 Termination of BIF Rights Agreement 42
Section 6.13 TIA Agreement 42
ARTICLE 7
COVENANTS OF FDB 42
Section 7.1 Information, Access Thereto, Confidentiality 42
Section 7.2 Carry on in Regular Course 43
Section 7.3 Subsequent FDB Financial Statements 45
Section 7.4 Stockholders' Meeting 45
Section 7.5 FDB Affiliate Undertaking 46
Section 7.6 Dividends 46
Section 7.7 Environmental Matters 46
Section 7.8 Advice of Changes 47
Section 7.9 Exclusivity 47
Section 7.10 Information Provided to BIF 48
Section 7.11 Reasonable Efforts 48
ARTICLE 8
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BIF 48
Section 8.1 Representations and Warranties True at Effective Time 48
Section 8.2 Compliance With Agreement 49
Section 8.3 Opinion of Counsel for FDB 49
Section 8.4 Proceedings and Documents Satisfactory 49
Section 8.5 Statutory Requirements 49
Section 8.6 Litigation 49
Section 8.7 Accuracy of Financial Statements 49
Section 8.8 Absence of Certain Changes or Events 49
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Section 8.9 Consents and Approvals 49
Section 8.10 Accrual of Costs 50
Section 8.11 Loan Loss Reserve 50
Section 8.12 Fairness Opinion 50
Section 8.13 Employment Agreements 50
Section 8.14 Environmental Reports 50
ARTICLE 9
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF FDB 51
Section 9.1 Representations and Warranties True at Effective Time 51
Section 9.2 Compliance With Agreement 51
Section 9.3 Opinion of Counsel for BIF 51
Section 9.4 Proceedings and Documents Satisfactory 51
Section 9.5 Statutory Requirements 51
Section 9.6 Litigation 51
Section 9.7 Accuracy of Financial Statements 52
Section 9.8 Absence of Certain Changes or Events 52
Section 9.9 Consents and Approvals 52
Section 9.10 Accrual of Costs 52
Section 9.11 Loan Loss Reserve 52
Section 9.12 Fairness Opinion 52
Section 9.13 Employment Agreements 53
Section 9.14 Environmental Reports 53
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS OF BOTH PARTIES 53
Section 10.1 Registration Statement 53
Section 10.2 Other Approvals 53
Section 10.3 Orders, Decrees and Judgments 53
Section 10.4 Regulatory Approvals 53
Section 10.5 Tax Opinion 54
Section 10.6 Pooling Letter 54
ARTICLE 11
ADDITIONAL COVENANTS OF THE PARTIES 54
Section 11.1 SEC Registration 54
Section 11.2 Cooperation 54
Section 11.3 Customer and Employee Relationships 54
Section 11.4 Pooling Treatment 55
Section 11.5 Expenses 55
Section 11.6 Publicity 55
Section 11.7 Newco Employee Benefits 55
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Section 11.8 Director and Officer Liability Coverage 55
Section 11.9 Actions by Newco 56
Section 11.10 Employment Agreement 56
ARTICLE 12
REGULATORY APPROVALS 56
Section 12.1 Initial Filings 56
Section 12.2 Necessary Approvals 56
ARTICLE 13
TERMINATION AND ABANDONMENT 57
Section 13.1 Termination of Agreement 57
Section 13.2 Effect of Termination or Abandonment 59
Section 13.3 Payments to FDB 59
Section 13.4 Payments to BIF 60
Section 13.5 Special Termination Fees 60
ARTICLE 14
MISCELLANEOUS 61
Section 14.1 Governing Law 61
Section 14.2 Assignment 62
Section 14.3 Amendment and Modification 62
Section 14.4 Notices 62
Section 14.5 Headings 63
Section 14.6 Entire Agreement 64
Section 14.7 Severability 64
Section 14.8 Further Instruments 64
Section 14.9 Counterparts 64
Section 14.10 All Reasonable Efforts 64
Section 14.11 Survival of Representations and Warranties 65
Section 14.12 No Third Party Beneficiaries 65
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LIST OF EXHIBITS
Exhibit A Amended and Restated Articles of
Incorporation of Newco
Exhibit B Bylaws of Newco
Exhibit C List of Directors and Executive Officers of Newco
Exhibit D Form of Opinion of Counsel to FDB
Exhibit E Form of Opinion of Counsel to BIF
Exhibit F Form of Exchange Agent Agreement
Exhibit G Form of Affiliate Undertaking
Exhibit H FDB Employment Agreement Amendments
Exhibit I BIF Employment Agreements Amendments
Exhibit J Newco Employment Agreement
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LIST OF SCHEDULES
Schedule 4.1 BIF Organization
Schedule 4.2 BIF Capitalization
Schedule 4.3 Subsidiary Organization
Schedule 4.6 BIF Litigation and Regulatory Matters
Schedule 4.7 BIF Insurance
Schedule 4.9 BIF Financial Statements and Reports
Schedule 4.10 BIF Properties, Contracts, Benefit Plans and Other
Agreements
Schedule 4.14 BIF Taxes
Schedule 4.15 BIF Encumbrances and Liens
Schedule 4.16 Keefe Bruyette & Woods, Inc. Engagement Letter
Schedule 4.17 Certificate or Articles of Incorporation of BIF
and TIA Corp, BKI Charter and Bylaws of BIF, TIA
Corp and BKI
Schedule 4.18 BIF Interim Events
Schedule 4.19 FDB SEC Filings
Schedule 4.25 BIF Year 2000 Plans
Schedule 5.1 FDB Organization
Schedule 5.2 Subsidiary Capitalization
Schedule 5.3 FNB Organization
Schedule 5.6 FDB Litigation and Regulatory Matters
Schedule 5.7 FDB Insurance
Schedule 5.9 FDB Financial Statements and Reports
Schedule 5.10 FDB Properties, Contracts, Benefit Plans and
Other Agreements
Schedule 5.14 FDB Taxes
Schedule 5.15 FDB Encumbrances and Liens
Schedule 5.16 ABN AMRO Engagement Letter
Schedule 5.17 Certificate of Incorporation of FDB and
FirsTech, FNB Articles of Association, First Trust
Charter and Bylaws of FDB, FirsTech, FNB and First
Trust
Schedule 5.18 FDB Interim Events
Schedule 5.19 FDB SEC Filings
Schedule 5.25 FDB Year 2000 Plans
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as
of this 12th day of August, 1999, among FIRST DECATUR BANCSHARES, INC., a
Delaware corporation ("FDB"), BANKILLINOIS FINANCIAL CORPORATION, a Delaware
corporation ("BIF"), and MAIN STREET TRUST, INC., an Illinois corporation
("Newco").
RECITALS
A. FDB and BIF each desire to merge with and into Newco (the "Merger") with
Newco as the resulting corporation (the "Resulting Corporation").
B. Pursuant to the terms of this Agreement, each outstanding share of the
common stock of FDB, $0.01 par value per share ("FDB Common Stock"), and each
outstanding share of the common stock of BIF, $0.01 par value per share ("BIF
Common Stock"), shall be converted into the right to receive and be
exchangeable for the number of shares of the common stock of Newco, $0.01 par
value per share ("Newco Common Stock"), provided for herein at the time of
the closing of the Merger (the "Closing").
AGREEMENTS
In consideration of the mutual covenants, representations and warranties
contained herein, the parties agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. The following terms, when used herein and unless
the context clearly requires otherwise, shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms
of the terms defined):
"Affiliate" shall have the meaning provided in Rule 144 promulgated
under the Securities Act.
"Agreement" shall mean this Agreement and Plan of Merger.
"Articles of Merger" shall mean the articles of merger filed by FDB, BIF
and Newco with the Secretary of State of the State of Illinois pursuant to
Section 2.9(b).
"BCA" shall mean the Illinois Business Corporation Act of 1983, as
amended.
"BHCA" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"BIF" shall mean BankIllinois Financial Corporation, a Delaware
corporation.
"BIF Common Stock" shall mean the common stock of BIF, $0.01 par value
per share.
"BIF Employee Benefit Plans" shall have the meaning provided in Section
4.10(d).
"BIF Exchange Ratio" shall have the meaning provided in Section 3.2(a).
"BIF Exchange Shares" shall have the meaning provided in Section 3.2(a).
"BIF Financial Statements" shall have the meaning provided in Section
4.9.
"BIF Subsidiary" shall mean any Subsidiary of BIF.
"BIF Transactional Expenses" shall mean all fees and expenses of
attorneys, accountants, consultants, financial advisors and other
professional advisors incurred by BIF in connection with this Agreement and
the transactions contemplated hereby, BIF's costs of preparing, printing and
mailing the Proxy Statement-Prospectus, and all other non-payroll related
costs and expenses owed or paid by BIF to third parties in connection with
this Agreement and the transactions contemplated hereby.
"BKI" shall mean BankIllinois, an Illinois state bank with its main
office located in Champaign, Illinois, and a wholly-owned Subsidiary of BIF.
"Blue Sky Laws" shall mean the securities or blue sky laws of the
various states and all regulations promulgated thereunder.
"Business Day" shall mean any day on which the trading of stocks occurs
on the New York Stock Exchange.
"Call Report" shall mean the Consolidated Report of Condition and Income
of a bank.
"Certificate" shall mean a stock certificate representing an outstanding
share or outstanding shares of either FDB Common Stock or BIF Common Stock.
"Closing" shall mean the closing of the Merger and all other transactions
contemplated by this Agreement.
"Closing Date" shall mean the day the Closing occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder.
"Commissioner" shall mean the Commissioner of the Office of Banks and
Real Estate of the State of Illinois.
"Competing BIF Proposal" shall have the meaning provided in Section 6.9.
"Competing FDB Proposal" shall have the meaning provided in Section 7.9.
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"Delaware Code" shall mean the General Corporation Law of the State of
Delaware, as amended.
"Dissenting Shares" shall have the meaning set forth in Section 3.5.
"Effective Time" shall have the meaning provided in Section 2.9(b).
"Environmental Laws" shall mean those statutes, regulations, rules,
ordinances, orders, restrictions and requirements relating to the protection
of the environment described in Section 4.22.
"Environmental Report" shall have the meaning set forth in Section 6.7.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean with respect to FDB or BIF, any person (as
defined in Section 3(9) of ERISA) which together with FDB or BIF,
respectively, or any of its respective Subsidiaries would be a member of the
same "controlled group" within the meaning of Section 414(b), (m), (c) and
(o) of the Code.
"Exchange Agent" shall have the meaning provided in Section 3.3(a).
"Federal Reserve" shall mean the Board of Governors of the Federal
Reserve System.
"FDB" shall mean First Decatur Bancshares, Inc., a Delaware corporation.
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"FDB Common Stock" shall mean the common stock of FDB, $0.01 par value
per share.
"FDB Employee Benefit Plans" shall have the meaning provided in Section
5.10(d).
"FDB Exchange Ratio" shall have the meaning provided in Section 3.2(a).
"FDB Exchange Shares" shall have the meaning provided in Section 3.2(a).
"FDB Financial Statements" shall have the meaning provided in Section
5.9.
"FDB Subsidiary" shall mean any Subsidiary of FDB.
"FDB Transactional Expenses" shall mean all fees and expenses of
attorneys, accountants, consultants, financial advisors and other
professional advisors incurred by FDB in connection with this Agreement and
the transactions contemplated hereby, FDB's costs of preparing, printing and
mailing the Proxy Statement-Prospectus, and all other non-payroll related
costs and expenses owed or paid by FDB to third parties in connection with
this Agreement and the transactions contemplated hereby.
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"FirsTech" shall mean FirsTech, Inc., a Delaware corporation, and a
wholly-owned Subsidiary of FDB.
"First Trust" shall mean the First Trust Bank of Shelbyville, an
Illinois state bank with its main office located in Shelbyville, Illinois,
and a wholly-owned Subsidiary of FDB.
"FNB" shall mean The First National Bank of Decatur, a national banking
association with its main office located in Decatur, Illinois, and a
wholly-owned Subsidiary of FDB.
"Illinois Act" shall mean the Illinois Bank Holding Company Act of 1957,
as amended.
"IRS" shall mean the United States Internal Revenue Service.
"Letter of Transmittal" shall have the meaning set forth in Section 3.3.
"Material Adverse Effect" or "Material Adverse Change" with respect to a
Person (other than an individual) means a material adverse effect on or
material adverse change in the consolidated financial condition, assets or
business of such Person and its Subsidiaries, if any, but not including the
effect of any change of law, rule or regulation or economic event affecting
financial institutions generally.
"Merger" shall mean the merger of FDB and BIF with and into Newco.
"Merging Corporations" shall collectively mean FDB, BIF and Newco.
"Newco Common Stock" shall mean the common stock of Newco, $0.01 par
value per share.
"OCC" shall mean the Office of the Comptroller of the Currency.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Proxy Statement-Prospectus" shall have the meaning provided in Section
11.1.
"Registration Statement" shall have the meaning provided in Section
11.1.
"Resulting Corporation" shall mean Newco, the corporation resulting from
the merger of FDB and BIF with and into Newco.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Subsequent BIF Financial Statements" shall have the meaning provided in
Section 6.3.
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"Subsequent FDB Financial Statements" shall have the meaning provided in
Section 7.3.
"Subsidiary" shall mean, as to any Person: (i) any corporation more
than fifty percent (50%) of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time stock of any
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person and/or one or more Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
and/or one or more Subsidiaries of such Person has more than a fifty percent
(50%) equity interest at the time.
"Superior BIF Proposal" shall have the meaning provided in Section
13.1(g).
"Superior FDB Proposal" shall have the meaning provided in Section
13.1(h).
"Termination Date" shall mean July 1, 2000, or such later date as shall
have been agreed to in writing by the parties.
"TIA Agreement" shall mean that certain Asset Purchase Agreement between
BKI and Trust and Investment Advisors, Inc. providing for the acquisition by
BKI or TIA Corp, as BKI's assignee, of certain assets which it will utilize
in establishing and maintaining an investment advisory business.
"TIA Corp" shall mean TIA Acquisition Corporation, an Indiana
corporation and a wholly-owned subsidiary of BIF.
"Unsolicited BIF Proposal" shall have the meaning provided in Section
6.9.
"Unsolicited FDB Proposal" shall have the meaning provided in Section
7.9.
Section 1.2 Principles of Construction. (a) In this Agreement,
unless otherwise stated or the context otherwise requires, the following uses
apply: (i) actions permitted under this Agreement may be taken at any time
and from time to time in the actor's sole discretion; (ii) references to a
statute shall refer to the statute and any successor statute, and to all
regulations promulgated under or implementing the statute or successor, as in
effect at the relevant time; (iii) in computing periods from a specified date
to a later specified date, the words "from" and "commencing on" (and the
like) mean "from and including," and the words "to," "until" and "ending on"
(and the like) mean "to, but excluding"; (iv) references to a governmental or
quasi-governmental agency, authority or instrumentality shall also refer to a
regulatory body that succeeds to the functions of the agency, authority or
instrumentality; (v) indications of time of day mean Decatur, Illinois time;
(vi) "including" means "including, but not limited to"; (vii) all references
to sections, schedules and exhibits are to sections, schedules and exhibits
in or to this Agreement unless otherwise specified; (viii) all words used in
this Agreement will be construed to be of such gender or number as the
circumstances require; and (ix) the captions and headings of articles,
sections, schedules and exhibits appearing in or attached to this Agreement
have been inserted solely for convenience of reference and shall not be
considered a part of this Agreement
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nor shall any of them affect the meaning or interpretation of this Agreement
or any of its provisions.
(b) The Book of Schedules of each of FDB and BIF referred to in this
Agreement shall consist of the information, agreements and other
documentation described and referred to in this Agreement as being included
in the Book of Schedules with respect to such party, which Book of Schedules
were delivered by each of FDB and BIF to the other not less than five (5)
Business Days before the date of this Agreement. Disclosure of any fact or
item in any Schedule or Exhibit hereto referenced by a particular paragraph
or section in this Agreement shall, should the existence of the fact or item
or its contents be relevant to any other paragraph or section, be deemed to
be disclosed with respect to that other paragraph or section whether or not
an explicit cross-reference appears.
(c) All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles in the
United States consistent with those used in the preparation of the most
recent audited consolidated financial statements of FDB or BIF, as the case
may be.
ARTICLE 2
THE MERGER
Section 2.1 Manner of Merger. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as defined below), FDB
and BIF shall be merged with and into Newco pursuant to the provisions of,
and with the effect provided in the BCA, and Newco shall be the corporation
resulting from such merger. As a result of the Merger, each share of FDB
Common Stock issued and outstanding immediately prior to the Effective Time,
other than any Dissenting Shares held by FDB stockholders or as otherwise
provided herein, and each share of BIF Common Stock issued and outstanding
immediately prior to the Effective Time, other than Dissenting Shares held by
BIF stockholders or as otherwise provided herein, will be converted into the
right to receive the number of shares of Newco Common Stock in accordance
with the FDB Exchange Ratio and the BIF Exchange Ratio, respectively, set
forth in Section 3.2(a).
Section 2.2 Effect of Merger. (a) At the Effective Time, BIF and FDB
shall be merged with and into Newco and Newco Corp shall be the Surviving
Corporation. BFI, FDB and Newco are sometimes referred to collectively
herein as the "Merging Corporations."
(b) Without limiting the generality of the foregoing, at the Effective
Time, the Surviving Corporation shall thereupon and thereafter possess all
the rights, privileges, immunities and franchises, as of a public or a
private nature, of each of the Merging Corporations, and all property, real,
personal and mixed, and all debts due on whatever account, including
subscriptions to shares, and all other choses in action, and all and every
other interest, of or belonging to or due to each of the Merging
Corporations, shall be taken and deemed to be transferred to and vested in
the Surviving Corporation without further act or deed; and the title to any
real estate, or any interest therein, vested in any of such corporations
shall not revert or be in
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any way impaired by reason of the Merger. Upon the terms and subject to the
conditions of this Agreement, the Surviving Corporation shall assume and
thenceforth be responsible and liable for all the liabilities and obligations
(including all obligations of indemnification, if any) of each of the Merging
Corporations, and any claim existing or action or proceeding pending by or
against any of the Merging Corporations may be prosecuted to judgment as if
the Merger had not taken place, or the Surviving Corporation may be
substituted in its place. Neither rights of creditors nor any liens upon
the property of any of the Merging Corporations shall be impaired by the
Merger.
Section 2.3 Amended and Restated Articles of Incorporation. At the
Effective Time, an amendment and restatement of the articles of incorporation
of Newco substantially in the form attached as Exhibit A shall be filed with
the Secretary of State of the State of Illinois, and such amended and
restated articles of incorporation shall thereafter represent the articles of
incorporation of the Resulting Corporation until amended as provided by law.
Section 2.4 Bylaws. The bylaws of Newco, in the form attached as
Exhibit B, shall be the bylaws of the Resulting Corporation until amended as
provided by law.
Section 2.5 Directors and Officers. From and after the Effective
Time, the directors and executive officers of the Resulting Corporation shall
be as set forth in Exhibit C, with the directors divided into Class I and
Class II of four (4) members each, and Class III of five (5) members. Such
directors and executive officers shall serve until their successors shall
have been elected or appointed and shall have qualified in accordance with
the BCA and the articles of incorporation and bylaws of the Resulting
Corporation.
Section 2.6 FDB's Deliveries at Closing. At the Closing, FDB shall
deliver, or cause to be delivered to BIF the following items:
(a) a good standing certificate for each of FDB and FirsTech, in each
case issued by the Secretary of State of each of the States of Delaware and
Illinois and dated in not more than fifteen (15) Business Days prior to the
Closing Date, as defined below;
(b) a good standing certificate for FNB issued by the OCC and dated not
more than fifteen (15) Business Days prior to the Closing Date;
(c) a good standing certificate for First Trust issued by the
Commissioner and dated not more than fifteen (15) Business Days prior to the
Closing Date;
(d) a copy of the certificate of incorporation of each of FDB and
FirsTech, in each case certified not more than fifteen (15) Business Days
prior to the Closing Date by the Secretary of State of the State of Delaware;
(e) a copy of the articles of association of FNB certified not more
that fifteen (15) Business Days prior to the Closing Date by the OCC;
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(f) a copy of the charter of First Trust certified not more that
fifteen (15) Business Days prior to the Closing Date by the Commissioner;
(g) a certificate of the Secretary or any Assistant Secretary of each
of FDB and FirsTech, in each case dated the Closing Date and certifying a
copy of their respective bylaws;
(h) a certificate of the Cashier or any Assistant Cashier of each of
FNB and First Trust, in each case dated the Closing Date and certifying a
copy of their respective bylaws;
(i) copies of resolutions of the board of directors of FDB authorizing
and approving this Agreement and the consummation of the transactions
contemplated hereby, certified as of the Closing Date by the Secretary or any
Assistant Secretary of FDB;
(j) the certificates contemplated by Section 8.1 and Section 8.2;
(k) a list of FDB's stockholders as of the Closing Date certified by
the Secretary or any Assistant Secretary of FDB;
(l) a legal opinion of FDB's counsel, Howard & Howard Attorneys, P.C.,
dated the Closing Date to the effect set forth in Exhibit D attached hereto;
and
(m) such other documents as BIF or its counsel shall reasonably
request.
Section 2.7 BIF's Deliveries at Closing. At the Closing, BIF shall
deliver, or cause to be delivered to FDB the following items:
(a) a good standing certificate for BIF issued by the Secretary of
State of the States of Delaware and Illinois, and a good standing certificate
for TIA Corp issued by the Secretary of State of the States of Indiana and
Illinois, in each case dated not more than fifteen (15) Business Days prior
to the Closing Date;
(b) a good standing certificate for BKI, issued by the Commissioner and
dated not more than fifteen (15) Business Days prior to the Closing Date;
(c) a copy of the certificate or articles of incorporation, as the case
may be, of each of BIF and TIA Corp, in each case certified not more than
fifteen (15) Business Days prior to the Closing Date by the Secretary of
State of the States of Delaware and Indiana, respectively;
(d) a copy of the charter of BKI certified not more that fifteen (15)
Business Days prior to the Closing Date by the Commissioner;
(e) a certificate of the Secretary or any Assistant Secretary of each
of BIF and TIA Corp, in each case dated the Closing Date certifying a copy of
their respective bylaws;
(f) a certificate of the Cashier or any Assistant Cashier of BKI dated
the Closing Date certifying a copy of the bylaws of BKI;
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(g) copies of resolutions of the board of directors of BIF authorizing
and approving this Agreement and the consummation of the transactions
contemplated hereby, certified as of the Closing Date by the Secretary or any
Assistant Secretary of BIF;
(h) the certificates contemplated by Section 9.1 and Section 9.2;
(i) a list of BIF's stockholders as of the Closing Date certified by
the Secretary or any Assistant Secretary of BIF;
(j) a legal opinion of BIF's counsel, Barack Ferrazzano Kirschbaum
Perlman & Nagelberg, dated the Closing Date to the effect set forth in
Exhibit E attached hereto; and
(k) such other documents as FDB or its counsel shall reasonably
request.
Section 2.8 Newco's Deliveries at Closing. At the Closing, Newco
shall deliver, or cause to be delivered to BIF and FDB the following items:
(a) a good standing certificate for Newco issued by the Secretary of
State of the State of Illinois and dated not more than fifteen (15) Business
Days prior to the Closing Date,
(b) a copy of the articles of incorporation of Newco certified not more
than fifteen (15) Business Days prior to the Closing Date by the Secretary of
State of the State of Illinois;
(c) a certificate of the Secretary or any Assistant Secretary of Newco
dated the Closing Date certifying a copy of the bylaws of Newco;
(d) copies of resolutions of the board of directors of Newco
authorizing and approving this Agreement and the consummation of the
transactions contemplated hereby, certified as of the Closing Date by the
Secretary or any Assistant Secretary of Newco;
(e) a certificate of the President or any Vice President and the
Secretary or any Assistant Secretary of Newco dated the Closing Date
certifying that: (i) there have been no further amendments to the articles
of incorporation delivered pursuant to subsection (b) of this Section; (ii)
all of the representations and warranties of Newco set forth in this
Agreement are true and correct with the same force and effect as if all of
such representations and warranties were made at the Closing Date; and (iii)
Newco has performed or complied with all of the covenants and obligations to
be performed or complied with by Newco under the terms of this Agreement on
or prior to the Closing Date; and
(f) such other documents as BIF, FDB or the counsel of either shall
reasonably request.
Section 2.9 Closing; Effective Time. (a) The Closing shall be on a
date agreed to by the parties hereto, and in the event the parties fail to so
agree, the Closing shall take place on the last Business Day of the calendar
month in which all of the following conditions are satisfied: (i) the
receipt of the last required regulatory approval of the Merger; (ii) the
expiration of the last
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requisite waiting period; and (iii) the satisfaction or waiver in writing of
all of the conditions provided for in Articles 8, 9 and 10; whichever is
later (the "Closing Date").
(b) The parties hereto agree to file on the Closing Date the
appropriate articles of merger, as contemplated by Section 11.25 of the BCA,
with the Secretary of State of the State of Illinois, and an appropriate
certificate of merger, as contemplated by Section 252(c) of the Delaware
Code, with the Secretary of State of the State of Delaware. The Merger shall
be effective at the time and on the date agreed to by the parties hereto, and
in the event the parties fail to so agree, at 12:01 a.m. of the day following
the later of the dates on which the Secretary of State of the State of
Illinois issues a certificate of Merger, or the Certificate of Merger is
accepted for filing by the Secretary of State of the State of Delaware, as
the case may be (the "Effective Time").
(c) The Closing shall take place at 10:00 a.m. on the Closing Date, at
such place as the parties hereto may mutually agree, and in the event they
fail to agree, at the main banking offices of FNB.
Section 2.10 Confirming Due Diligence. (a) Immediately after the
execution of this Agreement, FDB shall initiate an additional pre-acquisition
investigation and review of the books, records and facilities of BIF and its
Subsidiaries and will complete such pre-acquisition investigation not later
than thirty (30) days following the date of this Agreement. FDB shall have
the right to terminate this Agreement by giving written notice of its
election to terminate to BIF, together with a brief statement of the reason
therefor, by 5:00 p.m. on or before the thirtieth (30th) day after the date
of this Agreement in the event that such pre-acquisition investigation and
review discloses matters not previously disclosed to FDB which FDB in good
faith believes either: (i) violate or contravene in a material and adverse
respect any of the representations and warranties of BIF contained in this
Agreement or in any of the Schedules hereto provided by BIF; or (ii) could
reasonably be expected to have a Material Adverse Effect on BIF, and which in
either case of item (i) or (ii) has not been cured within ten (10) Business
Days of receipt of such written notice from FDB. Nothing in this Section
shall limit in any respect any other right or basis that FDB may then or
thereafter have to terminate this Agreement by reason of any breach hereof by
BIF or any breach or inaccuracy of any of the aforesaid representations and
warranties of BIF.
(b) Immediately after the execution of this Agreement, BIF shall
initiate an additional pre-acquisition investigation and review of the books,
records and facilities of FDB and its Subsidiaries and will complete such
pre-acquisition investigation not later than thirty (30) days following the
date of this Agreement. BIF shall have the right to terminate this Agreement
by giving written notice of its election to terminate to FDB, together with a
brief statement of the reason therefor, by 5:00 p.m. on or before the
thirtieth (30th) day after the date of this Agreement in the event that such
pre-acquisition investigation and review discloses matters not previously
disclosed to BIF which BIF in good faith believe either: (i) violate or
contravene in a material and adverse respect any of the representations and
warranties of FDB contained in this Agreement or in any of the Schedules
hereto provided by FDB; or (ii) could reasonably be expected to have a
Material Adverse Effect on FDB, and which in either case of item (i) or (ii)
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has not been cured within ten (10) Business Days of receipt of such written
notice from BIF. Nothing in this Section shall limit in any respect any
other right or basis that BIF may then or thereafter have to terminate this
Agreement by reason of any breach hereof by FDB or any breach or inaccuracy
of any of the aforesaid representations and warranties of FDB.
ARTICLE 3
TREATMENT OF SHARES
Section 3.1 Treatment of Newco, FDB and BIF Common Stock. Each share
of Newco Common Stock which is issued and outstanding immediately prior to
the Effective Time shall at the Effective Time be cancelled without
consideration and without any action required on the part of FDB or BIF, as
the holders thereof. Each share of FDB Common Stock and each share of BIF
Common Stock which is issued and outstanding immediately prior to the
Effective Time shall at the Effective Time be converted into and shall
thereafter represent the right to receive the number of shares of Newco
Common Stock as is set forth in Section 3.2(a).
Section 3.2 Exchange Ratios. (a) Subject to the provisions of this
Article, by virtue of the Merger and without any action on the part of the
holder thereof, at the Effective Time, (i) each share of FDB Common Stock
issued and outstanding immediately prior to the Effective Time shall become
and automatically be converted into 1.638 shares of Newco Common Stock (the
"FDB Exchange Ratio") and shall thereafter represent the right to receive and
be exchangeable for such number of shares, rounded to the nearest hundredth
of a share (subject to the provisions of Sections 3.2(b) and (c)), of Newco
Common Stock (the "FDB Exchange Shares"), and (ii) each share of BIF Common
Stock issued and outstanding immediately prior to the Effective Time shall
become and automatically be converted into one (1) share of Newco Common
Stock (the "BIF Exchange Ratio") and shall thereafter represent the right to
receive and be exchangeable for such number of shares, rounded to the nearest
hundredth of a share (subject to the provisions of Sections 3.2(b) and (c),
of Newco Common Stock (the "BIF Exchange Shares").
(b) After the Effective Time, no holder of FDB Common Stock or BIF
Common Stock which is issued and outstanding immediately prior to the
Effective Time will have any rights in respect of such FDB Common Stock or
BIF Common Stock, respectively, except: (i) to receive shares of Newco
Common Stock for the shares of FDB Common Stock or BIF Common Stock,
respectively, converted as provided in this Section 3.2(a), plus an amount in
cash, as provided below, for any fractional share of Newco Common Stock which
such holder would have been entitled to receive; or (ii) to receive payment
for such shares of FDB Common Stock or BIF Common Stock, respectively, in the
manner and to the extent provided in Section 262 of the Delaware Code.
Section 3.3 Steps of Transaction. (a) On the date agreed to by the
parties hereto, and in the event the parties fail to so agree, the date which
is ten (10) Business Days prior to the Closing, the Exchange Agent shall mail
or cause to be mailed to each then current holder of record of a certificate
or certificates representing outstanding shares of either FDB Common Stock or
BIF Common Stock (the "Certificates") a form of transmittal letter (the
"Letter of
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Transmittal") which shall provide instructions for the transmittal
of the Certificates and shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates (or a lost certificate affidavit and a bond in a form
reasonably acceptable to Newco). Pursuant to the terms of an exchange agent
agreement in the form attached as Exhibit F, BKI shall serve as exchange
agent (the "Exchange Agent") for the parties to effect the surrender of the
Certificates in exchange for Newco Common Stock. FDB and BIF agree to cause
the Exchange Agent to use all reasonable efforts to mail or cause to be
mailed the Letter of Transmittal to all Persons who become holders of FDB
Common Stock or BIF Common Stock, respectively, subsequent to the date the
Letter of Transmittal was first mailed to FDB and BIF stockholders,
respectively, and by 5:00 p.m. on the date which is five (5) Business Days
prior to the Closing Date.
(b) As promptly as practicable, BIF and FDB shall cause the Exchange
Agent to deliver to each holder of FDB Common Stock or BIF Common Stock who
has previously submitted an effective Letter of Transmittal accompanied by
the Certificates covered by such Letter of Transmittal: (i) certificates
representing the number of whole shares of Newco Common Stock into which the
shares of FDB Common Stock or BIF Common Stock previously represented by the
Certificates so surrendered were converted; plus (ii) an amount in cash, as
provided below, for any fractional share of Newco Common Stock which such
holder would have been entitled to receive.
(c) As promptly as practicable after the Effective Time, the Exchange
Agent shall send to each holder of record of FDB Common Stock or BIF Common
Stock immediately prior to the Effective Time who has not previously
submitted his or her Certificates, additional transmittal materials for use
in surrendering such Certificates to the Exchange Agent and instructions for
use in effecting such surrender in exchange for shares of Newco Common Stock.
(d) No dividends or other distributions declared after the Effective
Time with respect to Newco Common Stock payable to former stockholders of
record of FDB or BIF, respectively, after the Effective Time shall be paid to
a former stockholder of FDB or BIF, respectively, who holds any unsurrendered
Certificate with respect to FDB Common Stock or BIF Common Stock formerly
represented thereby, until such stockholder shall surrender such Certificate.
Until so surrendered and exchanged, each such outstanding Certificate shall
for all purposes, other than the payment of dividends or other distributions,
if any, to former holders of record of shares of FDB Common Stock or BIF
Common Stock represent the shares of Newco Common Stock into and for which
such shares have been so converted; provided, however, that upon surrender of
a Certificate, there shall be paid to the record holder or holders of the
Certificate, the amount, without interest thereon, of such dividends and
other distributions, if any, which previously have become payable with
respect to the number of whole shares of Newco Common Stock represented by
such Certificate.
(e) No fractional shares of Newco Common Stock shall be issued upon the
surrender for exchange of Certificates; no dividend or distribution of Newco
shall relate to any fractional share interest; and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Newco. Instead, each holder of shares of FDB Common Stock or
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BIF Common Stock having a fractional interest in shares of Newco Common Stock
arising upon the conversion of such shares of FDB Common Stock or BIF Common
Stock shall, at the time of surrender of the Certificates, be paid by Newco
an amount in cash, without interest, determined by multiplying such
fractional share of Newco Common Stock by the average of the closing sale
prices of Newco Common Stock for the three (3) trading days immediately
following the Closing Date.
(f) All rights to receive shares of Newco Common Stock into and for
which shares of FDB Common Stock or BIF Common Stock shall have been
converted and exchanged pursuant to this Agreement, shall be deemed to have
been issued in full satisfaction of all rights pertaining to such converted
and exchanged shares of FDB Common Stock or BIF Common Stock, respectively.
(g) At the Effective Time, FDB and BIF shall each deliver to the
Exchange Agent a certified copy of a list of its respective stockholders,
after which there shall be no further registration or transfers on the stock
transfer books of FDB of the shares of FDB Common Stock or of BIF of the
shares of BIF Common Stock, all of which were outstanding immediately prior
to the Effective Time. If, after the Effective Time, Certificates are
presented to the Exchange Agent or Newco, they shall be cancelled and
exchanged for Newco Common Stock as provided in this Agreement.
(h) If a certificate representing shares of Newco Common Stock is to be
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed,
accompanied by all documents required to evidence and effect such transfer
and otherwise in proper form for transfer and that the Person requesting such
exchange shall pay to Newco any transfer or other taxes required by reason of
the issuance of a certificate representing shares of Newco Common Stock in
any name other than that of the registered holder of the Certificate
surrendered, or otherwise required, or shall establish to the satisfaction of
Newco that such tax has been paid or is not payable.
Section 3.4 Tax Free Reorganization. The parties hereto intend for
the Merger to qualify as a nontaxable reorganization within the meaning of
Section 368(a) and related sections of the Code, and agree to cooperate and
to take such actions as may be reasonably necessary to ensure such result.
Section 3.5 Dissenting Shares. Notwithstanding anything to the
contrary contained in this Agreement, to the extent appraisal rights are
available to stockholders of FDB or BIF pursuant to the Delaware Code, any
shares of FDB Common Stock or BIF Common Stock held by a Person who objects
to the Merger, whose shares either were not entitled to vote or were not
voted in favor of the Merger and who complies with all of the provisions of
the Delaware Code concerning the rights of such Person to dissent from the
Merger and to require appraisal of such Person's shares and who has not
withdrawn such objection or waived such rights prior to the Effective Time
(collectively with respect to all such FDB or BIF stockholders, the
"Dissenting Shares"), shall not be converted pursuant to Section 3.2(a) but
shall become the right to receive
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such consideration as may be determined to be due to the holder of such
Dissenting Shares pursuant to the Delaware Code, including, if applicable,
any costs determined to be payable by either FDB or BIF to its respective
holders of Dissenting Shares pursuant to an order of the Delaware Court of
Chancery in accordance with the Delaware Code; provided, however, that
each Dissenting Share held by a Person at the Effective Time who shall, after
the Effective Time, withdraw the demand for appraisal or lose the right of
appraisal, in either case pursuant to the Delaware Code shall be deemed to be
converted, as of the Effective Time, into the number of shares of Newco
Common
Stock as is determined in accordance with Section 3.2(a).
Section 3.6 Options. (a) At and after the Effective Time, each
option granted by FDB and BIF to purchase shares of FDB Common Stock and BIF
Common Stock, respectively, which is outstanding and unexercised immediately
prior thereto shall cease to represent a right to acquire shares of either
FDB Common Stock or BIF Common Stock and shall be converted automatically
into an option to purchase shares of Newco Common Stock (the "FDB Converted
Stock Options" and the "BIF Converted Stock Options," respectively) in an
amount and at an exercise price determined as provided below and otherwise
subject to the terms of the agreements evidencing the grants of such options:
(i) The number of shares of Newco Common Stock to be subject
to each FDB Converted Stock Option shall be equal to the product of the
number of shares of FDB Common Stock subject to the original option and the
FDB Exchange Ratio, provided that any fractional shares of Newco Common Stock
shall be rounded up to the next highest whole share; and
(ii) The exercise price per share of Newco Common Stock
under the FDB Converted Stock Option shall be equal to the exercise price per
share of FDB Common Stock under the original option divided by the FDB
Exchange Ratio, provided that such exercise price shall be rounded to the
nearest whole cent.
(iii) The number of shares of Newco Common Stock to be
subject to each BIF Converted Stock Option shall be equal to the product of
the number of shares of BIF Common Stock subject to the original option and
the BIF Exchange Ratio, provided that any fractional shares of Newco Common
Stock shall be rounded up to the next highest whole share; and
(iv) The exercise price per share of Newco Common Stock
under the BIF Converted Stock Option shall be equal to the exercise price per
share of BIF Common Stock under the original option divided by the BIF
Exchange Ratio, provided that such exercise price shall be rounded to the
nearest whole cent.
(b) The adjustment provided herein with respect to any options which
are "incentive stock options" (as defined in Section 422 of the Code), shall
be and is intended to be effected in a manner which is consistent with
Section 424(a) of the Code. The duration and other terms of the FDB
Converted Stock Options and BIF Converted Stock Options shall be the same
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as he original option except that all references to FDB or BIF, as the case
may be, shall be deemed to be references to Newco.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES BY BIF
BIF hereby represents and warrants to FDB that the following are true
and correct as of the date hereof, and will be true and correct as of the
Effective Time:
Section 4.1 BIF Organization. BIF: (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and is a registered bank holding company under the BHCA; (b) is
duly qualified to do business and is in good standing in the states of
Delaware and Illinois and in each other jurisdiction in which the nature of
the business conducted or the properties or assets owned or leased by it
makes such qualification necessary and where failure to be so qualified would
reasonably be expected to have a Material Adverse Effect on BIF; and (c) has
full power and authority, corporate and otherwise, to own, operate and lease
its properties as presently owned, operated and leased, and to carry on its
business as it is now being conducted. BIF owns no voting stock or equity
securities of any corporation, association, partnership or other entity,
other than all of the voting stock of BKI and TIA Corp and as set forth on
Schedule 4.1 of the BIF Book of Schedules.
Section 4.2 BIF Capitalization. The authorized capital stock of BIF
consists, and at June 30, 1999, consisted of: (a) 6,500,000 shares of common
stock, $0.01 par value per share, of which 5,739,965 shares were issued as of
July 31, 1999, of which 193,910 shares were held in the treasury of BIF as of
that date; and (b) 300,000 shares of preferred stock, no par value per share,
none of which shares are issued and outstanding. The maximum number of
shares of BIF Common Stock (assuming for this purpose that share equivalents
constitute BIF Common Stock) that would be outstanding immediately prior to
the Effective Time (including treasury shares) if all options, warrants,
conversion rights and other rights with respect thereto were exercised and
the restrictions on any restricted stock were no longer applicable is
6,267,722 shares. All of the outstanding shares of capital stock of BIF have
been duly and validly authorized and issued and are fully paid and
nonassessable. Except as contemplated in this Agreement or as set forth in
Schedule 4.2 of the BIF Book of Schedules, there are, as of the date of this
Agreement, no outstanding subscriptions, contracts, conversion privileges,
options, warrants, calls or other rights obligating BIF or any BIF Subsidiary
to issue, sell or otherwise dispose of, or to purchase, redeem or otherwise
acquire, any shares of capital stock of BIF or any BIF Subsidiary, other than
preemptive rights granted to stockholders of Illinois state banks pursuant to
the Illinois Banking Act, as amended. Except as permitted by this Agreement
and provided on Schedule 4.2 of the BIF Book of Schedules, no shares of BIF
capital stock have been purchased, redeemed or otherwise acquired, directly
or indirectly, by BIF or any BIF Subsidiary and no dividends or other
distributions payable in any equity securities of BIF or any BIF Subsidiary
have been declared, set aside, made or paid to the stockholders of BIF.
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Section 4.3 Subsidiary Organization. (a) BKI is an Illinois state
bank duly organized, validly existing and in good standing under the laws of
the State of Illinois. BKI has full power and authority, corporate and
otherwise, to own, operate and lease its properties as presently owned,
operated and leased, and to carry on its business as it is now being
conducted. BKI owns no voting stock or equity securities of any corporation,
association, partnership or other entity, other than as shown on Schedule 4.3
of the BIF Book of Schedules.
(b) TIA Corp (i) is, or prior to the Closing will be, a corporation
duly organized, validly existing and in good standing under the laws of the
State of Indiana; (ii) is, or will be prior to the Closing, duly qualified to
do business and is in good standing in the states of Indiana and Illinois and
in each other jurisdiction in which the nature of the business conducted or
the properties or assets owned or leased by it makes such qualification
necessary and where failure to be so qualified would reasonably be expected
to have a Material Adverse Effect on BIF; and (iii) has, or will have prior
to the Closing, full power and authority, corporate and otherwise, to own,
operate and lease its properties as presently owned, operated and leased, and
to carry on its business as it is now being conducted. TIA Corp will own no
voting stock or equity securities of any corporation, association,
partnership or other entity, other than in a fiduciary or representative
capacity for others.
Section 4.4 Subsidiary Capitalization. (a) The authorized capital
stock of BKI consists, and at the Effective Time will consist, of 250,000
shares of common stock, $10.00 par value per share, all of which shares are
validly issued and outstanding, fully paid and nonassessable, and owned by
BIF. There are no options, warrants, rights, calls or commitments of any
character relating to any additional shares of the capital stock of BKI
except for stockholders' preemptive rights granted by the Illinois Banking
Act, as amended. No capital stock or other security issued by BKI has been
issued in violation of, or without compliance with, the preemptive rights of
stockholders.
(b) The authorized capital stock of TIA Corp will consists at the
Effective Time of 1,000 shares of common stock, $0.01 par value per share,
all of which shares will be validly issued and outstanding, fully paid and
nonassessable, and owned by BIF. There will be no options, warrants, rights,
calls or commitments of any character relating to any additional shares of
the capital stock of TIA Corp.
Section 4.5 Authorization. BIF has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and
the execution, delivery and performance of this Agreement by BIF and the
consummation by it of the transactions contemplated thereby, have been duly
authorized by all necessary corporate action, subject to stockholder
approval. This Agreement constitutes a legal, valid and binding obligation
of BIF enforceable in accordance with its terms except as such enforcement
may be limited by bankruptcy, insolvency, reorganization or other similar
laws and subject to general principles of equity.
Section 4.6 Litigation and Regulatory Matters. Schedule 4.6 of the
BIF Book of Schedules sets forth a list of all actions, suits or proceedings
pending as of the date hereof in
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which BIF or any BIF Subsidiary is a named party, other than collection or
foreclosure actions brought by BIF or any BIF Subsidiary in the ordinary
course of business and where no counterclaim has been filed against BIF or
such BIF Subsidiary. Except as set forth on Schedule 4.6 of the BIF Book of
Schedules, there is no action, suit, proceeding, claim or formal written
protest by any Person or agency, or any investigation or report by any
regulatory authority having jurisdiction over BIF or any BIF Subsidiary or
any of its respective assets or businesses which is pending or, to BIF's
knowledge, threatened against BIF or any BIF Subsidiary, or any of its
respective officers or directors in their capacities as such, or its assets,
business or goodwill which would reasonably be expected to have a Material
Adverse Effect on BIF or which would impair BIF's ability to consummate the
Merger. BIF further represents and warrants that except as set forth on
Schedule 4.6 of the BIF Book of Schedules, it does not know or have any
reason to believe that there is any basis for assertion against it or any BIF
Subsidiary of any material claims based upon the wrongful action or inaction
of either BIF or any BIF Subsidiary, and any of their respective officers,
directors or employees which would reasonably be expected to have a Material
Adverse Effect on BIF or which would impair BIF's ability to consummate the
Merger. Neither BIF nor any BIF Subsidiary is subject to, or in default with
respect to, nor are any of its assets subject to, any outstanding judgment,
regulatory agreement, injunction, writ, order or decree or any other
requirement of any governmental body or court or of any governmental agency
or instrumentality which would reasonably be expected to have a Material
Adverse Effect on BIF or which would impair BIF's ability to consummate the
Merger.
Section 4.7 Insurance. Schedule 4.7 of the BIF Book of Schedules
lists the policies of insurance (including bankers blanket bond and insurance
providing benefits for employees) owned or held by BIF or any BIF Subsidiary
on the date hereof. Each such policy is, and BIF will use all reasonable
efforts to keep each such policy, in full force and effect (except for any
expiring policy which is replaced by coverage at least as extensive) until
the Effective Time. All premiums due on such policies have been paid.
Section 4.8 Defaults Under Agreements. Neither BIF nor any BIF
Subsidiary is in default or alleged to be in default, under any loan or
credit agreement, conditional sales contract or other title retention
agreement or security agreement relating to money borrowed by BIF or any BIF
Subsidiary, agreements pursuant to which it leases real or personal property
or any other instrument or obligation, which would reasonably be expected to
have a Material Adverse Effect on BIF. Neither BIF nor any BIF Subsidiary is
in default in any material respect and BIF has no knowledge of any material
default under such instruments by any other party thereto and has no
knowledge of any event which with notice or lapse of time or both would
constitute a material default.
Section 4.9 Financial Statements and Reports. Copies of the
following financial statements and reports of BIF and the BIF Subsidiaries
(collectively, the "BIF Financial Statements") have been delivered by BIF to
FDB:
(a) Consolidated Balance Sheets and the related Statements of Income,
Statements of Changes in Stockholders' Equity and Statements of Cash Flows of
BIF for the years ended December 31, 1996, 1997 and 1998;
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(b) Consolidated Balance Sheets and the related Statements of Income of
BIF for the quarter ended March 31, 1999; and
(c) Consolidated Reports of Condition and Income (the "Call Reports")
for BKI at the close of business on December 31, 1996, 1997 and 1998, and on
March 31, 1999.
The BIF Financial Statements are complete and correct in all material
respects and fairly present the consolidated financial position of BIF and
BKI, as the case may be, at the dates shown and the results of operations for
the periods covered. The BIF Financial Statements described in clause (a)
above are audited statements and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis. The
BIF Financial Statements described in clauses (b) and (c) above have been
prepared on a basis consistent with past accounting practices and as required
by applicable rules or regulations and fairly present the consolidated
financial condition and results of operations at the dates and for the
entities and periods presented, subject to year-end audit adjustments (which
changes in the aggregate would not reasonably be expected to be materially
adverse). The BIF Financial Statements do not include any material assets or
omit to state any material liabilities, absolute or contingent, or other
facts, which inclusion or omission would render the BIF Financial Statements
misleading in any material respect.
Section 4.10 Properties, Contracts, Benefit Plans and Other
Agreements. Schedule 4.10 of the BIF Book of Schedules lists or describes
the following:
(a) All real property owned or leased by BIF or any BIF Subsidiary
together with a legal description of such real estate, and each lease of real
property to which BIF or any BIF Subsidiary is a party, identifying the
parties
thereto, the annual rental payable and the expiration date thereof;
(b) All loan and credit agreements, conditional sales contracts or
other title retention agreements or security agreements relating to money
borrowed by BIF or any BIF Subsidiary, exclusive of deposit agreements with
customers of any BIF Subsidiary entered into in the ordinary course of
business, agreements for the purchase of federal funds and repurchase
agreements;
(c) All agreements, loans, contracts, leases, guaranties, letters of
credit, lines of credit or commitments of BIF or any of the BIF Subsidiaries
not referred to elsewhere in this Section which:
(i) involve payment by BIF or any BIF Subsidiary (other than
as disbursement of loan proceeds to customers) of more than $50,000;
(ii) involve payments based on profits of BIF or any BIF
Subsidiary;
(iii) relate to the future purchase of goods or services in
excess of the requirements of its respective business at current levels or
for normal operating purposes;
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(iv) were not made in the ordinary course of business; or
(v) materially affect the business or financial condition of
BIF or any BIF Subsidiary;
(d) All profit sharing; group insurance; hospitalization; stock option;
pension; retirement; bonus; deferred compensation; stock bonus; stock
purchase; collective bargaining agreements, contracts or arrangements under
which pensions, deferred compensation or other retirement benefits are being
paid or may become payable respectively by BIF or any BIF Subsidiary; or
other employee welfare or benefit agreements, plans or arrangements
established, maintained, sponsored or undertaken by BIF or any BIF Subsidiary
for the benefit of its respective officers, directors or employees, including
each trust or other agreement with any custodian or any trustee for funds
held under any such agreement, plan or arrangement (collectively, the "BIF
Employee Benefit Plans"), and, in respect to any of them, the latest reports
or forms, if any, filed with the Department of Labor and Pension Benefit
Guaranty Corporation under the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), any current financial or actuarial reports and
any currently effective United States Internal Revenue Service ("IRS")
private rulings or determination letters obtained by or for the benefit of
BIF or any BIF Subsidiary;
(e) All leases or licenses of BIF or any BIF Subsidiary with respect to
personal property, whether as lessee or licensee, with annual rental or other
payments due thereunder in excess of $20,000;
(f) All employment and consulting contracts to which BIF or any BIF
Subsidiary is a party (except for ordinary oral employment contracts with
employees of BIF or any BIF Subsidiary creating at will employment
relationships);
(g) The name and annual salary as of January 1, 1999, of each director,
officer or employee of BIF or any BIF Subsidiary; and
(h) The TIA Agreement.
Copies of each document, plan or contract listed and described in
Schedule 4.10 of the BIF Book of Schedules are appended to such Schedule and
included in the BIF Book of Schedules.
Section 4.11 Disclosures. No representation or warranty made herein
by BIF contains any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements contained herein under the
circumstances under which they were made not misleading. Except as and to
the extent reflected or reserved against in BIF's audited financial
statements for the year ended December 31, 1998, referenced in Section 4.9
above, or the Subsequent BIF Financial Statements (as such term is defined in
Section 6.3), neither BIF nor any BIF Subsidiary has, and with respect to the
Subsequent BIF Financial Statements will not have, any liabilities or
obligations, of any nature, secured or unsecured, (whether accrued,
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absolute, contingent or otherwise) including, without limitation, any tax
liabilities due or to become due, which would reasonably be expected to have
a
Material Adverse Effect on BIF.
Section 4.12 Effect of Agreement. The execution, delivery and
performance of this Agreement by BIF and the consummation by it of the
transactions contemplated hereby do not: (a) require the consent, waiver,
order, registration, qualification, approval, license or authorization of any
Person, court, regulatory authority or other governmental body, other than as
specifically contemplated by this Agreement and as may be required in
connection or in compliance with the provisions of the BCA, the Delaware
Code, the BHCA and the Illinois Act; (b) violate, with or without the giving
of notice or the passage of time or both, in any material respect any
provision of law applicable to it; (c) conflict with or result in a breach of
any terms of its certificate of incorporation or bylaws, or any material
mortgage, deed of trust, license, indenture or other agreement or instrument,
or any order, judgment, decree, statute, regulation or other restriction of
any kind or character, to which BIF or any BIF Subsidiary is a party or by
which it or any of its respective assets may be bound; (d) give to others any
right to accelerate or terminate, or result in acceleration or termination
of, any such agreement or instrument; (e) result in termination of any
provision of any such agreement or instrument; or (f) result in the creation
of any lien, charge or encumbrance upon any of the property or assets of BIF
or any BIF Subsidiary.
Section 4.13 Books and Records. The books and records of BIF and the
BIF Subsidiaries are in all material respects complete and correct and
accurately reflect the basis for the respective financial condition and
results of operations of BIF and the BIF Subsidiaries set forth in the BIF
Financial Statements.
Section 4.14 Taxes. Each of BIF and the BIF Subsidiaries has filed
with the appropriate governmental agencies all federal, state and local
income, franchise, excise, sales, use, real and personal property and other
tax returns and reports required to be filed by it. Except as set forth on
Schedule 4.14 of the BIF Book of Schedules, neither BIF nor any BIF
Subsidiary is: (a) delinquent in the payment of any taxes shown on such
returns or reports or on any assessments received by it for such taxes; (b)
aware of any pending or threatened examination for income taxes for any year
by the IRS or any state tax agency; (c) subject to any agreement extending
the period for assessment or collection of any federal or state tax; or (d) a
party to any action or proceeding nor has any claim been asserted against it
by any governmental authority for assessment or collection of taxes. None of
the tax liabilities of BIF or any BIF Subsidiary has ever been audited by the
IRS or any state tax agency for any period since January 1, 1994. Other than
non-material items related to real estate tax assessments, neither BIF nor
any BIF Subsidiary is, to the knowledge of BIF, a party to any threatened
action or proceeding by any governmental authority for assessment or
collection of taxes. The reserve for taxes in the audited financial
statements of BIF for the year ended December 31, 1998, is adequate to cover
all of the tax liabilities of BIF and the BIF Subsidiaries (including,
without limitation, income taxes and franchise fees) that may become payable
in future years in respect to any transactions consummated prior to December
31, 1998. Neither BIF nor any of the BIF Subsidiaries has and, to the best
of BIF's knowledge, will not have any liability for taxes of any nature for
or in respect of the operation of its business or ownership of its assets
from December 31, 1998, up to and
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including the Effective Time, except to the extent reflected on the audited
BIF Financial Statements for the year ended December 31, 1998, or on the
Subsequent BIF Financial Statements or otherwise reflected in the books and
records of BIF and the BIF Subsidiaries for the period following its then
most recent of the Subsequent BIF Financial Statements.
Section 4.15 Title to Properties. BIF either directly or indirectly
owns all of the issued and outstanding capital stock of the BIF Subsidiaries
free and clear of all liens and encumbrances of any kind whatsoever. Each of
BIF and the BIF Subsidiaries has good and marketable title to all other
assets and properties, whether real or personal, tangible or intangible,
which it purports to own subject to no liens, mortgages, security interests,
encumbrances or charges of any kind except: (a) as noted in the BIF Financial
Statements or on Schedule 4.15 of the BIF Book of Schedules; (b) statutory
liens for taxes not yet delinquent or being contested in good faith by
appropriate proceedings and for which appropriate reserves have been
established and reflected on the BIF Financial Statements or will be
reflected on the Subsequent BIF Financial Statements; (c) pledges or liens
required to be granted in connection with the acceptance of government
deposits, granted in connection with repurchase or reverse repurchase
agreements or otherwise incurred in the ordinary course of business; and (d)
minor defects and irregularities in title and encumbrances which do not
materially impair the use thereof for the purposes for which they are held
and which would not reasonably be expected to have a Material Adverse Effect
on BIF. Each of BIF and the BIF Subsidiaries as lessee has the right under
valid and subsisting leases to occupy, use, possess and control any and all
of the respective properties leased by it.
Section 4.16 Brokerage Commissions. Except as disclosed in Schedule
4.16 of the BIF Book of Schedules, all negotiations relating to this
Agreement and the transactions contemplated herein have been and will be
carried on between BIF and FDB and its respective counsel, accountants and
other representatives in such a manner that no actions of BIF or any BIF
Subsidiary or any of its respective officers, agents or representatives shall
give rise to any claim against BIF, FDB or Newco or any of its respective
Affiliates for any brokerage commission, finder's fee, investment advisor's
fee or other like payment.
Section 4.17 Certificate of Incorporation, Charter and Bylaws. The
copies of the certificate of incorporation of BIF and the charter of BKI, and
the bylaws of each of BIF and BKI, as amended to date, are complete and
correct and set forth in Schedule 4.17 of the BIF Book of Schedules.
Section 4.18 Interim Events. Except as disclosed on Schedule 4.18 of
the BIF Book of Schedules and as otherwise permitted hereunder, since
December 31, 1998, neither BIF nor any of the BIF Subsidiaries has:
(a) Suffered any changes having a Material Adverse Effect on BIF, or in
the operation or conduct of the respective businesses of BIF or any of the
BIF Subsidiaries;
(b) Suffered any material damage, destruction or loss to any of its
respective properties whether covered by insurance or not;
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(c) Declared any dividend or other distribution with respect to its
stock (except for payment of dividends and distributions from any BIF
Subsidiary to BIF or any other BIF Subsidiary), repurchased or redeemed
shares of its stock, issued any shares of its stock or sold or agreed to
issue or sell any of its stock or any right to purchase or acquire any such
stock or any security convertible into such stock or taken any action to
reclassify, recapitalize or split up its stock or issued any stock
appreciation rights;
(d) Granted or agreed to grant any increase in benefits payable or to
become payable under any BIF Employee Benefit Plan;
(e) Cancelled or compromised any debt or claim other than in the
ordinary course of business;
(f) Entered into any transaction, contract or commitment other than in
the ordinary course of business;
(g) Incurred any obligation or liability (fixed or contingent) other
than obligations and liabilities incurred in the ordinary course of its
respective business;
(h) Mortgaged, pledged or subjected to a lien, security interest or
other encumbrance any of its assets except to tax and other liens which arise
by operation of law and with respect to which payment is not past due and
except for pledges or liens: (i) required to be granted in connection with
the acceptance by any BIF Subsidiary of government deposits; (ii) granted in
connection with repurchase or reverse repurchase agreements; or (iii)
otherwise incurred in the ordinary course of the conduct of its respective
business;
(i) Conducted its respective business in any manner other than
substantially as it was being conducted prior to such time;
(j) Leased, sold or otherwise disposed of any of its assets except in
the ordinary course of business or leased, purchased or otherwise acquired
from third parties any assets except in the ordinary course of business;
(k) Except for the transactions contemplated by this Agreement, merged,
consolidated or agreed to merge or consolidate with or into any other Person,
or acquired or agreed to acquire any stock, equity interest or business of
any other Person;
(l) Agreed to enter into any transaction for the borrowing or loaning
of monies, other than in the ordinary course of business; or
(m) Increased the salary of any officer or the compensation or fees
payable to any director, except for normal increases in the ordinary course
of business or in accordance with any BIF Employee Benefit Plan, or entered
into any employment contract with any officer or salaried employee or
installed any employee welfare, stock option, profit sharing or other similar
plan or arrangement.
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Section 4.19 Regulatory Filings. Each of BIF and the BIF Subsidiaries
has filed in a timely manner all required filings with all proper regulatory
agencies, including, but not limited to: (a) the Securities and Exchange
Commission (the "SEC"); (b) the Board of Governors of the Federal Reserve
System (the "Federal Reserve"); (c) the Federal Deposit Insurance Corporation
(the "FDIC"); and (d) the Commissioner. All such filings with such federal
and state regulatory agencies were accurate and complete in all material
respects as of the dates of the filings, and no such filing has made any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading. Accurate and
complete copies of each document filed by BIF with the SEC since January 1,
1999, are attached as Schedule 4.19 of the BIF Book of Schedules.
Section 4.20 Compliance with Applicable Law. Each of BIF and the BIF
Subsidiaries holds all licenses, certificates, permits, franchises and rights
from all appropriate federal, state or other public authorities necessary for
the conduct of its respective business and where failure to do so would
reasonably be expected to have a Material Adverse Effect on BIF. Each of BIF
and the BIF Subsidiaries has complied in all material respects with all
applicable federal, state and local statutes, ordinances, regulations, rules
or requirements, and neither BIF nor any BIF Subsidiary is presently charged
with, or to the knowledge of BIF, under governmental investigation with
respect to, any actual or alleged material violations of any statute,
ordinance, regulation or rule.
Section 4.21 Compliance With ERISA. All of the employee benefit plans
(as defined in Section 3(3) of ERISA) established or maintained by BIF or any
of the BIF Subsidiaries, or to which BIF or any of the BIF Subsidiaries
contributes are in compliance in all material respects with all applicable
requirements of ERISA, and are in compliance in all material respects with
all applicable requirements (including qualification and non-discrimination
requirements in effect as of the Effective Time) of the Code for obtaining
the tax benefits the Code thereupon permits with respect to such employee
benefit plans. For purposes of this Section, non-compliance with the Code
and ERISA is material if such non-compliance would reasonably be expected to
have a Material Adverse Effect on BIF. No such employee benefit plan has, or
as of the Effective Time will have, any amount of unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA) for which BIF or any
of the BIF Subsidiaries would be liable to any Person under Title IV of ERISA
if any such employee benefit plan were terminated as of the Effective Time,
which amounts would be material to BIF and the BIF Subsidiaries taken as a
whole. Such employee benefit plans are funded in accordance with Section 412
of the Code (if applicable). There would be no obligations which would be
material to BIF and the BIF Subsidiaries taken as a whole under Title IV of
ERISA relating to any such employee benefit plan that is a multi-employer
plan if any such plan were terminated or if BIF or the BIF Subsidiaries
withdrew from any such plan as of the Effective Time.
Section 4.22 Compliance With Environmental Laws. Each of BIF and the
BIF Subsidiaries has conducted its respective business in material compliance
with all federal, state, county and municipal laws, including statutes,
regulations, rules, ordinances, orders, restrictions and requirements,
relating to underground storage tanks, petroleum products, air pollutants,
water pollutants or process waste water or otherwise relating to the
environment or toxic or
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hazardous substances or to the manufacture, processing, distribution, use,
recycling, generation, treatment, handling, storage, disposal or transport of
any hazardous or toxic substances or petroleum products (including
polychlorinated biphenyls, whether contained or uncontained, and
asbestos-containing materials, whether friable or not), including, but not
limited to, the Federal Solid Waste Disposal Act, the Hazardous and Solid
Waste Amendments, the Federal Clean Air Act, the Federal Clean Water Act, the
Occupational Health and Safety Act, the Federal Resource Conservation and
Recovery Act, the Toxic Substances Control Act, the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and the
Superfund Amendments and Reauthorization Act of 1986, all as amended,
and regulations of the Environmental Protection Agency, the Nuclear
Regulatory Agency and any state department of natural resources or state
environmental protection agency now or at any time hereafter in effect
(collectively, the "Environmental Laws"). There are no pending or, to the
knowledge of BIF, threatened actions or proceedings by any local
municipality, sewerage district or other governmental entity against BIF or
any of the BIF Subsidiaries with respect to the Environmental Laws and, to
the knowledge of BIF, there is no basis or grounds for any such action or
proceeding. No environmental clearances or other governmental approvals are
required for the conduct of the business of BIF or any of the BIF
Subsidiaries or the consummation of the transactions contemplated hereby. To
the knowledge of BIF, neither BIF nor any of the BIF Subsidiaries is the
owner of any interest in real estate on which any substances have been used,
stored, deposited, treated, recycled or disposed of, which substances if
known to be present on, at or under such property, would require clean-up,
removal or some other remedial action under any Environmental Laws.
Section 4.23 Trust Administration. Each of BIF and the BIF
Subsidiaries has properly administered, in all material respects, all
accounts for which it acts as fiduciary, including but not limited to
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian or investment advisor, in accordance with the terms
of the governing documents and applicable state and federal law and
regulations and common law. None of BIF or any BIF Subsidiary, or any
director, officer or employee of BIF or any BIF Subsidiary has committed any
material breach of trust with respect to any such fiduciary account, and the
accountings for each such fiduciary account are true and correct in all
material respects and accurately reflect the assets of such fiduciary
account.
Section 4.24 Loan Loss Reserve. The reserve for possible loan and
lease losses shown on the March 31, 1999, Call Report for BKI is adequate in
all material respects under the requirements of generally accepted accounting
principles to provide for possible losses, net of recoveries relating to
loans previously charged off, on loans outstanding (including, without
limitation, accrued interest receivable) as of March 31, 1999. The aggregate
loan balances of BKI at such date in excess of such reserves are, to the best
knowledge of BIF, and based on past loan loss experience, collectible in
accordance with their terms.
Section 4.25 Year 2000. Neither BIF nor any BIF Subsidiary has
received, and BIF has no reason to believe that it or any BIF Subsidiary will
receive, a rating of less than "satisfactory" on any Year 2000 Report of
Examination conducted by the Commissioner, the FDIC, the Federal Reserve or
any other regulatory authority. Schedule 4.25 of the BIF Book of
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Schedules contains complete and accurate copies of the plans of BIF and each
BIF Subsidiary for addressing the issues set forth in the statements of the
FFIEC dated May 5, 1997, entitled "Year 2000 Project Management Awareness,"
and December 17, 1997, entitled "Safety and Soundness Guidelines Concerning
the Year 2000 Business Risk," as such issues affect BIF and its Subsidiaries.
BIF, each BIF Subsidiary and their respective plans are in material
compliance with the Schedule set forth in the foregoing FFIEC statements and
with the foregoing FFIEC guidelines.
Section 4.26 Approval Delays. To the best of its knowledge, BIF knows
of no reason why the granting of any of the regulatory approvals referred to
in Section 12.2 would be denied or unduly delayed.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES BY FDB
FDB hereby represents and warrants to BIF that the following are true
and correct as of the date hereof, and will be true and correct as of the
Effective Time:
Section 5.1 FDB Organization. FDB: (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and is a registered bank holding company under the BHCA; (b) is
duly qualified to do business and is in good standing in the states of
Delaware and Illinois and in each other jurisdiction in which the nature of
the business conducted or the properties or assets owned or leased by it
makes such qualification necessary and where failure to be so qualified would
reasonably be expected to have a Material Adverse Effect on FDB; and (c) has
full power and authority, corporate and otherwise, to own, operate and lease
its properties as presently owned, operated and leased, and to carry on its
business as it is now being conducted. FDB owns no voting stock or equity
securities of any corporation, association, partnership or other entity,
other than all of the voting stock of FNB, First Trust and FirsTech and as
set forth on Schedule 5.1 of the FDB Book of Schedules.
Section 5.2 FDB Capitalization. The authorized capital stock of FDB
consists, and at June 30, 1999, consisted of: (a) 5,000,000 shares of common
stock, $0.01 par value per share, of which 2,909,397 shares were issued as of
July 28, 1999, of which 144,427 shares were held in the treasury of FDB as of
that date; and (b) 200,000 shares of preferred stock, no par value per share,
none of which shares are issued and outstanding. The maximum number of
shares of FDB Common Stock (assuming for this purpose that share equivalents
constitute FDB Common Stock) that would be outstanding immediately prior to
the Effective Time (including treasury shares) if all options, warrants,
conversion rights and other rights with respect thereto were exercised and
the restrictions on any restricted stock were no longer applicable is
2,926,647 shares. All of the outstanding shares of capital stock of FDB have
been duly and validly authorized and issued and are fully paid and
nonassessable. Except as contemplated in this Agreement or as set forth in
Schedule 5.2 of the FDB Book of Schedules, there are, as of the date of this
Agreement, no outstanding subscriptions, contracts, conversion privileges,
options, warrants, calls or other rights obligating FDB or any FDB Subsidiary
to issue, sell or otherwise dispose of, or to purchase, redeem or otherwise
acquire, any shares of capital stock of FDB or
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any FDB Subsidiary, other than preemptive rights granted to stockholders of
Illinois state banks pursuant to the Illinois Banking Act, as amended.
Except as permitted by this Agreement and provided on Schedule 5.2 of the FDB
Book of Schedules, no shares of FDB capital stock have been purchased,
redeemed or otherwise acquired, directly or indirectly, by FDB or any FDB
Subsidiary and no dividends or other distributions payable in any equity
securities of FDB or any FDB Subsidiary have been declared, set aside, made
or paid to the stockholders of FDB.
Section 5.3 Subsidiary Organization. (a) FNB is a national banking
association duly organized, validly existing and in good standing under the
laws of the United States. FNB has full power and authority, corporate and
otherwise, to own, operate and lease its properties as presently owned,
operated and leased, and to carry on its business as it is now being
conducted. FNB owns no voting stock or equity securities of any corporation,
association, partnership or other entity, other than as shown on Schedule 5.3
of the FDB Book of Schedules.
(b) First Trust is an Illinois state bank duly organized, validly
existing and in good standing under the laws of the State of Illinois. The
Bank has full power and authority, corporate and otherwise, to own, operate
and lease its properties as presently owned, operated and leased, and to
carry on its business as it is now being conducted. First Trust owns no
voting stock or equity securities of any corporation, association,
partnership or other entity, other than as shown on Schedule 5.3 of the FDB
Book of Schedules.
(c) FirsTech: (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware; (ii) is duly
qualified to do business and is in good standing in the states of Delaware
and Illinois and in each other jurisdiction in which the nature of the
business conducted or the properties or assets owned or leased by it makes
such qualification necessary and where failure to be so qualified would
reasonably be expected to have a Material Adverse Effect on FDB; and (iii)
has full power and authority, corporate and otherwise, to own, operate and
lease its properties as presently owned, operated and leased, and to carry on
its business as it is now being conducted. FirsTech owns no voting stock or
equity securities of any corporation, association, partnership or other
entity.
Section 5.4 Subsidiary Capitalization. (a) The authorized capital
stock of FNB consists, and at the Effective Time will consist, of 130,975
shares of common stock, $25.00 par value per share, all of which shares are
validly issued and outstanding, fully paid and nonassessable, and owned by
FDB. There are no options, warrants, rights, calls or commitments of any
character relating to any additional shares of the capital stock of FNB.
(b) The authorized capital stock of First Trust consists, and at the
Effective Time will consist, of 9,000 shares of common stock, $50.00 par
value per share, all of which shares are validly issued and outstanding,
fully paid and nonassessable, and owned by FDB. There are no options,
warrants, rights, calls or commitments of any character relating to any
additional shares of the capital stock of First Trust except for the
stockholders' pre-emptive rights granted by the Illinois Banking Act, as
amended.
(c) The authorized capital stock of FirsTech consists, and at the
Effective Time will consist, of 1,000 shares of common stock, no par value
per share, 100 of which shares are validly
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issued and outstanding, fully paid and nonassessable, and owned by FDB.
There are no options, warrants, rights, calls or commitments of any character
relating to any additional shares of the capital stock of FirsTech.
Section 5.5 Authorization. FDB has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and
the execution, delivery and performance of this Agreement by FDB and the
consummation by it of the transactions contemplated thereby, have been duly
authorized by all necessary corporate action, subject to stockholder
approval. This Agreement constitutes a legal, valid and binding obligation
of FDB enforceable in accordance with its terms except as such enforcement
may be limited by bankruptcy, insolvency, reorganization or other similar
laws and subject to general principles of equity.
Section 5.6 Litigation and Regulatory Matters. Schedule 5.6 of the
FDB Book of Schedules sets forth a list of all actions, suits or proceedings
pending as of the date hereof in which FDB or any FDB Subsidiary is a named
party, other than collection or foreclosure actions brought by FDB or any FDB
Subsidiary in the ordinary course of business and where no counterclaim has
been filed against FDB or such FDB Subsidiary. Except as set forth on
Schedule 5.6 of the FDB Book of Schedules, there is no action, suit,
proceeding, claim or formal written protest by any Person or agency, or any
investigation or report by any regulatory authority having jurisdiction over
FDB or any FDB Subsidiary or any of its respective assets or businesses which
is pending or, to FDB's knowledge, threatened against FDB or any FDB
Subsidiary, or any of its respective officers or directors in their
capacities as such, or its assets, business or goodwill which would
reasonably be expected to have a Material Adverse Effect on FDB or which
would impair FDB's ability to consummate the Merger. FDB further represents
and warrants that except as set forth on Schedule 5.6 of the FDB Book of
Schedules, it does not know or have any reason to believe that there is any
basis for assertion against it or any FDB Subsidiary of any material claims
based upon the wrongful action or inaction of either FDB or any FDB
Subsidiary, and any of their respective officers, directors or employees
which would reasonably be expected to have a Material Adverse Effect on FDB
or which would impair FDB's ability to consummate the Merger. Neither FDB
nor any FDB Subsidiary is subject to, or in default with respect to, nor are
any of its assets subject to, any outstanding judgment, regulatory agreement,
injunction, writ, order or decree or any other requirement of any
governmental body or court or of any governmental agency or instrumentality
which would reasonably be expected to have a Material Adverse Effect on FDB
or which would impair FDB's ability to consummate the Merger.
Section 5.7 Insurance. Schedule 5.7 of the FDB Book of Schedules
lists the policies of insurance (including bankers blanket bond and insurance
providing benefits for employees) owned or held by FDB or any FDB Subsidiary
on the date hereof. Each such policy is, and FDB will use all reasonable
efforts to keep each such policy, in full force and effect (except for any
expiring policy which is replaced by coverage at least as extensive) until
the Effective Time. All premiums due on such policies have been paid.
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Section 5.8 Defaults Under Agreements. Neither FDB nor any FDB
Subsidiary is in default or alleged to be in default, under any loan or
credit agreement, conditional sales contract or other title retention
agreement or security agreement relating to money borrowed by FDB or any FDB
Subsidiary, agreements pursuant to which it leases real or personal property
or any other instrument or obligation, which would reasonably be expected to
have a Material Adverse Effect on FDB. Neither FDB nor any FDB Subsidiary is
in default in any material respect and FDB has no knowledge of any material
default under such instruments by any other party thereto and has no
knowledge of any event which with notice or lapse of time or both would
constitute a material default.
Section 5.9 Financial Statements and Reports. Copies of the
following financial statements and reports of FDB and the FDB Subsidiaries
(collectively, the "FDB Financial Statements") have been delivered by FDB to
BIF:
(a) Consolidated Balance Sheets and the related Statements of Income,
Statements of Changes in Stockholders' Equity and Statements of Cash Flows of
FDB for the years ended December 31, 1996, 1997 and 1998; and
(b) Consolidated Balance Sheets and the related Statements of Income of
FDB for the quarter ended March 31, 1999; and
(c) Call Reports for FNB and First Trust, in each case at the close of
business on December 31, 1996, 1997 and 1998, and on March 31, 1999.
The FDB Financial Statements are complete and correct in all material
respects and fairly present the consolidated financial position of FDB, FNB,
First Trust and FirsTech, as the case may be, at the dates shown and the
results of operations for the periods covered. The FDB Financial Statements
described in clause (a) above are audited statements and have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis. The FDB Financial Statements described in clauses (b) and
(c) above have been prepared on a basis consistent with past accounting
practices and as required by applicable rules or regulations and fairly
present the consolidated financial condition and results of operations at the
dates and for the entities and periods presented, subject to year-end audit
adjustments (which changes in the aggregate would not reasonably be expected
to be materially adverse). The FDB Financial Statements do not include any
material assets or omit to state any material liabilities, absolute or
contingent, or other facts, which inclusion or omission would render the FDB
Financial Statements misleading in any material respect.
Section 5.10 Properties, Contracts, Benefit Plans and Other
Agreements. Schedule 5.10 of the FDB Book of Schedules lists or describes
the following:
(a) All real property owned or leased by FDB or any FDB Subsidiary
together with a legal description of such real estate, and each lease of real
property to which FDB or any FDB Subsidiary is a party, identifying the
parties thereto, the annual rental payable and the expiration date thereof;
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(b) All loan and credit agreements, conditional sales contracts or
other title retention agreements or security agreements relating to money
borrowed by FDB or any FDB Subsidiary, exclusive of deposit agreements with
customers of any FDB Subsidiary entered into in the ordinary course of
business, agreements for the purchase of federal funds and repurchase
agreements;
(c) All agreements, loans, contracts, leases, guaranties, letters of
credit, lines of credit or commitments of FDB or any of the FDB Subsidiaries
not referred to elsewhere in this Section which:
(i) involve payment by FDB or any FDB Subsidiary (other than
as disbursement of loan proceeds to customers) of more than $50,000;
(ii) involve payments based on profits of FDB or any FDB
Subsidiary;
(iii) relate to the future purchase of goods or services in
excess of the requirements of its respective business at current levels or
for normal operating purposes;
(iv) were not made in the ordinary course of business; or
(v) materially affect the business or financial condition of
FDB or any FDB Subsidiary;
(d) All profit sharing; group insurance; hospitalization; stock option;
pension; retirement; bonus; deferred compensation; stock bonus; stock
purchase; collective bargaining agreements, contracts or arrangements under
which pensions, deferred compensation or other retirement benefits are being
paid or may become payable respectively by FDB or any FDB Subsidiary; or
other employee welfare or benefit agreements, plans or arrangements
established, maintained, sponsored or undertaken by FDB or any FDB Subsidiary
for the benefit of its respective officers, directors or employees, including
each trust or other agreement with any custodian or any trustee for funds
held under any such agreement, plan or arrangement (collectively, the "FDB
Employee Benefit Plans"), and, in respect to any of them, the latest reports
or forms, if any, filed with the Department of Labor and Pension Benefit
Guaranty Corporation under ERISA, any current financial or actuarial reports
and any currently effective IRS private rulings or determination letters
obtained by or for the benefit of FDB or any FDB Subsidiary;
(e) All leases or licenses of FDB or any FDB Subsidiary with respect to
personal property, whether as lessee or licensee, with annual rental or other
payments due thereunder in excess of $20,000;
(f) All employment and consulting contracts to which FDB or any FDB
Subsidiary is a party (except for ordinary oral employment contracts with
employees of FDB or any FDB Subsidiary creating at will employment
relationships); and
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(g) The name and annual salary as of January 1, 1999, of each director,
officer or employee of FDB or any FDB Subsidiary.
Copies of each document, plan or contract listed and described in
Schedule 5.10 of the FDB Book of Schedules are appended to such Schedule and
included in the FDB Book of Schedules.
Section 5.11 Disclosures. No representation or warranty made herein
by FDB contains any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements contained herein under the
circumstances under which they were made not misleading. Except as and to
the extent reflected or reserved against in FDB's audited financial
statements for the year ended December 31, 1998, referenced in Section 5.9
above, or the Subsequent FDB Financial Statements, neither FDB nor any FDB
Subsidiary has, and with respect to the Subsequent FDB Financial Statements
(as such term is defined in Section 7.3) will not have, any liabilities or
obligations, of any nature, secured or unsecured, (whether accrued, absolute,
contingent or otherwise) including, without limitation, any tax liabilities
due or to become due, which would reasonably be expected to have a Material
Adverse Effect on FDB.
Section 5.12 Effect of Agreement. The execution, delivery and
performance of this Agreement by FDB and the consummation by it of the
transactions contemplated hereby do not: (a) require the consent, waiver,
order, registration, qualification, approval, license or authorization of any
Person, court, regulatory authority or other governmental body, other than as
specifically contemplated by this Agreement and as may be required in
connection or in compliance with the provisions of the BCA, the Delaware
Code, the BHCA and the Illinois Act; (b) violate, with or without the giving
of notice or the passage of time or both, in any material respect any
provision of law applicable to it; (c) conflict with or result in a breach of
any terms of its certificate of incorporation or bylaws, or any material
mortgage, deed of trust, license, indenture or other agreement or instrument,
or any order, judgment, decree, statute, regulation or other restriction of
any kind or character, to which FDB or any FDB Subsidiary is a party or by
which it or any of its respective assets may be bound; (d) give to others any
right to accelerate or terminate, or result in acceleration or termination
of, any such agreement or instrument; (e) result in termination of any
provision of any such agreement or instrument; or (f) result in the creation
of any lien, charge or encumbrance upon any of the property or assets of FDB
or any FDB Subsidiary.
Section 5.13 Books and Records. The books and records of FDB and the
FDB Subsidiaries are in all material respects complete and correct and
accurately reflect the basis for the respective financial condition and
results of operations of FDB and the FDB Subsidiaries set forth in the FDB
Financial Statements.
Section 5.14 Taxes. Each of FDB and the FDB Subsidiaries has filed
with the appropriate governmental agencies all federal, state and local
income, franchise, excise, sales, use, real and personal property and other
tax returns and reports required to be filed by it. Except as set forth on
Schedule 5.14 of the FDB Book of Schedules, neither FDB nor any FDB
Subsidiary is: (a) delinquent in the payment of any taxes shown on such
returns or reports or on
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any assessments received by it for such taxes; (b) aware of any pending or
threatened examination for income taxes for any year by the IRS or any state
tax agency; (c) subject to any agreement extending the period for assessment
or collection of any federal or state tax; or (d) a party to any action or
proceeding nor has any claim been asserted against it by any governmental
authority for assessment or collection of taxes. None of the tax liabilities
of FDB or any FDB Subsidiary has ever been audited by the IRS or any state
tax agency for any period since January 1, 1994. Other than non-material
items related to real estate tax assessments, neither FDB nor any FDB
Subsidiary is, to the knowledge of FDB, a party to any threatened action or
proceeding by any governmental authority for assessment or collection of
taxes. The reserve for taxes in the audited financial statements of FDB for
the year ended December 31, 1998, is adequate to cover all of the tax
liabilities of FDB and the FDB Subsidiaries (including, without limitation,
income taxes and franchise fees) that may become payable in future years in
respect to any transactions consummated prior to December 31, 1998. Neither
FDB nor any of the FDB Subsidiaries has and, to the best of FDB's knowledge,
will not have any liability for taxes of any nature for or in respect of the
operation of its business or ownership of its assets from December 31, 1998,
up to and including the Effective Time, except to the extent reflected on the
audited FDB Financial Statements for the year ended December 31, 1998, or on
the Subsequent FDB Financial Statements or otherwise reflected in the books
and records of FDB and the FDB Subsidiaries for the period following its then
most recent of the Subsequent FDB Financial Statements.
Section 5.15 Title to Properties. FDB either directly or indirectly
owns all of the issued and outstanding capital stock of the FDB Subsidiaries
free and clear of all liens and encumbrances of any kind whatsoever. Each of
FDB and the FDB Subsidiaries has good and marketable title to all other
assets and properties, whether real or personal, tangible or intangible,
which it purports to own subject to no liens, mortgages, security interests,
encumbrances or charges of any kind except: (a) as noted in the FDB Financial
Statements or on Schedule 5.15 of the FDB Book of Schedules; (b) statutory
liens for taxes not yet delinquent or being contested in good faith by
appropriate proceedings and for which appropriate reserves have been
established and reflected on the FDB Financial Statements or will be
reflected on the Subsequent FDB Financial Statements; (c) pledges or liens
required to be granted in connection with the acceptance of government
deposits, granted in connection with repurchase or reverse repurchase
agreements or otherwise incurred in the ordinary course of business; and (d)
minor defects and irregularities in title and encumbrances which do not
materially impair the use thereof for the purposes for which they are held
and which would not reasonably be expected to have a Material Adverse Effect
on FDB. Each of FDB and the FDB Subsidiaries as lessee has the right under
valid and subsisting leases to occupy, use, possess and control any and all
of the respective properties leased by it.
Section 5.16 Brokerage Commissions. Except as disclosed in Schedule
5.16 of the FDB Book of Schedules, all negotiations relating to this
Agreement and the transactions contemplated herein have been and will be
carried on between FDB and BIF and its respective counsel, accountants and
other representatives in such a manner that no actions of FDB or any FDB
Subsidiary or any of its respective officers, agents or representatives shall
give rise to any claim against FDB or BIF or any of its respective Affiliates
for any brokerage commission, finder's fee, investment advisor's fee or other
like payment.
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Section 5.17 Certificate of Incorporation and Bylaws. The copies of
the certificate of incorporation of FDB and FirsTech, the articles of
association of FNB and the charter of First Trust and the bylaws of each of
FDB, FirsTech, FNB and First Trust, as amended to date, are complete and
correct and set forth in Schedule 5.17 of the FDB Book of Schedules.
Section 5.18 Interim Events. Except as disclosed on Schedule 5.18 of
the FDB Book of Schedules and as otherwise permitted hereunder, since
December 31, 1998, neither FDB nor any of the FDB Subsidiaries has:
(a) Suffered any changes having a Material Adverse Effect on FDB, or in
the operation or conduct of the respective businesses of FDB or any of the
FDB Subsidiaries;
(b) Suffered any material damage, destruction or loss to any of its
respective properties whether covered by insurance or not;
(c) Declared any dividend or other distribution with respect to its
stock (except for payment of dividends and distributions from any FDB
Subsidiary to FDB or any other FDB Subsidiary), repurchased or redeemed
shares of its stock, issued any shares of its stock or sold or agreed to
issue or sell any of its stock or any right to purchase or acquire any such
stock or any security convertible into such stock or taken any action to
reclassify, recapitalize or split up its stock or issued any stock
appreciation rights;
(d) Granted or agreed to grant any increase in benefits payable or to
become payable under any FDB Employee Benefit Plan;
(e) Cancelled or compromised any debt or claim other than in the
ordinary course of business;
(f) Entered into any transaction, contract or commitment other than in
the ordinary course of business;
(g) Incurred any obligation or liability (fixed or contingent) other
than obligations and liabilities incurred in the ordinary course of its
respective business;
(h) Mortgaged, pledged or subjected to a lien, security interest or
other encumbrance any of its assets except to tax and other liens which arise
by operation of law and with respect to which payment is not past due and
except for pledges or liens: (i) required to be granted in connection with
the acceptance by any FDB Subsidiary of government deposits; (ii) granted in
connection with repurchase or reverse repurchase agreements; or (iii)
otherwise incurred in the ordinary course of the conduct of its respective
business;
(i) Conducted its respective business in any manner other than
substantially as it was being conducted prior to such time;
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(j) Leased, sold or otherwise disposed of any of its assets except in
the ordinary course of business or leased, purchased or otherwise acquired
from third parties any assets except in the ordinary course of business;
(k) Except for the transactions contemplated by this Agreement, merged,
consolidated or agreed to merge or consolidate with or into any other Person,
or acquired or agreed to acquire any stock, equity interest or business of
any other Person;
(l) Agreed to enter into any transaction for the borrowing or loaning
of monies, other than in the ordinary course of business; or
(m) Increased the salary of any officer or the compensation or fees
payable to any director, except for normal increases in the ordinary course
of business or in accordance with any FDB Employee Benefit Plan, or entered
into any employment contract with any officer or salaried employee or
installed any employee welfare, stock option, profit sharing or other similar
plan or arrangement.
Section 5.19 Regulatory Filings. Each of FDB and the FDB Subsidiaries
has filed in a timely manner all required filings with all proper regulatory
agencies, including, but not limited to: (a) the SEC; (b) the Federal
Reserve; (c) the OCC; (d) the FDIC and (e) the Commissioner. All such
filings with such federal and state regulatory agencies were accurate and
complete in all material respects as of the dates of the filings, and no such
filing has made any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading. Accurate and
complete copies of each document filed by FDB with the SEC since January 1,
1999, are attached as Schedule 5.19 of the FDB Book of Schedules.
Section 5.20 Compliance with Applicable Law. Each of FDB and the FDB
Subsidiaries holds all licenses, certificates, permits, franchises and rights
from all appropriate federal, state or other public authorities necessary for
the conduct of its respective business and where failure to do so would
reasonably be expected to have a Material Adverse Effect on FDB. Each of FDB
and the FDB Subsidiaries has complied in all material respects with all
applicable federal, state and local statutes, ordinances, regulations, rules
or requirements, and neither FDB nor any FDB Subsidiary is presently charged
with, or to the knowledge of FDB, under governmental investigation with
respect to, any actual or alleged material violations of any statute,
ordinance, regulation or rule.
Section 5.21 Compliance With ERISA. All of the employee benefit plans
(as defined in Section 3(3) of ERISA) established or maintained by FDB or any
of the FDB Subsidiaries, or to which FDB or any of the FDB Subsidiaries
contributes are in compliance in all material respects with all applicable
requirements of ERISA, and are in compliance in all material respects with
all applicable requirements (including qualification and non-discrimination
requirements in effect as of the Effective Time) of the Code for obtaining
the tax benefits the Code thereupon permits with respect to such employee
benefit plans. For purposes of this Section, non-compliance with the Code
and ERISA is material if such non-compliance would reasonably be expected to
have a Material Adverse Effect on FDB. No such employee benefit
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plan has, or as of the Effective Time will have, any amount of unfunded
benefit liabilities (as defined in Section 4001(a)(18) of ERISA) for which
FDB or any of the FDB Subsidiaries would be liable to any Person under Title
IV of ERISA if any such employee benefit plan were terminated as of the
Effective Time, which amounts would be material to FDB and the FDB
Subsidiaries taken as a whole. Such employee benefit plans are funded in
accordance with Section 412 of the Code (if applicable). There would be no
obligations which would be material to FDB and the FDB Subsidiaries taken as
a whole under Title IV of ERISA relating to any such employee benefit plan
that is a multi-employer plan if any such plan were terminated or if FDB or
the FDB Subsidiaries withdrew from any such plan as of the Effective Time.
Section 5.22 Compliance With Environmental Laws. Each of FDB and the
FDB Subsidiaries has conducted its respective business in material compliance
with all Environmental Laws. There are no pending or, to the knowledge of
FDB, threatened actions or proceedings by any local municipality, sewerage
district or other governmental entity against FDB or any of the FDB
Subsidiaries with respect to the Environmental Laws and, to the knowledge of
FDB, there is no basis or grounds for any such action or proceeding. No
environmental clearances or other governmental approvals are required for the
conduct of the business of FDB or any of the FDB Subsidiaries or the
consummation of the transactions contemplated hereby. To the knowledge of
FDB, neither FDB nor any of the FDB Subsidiaries is the owner of any interest
in real estate on which any substances have been used, stored, deposited,
treated, recycled or disposed of, which substances if known to be present on,
at or under such property, would require clean-up, removal or some other
remedial action under any Environmental Laws.
Section 5.23 Trust Administration. Each of FDB and the FDB
Subsidiaries has properly administered, in all material respects, all
accounts for which it acts as fiduciary, including but not limited to
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian or investment advisor, in accordance with the terms
of the governing documents and applicable state and federal law and
regulations and common law. None of FDB or any FDB Subsidiary, or any
director, officer or employee of FDB or any FDB Subsidiary has committed any
material breach of trust with respect to any such fiduciary account, and the
accountings for each such fiduciary account are true and correct in all
material respects and accurately reflect the assets of such fiduciary
account.
Section 5.24 Loan Loss Reserve. The reserve for possible loan and
lease losses shown on the March 31, 1999, Call Reports for FNB and First
Trust, respectively in each case is adequate in all material respects under
the requirements of generally accepted accounting principles to provide for
possible losses, net of recoveries relating to loans previously charged off,
on loans outstanding (including, without limitation, accrued interest
receivable) as of March 31, 1999. The aggregate loan balances of FNB and of
First Trust at such date in excess of such reserves are, to the best
knowledge of FDB, and based on past loan loss experience, collectible in
accordance with their terms.
Section 5.25 Year 2000. Neither FDB nor any FDB Subsidiary has
received, and FDB has no reason to believe that it or any FDB Subsidiary will
receive, a rating of less than "satisfactory" on any Year 2000 Report of
Examination conducted by the Commissioner, the
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OCC, the FDIC, the Federal Reserve or any other regulatory authority.
Schedule 5.25 of the FDB Book of Schedules contains complete and accurate
copies of the plans of FDB and each FDB Subsidiary for addressing the issues
set forth in the statements of the FFIEC dated May 5, 1997, entitled "Year
2000 Project Management Awareness," and December 17, 1997, entitled "Safety
and Soundness Guidelines Concerning the Year 2000 Business Risk," as such
issues affect FDB and its Subsidiaries. FDB, each FDB Subsidiary and their
respective plans are in material compliance with the schedule set forth in
the foregoing FFIEC statements and with the foregoing FFIEC guidelines.
Section 5.26 Approval Delays. To the best of its knowledge, FDB knows
of no reason why the granting of any of the regulatory approvals referred to
in Section 12.2 would be denied or unduly delayed.
ARTICLE 6
COVENANTS OF BIF
From and after the date hereof and until the Effective Time, BIF hereby
covenants and agrees with FDB as follows:
Section 6.1 Information, Access Thereto, Confidentiality. (a) FDB,
its representatives and agents shall, at all times during normal business
hours prior to the Closing Date, have full and continuing access to the
facilities, operations, records and properties of BIF and the BIF
Subsidiaries. FDB, its representatives and agents may, prior to the Closing
Date, make or cause to be made such reasonable investigation of the
operations, records and properties of BIF and the BIF Subsidiaries, including
observation of any audit of, and examination of any audit work papers with
respect to, BIF or any BIF Subsidiary, and of its and their financial and
legal condition as FDB shall deem necessary or advisable to familiarize
itself with such records, properties and other matters; provided, that such
access or investigation shall not interfere unnecessarily with the normal
operations of BIF or any of the BIF Subsidiaries. Upon request, each of BIF
and the BIF Subsidiaries will furnish FDB or its representatives or agents,
its attorneys' responses to auditors' requests for information, and such
financial and operating data and other information reasonably requested by
FDB developed by BIF or any of the BIF Subsidiaries, its auditors,
accountants or attorneys (provided with respect to attorneys, such disclosure
shall be limited to information that would not result in the waiver by BIF of
any claim of attorney-client privilege), and will permit FDB, its
representatives or agents to discuss such information directly with any
individual or firm performing auditing or accounting functions for BIF or any
of the BIF Subsidiaries, and such auditors and accountants shall be directed
to furnish copies of any reports or financial information as developed to FDB
or its representatives or agents. No investigation by FDB shall affect the
representations and warranties made by BIF. This Section shall not require
the disclosure of any information the disclosure of which to FDB would be
prohibited by law.
(b) Any confidential information or trade secrets received by BIF, its
employees or agents in the course of the examination described in Sections
2.10(a) or 7.1 shall be treated confidentially, and any correspondence,
memoranda, records, copies, documents and electronic
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or other media of any kind containing either such confidential information,
or trade secrets or both shall be destroyed by BIF or, at FDB's request,
returned to FDB in the event this Agreement is terminated as provided in
Section 13.1. Such information shall not be used by BIF or its agents to the
detriment of FDB or any FDB Subsidiary.
Section 6.2 Carry on in Regular Course. Each of BIF and the BIF
Subsidiaries shall carry on its business diligently and substantially in the
same manner as is presently being conducted and shall not make or institute
any unusual or material change in its methods of doing business without the
prior written consent of FDB. BIF shall, and shall also cause each of the
BIF Subsidiaries to, unless otherwise consented to in writing in advance by
FDB:
(a) Enter into loan transactions only in accordance with sound credit
practices and only on terms and conditions which are not materially more
favorable than those available to the borrower from competitive sources in
transactions in the ordinary course of business and consistent with prudent
banking practices and policies and regulations of applicable regulatory
authorities, and in that connection, BIF will apprise FDB of all new credits
or new lending relationships approved in excess of $1.0 million to any Person
or Persons and his, her or their Affiliates from the date hereof to the
Effective Time;
(b) Maintain all of its assets necessary for the conduct of its
business in good operating condition and repair, reasonable wear and tear and
damage by fire or unavoidable casualty excepted, and maintain policies of
insurance upon its assets and with respect to the conduct of its business in
amounts and kinds comparable to that in effect on the date hereof and pay all
premiums on such policies when due;
(c) Use all reasonable efforts to preserve its present business
organization intact, keep available the services of its present officers and
employees and preserve its present relationships with Persons having business
dealings with it;
(d) Maintain its books, accounts and records in the usual, regular and
ordinary manner, on a basis consistent with prior years and comply in all
material respects with all laws and regulations applicable to it and to the
conduct of its business;
(e) Subject to the provisions of Section 6.9, make no amendment to its
certificate of incorporation, charter or bylaws and enter into no merger or
consolidation with, or sale of a significant portion of its assets to, any
other Person;
(f) Except as otherwise permitted or required by this Agreement, make
no change in the number of shares of its capital stock issued and
outstanding, grant or make no option, warrant, call, right, commitment or any
other security or agreement of any character obligating it to issue any
shares of its capital stock and issue no other securities or evidences of
indebtedness, so long as any such permitted actions are taken prior to the
Closing Date;
(g) Except as otherwise permitted by this Agreement, make no increase
in the compensation payable or to become payable by it to any employee except
for normal periodic increases, and as may be required, or as is normal and
customary based upon past practices over
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the last three (3) fiscal years, under the terms of any existing BIF Employee
Benefit Plan, so long as any such permitted actions are taken prior to the
Closing Date;
(h) Except as contemplated by Schedule 5.10(c)(i) of the FDB Book of
Schedules, not make any investment of a capital nature exceeding $100,000 or
aggregate investments of a capital nature exceeding $500,000;
(i) Except as otherwise permitted or required by this Agreement and for
modifications necessary to comply with any applicable law, rule or
regulation, make no change in any BIF Employee Benefit Plan;
(j) Cause BKI, consistent with BKI's past practices, to maintain a
reserve for possible loan and lease losses which is adequate in all material
respects under the requirements of generally accepted accounting principles
to provide for possible losses, net of recoveries relating to loans
previously charged off, on loans outstanding (including, without limitation,
accrued interest receivable);
(k) Make no material change in any lease of real property;
(l) File in a timely manner all required filings with all proper
regulatory authorities and cause such filings to be true and correct in all
material respects;
(m) Enter into no employment, consulting or similar agreement or
arrangement that is not terminable, without penalty or premium, on thirty
(30) days' notice or less;
(n) File with the appropriate governmental agencies all federal, state
and local income, franchise, excise, sales, use, real and personal property
and other tax returns and reports required to be filed by it;
(o) Enter into no lease of assets having annual rental payments in
excess of $25,000 or such leases which in the aggregate have annual rental
payments exceeding $100,000;
(p) Except for the TIA Agreement, enter into no material contract that
is not terminable, without penalty or premium, on thirty (30) days' notice or
less; and
(q) Purchase or sell any investment securities other than pursuant to
its investment policy in the ordinary course of business.
With respect to any written request by BIF for FDB's consent to any
non-permitted action of BIF or any BIF Subsidiary described in this Section,
BIF shall be entitled to conclusively presume FDB has consented to any such
action unless BIF shall have received FDB's written objection to such action
within five (5) Business Days of the date of FDB's receipt of such written
request.
Section 6.3 Subsequent BIF Financial Statements. As soon as
available after the date hereof, BIF will furnish FDB copies of each filing
made by BIF with the SEC subsequent to May 15, 1999, the monthly unaudited
consolidated balance sheets and profit and loss statements
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of each of BKI and TIA Corp prepared for its internal use, BKI's Call Reports
for each quarterly period completed prior to the Effective Time and all other
financial reports or statements submitted to regulatory authorities after the
date hereof, to the extent permitted by law (collectively, the "Subsequent
BIF Financial Statements"). The Subsequent BIF Financial Statements shall be
prepared on a basis consistent with past accounting practices and shall
fairly present the financial condition and results of operations for the
dates and periods presented, subject in the case of unaudited financial
statements to year-end audit adjustments (which changes in the aggregate
would not reasonably be expected to be materially adverse). The Subsequent
BIF Financial Statements will not include any material assets or omit to
state any material liabilities, absolute or contingent, or other facts, which
inclusion or omission would render such financial statements misleading in
any material respect.
Section 6.4 Stockholders' Meeting. BIF shall cause a meeting of its
stockholders to be held at the earliest practicable date after the
Registration Statement (as defined below) has been declared effective by the
SEC for the purpose of acting upon this Agreement. In connection with such
stockholders' meeting and in accordance with the Delaware Code, BIF shall
recommend to its stockholders the approval of this Agreement and the Merger
and shall solicit proxies voting in favor thereof from its stockholders.
Section 6.5 BIF Affiliate Undertaking. BIF shall use all reasonable
efforts to furnish to FDB as soon as practicable after the date of this
Agreement an undertaking in the form attached as Exhibit G executed by each
Person who is identified by BIF as one of its Affiliates.
Section 6.6 Dividends. Between the date of this Agreement and the
Effective Time, BIF may continue to declare and pay to its stockholders, on
dates consistent with its past practices, its normal quarterly cash dividend
not to exceed $0.09 per share of BIF Common Stock, and shall declare, pay or
make no other dividend or other distribution or payment in respect of, or
redemption of, shares of BIF Common Stock, provided, however, that BIF shall
not declare the record date for any dividend, or pay or make any such
dividend or other distribution or payment, in the quarter in which the
Effective Time shall occur. It is the intent of this Section to provide that
the holders of BIF Common Stock will receive either payment of dividends on
their shares of BIF Common Stock as permitted under this Section or the
payment of cash dividends as the holders of the BIF Exchange Shares for the
calendar quarter during which the Effective Time shall occur, but will not
receive and will not become entitled to receive for the same calendar quarter
both the payment of a permitted dividend as stockholders of BIF and the
payment of a cash dividend as the holders of the BIF Exchange Shares. If BIF
does not declare and pay permitted dividends on its BIF Common Stock in a
particular calendar quarter because of BIF's reasonable expectation that the
Effective Time would occur in such quarter wherein the holders of BIF Common
Stock would have become entitled to receive cash dividends for such calendar
quarter on the BIF Exchange Shares, and the Effective Time does not in fact
occur in said calendar quarter, then, as a result thereof, BIF shall be
entitled to declare and pay a permitted dividend on said shares of BIF Common
Stock for said calendar quarter as soon as reasonably practicable.
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Section 6.7 Environmental Matters. FDB may in its discretion, prior
to the Closing, retain at its own expense an independent professional
consultant to perform an environmental site assessment and render to FDB a
report (an "Environmental Report") to determine if any real property in which
BIF holds any interest contains or gives evidence that any violations of
Environmental Laws have occurred on any such property. Neither FDB nor its
independent professional consultant shall enter upon any such real property
in which BIF or any BIF Subsidiary holds only a mortgagee's interest without
the prior permission of BIF and the Person in possession thereof. BIF shall
not withhold such permission unreasonably, and shall use all reasonable
efforts to obtain such permission for FDB from the Person in possession of
any such mortgaged real property for which FDB desires its independent
professional consultant to conduct a site assessment. FDB shall have no duty
to act upon any information produced by such reviews or investigations with
or for the benefit of BIF, any BIF Subsidiary or any other Person, but shall
provide such information to BIF as soon as practicable after such information
becomes available to FDB.
Section 6.8 Advice of Changes. Between the date hereof and the
Closing Date, BIF shall promptly advise FDB in writing of any fact, change or
event which, if existing or known at the date hereof, would have been
required to be set forth or disclosed in or pursuant to this Agreement or of
any fact which, if existing or known at the date hereof, would have made any
of the representations contained herein materially untrue, provided, however,
that receipt of notice of such facts after the date of this Agreement shall
have no effect on the truth and accuracy of the representations and
warranties made in this Agreement as of the date hereof. BIF shall also
provide to FDB copies of each written communication sent to its stockholders
between the date of this Agreement and the Closing Date.
Section 6.9 Exclusivity. Neither BIF, any BIF Subsidiary nor any of
their respective directors, officers, employees, professional and financial
advisors, representatives, agents and Affiliates shall, directly or
indirectly, make, encourage, facilitate, solicit, initiate or assist any
inquiries, proposals, offers or expressions of interest from, or provide any
nonpublic information or access to BIF's or any BIF Subsidiary's premises to,
or participate in any discussions or negotiations with, any Person (other
than FDB and Newco and their directors, officers, employees, professional and
financial advisors, representatives, agents and Affiliates) concerning or
relating to (a) any merger, sale of assets not in the ordinary course of
business, acquisition, business combination, change of control or other
similar transaction involving BIF or any BIF Subsidiary, or (b) any purchase
or other acquisition by any Person of five percent (5%) or more of the
capital stock of BIF or of any capital stock of any BIF Subsidiary, or (c)
any issuance by any BIF Subsidiary of any shares of its capital stock
(collectively, a "Competing BIF Proposal"). BIF will promptly advise FDB of,
and communicate to FDB the terms and conditions of, and the identity of the
Person making, any Competing BIF Proposal, and will promptly furnish FDB with
copies of any non-privileged documents provided to and received from such
Person, and summaries of any other communications with respect to such
Competing BIF Proposal. Upon the date of this Agreement, BIF will terminate
all discussions and negotiations that it has heretofore engaged in or
conducted with any other Person with respect to any of the above, and will
cause its directors, officers, employees, professional and financial
advisors, representatives, agents and Affiliates to also terminate the same.
Notwithstanding the
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foregoing, BIF may engage in discussions or negotiations with, furnish
nonpublic information concerning BIF and any BIF Subsidiary and
their respective properties, assets and business, and grant access to the
facilities of BIF and any BIF Subsidiary, to any Person that hereafter makes
a Competing BIF Proposal that was not directly or indirectly, after the date
hereof, made, encouraged, facilitated, solicited, initiated or assisted by
BIF, any BIF Subsidiary or any of their respective directors, officers,
employees, professional or financial advisors, representatives, agents or
Affiliates (an "Unsolicited BIF Proposal"), but only to the extent that the
BIF Board of Directors shall conclude in good faith on the basis of the
written opinion of its outside counsel that the failure to take such actions
would be inconsistent with its fiduciary duties, and then only if BIF
provides FDB with prior written notice of its intent to take such actions and
such notice summarizes all material terms of the Unsolicited BIF Proposal and
identifies the Person making it.
Section 6.10 Information Provided to FDB. BIF agrees that none of the
information concerning BIF or any BIF Subsidiary or the Merger which is
provided or to be provided by BIF or any BIF Subsidiary to FDB for inclusion
or which is included in the Registration Statement or Proxy
Statement-Prospectus and any other documents to be filed with any
governmental authority in connection with the transactions contemplated by
this Agreement will, at the respective times such documents are filed and, in
the case of the Registration Statement, when it becomes effective and, with
respect to the Proxy Statement-Prospectus, and any amendments or supplements
thereto, when mailed and at the time of the stockholder meetings referred to
in Sections 6.4 and 7.4, contain any untrue statement of a material fact, or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading. Notwithstanding the foregoing, BIF shall
have no responsibility for the truth or accuracy of any information with
respect to FDB or the FDB Subsidiaries or any of their affiliates or
associates contained in the Registration Statement or the Proxy
Statement-Prospectus.
Section 6.11 Reasonable Efforts. Subject to the terms and conditions
of this Agreement, BIF agrees to use all reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
satisfy the conditions set forth herein and to consummate and make effective
the transactions contemplated by this Agreement, including cooperating fully
with FDB. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
Newco with full title to all properties, assets, rights, approvals,
immunities and franchises of BIF, the proper officers and directors of BIF
shall take all such necessary action.
Section 6.12 Termination of BIF Rights Agreement. Prior to the
Effective Time, BIF shall take all actions that may be necessary to terminate
the Rights Agreement dated as of April 28, 1995, between BIF and BKI and to
redeem all rights previously issued thereunder.
Section 6.13 TIA Agreement. BIF agrees to diligently pursue the
consummation of the transactions contemplated by the TIA Agreement prior to
the Closing Date.
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ARTICLE 7
COVENANTS OF FDB
From and after the date hereof and until the Effective Time, FDB hereby
covenants and agrees with BIF as follows:
Section 7.1 Information, Access Thereto, Confidentiality. (a) BIF,
its representatives and agents shall, at all times during normal business
hours prior to the Closing Date, have full and continuing access to the
facilities, operations, records and properties of FDB and the FDB
Subsidiaries. BIF, its representatives and agents may, prior to the Closing
Date, make or cause to be made such reasonable investigation of the
operations, records and properties of FDB and the FDB Subsidiaries, including
observation of any audit of, and examination of any audit work papers with
respect to, FDB or any FDB Subsidiary, and of its and their financial and
legal condition as BIF shall deem necessary or advisable to familiarize
itself with such records, properties and other matters; provided, that such
access or investigation shall not interfere unnecessarily with the normal
operations of FDB or any of the FDB Subsidiaries. Upon request, each of FDB
and the FDB Subsidiaries will furnish BIF or its representatives or agents,
its attorneys' responses to auditors' requests for information, and such
financial and operating data and other information reasonably requested by
BIF developed by FDB or any of the FDB Subsidiaries, its auditors,
accountants or attorneys (provided with respect to attorneys, such disclosure
shall be limited to information that would not result in the waiver by FDB of
any claim of attorney-client privilege), and will permit BIF, its
representatives or agents to discuss such information directly with any
individual or firm performing auditing or accounting functions for FDB or any
of the FDB Subsidiaries, and such auditors and accountants shall be directed
to furnish copies of any reports or financial information as developed to BIF
or its representatives or agents. No investigation by BIF shall affect the
representations and warranties made by FDB. This Section shall not require
the disclosure of any information the disclosure of which to BIF would be
prohibited by law
(b) Any confidential information or trade secrets received by FDB, its
employees or agents in the course of the examination described in Sections
2.10(b) or 6.1 shall be treated confidentially, and any correspondence,
memoranda, records, copies, documents and electronic or other media of any
kind containing either such confidential information, or trade secrets or
both shall be destroyed by FDB or, at BIF's request, returned to BIF in the
event this Agreement is terminated as provided in Section 13.1. Such
information shall not be used by FDB or its agents to the detriment of BIF or
any BIF Subsidiary.
Section 7.2 Carry on in Regular Course. Each of FDB and the FDB
Subsidiaries shall carry on its business diligently and substantially in the
same manner as is presently being conducted and shall not make or institute
any unusual or material change in its methods of doing business without the
prior written consent of BIF. FDB shall, and shall also cause each of the
FDB Subsidiaries to, unless otherwise consented to in writing in advance by
BIF:
(a) Enter into loan transactions only in accordance with sound credit
practices and only on terms and conditions which are not materially more
favorable than those available to the
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borrower from competitive sources in transactions in the ordinary course of
business and consistent with prudent banking practices and policies and
regulations of applicable regulatory authorities, and in that connection, FDB
will apprise BIF of all new credits or new lending relationships approved in
excess of $1.0 million to any Person or Persons and his, her or their
Affiliates from the date hereof to the Effective Time;
(b) Maintain all of its assets necessary for the conduct of its
business in good operating condition and repair, reasonable wear and tear and
damage by fire or unavoidable casualty excepted, and maintain policies of
insurance upon its assets and with respect to the conduct of its business in
amounts and kinds comparable to that in effect on the date hereof and pay all
premiums on such policies when due;
(c) Use all reasonable efforts to preserve its present business
organization intact, keep available the services of its present officers and
employees and preserve its present relationships with Persons having business
dealings with it;
(d) Maintain its books, accounts and records in the usual, regular and
ordinary manner, on a basis consistent with prior years and comply in all
material respects with all laws and regulations applicable to it and to the
conduct of its business;
(e) Subject to the provisions of Section 7.9, make no amendment to its
certificate of incorporation, articles of association, charter or bylaws and
enter into no merger or consolidation with, or sale of a significant portion
of its assets to, any other Person;
(f) Except as otherwise permitted or required by this Agreement, make
no change in the number of shares of its capital stock issued and
outstanding, grant or make no option, warrant, call, right, commitment or any
other security or agreement of any character obligating it to issue any
shares of its capital stock and issue no other securities or evidences of
indebtedness, so long as any such permitted actions are taken prior to the
Closing Date;
(g) Except as otherwise permitted by this Agreement, make no increase
in the compensation payable or to become payable by it to any employee except
for normal periodic increases, and as may be required, or as is normal and
customary based upon past practices over the last three (3) fiscal years,
under the terms of any existing FDB Employee Benefit Plan, so long as any
such permitted actions are taken prior to the Closing Date;
(h) Not make any investment of a capital nature exceeding $100,000 or
aggregate investments of a capital nature exceeding $500,000;
(i) Except as otherwise permitted by this Agreement and for
modifications necessary to comply with any applicable law, rule or
regulation, make no change in any FDB Employee Benefit Plan, provided,
however, that in a manner reasonably acceptable to BIF, FDB shall take all
steps necessary as soon as practicable after the date of this Agreement to
freeze all benefits under any defined benefit plan sponsored by FDB;
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(j) Cause each of FNB and First Trust, consistent with their respective
past practices, to maintain a reserve for possible loan and lease losses
which is adequate in all material respects under the requirements of
generally accepted accounting principles to provide for possible losses, net
of recoveries relating to loans previously charged off, on loans outstanding
(including, without limitation, accrued interest receivable);
(k) Make no material change in any lease of real property;
(l) File in a timely manner all required filings with all proper
regulatory authorities and cause such filings to be true and correct in all
material respects;
(m) Enter into no employment, consulting or similar agreement or
arrangement that is not terminable, without penalty or premium, on thirty
(30) days' notice or less;
(n) File with the appropriate governmental agencies all federal, state
and local income, franchise, excise, sales, use, real and personal property
and other tax returns and reports required to be filed by it;
(o) Enter into no lease of assets having annual rental payments in excess of
$25,000 or such leases which in the aggregate have annual rental payments
exceeding $100,000;
(p) Except for the TIA Agreement, enter into no material contract that
is not terminable, without penalty or premium, on thirty (30) days' notice or
less; and
(q) Purchase or sell any investment securities other than pursuant to
its investment policy in the ordinary course of business.
With respect to any written request by FDB for BIF's consent to any
non-permitted action of FDB or any FDB Subsidiary described in this Section,
FDB shall be entitled to conclusively presume BIF has consented to any such
action unless FDB shall have received BIF's written objection to such action
within five (5) Business Days of the date of BIF's receipt of such written
request.
Section 7.3 Subsequent FDB Financial Statements. As soon as
available after the date hereof, FDB will furnish BIF copies of each filing
made by FDB with the SEC subsequent to May 15, 1999, the monthly unaudited
consolidated balance sheets and profit and loss statements of each of FNB,
First Trust and FirsTech prepared for their internal use, Call Reports of
each of FNB and First Trust for each quarterly period completed prior to the
Effective Time and all other financial reports or statements submitted to
regulatory authorities after the date hereof, to the extent permitted by law
(collectively, the "Subsequent FDB Financial Statements"). The Subsequent
FDB Financial Statements shall be prepared on a basis consistent with past
accounting practices and shall fairly present the financial condition and
results of operations for the dates and periods presented, subject in the
case of unaudited financial statements to year-end audit adjustments (which
changes in the aggregate would not reasonably be expected to be materially
adverse). The Subsequent FDB Financial Statements will not include any
material assets or omit to state any material liabilities, absolute or
contingent, or
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other facts, which inclusion or omission would render such financial
statements misleading in any material respect.
Section 7.4 Stockholders' Meeting. FDB shall cause a meeting of its
stockholders to be held at the earliest practicable date after the
Registration Statement has been declared effective by the SEC for the purpose
of acting upon this Agreement. In connection with such stockholders' meeting
and in accordance with the Delaware Code, FDB shall recommend to its
stockholders the approval of this Agreement and the Merger and shall solicit
proxies voting in favor thereof from its stockholders.
Section 7.5 FDB Affiliate Undertaking. FDB shall use all reasonable
efforts to furnish to BIF as soon as practicable after the date of this
Agreement an undertaking in the form attached as Exhibit G executed by each
Person who is identified by FDB as one of its Affiliates
Section 7.6 Dividends. Between the date of this Agreement and the
Effective Time, FDB may continue to declare and pay to its stockholders, on
dates consistent with its past practices, its normal quarterly cash dividend
not to exceed $0.15 per share of FDB Common Stock, and shall declare, pay or
make no other dividend or other distribution or payment in respect of, or
redemption of, shares of FDB Common Stock, provided, however, that FDB shall
not declare the record date for any dividend, or pay or make any such
dividend or other distribution or payment, in the quarter in which the
Effective Time shall occur. It is the intent of this Section to provide that
the holders of FDB Common Stock will receive either payment of dividends on
their shares of FDB Common Stock as permitted under this Section or the
payment of cash dividends as the holders of the FDB Exchange Shares for the
calendar quarter during which the Effective Time shall occur, but will not
receive and will not become entitled to receive for the same calendar quarter
both the payment of a permitted dividend as stockholders of FDB and the
payment of a cash dividend as the holders of the FDB Exchange Shares. If FDB
does not declare and pay permitted dividends on its FDB Common Stock in a
particular calendar quarter because of FDB's reasonable expectation that the
Effective Time would occur in such quarter wherein the holders of FDB Common
Stock would have become entitled to receive cash dividends for such calendar
quarter on the FDB Exchange Shares, and the Effective Time does not in fact
occur in said calendar quarter, then, as a result thereof, FDB shall be
entitled to declare and pay a permitted dividend on said shares of FDB Common
Stock for said calendar quarter as soon as reasonably practicable.
Section 7.7 Environmental Matters. BIF may in its discretion, prior
to the Closing, retain at its own expense an independent professional
consultant to perform an environmental site assessment and render to BIF an
Environmental Report to determine if any real property in which FDB holds any
interest contains or gives evidence that any violations of Environmental Laws
have occurred on any such property. Neither BIF nor its independent
professional consultant shall enter upon any such real property in which FDB
or any FDB Subsidiary holds only a mortgagee's interest without the prior
permission of FDB and the Person in possession thereof. FDB shall not
withhold such permission unreasonably, and shall use all reasonable efforts
to obtain such permission for BIF from the Person in possession of any such
mortgaged real property for which BIF desires its independent professional
consultant to conduct a site
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assessment. BIF shall have no duty to act upon any information produced by
such reviews or investigations with or for the benefit of FDB, any FDB
Subsidiary or any other Person, but shall provide such information to FDB as
soon as practicable after such information becomes available to BIF.
Section 7.8 Advice of Changes. Between the date hereof and the
Closing Date, FDB shall promptly advise BIF in writing of any fact, change or
event which, if existing or known at the date hereof, would have been
required to be set forth or disclosed in or pursuant to this Agreement or of
any fact which, if existing or known at the date hereof, would have made any
of the representations contained herein materially untrue, provided, however,
that receipt of notice of such facts after the date of this Agreement shall
have no effect on the truth and accuracy of the representations and
warranties made in this Agreement as of the date hereof. FDB shall also
provide to BIF copies of each written communication sent to its stockholders
between the date of this Agreement and the Closing Date.
Section 7.9 Exclusivity. Neither FDB, any FDB Subsidiary nor any of
their respective directors, officers, employees, professional and financial
advisors, representatives, agents and Affiliates shall, directly or
indirectly, make, encourage, facilitate, solicit, initiate or assist any
inquiries, proposals, offers or expressions of interest from, or provide any
nonpublic information or access to FDB's or any FDB Subsidiary's premises to,
or participate in any discussions or negotiations with, any Person (other
than BIF and Newco and their directors, officers, employees, professional and
financial advisors, representatives, agents and Affiliates) concerning or
relating to (a) any merger, sale of assets not in the ordinary course of
business, acquisition, business combination, change of control or other
similar transaction involving FDB or any FDB Subsidiary, or (b) any purchase
or other acquisition by any Person of five percent (5%) or more of the
capital stock of FDB or of any capital stock of any FDB Subsidiary, or (c)
any issuance by any FDB Subsidiary of any shares of its capital stock
(collectively, a "Competing FDB Proposal"). FDB will promptly advise BIF of,
and communicate to BIF the terms and conditions of, and the identity of the
Person making, any Competing FDB Proposal, and will promptly furnish BIF with
copies of any non-privileged documents provided to and received from such
Person, and summaries of any other communications with respect to such
Competing FDB Proposal. Upon the date of this Agreement, FDB will terminate
all discussions and negotiations that it has heretofore engaged in or
conducted with any other Person with respect to any of the above, and will
cause its directors, officers, employees, professional and financial
advisors, representatives, agents and Affiliates to also terminate the same.
Notwithstanding the foregoing, FDB may engage in discussions or negotiations
with, furnish nonpublic information concerning FDB and any FDB Subsidiary and
their respective properties, assets and business, and grant access to the
facilities of FDB and any FDB Subsidiary, to any Person that hereafter makes
a Competing FDB Proposal that was not directly or indirectly, after the date
hereof, made, encouraged, facilitated, solicited, initiated or assisted by
FDB, any FDB Subsidiary or any of their respective directors, officers,
employees, professional or financial advisors, representatives, agents or
Affiliates (an "Unsolicited FDB Proposal"), but only to the extent that the
FDB Board of Directors shall conclude in good faith on the basis of the
written opinion of its outside counsel that the failure to take such actions
would be inconsistent with its fiduciary duties, and then only if FDB
provides BIF with prior written notice of its intent to take
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such actions and such notice summarizes all material terms of the Unsolicited
FDB Proposal and identifies the Person making it.
Section 7.10 Information Provided to BIF. FDB agrees that none of the
information concerning FDB or any FDB Subsidiary or the Merger which is
provided or to be provided by FDB or any FDB Subsidiary to BIF for inclusion
or which is included in the Registration Statement or Proxy
Statement-Prospectus and any other documents to be filed with any
governmental authority in connection with the transactions contemplated by
this Agreement will, at the respective times such documents are filed and, in
the case of the Registration Statement, when it becomes effective and, with
respect to the Proxy Statement-Prospectus, and any amendments or supplements
thereto, when mailed and at the time of the stockholder meetings referred to
in Sections 6.4 and 7.4, contain any untrue statement of a material fact, or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading. Notwithstanding the foregoing, FDB shall
have no responsibility for the truth or accuracy of any information with
respect to BIF or the BIF Subsidiaries or any of their affiliates or
associates contained in the Registration Statement or the Proxy
Statement-Prospectus.
Section 7.11 Reasonable Efforts. Subject to the terms and conditions
of this Agreement, FDB agrees to use all reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
satisfy the conditions set forth herein and to consummate and make effective
the transactions contemplated by this Agreement, including cooperating fully
with BIF. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
Newco with full title to all properties, assets, rights, approvals,
immunities and franchises of FDB, the proper officers and directors of FDB
shall take all such necessary action.
ARTICLE 8
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BIF
The obligations of BIF under this Agreement are subject, unless waived
by BIF, to the satisfaction of the following conditions on or prior to the
Effective Time:
Section 8.1 Representations and Warranties True at Effective Time.
The representations and warranties made by FDB in this Agreement shall be
true and correct on and as of the Effective Time with the same effect as
though such representations and warranties had been made or given on and as
of the Effective Time, except for changes contemplated by this Agreement, and
except also for representations and warranties as of a specified time other
than the Effective Time, which shall be true and correct in all material
respects at such specified time. FDB shall have delivered to BIF a
certificate of its President or any Vice President to the same effect.
Section 8.2 Compliance With Agreement. FDB shall have performed and
complied with all of its obligations under this Agreement which are to be
performed or complied with prior
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to or at the Effective Time and FDB shall have delivered to BIF a certificate
of its President or any Vice President to the same effect.
Section 8.3 Opinion of Counsel for FDB. BIF shall have received from
Howard & Howard Attorneys PC the opinion contemplated by Section 2.6(l),
dated as of the Closing Date, addressed to BIF.
Section 8.4 Proceedings and Documents Satisfactory. All proceedings,
corporate or other, to be taken by FDB in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to counsel for BIF, and FDB
shall have made available to BIF for examination the originals or true and
correct copies of all records and documents relating to the business and
affairs of FDB which BIF may reasonably request in connection with said
transactions.
Section 8.5 Statutory Requirements. This Agreement shall have been
duly and validly authorized by the stockholders of FDB. Such stockholder
approval shall have been obtained in conformity with all applicable laws at a
meeting of stockholders for which proxies are solicited in compliance with
applicable laws and requirements.
Section 8.6 Litigation. Neither FDB nor any FDB Subsidiary shall be
made a party to any actions, suits, proceedings, litigation or legal
proceedings which, in the reasonable opinion of BIF, have or are likely to
have a Material Adverse Effect on FDB, and no action, suit, proceeding or
claim shall have been instituted, made or threatened by any Person relating
to the Merger or the validity or propriety of the transactions contemplated
by this Agreement which BIF reasonably believes will result in material
damages or an order enjoining the Merger or a determination that FDB failed
to comply with legal requirements of a material nature in connection with the
Merger.
Section 8.7 Accuracy of Financial Statements. The FDB Financial
Statements and the Subsequent FDB Financial Statements, previously or
subsequently furnished to BIF by FDB shall not be inaccurate in any material
respect.
Section 8.8 Absence of Certain Changes or Events. From the date
hereof to the Effective Time, there shall be and have been no Material
Adverse Change in FDB or any event or occurrence reasonably likely to result
in a Material Adverse Change.
Section 8.9 Consents and Approvals. Any consents or approvals
required to be secured by the parties to this Agreement or otherwise
reasonably necessary in the opinion of BIF to consummate the transactions
contemplated by this Agreement shall have been obtained and shall be
reasonably satisfactory to BIF.
Section 8.10 Accrual of Costs. On or prior to the Closing Date, the
sum of: (a) the cost of any benefits or contributions supplied or made or to
be supplied or made through the Effective Time under any of the FDB Employee
Benefit Plans; (b) the costs of any corrective action to bring any such plans
into compliance with applicable law; (c) the aggregate cost of complying with
any representation, warranty or covenant of FDB set forth in this Agreement;
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and (d) all transaction costs of FDB necessary to consummate the Merger,
including, but not limited to, its share of organizational expenses of Newco
and the aggregate professional fees of attorneys, accountants and financial
advisors, in each case incurred or to be incurred by FDB through the
Effective Time in connection with this Agreement or the Merger, shall be
fully paid or accrued for in accordance with generally accepted accounting
principles.
Section 8.11 Loan Loss Reserve. At the Effective Time, the reserve
for possible loan and lease losses of each FNB and First Trust shall be
adequate in all material respects under the requirements of generally
accepted accounting principles to provide for possible losses, net of
recoveries relating to loans previously charged off, on loans outstanding
(including, without limitation, accrued interest receivable) as of the
Closing Date and the Effective Time.
Section 8.12 Fairness Opinion. As of the date of this Agreement and
prior to distribution of the Proxy Statement-Prospectus to the stockholders
of BIF, BIF shall have received an opinion from Keefe, Bruyette & Woods, Inc.
to the effect that the consideration to be received by BIF's stockholders in
connection with the Merger, from a financial point of view, is fair to BIF's
stockholders, and the same shall not have been withdrawn.
Section 8.13 Employment Agreements. On or prior to the Closing Date,
the Employment Agreements identified on Exhibit H, shall be amended in a
manner, or replaced with a substitute agreement, in each case reasonably
satisfactory to BIF to provide that the Merger, if consummated in accordance
with the terms of this Agreement, will not constitute a "Change of Control"
as defined in such agreements.
Section 8.14 Environmental Reports. BIF shall have been granted
acceptable access to any real property in which FDB or any FDB Subsidiary has
an interest and for which BIF desired its independent professional consultant
to prepare an Environmental Report, and the results of any Environmental
Report rendered to BIF with respect to such real property shall have not
disclosed any violation of Environmental Laws which would reasonably be
expected to have a Material Adverse Effect on FDB.
ARTICLE 9
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF FDB
The obligations of FDB under this Agreement are subject, unless waived
by FDB, to the satisfaction on or prior to the Effective Time of the
following conditions:
Section 9.1 Representations and Warranties True at Effective Time.
The representations and warranties made by BIF in this Agreement shall be
true and correct on and as of the Effective Time with the same effect as
though such representations and warranties had been made or given on and as
of the Effective Time, except for changes contemplated by this Agreement, and
except also for representations and warranties as of a specified time other
than the Effective Time, which shall be true and correct in all material
respects at such specified time. BIF shall have delivered to FDB a
certificate of its President or any Vice President to the same effect.
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Section 9.2 Compliance With Agreement. BIF shall have performed and
complied with all of its obligations under this Agreement which are to be
performed or complied with prior to or at the Effective Time and BIF shall
have delivered to FDB a certificate of its President or any Vice President to
the same effect.
Section 9.3 Opinion of Counsel for BIF. FDB shall have received from
Barack Ferrazzano Kirschbaum Perlman & Nagelberg the opinion contemplated by
Section 2.7(j), dated as of the Closing Date, addressed to FDB.
Section 9.4 Proceedings and Documents Satisfactory. All proceedings,
corporate or other, to be taken by BIF in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to counsel for FDB, and BIF
shall have made available to FDB for examination the originals or true and
correct copies of all records and documents relating to the business and
affairs of BIF which FDB may reasonably request in connection with said
transactions.
Section 9.5 Statutory Requirements. This Agreement shall have been
duly and validly authorized by the stockholders of BIF. Such stockholder
approval shall have been obtained in conformity with all applicable laws at a
meeting of stockholders for which proxies are solicited in compliance with
applicable laws and requirements.
Section 9.6 Litigation. Neither BIF nor any BIF Subsidiary shall be
made a party to any actions, suits, proceedings, litigation or legal
proceedings which, in the reasonable opinion of FDB, have or are likely to
have a Material Adverse Effect on BIF, and no action, suit, proceeding or
claim shall have been instituted, made or threatened by any Person relating
to the Merger or the validity or propriety of the transactions contemplated
by this Agreement which FDB reasonably believes will result in material
damages or an order enjoining the Merger or a determination that BIF failed
to comply with legal requirements of a material nature in connection with the
Merger.
Section 9.7 Accuracy of Financial Statements. The BIF Financial
Statements and the Subsequent BIF Financial Statements, previously or
subsequently furnished to FDB by BIF shall not be inaccurate in any material
respect.
Section 9.8 Absence of Certain Changes or Events. From the date
hereof to the Effective Time, there shall be and have been no Material
Adverse Change in BIF or any event or occurrence reasonably likely to result
in a Material Adverse Change.
Section 9.9 Consents and Approvals. Any consents or approvals
required to be secured by the parties to this Agreement or otherwise
reasonably necessary in the opinion of FDB to consummate the transactions
contemplated by this Agreement shall have been obtained and shall be
reasonably satisfactory to FDB.
Section 9.10 Accrual of Costs. On or prior to the Closing Date, the
sum of: (a) the cost of any benefits or contributions supplied or made or to
be supplied or made through the Effective Time under any of the BIF Employee
Benefit Plans; (b) the costs of any corrective
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action to bring any such plans into compliance with applicable law; (c) the
aggregate cost of complying with any representation, warranty or covenant of
BIF set forth in this Agreement; and (d) all transaction costs of BIF
necessary to consummate the Merger, including, but not limited to, its share
of organizational expenses of Newco and the aggregate professional fees of
attorneys, accountants and financial advisors, in each case incurred or to be
incurred by BIF through the Effective Time in connection with this Agreement
or the Merger, shall be fully paid or accrued for in accordance with
generally accepted accounting principles.
Section 9.11 Loan Loss Reserve. At the Effective Time, the reserve
for possible loan and lease losses of BKI shall be adequate in all material
respects under the requirements of generally accepted accounting principles
to provide for possible losses, net of recoveries relating to loans
previously charged off, on loans outstanding (including, without limitation,
accrued interest receivable) as of the Closing Date and the Effective Time.
Section 9.12 Fairness Opinion. As of the date of this Agreement and
prior to distribution of the Proxy Statement-Prospectus to the stockholders
of FDB, FDB shall have received an opinion from ABN AMRO to the effect that
the FDB Exchange Ratio is fair to FDB's stockholders from a financial point
of view, and the same shall not have been withdrawn.
Section 9.13 Employment Agreements. On or prior to the Closing Date,
the Employment Agreements identified on Exhibit I shall be amended in a
manner, or replaced with a substitute agreement, in each case reasonably
satisfactory to FDB to provide that the Merger, if consummated in accordance
with the terms of this Agreement, will not constitute a "Change of Control"
as defined in such agreements.
Section 9.14 Environmental Reports. FDB shall have been granted
acceptable access to any real property in which BIF or any BIF Subsidiary has
an interest and for which FDB desired its independent professional consultant
to prepare an Environmental Report, and the results of any Environmental
Report rendered to FDB with respect to such real property shall have not
disclosed any violation of Environmental Laws which would reasonably be
expected to have a Material Adverse Effect on BIF.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS OF BOTH PARTIES
Section 10.1 Registration Statement. The Registration Statement shall
have become effective and no stop order suspending such effectiveness shall
have been issued or threatened by the SEC that suspends the effectiveness of
the Registration Statement and no proceeding shall have been commenced or be
pending or overtly threatened for such purpose.
Section 10.2 Other Approvals. All actions, consents or approvals,
governmental or otherwise, which are, or in the opinion of counsel for BIF or
FDB may be, necessary to permit or enable the Resulting Corporation upon and
after the Merger, to conduct all or any part of the business of FDB or BIF,
in the manner in which such activities and businesses are conducted up
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to the Effective Time, shall have been obtained without any conditions which
in the reasonable opinion of BIF or FDB are materially adverse, and shall not
have been withdrawn or stayed.
Section 10.3 Orders, Decrees and Judgments. Consummation of the
transactions contemplated by this Agreement shall not violate any order,
decree or judgment of any court or governmental body having competent
jurisdiction.
Section 10.4 Regulatory Approvals. BIF, FDB and Newco shall have
received any and all required approvals from the Federal Reserve and the
Commissioner and any other necessary governmental authority, for the
consummation of the transactions contemplated hereby.
Section 10.5 Tax Opinion. Each of FDB and BIF shall have received
from counsel, accountants or tax advisors reasonably acceptable to FDB and
BIF an opinion dated as of the Closing Date to the effect that the Merger
qualifies as a nontaxable reorganization within the meaning of Section 368(a)
and related sections of the Code.
Section 10.6 Pooling Letter. Each of FDB and BIF shall have received
from accountants mutually acceptable to BIF and FDB a letter opining that
Newco may properly account for the Merger as a pooling of interests.
ARTICLE 11
ADDITIONAL COVENANTS OF THE PARTIES
Section 11.1 SEC Registration. Newco shall file with the SEC as soon
as practicable after the execution of this Agreement, a Registration
Statement on an appropriate form under the Securities Act covering Newco
Common Stock to be issued pursuant to this Agreement and shall use all
reasonable efforts to cause the same to become effective and thereafter,
until the Effective Time or lawful termination of this Agreement, to keep the
same effective and, if necessary, amend and supplement the same. Such
Registration Statement and any amendments and supplements thereto are
referred to herein as the "Registration Statement." The Registration
Statement shall include a Proxy Statement-Prospectus thereto reasonably
acceptable to BIF and FDB (the "Proxy Statement-Prospectus"), prepared by
Newco, and reasonably acceptable to BIF and FDB, for use in connection with
the meetings of the stockholders of BIF and FDB referred to in Sections 6.4
and 7.4, respectively, of this Agreement, all in accordance with the rules
and regulations of the SEC. Newco shall, as soon as practicable after the
execution of this Agreement, make all filings required to obtain all Blue Sky
permits, authorizations, consents or approvals required for the issuance of
the Newco Common Stock. In advance of any filing made under this Section,
FDB and BIF and their respective counsel shall be provided with the
opportunity to comment thereon, and FDB, BIF and Newco each agree promptly to
advise each other and each other's counsel of any material communication
received by it or its counsel from the SEC or any other regulatory
authorities with respect to such filings.
Section 11.2 Cooperation. Each of FDB and BIF and their respective
Subsidiaries and Newco will fully and promptly cooperate with each other and
their respective counsel and
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accountants in connection with any steps to be taken as part of their
obligations under this Agreement.
Section 11.3 Customer and Employee Relationships. Each of FDB and BIF
agrees that its respective representatives may jointly:
(a) participate in meetings or discussions with officers and employees
of BIF and FDB and their Subsidiaries in connection with employment
opportunities with Newco after the Effective Time; and
(b) contact Persons having dealings with BIF or FDB or any of its
respective Subsidiaries for the purpose of informing such Persons of the
services to be offered by Newco after the Effective Time.
Section 11.4 Pooling Treatment. The parties agree to cooperate and to
take such actions as are reasonably necessary to permit Newco properly to
account for the transaction contemplated by this Agreement as a
pooling-of-interests.
Section 11.5 Expenses. Except as otherwise provided herein, all costs
and expenses incurred by a party hereto shall be borne by such party,
including the fees of their respective accountants and attorneys.
Organizational expenses of Newco and reasonable expenses incurred in its
performance of this Agreement (but not including attorneys fees) shall be
divided equally between BIF and FDB and shall be considered expenses of each
for purposes of Sections 8.11 and 9.11.
Section 11.6 Publicity. Prior to the Effective Time, the parties
hereto will consult with each other before issuing any press releases or
otherwise making any public statements with respect to this Agreement or the
transactions contemplated hereby and shall not issue any such press release
or make any such public statement without the prior consent of the other
parties, except as may be required by law.
Section 11.7 Newco Employee Benefits. FDB and BIF agree to cooperate
to determine prior to the Closing the types of benefits to be offered after
the Effective Time by Newco to former employees of BIF and FDB who become
employees of Newco.
Section 11.8 Director and Officer Liability Coverage. FDB and BIF
agree to cooperate to attempt to obtain after the Effective Time directors'
and officers' liability insurance coverage for the officers and directors of
Newco, to the extent the same is economically practicable. Any such coverage
shall be on substantially the same terms and conditions and provide the same
coverage against personal liability for actions taken after the Effective
Time as the most protective coverage which is currently provided to officers
and directors of either BIF or FDB. Such coverage may be provided through an
insurance policy or through an agreement by Newco to indemnify such officers
and directors. FDB and BIF also agree to cooperate to attempt to obtain as
of the Effective Time and to maintain in effect for a period of not less than
three (3) years after the Effective Time directors' and officers' liability
insurance coverage for the officers and directors of each of FDB and BIF with
respect to actions taken by them prior to the Effective
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to the extent the same is economically practicable ("Tail Coverage").
Notwithstanding any such Tail Coverage, the parties further agree that after
the Effective Time Newco will indemnify the current and past officers and
directors of FDB and BIF for all actions taken by them prior to the Effective
Time in their respective capacities as officers and directors of FDB and BIF
to the same extent as the indemnification provided by FDB or BIF to its
respective officers and directors as of the time immediately prior to the
Effective Time.
Section 11.9 Actions by Newco. Prior to the date hereof, FDB and BIF
have incorporated Newco under Illinois law, and Newco has issued one half of
Newco's capital stock to each of BIF and FDB. BIF and FDB agree that from
and after the date hereof they shall each cause Newco to take all other
corporate and other actions that are necessary for Newco to comply with its
respective obligations under this Agreement and to effectuate the Merger and
the other transactions contemplated by this Agreement.
Section 11.10 Employment Agreement. FDB and BIF shall cause Newco to
enter into an employment agreement, to become effective at the Effective
Time, with Phillip Wise which will embody the terms set forth in Exhibit J
hereto.
ARTICLE 12
REGULATORY APPROVALS
Section 12.1 Initial Filings. FDB and BIF shall use all reasonable
efforts to make as soon as practicable all appropriate initial filings
necessary to obtain the regulatory approvals referred to in Section 12.2 at
such time as they reasonably believe that such filings would be accepted and
approved by the appropriate regulatory agencies. FDB and BIF shall in good
faith pursue the regulatory approvals necessary to consummate the
transactions contemplated in this Agreement. FDB and BIF and their
respective counsel shall be provided with a copy of each application or
document filed with federal or state regulatory officials to obtain such
approvals.
Section 12.2 Necessary Approvals. FDB and BIF shall mutually agree
upon the parties who will have primary responsibility for preparation of the
Registration Statement and for the necessary applications for regulatory
approval of the transactions contemplated in this Agreement, including, but
not limited to, the preparation of an application or any amendment thereto or
any other required statements or documents filed or to be filed by any party
with: (a) the Federal Reserve pursuant to the BHCA; and (b) any other party
or governmental authority pursuant to any applicable law or regulation, for
authority to consummate the transactions contemplated by this Agreement.
Each of FDB and BIF agrees to cooperate with the other and to use all
reasonable efforts to assist the other in preparing the Registration
Statement and such applications and in pursuit of such approvals.
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ARTICLE 13
TERMINATION AND ABANDONMENT
Section 13.1 Termination of Agreement. This Agreement may be
terminated only as set forth below:
(a) by mutual consent of the Boards of Directors of BIF and FDB, each
evidenced by appropriate written resolutions; or
(b) by BIF by giving written notice of such termination to FDB, (i) if
there has been (A) a material breach of any covenant herein (except for
breaches of Section 7.4 or 7.9, which are separately addressed in Section
13.1(e)) on the part of FDB which has not been cured or adequate assurance of
cure given, in either case within thirty (30) Business Days following notice
of such breach from BIF, unless such breach or failure is a result of the
failure by BIF to perform and comply in all material respects with any of its
material obligations under this Agreement which are to be performed or
complied with by it prior to or on the date required hereunder; or (B) a
breach of a representation or warranty of FDB herein which (individually or,
together with other such breaches, in the aggregate) affect or could
reasonably be expected to have a Material Adverse Effect on Newco following
the consummation of the Merger, and which, in the reasonable opinion of the
BIF Board of Directors, by its nature cannot be cured on or prior to the
Termination Date, or (ii) if there shall have occurred after the date of this
Agreement, any change in any law, rule or regulation, or after the date of
this Agreement there shall have been any decision or action by any court,
government or governmental agency (including, without limitation, any bank
regulatory authority), that could reasonably be expected to prevent or delay
consummation of the Merger beyond the Termination Date; or
(c) by FDB by giving written notice of such termination to BIF, (i) if
there has been (A) a material breach of any covenant herein (except for
breaches of Section 6.4 or 6.9 which are separately addressed in Section
13.1(f)) on the part of BIF which has not been cured or adequate assurance of
cure given, in either case within thirty (30) Business Days following notice
of such breach from FDB, unless such breach or failure is a result of the
failure by FDB to perform and comply in all material respects with any of its
material obligations under this Agreement which are to be performed or
complied with by it prior to or on the date required hereunder; or (B) a
breach of a representation or warranty of BIF herein which (individually or,
together with other such breaches, in the aggregate) affect or could
reasonably be expected to affect in a material and adverse manner the
business and affairs of Newco, on a consolidated basis, following the
consummation of the Merger, and which, in the reasonable opinion of the FDB
Board of Directors, by its nature cannot be cured on or prior to the
Termination Date, or (ii) if there shall have occurred after the date of this
Agreement, any change in any law, rule or regulation, or after the date of
this Agreement there shall have been any decision or action by any court,
government or governmental agency (including, without limitation, any bank
regulatory authority), that could reasonably be expected to prevent or delay
consummation of the Merger beyond the Termination Date; or
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(d) by BIF or FDB, by giving written notice of such termination to the
other party or parties, if (i) the Federal Reserve, the Commissioner or any
other applicable governmental authority whose approval is required for
consummation of the Merger has denied approval of the Merger and such denial
has become final and nonappealable, (ii) any application, filing or notice
for a regulatory approval has been withdrawn at the request or recommendation
of the applicable governmental authority and a petition for rehearing shall
not have been granted or an amended application shall not have been accepted
for filing by the applicable governmental authority within the sixty (60) day
period following such withdrawal, or (iii) the Effective Time shall not have
occurred at or before 11:59 p.m. on the Termination Date, provided, however
(and without limiting the applicability, if any, of the provisions of Section
13.2 below, with respect to the occurrence of any event described in clauses
(i) or (ii) above), that the right to terminate this Agreement under this
Section 13.1(d) shall not be available to any party hereto whose failure to
fulfill any of its obligations (excluding warranties and representations)
under this Agreement has been the cause of or resulted in the occurrence of
the event described in clause (iii) above; or
(e) by BIF, by giving written notice of such termination to FDB, and
subject to the special termination fee set forth in Section 13.5(a), (i) if
FDB breaches its obligations under Section 7.9, or (ii) if FDB breaches any
of its obligations under Section 7.4 to call a stockholders' meeting to vote
on, and to recommend to its stockholders to vote to approve, this Agreement
and the transactions contemplated hereby, including the Merger; or
(f) by FDB, by giving written notice of such termination to BIF, and
subject to the special termination fee set forth in Section 13.5(b), (i) if
BIF breaches its obligations under Section 6.9, or (ii) if BIF breaches any
of its obligations under Section 6.4 to call a stockholders' meeting to vote
on, and to recommend to its stockholders to vote to approve, this Agreement
and the transactions contemplated hereby, including the Merger.
(g) by BIF, by giving written notice of such termination to FDB, and
subject to the special termination fee set forth in Section 13.5(c), if BIF
receives an Unsolicited BIF Proposal that is determined in good faith by the
BIF Board of Directors, after consultation with BIF's financial advisor, is
on terms that are more favorable to the stockholders of BIF than the Merger
and has a reasonable prospect of being consummated in accordance with its
terms (a "Superior BIF Proposal"); provided, however, that BIF shall not be
permitted to terminate this Agreement pursuant to this Section 13.1(g) unless
BIF shall have given FDB five (5) Business Days' prior written notice thereof
(or, if there are less than five (5) Business Days remaining prior to the
Closing, written notice prior to the Closing) of its intent to so terminate
this Agreement pursuant to this Section 13.1(g), together with a summary of
the terms of, and the identity of the Person making, such Superior BIF
Proposal; or
(h) by FDB, by giving written notice of such termination to BIF, and
subject to the special termination fee set forth in Section 13.5(d), if FDB
receives an Unsolicited FDB Proposal that is determined in good faith by the
FDB Board of Directors, after consultation with FDB's financial advisor, is
on terms that are more favorable to the stockholders of FDB than the Merger
and has a reasonable prospect of being consummated in accordance with its
terms (a "Superior FDB Proposal"), provided, however, that FDB shall not be
permitted to terminate this
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Agreement pursuant to this Section 13.1(h) unless FDB shall have given BIF
five (5) Business Days' prior written notice thereof (or, if there are less
than five (5) Business Days remaining prior to the Closing, written notice
prior to the Closing) of its intent to so terminate this Agreement pursuant
to this Section 13.1(h), together with a summary of the terms of, and the
identity of the Person making, such Superior FDB Proposal; or
(i) by BIF, by giving written notice of such termination to FDB, and
subject to the special termination fee set forth in Section 13.5(b), if the
fairness opinion provided for in Section 8.12 shall have been withdrawn prior
to the Closing; or
(j) by FDB, by giving written notice of such termination to BIF, and
subject to the special termination fee set forth in Section 13.5(a), if the
fairness opinion provided for in Section 9.12 shall have been withdrawn prior
to the Closing; or
(k) by BIF as provided in Section 2.10(b); or
(l) by FDB as provided in Section 2.10(a).
Section 13.2 Effect of Termination or Abandonment. In the event of
the lawful termination of this Agreement and the abandonment of the Merger
pursuant to Section 13.1, this Agreement shall become null and void, BIF
shall bear all BIF Transactional Expenses, FDB shall bear all FDB
Transactional Expenses, and there shall be no liability of one party to the
other or any restrictions on the future activities on the part of any party
hereto, or its directors, officers or stockholders, except for the
obligations of BIF and FDB concerning confidentiality referred to in Sections
6.1 and 7.1, respectively, and except as provided under Sections 13.3, 13.4
and 13.5.
Section 13.3 Payments to FDB. Subject to the further provisions of
this Section, if: (a) FDB lawfully terminates this Agreement pursuant to
Section 13.1(c) or (f); or (b) BIF lawfully terminates this Agreement
pursuant to Section 13.1(i), then in either case, BIF shall pay to FDB, upon
its written demand, the FDB Transactional Expenses in an amount not to exceed
$500,000, and an additional sum equal to $1,500,000 (the "BIF Base
Termination Fee"), by wire transfer of immediately available funds to such
account as FDB shall designate. Such sums shall constitute liquidated
damages and the receipt thereof shall be the sole and exclusive remedy of FDB
and the FDB Subsidiaries against BIF, the BIF Subsidiaries, and their
respective officers, directors, employees and stockholders for any claims
arising from or relating in any way to this Agreement or the transactions
contemplated herein; provided, however, that nothing herein shall preclude or
bar FDB from asserting or enforcing any such claim against any Person other
than BIF, the BIF Subsidiaries and their respective officers, directors,
employees and stockholders. Notwithstanding the foregoing, this Section 13.3
shall not require (x) BIF to pay any BIF Base Termination Fee or FDB
Transactional Expenses if the Merger is not consummated as a result of the
termination of this Agreement by the mutual consent of FDB and BIF pursuant
to Section 13.1(a), or as a result of the lawful termination of this
Agreement by FDB or BIF pursuant to Section 13.1(d), or as a result of the
lawful termination of this Agreement by FDB pursuant to Section 2.10(a) or
Section 13.1(c)(ii); or (y) BIF to pay any BIF Base Termination Fee if the
Merger is not consummated as a result of the lawful termination of this
Agreement by FDB pursuant to Section 13.1(c)(i)(B), and such
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termination is based solely upon a material but unintentional breach by BIF
of any representation or warranty, provided, however, in such event, BIF
shall remain obligated to pay the FDB Transactional Expenses, but only up to
a maximum amount of $250,000.
Section 13.4 Payments to BIF. Subject to the further provisions of
this Section, if: (a) BIF lawfully terminates this Agreement pursuant to
Section 13.1(b) or (e); or (b) FDB lawfully terminates this Agreement
pursuant to Section 13.1(j), then in either case, FDB shall pay to BIF, upon
its written demand, the BIF Transactional Expenses in an amount not to exceed
$500,000, and an additional sum equal to $1,500,000 (the "FDB Base
Termination Fee"), by wire transfer of immediately available funds to such
account as BIF shall designate. Such sums shall constitute liquidated
damages and the receipt thereof shall be the sole and exclusive remedy of BIF
and the BIF Subsidiaries against FDB, the FDB Subsidiaries and their
respective officers, directors, employees and stockholders for any claims
arising from or relating in any way to this Agreement or the transactions
contemplated herein; provided, however, that nothing herein shall preclude or
bar BIF from asserting or enforcing any such claim against any Person other
than FDB, the FDB Subsidiaries and their respective officers, directors,
employees and stockholders. Notwithstanding the foregoing, this Section 13.4
shall not require (x) FDB to pay any FDB Base Termination Fee or BIF
Transactional Expenses if the Merger is not consummated as a result of the
termination of this Agreement by the mutual consent of FDB and BIF pursuant
to Section 13.1(a), or as a result of the lawful termination of this
Agreement by FDB or BIF pursuant to Section 13.1(d), or as a result of the
lawful termination of this Agreement by BIF pursuant to Section 2.10(b) or
Section 13.1(b)(ii); or (y) FDB to pay any FDB Base Termination Fee if the
Merger is not consummated as a result of the lawful termination of this
Agreement by BIF pursuant to Section 13.1(b)(i)(B), and such termination is
based solely upon a material but unintentional breach by FDB of any
representation or warranty, provided, however, in such event, FDB shall
remain obligated to pay the BIF Transactional Expenses, but only up to a
maximum amount of $250,000.
Section 13.5 Special Termination Fees (a) If this Agreement is
lawfully terminated by BIF pursuant to Section 13.1(b)(i) or (e), or by FDB
pursuant to Section 13.1(j), and within twelve (12) months after such
termination FDB shall enter into a letter of intent or definitive written
agreement with any Person (other than BIF and its Affiliates) with respect to
an acquisition of not less than thirty-five percent (35%) of the outstanding
shares of FDB Common Stock or all or substantially all of the assets of FDB
or FNB, and after giving credit for any prior payment under Section 13.4, FDB
shall pay to BIF, within ten (10) Business Days after the execution of such
letter of intent or definitive agreement, the amount of $3.0 million plus the
BIF Transactional Expenses up to $500,000 by wire transfer of immediately
available funds to such account as BIF shall designate. Notwithstanding the
foregoing, this Section 13.5(a) shall not apply in the event that BIF
lawfully terminates this Agreement pursuant to Section 13.1(b)(i)(B) unless
FDB intentionally breached or caused the applicable warranty or
representation to be breached.
(b) If this Agreement is lawfully terminated by FDB pursuant to Section
13.1(c)(i) or (f), or by BIF pursuant to Section 13.1(i), and within twelve
(12) months after such termination BIF shall enter into a letter of intent or
definitive written agreement with any Person (other than FDB and its
Affiliates) with respect to an acquisition of not less than thirty-five
percent (35%) of the outstanding shares of BIF Common Stock or all or
substantially all of the assets of BIF or BKI,
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and after giving credit for any prior payment under Section 13.3, BIF shall
pay to FDB, within ten (10) Business Days after the execution of such letter
of intent or definitive agreement, the amount of $3.0 million plus the FDB
Transactional Expenses up to $500,000 by wire transfer of immediately
available funds to such account as FDB shall designate. Notwithstanding the
foregoing, this Section 13.5(b) shall not apply in the event that FDB
lawfully terminates this Agreement pursuant to Section 13.1(c)(i)(B) unless
BIF intentionally breached or caused the applicable warranty or
representation to be breached.
(c) If this Agreement is terminated by BIF pursuant to Section 13.1(g),
and in lieu of any payment under Sections 13.3 or 13.5 (b), BIF shall pay to
FDB, within ten (10) Business Days after the occurrence of any such
termination by BIF pursuant to Section 13.1(g), the amount of $4.0 million
plus the FDB Transactional Expenses up to $500,000 by wire transfer of
immediately available funds to such account as FDB shall designate.
(d) If this Agreement is terminated by FDB pursuant to Section 13.1(h),
and in lieu of any payment under Sections 13.4 or 13.5(a), FDB shall pay to
BIF, within ten (10) Business Days after the occurrence of any such
termination by FDB pursuant to Section 13.1(h), the amount of $4.0 million
plus the FDB Transactional Expenses up to $500,000 by wire transfer of
immediately available funds to such account as BIF shall designate.
(e) All payments made pursuant to this Section shall constitute
liquidated damages and the receipt thereof shall be the sole and exclusive
remedy of the receiving party against the party making such payment, its
Affiliates and their respective directors, officers and stockholders for any
claims arising out of or relating in any way to this Agreement or the
transactions contemplated herein; provided, however, that nothing herein
shall preclude or bar the party receiving such payment from asserting or
enforcing any such claim against any Person other than the party making such
payment, such party's Affiliates and their respective officers, directors,
employees and stockholders.
ARTICLE 14
MISCELLANEOUS
Section 14.1 Governing Law. All questions concerning the
construction, validity and interpretation of this Agreement, and the
performance of the obligations imposed by this Agreement shall be governed by
the internal laws of the State of Illinois applicable to contracts made and
wholly to be performed in such state without regard to conflicts of laws,
except that the law of the state of Delaware shall apply to all matters of
corporate law and except to the extent superseded by federal law.
Section 14.2 Assignment. Neither this Agreement nor any of the rights
or obligations hereunder may be assigned, in whole or in part, by any of the
parties hereto without the prior written consent of the other parties hereto
and any purported assignment in violation hereof shall be void and of no
effect.
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Section 14.3 Amendment and Modification. The parties may by written
agreement signed by FDB and FDB: (a) extend the time for the performance of
any of the obligations or other acts of the parties hereto; (b) waive any
inaccuracies in the representations or warranties contained in this Agreement
or in any document delivered pursuant to this Agreement; and (c) waive
compliance with or modify, amend or supplement any of the conditions,
covenants, agreements, representations or warranties contained in this
Agreement or waive or modify performance of any of the obligations of any of
the parties hereto, which are for the benefit of the waiving party, provided,
however, that no such modification, amendment or supplement agreed to after
authorization of this Agreement by the stockholders of FDB or FDB shall
affect the rights of such respective stockholders in any manner which is
materially adverse to such stockholders. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be construed to
be a waiver of such provision, nor in any way affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement
shall be held to constitute a waiver of any other or subsequent breach.
Section 14.4 Notices. All notices, requests and other communications
hereunder shall be in writing (which shall include telecopier communication)
and shall be deemed to have been duly given if delivered by hand or by
overnight express delivery service, mailed certified or registered mail with
first class postage prepaid or telecopied if confirmed immediately thereafter
by also mailing a copy of any notice, request or other communication by
certified or registered mail with first class postage prepaid:
(a) If to FDB or Newco, to:
First Decatur Bancshares, Inc.
130 N. Water Street
Decatur, Illinois 62523-1376
Attention: John W. Luttrell
Chairman of the Board
Telephone: (217) 424-1111
Telecopier: (217) 425-8356
with copies to:
Howard & Howard Attorneys PC
321 Liberty Street, Suite 200
Peoria, Illinois 61602
Attention: Theodore L. Eissfeldt, Esq.
Telephone: (309) 672-1483
Telecopier: (309) 672-1568
or to such other Person and place as FDB shall furnish to FDB in
writing; or
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(b) if to BIF or Newco, to:
BankIllinois Financial Corporation
100 West University Avenue
Box 128
Champaign, Illinois 61820-3511
Attention: Gregory B. Lykins
Chairman of the Board
Telephone: (217) 351-6500
Telecopier: (217) 351-7188
with copies to:
Barack Ferrazzano Kirschbaum Perlman & Nagelberg
333 West Wacker
Suite 2700
Chicago, Illinois 60606
Attention: James J. Brennan, Esq.
Dennis R. Wendte, Esq.
Telephone: (312) 984-3100
Telecopier: (312) 984-3220
or to such other Person or place as FDB or FDB shall furnish to FDB
or FDB shall furnish to FDB and FDB in writing. Except as otherwise provided
herein, all such notices, requests or other communications shall be
effective: (i) if delivered by hand, when delivered; (ii) if mailed in the
manner provided in this Section, five (5) Business Days after deposit with
the United States Postal Service; (iii) if delivered by overnight express
delivery service, on the next Business Day after deposit with such service;
(iv) if by telecopier, on the next Business Day if also confirmed by mail in
the manner provided in this Section.
Section 14.5 Headings. The table of contents and the captions and
headings of articles, sections, schedules and exhibits appearing in or
attached to this Agreement have been inserted solely for convenience of
reference and shall not be considered a part of this Agreement nor shall any
of them affect the meaning or interpretation of this Agreement or any of its
provisions.
Section 14.6 Entire Agreement. This Agreement and any documents
executed by the parties pursuant to this Agreement and referred to herein
constitute the entire understanding and agreement of the parties hereto and
supersede all other prior agreements and understandings, written or oral,
relating to such subject matter between the parties, except for the Joint
Confidentiality Agreement between FDB and FDB dated July 9, 1999. This
Agreement and every representation, warranty, covenant, agreement and
provision hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
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Section 14.7 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement unless the consummation of the transactions contemplated
hereby is adversely affected thereby.
Section 14.8 Further Instruments. The parties hereto will, at or
before the Effective Time, execute and deliver such further instruments as
may be reasonably requested by any other party which are necessary to or
appropriate with respect to the consummation of the transactions contemplated
by this Agreement.
Section 14.9 Counterparts. This Agreement and any amendments thereto
may be executed in any number of counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
Section 14.10 All Reasonable Efforts. Each party represents and
warrants that it will use all reasonable efforts to bring about the
transactions contemplated by this Agreement as soon as practicable provided
that this Section shall not obligate FDB or FDB to remedy any breach of any
of its representations, warranties and covenants herein. In the event that
any party becomes aware of the occurrence or impending occurrence of any
event which would constitute or cause a breach by it of any of the
representations or warranties herein, or would have constituted or caused a
breach by it of any of the representations or warranties herein, had such an
event occurred or been known prior to the date hereof, said party shall
immediately give detailed and written notice thereof to the other party.
Section 14.11 Survival of Representations and Warranties. Except as
otherwise expressly provided herein, the covenants, representations and
warranties contained in this Agreement shall survive only until the Effective
Time.
Section 14.12 No Third Party Beneficiaries. This Agreement is not
intended to and shall not create any rights in or confer any benefits upon
any Person or entity other than the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers as of the day and year first written
above.
ATTEST: FIRST DECATUR BANCSHARES, INC.
By: /s/ Pete Grosso By: /s/ John W. Luttrell
Name: Pete Grosso John W. Luttrell
Secretary Chairman
ATTEST: BANKILLINOIS FINANCIAL CORPORATION
By: /s/ Teresa M. Marsh By: /s/ Gregory B. Lykins
Name: Teresa M. Marsh Gregory B. Lykins
Secretary Chairman
ATTEST: MAIN STREET TRUST, INC.
By: /s/ Teresa M. Marsh By: /s/ Van A. Dukeman
Name: Teresa M. Marsh Van A. Dukeman
Secretary President
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BankIllinois Financial Corporation First Decatur Bancshares, Inc.
Contact: GREGORY B. LYKINS, Chairman JOHN W. LUTTRELL, Chairman/CEO
VAN A. DUKEMAN, President & CEO PHILIP C. WISE, President
BankIllinois Financial Corporation First Decatur Bancshares, Inc.
P. O. Box 4028 130 N. Water St.
Champaign, IL 61824-4028 Decatur, IL 62523
Phone: 217.351.6506 Phone: 217.425.8221
FAX: 217.351.6651 FAX: 217.425.8312
Release Date: August 13, 1999
FOR IMMEDIATE RELEASE
BankIllinois Financial Corporation,
First Decatur Bancshares, Inc.
Agree to Merge
Merger of Two Strong Community-Banking Organizations
Will Create Billion Dollar Central Illinois Financial Services Company
BankIllinois Financial Corporation ("BIFC") and First Decatur Bancshares,
Inc. ("FDB"), today announced the signing of a definitive merger agreement
which provides for the merger of the two companies into a newly-organized
bank holding company to be known as Main Street Trust, Inc." ("MAIN STREET").
BIFC is the parent company of BankIllinois in Champaign, Illinois, and FDB is
the parent company of First National Bank of Decatur, First Trust Bank of
Shelbyville and FirsTech, Inc. of Decatur. These subsidiaries, including the
three banks, will retain their current names and separate charters after the
merger of their parent companies.
The merger was announced in a joint statement issued by Gregory B. Lykins,
the Chairman of BIFC, Van A. Dukeman, the President and CEO of BIFC, John W.
Luttrell, the Chairman and CEO of FDB, and Phillip C. Wise, the President of
FDB. They said the transaction will be a "merger of equals," with the
stockholders of each company exchanging their existing shares of stock for
shares of stock in MAIN STREET.
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Stockholders of BIFC will receive one share of MAIN STREET for each share of
BIFC, and stockholders of FDB will receive 1.638 shares of MAIN STREET for
each share of FDB. BIFC, which currently has approximately 5,775,000 fully
diluted shares outstanding, last traded at $23.75 per share. FDB, which
currently has approximately 2,780,000 fully diluted shares outstanding, last
traded at $29.00 per share. The transaction will be accounted for as a
"pooling of interests", and is expected to be immediately accretive to the
consolidated operating earnings of BIFC and FDB. The merger is expected to
close in late 1999 or early 2000. The transaction is structured to be a
tax-free exchange for stockholders of both companies.
As of June 30, 1999, BIFC and FDB had combined total banking assets of over
$1 billion, combined stockholders' equity of $115 million, and a total of
eighteen (18) offices located throughout Champaign, Macon and Shelby
Counties. After the merger, MAIN STREET's deposit market share in Champaign,
Macon and Shelby Counties will be approximately 17% of total deposits,
ranking it #1 in this combined area. In addition to banking assets, the
combined Trust & Investments Divisions of the two organizations will have
over $1 billion in trust and investment assets under management.
Luttrell said that "we are enthusiastic about the prospect of joining forces
to create the premier financial services organization in Central Illinois."
He noted that "the two organizations are a perfect fit - we are each focused
on serving our local communities, have similar values, cultures and business
philosophies, and have had a very positive relationship for many years, often
pooling our resources to make larger loans to local customers." "Through
these and other efforts," he said, "we have developed a very consistent and
trusting relationship."
Luttrell added that "The Champaign and Decatur banks have each provided
banking services to their respective communities for over 125 years, and the
Shelbyville bank for over 90 years. We will continue this tradition of
community banking in our respective market areas."
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Dukeman said, "the new combined organization will have a better opportunity
for enhanced growth than would have occurred on an independent basis." He
said that, "in today's competitive financial services environment, where
large out of area banks are acquiring local community banks and other
non-banking competitors are entering our markets, the affiliation of two very
well-capitalized and profitable community banks will allow us to compete even
more effectively and serve our clients even better. The larger organization
will expand our ability to serve the needs of our clients, particularly in
our niches of investment management, business banking, mortgage banking, and
bill processing services (FirsTech, Inc.) We see this as a tremendous
opportunity for both organizations, and our respective stockholders,
customers, employees, and the communities in which we operate."
The Board of the Directors of MAIN STREET will consist of seven directors
from BIFC and six directors from FDB. Mr. Luttrell, 67, will be Chairman of
MAIN STREET. Mr. Lykins, 52, will be Vice Chairman of MAIN STREET, and will
succeed Mr. Luttrell as Chairman within three years. Mr. Dukeman, 40, will
be MAIN STREET's President and CEO. Mr. Wise, 60, will serve as Executive
Vice President of MAIN STREET.
Mr. Lykins said he believes that the future for the combined organization is
excellent. "We are very confident of the economy of the Midwest and look
forward to delivering financial services within and outside of Illinois. We
are also confident that organizing our people into a unified team, our
combined market presence, and the strong capital position of the new company
will allow us to continue to provide Champaign, Macon and Shelby Counties
with local decision-making and quality financial services."
The merger is subject to the approval of the stockholders of both companies,
registration of MAIN STREET's stock with the Securities and Exchange
Commission, regulatory approvals of state and federal banking agencies and
other conditions. Each organization will continue to use its existing Y2K
compliant data processing system beyond year-end 1999.
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The following Summary Financial Data is a part of the Press Release.
Summary Financial Data
BIFC FDB
YTD June 30, 1999 YTD June 30, 1999
Earnings Summary:
Basic Earnings Per Share $ 0.67 $ 1.13
Diluted Earnings Per Share $ 0.65 $ 1.13
Net Income (in millions) $3,756 $3,128
Return on Average Assets 1.39% 1.39%
Balance Sheet Data (in millions):
Total Loans $ 319 $ 229
Total Deposits 394 372
Total Assets 540 461
Shareholders' Equity 61 53
NOTE: This news release contains forward-looking statements which are
subject to numerous assumptions, risk and uncertainties. Actual results
could differ from those contained in or implied by such forward-looking
statements for a variety of factors including: (1) developments in general
economic conditions, including interest rate and currency fluctuations,
market fluctuations and perceptions, and inflation; (2) changes in the
economy which could materially change anticipated credit quality trends and
the ability to generate loans and deposits; (3) a failure of the capital
markets to function consistently with customary levels; (4) a delay in or an
inability to execute strategic initiatives designed to grow revenues and/or
manage expenses; (5) legislative developments, including changes in laws
concerning taxes, banking, securities, insurance and other aspects of the
industry; (6) changes in the competitive environment for financial services
organizations and the company's ability to adapt to such changes; and (7) the
company's ability and resources to effect articulated business strategies and
manage risks associated with the Year 2000.
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BankIllinois Financial Corporation First Decatur Bancshares, Inc.
Legal Counsel:
Barack, Ferrazzano, Kirschbaum, Howard & Howard
Perlman, & Nagelberg
Investment
Bankers:
Keefe, Bruyette & Woods ABN AMRO
